[Federal Register Volume 72, Number 96 (Friday, May 18, 2007)]
[Proposed Rules]
[Pages 28098-28393]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 07-1998]



[[Page 28097]]

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Part II





Environmental Protection Agency





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40 CFR Parts 60, 63, et al.



Control of Emissions from Nonroad Spark-Ignition Engines and Equipment; 
Proposed Rule

Federal Register / Vol. 72, No. 96 / Friday, May 18, 2007 / Proposed 
Rules

[[Page 28098]]


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ENVIRONMENTAL PROTECTION AGENCY

40 CFR Parts 60, 63, 85, 89, 90, 91, 1027, 1045, 1048, 1051, 1054, 
1060, 1065, 1068, and 1074

[EPA-HQ-OAR-2004-0008; FRL-8303-7]
RIN 2060-AM34


Control of Emissions from Nonroad Spark-Ignition Engines and 
Equipment

AGENCY: Environmental Protection Agency (EPA).

ACTION: Proposed rule.

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SUMMARY: We are proposing emission standards for new nonroad spark-
ignition engines that will substantially reduce emissions from these 
engines. The proposed exhaust emission standards would apply in 2009 
for new marine spark-ignition engines, including first-time EPA 
standards for sterndrive and inboard engines. The proposed exhaust 
emission standards would apply starting in 2011 and 2012 for different 
sizes of new land-based, spark-ignition engines at or below 19 
kilowatts (kW). These small engines are used primarily in lawn and 
garden applications. We are also proposing evaporative emission 
standards for vessels and equipment using any of these engines. In 
addition, we are making other minor amendments to our regulations. We 
estimate that by 2030, the proposed standards would result in 
significant annual reductions of pollutant emissions from regulated 
engine and equipment sources nationwide, including 631,000 tons of 
volatile organic hydrocarbon emissions, 98,200 tons of NOX 
emissions, and 6,300 tons of direct particulate matter 
(PM2.5) emissions. These reductions correspond to 
significant reductions in the formation of ground-level ozone. We also 
expect to see annual reductions of 2,690,000 tons of carbon monoxide 
emissions, with the greatest reductions in areas where there have been 
problems with individual exposures. The requirements in this proposal 
would result in substantial benefits to public health and welfare and 
the environment. We estimate that by 2030, on an annual basis, these 
emission reductions would prevent 450 PM-related premature deaths, 
approximately 500 hospitalizations, 52,000 work days lost, and other 
quantifiable benefits every year. The total estimated annual benefits 
of this rule in 2030 are approximately $3.4 billion. Estimated costs in 
2030 are many times less at approximately $240 million.

DATES: Comments: Comments must be received on or before August 3, 2007. 
Under the Paperwork Reduction Act, comments on the information 
collection provisions must be received by OMB on or before June 18, 
2007.

ADDRESSES: Submit your comments, identified by Docket No. EPA-HQ-OAR-
2004-0008, by one of the following methods:
    www.regulations.gov: Follow the on-line instructions for submitting 
comments.
    E-mail: [email protected].
    Fax: (202) 260-4400.
    Mail: Environmental Protection Agency, Air Docket, Mail-code 6102T, 
1200 Pennsylvania Ave., NW., Washington, DC 20460. In addition, please 
mail a copy of your comments on the information collection provisions 
to the Office of Information and Regulatory Affairs, Office of 
Management and Budget (OMB), Attn: Desk Officer for EPA, 725 17th St., 
NW., Washington, DC 20503.
    Hand Delivery: EPA Docket Center (EPA/DC), EPA West, Room 3334, 
1301 Constitution Ave., NW., Washington, DC, Attention Docket No. EPA-
HQ-OAR-2004-0008. Such deliveries are accepted only during the Docket's 
normal hours of operation, special arrangements should be made for 
deliveries of boxed information.
    Instructions: Direct your comments to Docket ID No. EPA-HQ-OAR-
2004-0008. EPA's policy is that all comments received will be included 
in the public docket without change and may be made available online at 
www.regulations.gov, including any personal information provided, 
unless the comment includes information claimed to be Confidential 
Business Information (CBI) or other information whose disclosure is 
restricted by statute. Do not submit information that you consider to 
be CBI or otherwise protected through www.regulations.gov or e-mail. 
The www.regulations.gov Web site is an ``anonymous access'' system, 
which means EPA will not know your identity or contact information 
unless you provide it in the body of your comment. If you send an e-
mail comment directly to EPA without going through www.regulations.gov, 
your e-mail address will be automatically captured and included as part 
of the comment that is placed in the public docket and made available 
on the Internet. If you submit an electronic comment, EPA recommends 
that you include your name and other contact information in the body of 
your comment and with any disk or CD-ROM you submit. If EPA cannot read 
your comment due to technical difficulties and cannot contact you for 
clarification, EPA may not be able to consider your comment. Electronic 
files should avoid the use of special characters, any form of 
encryption, and be free of any defects or viruses. For additional 
instructions on submitting comments, go to Unit XIII of the 
SUPPLEMENTARY INFORMATION section of this document.
    Docket: All documents in the docket are listed in the 
www.regulations.gov index. Although listed in the index, some 
information is not publicly available, such as CBI or other information 
whose disclosure is restricted by statute. Certain other material, such 
as copyrighted material, will be publicly available only in hard copy. 
Publicly available docket materials are available either electronically 
in www.regulations.gov or in hard copy at the ``Control of Emissions 
from Nonroad Spark-Ignition Engines, Vessels and Equipment'' Docket, 
EPA/DC, EPA West, Room 3334, 1301 Constitution Ave., NW., Washington, 
DC. The Public Reading Room is open from 8:30 a.m. to 4:30 p.m., Monday 
through Friday, excluding legal holidays. The telephone number for the 
Public Reading Room is (202) 566-1744 and the telephone number for the 
``Control of Emissions from Nonroad Spark-Ignition Engines, Vessels, 
and Equipment'' Docket is (202) 566-1742.
    Hearing: A hearing will be held at 9:30 a.m. on Tuesday, June 5, 
2007 at the Sheraton Reston Hotel. The hotel is located at 11810 
Sunrise Valley Drive in Reston, Virginia; their phone number is 703-
620-9000. For more information on these hearings or to request to 
speak, see Section XIII.

FOR FURTHER INFORMATION CONTACT: Carol Connell, Environmental 
Protection Agency, Office of Transportation and Air Quality, Assessment 
and Standards Division, 2000 Traverwood Drive, Ann Arbor, Michigan 
48105; telephone number: 734-214-4349; fax number: 734-214-4050; e-mail 
address: [email protected].

SUPPLEMENTARY INFORMATION:

Does This Action Apply to Me?

    This action will affect you if you produce or import new spark-
ignition engines intended for use in marine vessels or in new vessels 
using such engines. This action will also affect you if you produce or 
import new spark-ignition engines below 19 kilowatts used in nonroad 
equipment, including agricultural and construction equipment, or 
produce or import such nonroad vehicles.

[[Page 28099]]

    The following table gives some examples of entities that may have 
to follow the regulations; however, since these are only examples, you 
should carefully examine the proposed regulations. Note that we are 
proposing minor changes in the regulations that apply to a wide range 
of products that may not be reflected in the following table (see 
Section XI). If you have questions, call the person listed in the FOR 
FURTHER INFORMATION CONTACT section of this preamble:

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                                                                               Examples of potentially regulated
                Category                    NAICS codes a      SIC codes b                 entities
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Industry                                            333618              3519  Manufacturers of new engines.
Industry                                            333111              3523  Manufacturers of farm machinery
                                                                               and equipment.
Industry                                            333112              3524  Manufacturers of lawn and garden
                                                                               tractors (home).
Industry                                            336612        3731, 3732  Manufacturers of marine vessels.
Industry                                    811112, 811198        7533, 7549  Commercial importers of vehicles
                                                                               and vehicle components.
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a North American Industry Classification System (NAICS).
b Standard Industrial Classification (SIC) system code.

What Should I Consider as I Prepare My Comments for EPA?

    Submitting CBI. Do not submit this information to EPA through 
www.regulations.gov or e-mail. Clearly mark the part or all of the 
information that you claim to be CBI. For CBI information in a disk or 
CD ROM that you mail to EPA, mark the outside of the disk or CD ROM as 
CBI and then identify electronically within the disk or CD ROM the 
specific information that is claimed as CBI. In addition to one 
complete version of the comment that includes information claimed as 
CBI, a copy of the comment that does not contain the information 
claimed as CBI must be submitted for inclusion in the public docket. 
Information so marked will not be disclosed except in accordance with 
procedures set forth in 40 CFR part 2.
    Tips for Preparing Your Comments. When submitting comments, 
remember to:
     Identify the rulemaking by docket number and other 
identifying information (subject heading, Federal Register date and 
page number).
     Follow directions--The agency may ask you to respond to 
specific questions or organize comments by referencing a Code of 
Federal Regulations (CFR) part or section number.
     Explain why you agree or disagree; suggest alternatives 
and substitute language for your requested changes.
     Describe any assumptions and provide any technical 
information and/or data that you used.
     If you estimate potential costs or burdens, explain how 
you arrived at your estimate in sufficient detail to allow for it to be 
reproduced.
     Provide specific examples to illustrate your concerns and 
suggest alternatives.
     Explain your views as clearly as possible, avoiding the 
use of profanity or personal threats.
     Make sure to submit your comments by the comment period 
deadline identified.

Table of Contents

I. Introduction
    A. Overview
    B. Why Is EPA Taking This Action?
    C. What Regulations Currently Apply to Nonroad Engines or 
Vehicles?
    D. Putting This Proposal into Perspective
    E. What Requirements Are We Proposing?
    F. How Is This Document Organized?
II. Public Health and Welfare Effects
    A. Ozone
    B. Particulate Matter
    C. Air Toxics
    D. Carbon Monoxide
III. Sterndrive and Inboard Marine Engines
    A. Overview
    B. Engines Covered by This Rule
    C. Proposed Exhaust Emission Standards
    D. Test Procedures for Certification
    E. Additional Certification and Compliance Provisions
    F. Small-Business Provisions
    G. Technological Feasibility
IV. Outboard and Personal Watercraft Engines
    A. Overview
    B. Engines Covered by This Rule
    C. Proposed Exhaust Emission Standards
    D. Changes to Existing OB/PWC Test Procedures
    E. Additional Certification and Compliance Provisions
    F. Other Adjustments to Regulatory Provisions
    G. Small-Business Provisions
    H. Technological Feasibility
V. Small SI Engines
    A. Overview
    B. Engines Covered by This Rule
    C. Proposed Requirements
    D. Testing Provisions
    E. Certification and Compliance Provisions for Small SI Engines 
and Equipment
    F. Small Business Provisions
    G. Technological Feasibility
VI. Evaporative Emissions
    A. Overview
    B. Fuel Systems Covered by This Rule
    C. Proposed Evaporative Emission Standards
    D. Emission Credit Programs
    E. Testing Requirements
    F. Certification and Compliance Provisions
    G. Small-Business Provisions
    H. Technological Feasibility
VII. General Concepts Related to Certification and Other 
Requirements
    A. Scope of Application
    B. Emission Standards and Testing
    C. Demonstrating Compliance
    D. Other Concepts
VIII. General Nonroad Compliance Provisions
    A. Miscellaneous Provisions (Part 1068, subpart A)
    B. Prohibited Acts and Related Requirements (Part 1068, subpart 
B)
    C. Exemptions (Part 1068, subpart C)
    D. Imports (Part 1068, subpart D)
    E. Selective Enforcement Audit (Part 1068, subpart E)
    F. Defect Reporting and Recall (Part 1068, subpart F)
    G. Hearings (Part 1068, subpart G)
IX. General Test Procedures
    A. Overview
    B. Special Provisions for Nonroad Spark-Ignition Engines
X. Energy, Noise, and Safety
    A. Safety
    B. Noise
    C. Energy
XI. Proposals Affecting Other Engine and Vehicle Categories
    A. State Preemption
    B. Certification Fees
    C. Amendments to General Compliance Provisions in 40 CFR Part 
1068
    D. Amendments Related to Large SI Engines (40 CFR Part 1048)
    E. Amendments Related to Recreational Vehicles (40 CFR Part 
1051)
    F. Amendments Related to Heavy-Duty Highway Engines (40 CFR Part 
85)
    G. Amendments Related to Stationary Spark-Ignition Engines (40 
CFR Part 60)
XII. Projected Impacts
    A. Emissions from Small Nonroad and Marine Spark-Ignition 
Engines
    B. Estimated Costs
    C. Cost per Ton
    D. Air Quality Impact
    E. Benefits
    F. Economic Impact Analysis
XIII. Public Participation
XIV. Statutory and Executive Order Reviews
    A. Executive Order 12866: Regulatory Planning and Review
    B. Paperwork Reduction Act
    C. Regulatory Flexibility Act
    D. Unfunded Mandates Reform Act
    E. Executive Order 13132: Federalism

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    F. Executive Order 13175: Consultation and Coordination With 
Indian Tribal Governments
    G. Executive Order 13045: Protection of Children from 
Environmental Health and Safety Risks
    H. Executive Order 12898: Federal Actions to Address 
Environmental Justice in Minority Populations and Low-Income 
Populations.
    I. Executive Order 13211: Actions that Significantly Affect 
Energy Supply, Distribution, or Use
    J. National Technology Transfer Advancement Act

I. Introduction

A. Overview

    Air pollution is a serious threat to the health and well-being of 
millions of Americans and imposes a large burden on the U.S. economy. 
Ground-level ozone is linked to potentially serious health problems, 
especially respiratory effects, and environmental degradation. Carbon 
monoxide emissions are also related to health problems. Over the past 
quarter century, state and federal agencies have established emission 
control programs that make significant progress in addressing these 
concerns.
    This proposal includes steps that would reduce the mobile-source 
contribution to air pollution in the United States. In particular, we 
are proposing standards that would require manufacturers to 
substantially reduce emissions from marine spark-ignition engines and 
from nonroad spark-ignition engines below 19 kW that are generally used 
in lawn and garden applications.\1\ We refer to these as Marine SI 
engines and Small SI engines, respectively. The proposed standards are 
a continuation of the process of establishing standards for nonroad 
engines and vehicles as required by Clean Air Act section 213. All the 
nonroad engines subject to this proposal are already regulated under 
existing emission standards, except sterndrive and inboard marine 
engines, which will be subject to EPA emission standards for the first 
time.
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    \1\ Otto-cycle engines (referred to here as spark-ignition or SI 
engines) typically operate on gasoline, liquefied petroleum gas, or 
natural gas. Diesel-cycle engines, referred to simply as ``diesel 
engines'' in this document, may also be referred to as compression-
ignition or CI engines. These engines typically operate on diesel 
fuel, but other fuels may also be used.
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    Nationwide, emissions from Marine SI engines and Small SI engines 
contribute significantly to mobile source air pollution. By 2020 
without the proposed requirements these engines will account for about 
27 percent (1,352,000 tons) of mobile source volatile organic 
hydrocarbon compounds (VOC) emissions, 31 percent (16,374,000 tons) of 
mobile source carbon monoxide (CO) emissions, 4 percent (202,000 tons) 
of mobile source oxides of nitrogen (NOX) emissions, and 16 
percent (39,000 tons) of mobile source particulate matter 
(PM2.5) emissions. The proposed standards will reduce 
exposure to these emissions and help avoid a range of adverse health 
effects associated with ambient ozone, CO, and PM levels. In addition, 
the proposed standards will help reduce acute exposure to CO, air 
toxics, and PM for persons who operate or who work with or are 
otherwise active in close proximity to these engines. They will also 
help address other environmental problems associated with Marine SI 
engines and Small SI engines, such as visibility impairment in our 
national parks and other wilderness areas. These effects are described 
in more detail in subsequent sections of this Preamble.

B. Why Is EPA Taking This Action?

    Clean Air Act section 213(a)(1) directs us to study emissions from 
nonroad engines and vehicles to determine, among other things, whether 
these emissions ``cause, or significantly contribute to, air pollution 
which may reasonably be anticipated to endanger public health or 
welfare.'' Section 213(a)(2) further requires us to determine whether 
emissions of CO, VOC, and NOX from all nonroad engines 
significantly contribute to ozone or CO concentrations in more than one 
nonattainment area. If we determine that emissions from all nonroad 
engines do contribute significantly to these nonattainment areas, 
section 213(a)(3) then requires us to establish emission standards for 
classes or categories of new nonroad engines and vehicles that cause or 
contribute to such pollution. We may also set emission standards under 
section 213(a)(4) regulating any other emissions from nonroad engines 
that we find contribute significantly to air pollution which may 
reasonably be anticipated to endanger public health or welfare.
    Specific statutory direction to propose standards for nonroad 
spark-ignition engines comes from section 428(b) of the 2004 
Consolidated Appropriations Act, which requires EPA to propose 
regulations under the Clean Air Act ``that shall contain standards to 
reduce emissions from new nonroad spark-ignition engines smaller than 
50 horsepower.'' \2\ As highlighted above and more fully described in 
Section II, these engines emit pollutants that contribute to ground-
level ozone and ambient CO levels. Human exposure to ozone and CO can 
cause serious respiratory and cardiovascular problems. Additionally, 
these emissions contribute to other serious environmental degradation. 
This proposal implements Congress' mandate by proposing new 
requirements for particular nonroad engines and equipment that are 
regulated as part of EPA's overall nonroad emission control program.
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    \2\ Pub. L. 108-199, Div G, Title IV, Sec.  428(b), 118 Stat. 
418 (January 23, 2004).
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    We are proposing this rule under the procedural authority of 
section 307(d) of the Clean Air Act.

C. What Regulations Currently Apply to Nonroad Engines or Vehicles?

    EPA has been setting emission standards for nonroad engines and/or 
vehicles since Congress amended the Clean Air Act in 1990 and included 
section 213. These amendments have led to a series of rulemakings to 
reduce the air pollution from this widely varying set of products. In 
these rulemakings, we divided the broad group of nonroad engines and 
vehicles into several different categories for setting application-
specific requirements. Each category involves many unique 
characteristics related to the participating manufacturers, technology, 
operating characteristics, sales volumes, and market dynamics. 
Requirements for each category therefore take on many unique features 
regarding the stringency of standards, the underlying expectations 
regarding emission control technologies, the nature and extent of 
testing, and the myriad details that comprise the implementation of a 
compliance program.
    At the same time, the requirements and other regulatory provisions 
for each engine category share many characteristics. Each rulemaking 
under section 213 sets technology-based standards consistent with the 
Clean Air Act and requires annual certification based on measured 
emission levels from test engines or vehicles. As a result, the broader 
context of EPA's nonroad emission control programs demonstrates both 
strong similarities between this rulemaking and the requirements 
adopted for other types of engines or vehicles and distinct differences 
as we take into account the unique nature of these engines and the 
companies that produce them.
    We completed the Nonroad Engine and Vehicle Emission Study to 
satisfy Clean Air Act section 213(a)(1) in

[[Page 28101]]

November 1991.\3\ On June 17, 1994, we made an affirmative 
determination under section 213(a)(2) that nonroad emissions are 
significant contributors to ozone or CO in more than one nonattainment 
area (56 FR 31306). Since then we have undertaken several rulemakings 
to set emission standards for the various categories of nonroad 
engines. Table I-1 highlights the different engine or vehicle 
categories we have established and the corresponding cites for emission 
standards and other regulatory requirements. Table I-2 summarizes the 
series of EPA rulemakings that have set new or revised emission 
standards for any of these nonroad engines or vehicles. These actions 
are described in the following sections, with additional discussion to 
explain why we are not proposing more stringent standards for certain 
types of nonroad spark-ignition engines below 50 horsepower.
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    \3\ This study is available on EPA's web site at http://www.epa.gov/otaq/equip-ld.

                        Table I-1.--Nonroad Engine Categories for EPA Emission Standards
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                                             CFR cite for regulationse
            Engine categories                  establishing emission          Cross reference to Table I.C-2
                                                     standards
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1. Locomotives engines...................  40 CFR Part 92..............  d
2. Marine diesel engines.................  40 CFR Part 94..............  g, i, j
3. Other nonroad diesel engines..........  40 CFR Parts 89 and 1039....  a, e, k
4. Marine SI engines \4\.................  40 CFR Part 91..............  c
5. Recreational vehicles.................  40 CFR Part 1051............  i
6. Small SI engines \5\..................  40 CFR Part 90..............  b, f, h
7. Large SI engines \4\..................  40 CFR Part 1048............  i
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                                Table I-2.--EPA's Rulemakings for Nonroad Engines
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 Nonroad engines (categories and sub-
              categories)                         Final rulemaking                           Date
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a. Land-based diesel engines >=37 kW    56 FR 31306........................  June 17, 1994.
 Tier 1.
b. Small SI engines--Phase 1..........  60 FR 34581........................  July 3, 1995.
c. Marine SI engines--outboard and      61 FR 52088........................  October 4, 1996.
 personal watercraft.
d. Locomotives........................  63 FR 18978........................  April 16, 1998.
e. Land-based diesel engines--Tier 1    63 FR 56968........................  October 23, 1998.
 and Tier 2 for engines <37 kW--Tier 2
 and Tier 3 for engines >=37 kW.
f. Small SI engines (Nonhandheld)--     64 FR 15208........................  March 30, 1999.
 Phase 2.
g. Commercial marine diesel <30 liters  64 FR 73300........................  December 29, 1999.
 per cylinder.
h. Small SI engines (Handheld)--Phase   65 FR 24268........................  April 25, 2000.
 2.
i. Recreational vehicles, Industrial    67 FR 68242........................  November 8, 2002.
 spark-ignition engines >19 kW, and
 Recreational marine diesel.
j. Marine diesel engines >=2.5 liters/  68 FR 9746.........................  February 28, 2003.
 cylinder.
k. Land-based diesel engines--Tier 4..  69 FR 38958........................  June 29, 2004.
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(1) Small SI Engines
    We have previously adopted emission standards for nonroad spark-
ignition engines at or below 19 kW in two phases. The first phase of 
these standards introduced certification and an initial level of 
emission standards for both handheld and nonhandheld engines. On March 
30, 1999 we adopted a second phase of standards for nonhandheld 
engines, including both Class I and Class II engines, which are almost 
fully phased-in today (64 FR 15208).\6\ These standards involved 
emission reductions based on improving engine calibrations to reduce 
exhaust emissions and added a requirement that emission standards must 
be met over the engines' entire useful life as defined in the 
regulations. We believe catalyst technology has now developed to the 
point that it can be applied to all nonhandheld Small SI engines to 
reduce exhaust emissions. Various emission control technologies are 
similarly available to address the different types of fuel evaporative 
emissions we have identified.
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    \4\ The term ``Marine SI,'' used throughout this document, 
refers to all spark-ignition engines used to propel marine vessels. 
This includes outboard engines, personal watercraft engines, and 
sterndrive/inboard engines. See Section III for additional 
information.
    \5\ The terms ``Small SI'' and ``Large SI'' are used throughout 
this document. All nonroad spark-ignition engines not covered by our 
programs for Marine SI engines or recreational vehicles are either 
Small SI engines or Large SI engines. Small SI engines include those 
engines with maximum power at or below 19 kW, and Large SI engines 
include engines with maximum power above 19 kW.
    \6\ Handheld engines generally include those engines for which 
the operator holds or supports the equipment during operation; 
nonhandheld engines are Small SI engines that are not handled 
engines (see Sec.  1054.801). Class I refers to nonhandheld engines 
with displacement below 225 cc; Class II refers to larger 
nonhandheld engines.
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    For handheld engines, we adopted Phase 2 exhaust emission standards 
in April 25, 2000 (65 FR 24268). These standards were based on the 
application of catalyst technology, with the expectation that 
manufacturers would have to make considerable investments to modify 
their engine designs and production processes. A technology review we 
completed in 2003 indicated that manufacturers were making progress 
toward compliance, but that additional implementation flexibility was 
needed if manufacturers were to fully comply with the regulations by 
2010. This finding and a change in the rule were published in the 
Federal Register on January 12, 2004 (69FR1824). At this point, we have 
no information to suggest that manufacturers can uniformly apply new 
technology or make design improvements to reduce exhaust emissions 
below the Phase 2 levels. We therefore believe the Phase 2 standards 
continue to represent the greatest degree of emission reduction 
achievable for these engines.\7\ However, we believe it is appropriate 
to apply evaporative emission standards to the handheld engines similar 
to those we are

[[Page 28102]]

proposing for the nonhandheld engines. Manufacturers can control 
evaporative emissions in a way that has little or no impact on exhaust 
emissions.
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    \7\ Note that we refer to the handheld exhaust emission 
standards in 40 CFR part 1054 as Phase 3 standards. This is intended 
to maintain consistent terminology with the comparable standards in 
California rather than indicating an increase in stringency.
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(2) Marine SI Engines
    On October 4, 1996 we adopted emission standards for spark-ignition 
outboard and personal watercraft engines that have recently been fully 
phased in (61 FR 52088). We decided not to finalize emission standards 
for sterndrive or inboard marine engines at that time. Uncontrolled 
emission levels from sterndrive and inboard marine engines were already 
significantly lower than the outboard and personal watercraft engines. 
We did, however, leave open the possibility of revisiting the need for 
emission standards for sterndrive and inboard engines in the future. 
See Section III for further discussion of the scope and background of 
past and current rulemakings for these engines.
    We believe existing technology can be applied to all Marine SI 
engines to reduce emissions of harmful pollutants, including both 
exhaust and evaporative emissions. Manufacturers of outboard and 
personal watercraft engines can continue the trend of producing four-
stroke engines and advanced-technology two-stroke engines to further 
reduce emissions. For sterndrive/inboard engines, manufacturers can add 
technologies, such as fuel injection and aftertreatment, that can 
safely and substantially improve the engines' emission control 
capabilities.
    (3) Large SI Engines
    We adopted emission standards for Large SI engines on November 8, 
2002 (67 FR 68242). This includes Tier 1 standards for 2004 through 
2006 model years and Tier 2 standards starting with 2007 model year 
engines. Manufacturers are today facing a considerable challenge to 
comply with the Tier 2 standards, which are already substantially more 
stringent than any of the standards proposed or contemplated for the 
other engine categories in this proposal. The Tier 2 standards also 
include evaporative emission standards, new transient test procedures, 
and additional exhaust emission standards to address off-cycle 
emissions, and diagnostic requirements. Stringent standards for this 
category of engines, and in particular, engines between 25 and 50 
horsepower (19 to 37 kW), have been completed in the recent past, and 
are currently being implemented. Because of that we do not have 
information on the actual Tier 2 technology that manufacturers will use 
and do not have information at this time on possible advances in 
technology beyond Tier 2. We therefore believe the evidence provided in 
the recently promulgated rulemaking continues to represent the best 
available information regarding the appropriate level of standards for 
these engines under section 213 at this time. California Air Resources 
Board (ARB) has adopted an additional level of emission control for 
Large SI engines starting with the 2010 model year. However, as 
described in Section I.D.1, their new standards would not increase 
overall stringency beyond that reflected in the federal standards. As a 
result, we believe it would be inappropriate to pursue more stringent 
emission standards for these engines in this rulemaking.
    Note that the Large SI standards apply to nonroad spark-ignition 
engines above 19 kW. However, we adopted a special provision for engine 
families where production engines have total displacement at or below 
1000 cc and maximum power at or below 30 kW, allowing these engine 
families to instead certify to the applicable standards for Small SI 
engines.
(4) Recreational Vehicles
    We adopted exhaust and evaporative emission standards for 
recreational vehicles in our November 8, 2002 final rule (67FR68242). 
These standards apply to all-terrain vehicles, off-highway motorcycles, 
and snowmobiles.\8\ These exhaust emission standards will be fully 
phased in starting with the 2007 model year. The evaporative emission 
standards apply starting with the 2008 model year.
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    \8\ Note that we treat certain high-speed off-road utility 
vehicles as all-terrain vehicles (see 40 CFR part 1051).
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    Recreational vehicles will soon be subject to permeation 
requirements that are very similar to the requirements proposed in this 
rulemaking. We have also learned more about controlling running losses 
and diffusion emissions that may eventually lead us to propose 
comparable standards for recreational vehicles. We expect to revisit 
these questions in the context of a rulemaking to modify the duty cycle 
for all-terrain vehicles, as described below. Considering these new 
requirements for recreational vehicles in this later rulemaking would 
give us additional time to collect information to better understand the 
feasibility, costs, and benefits of applying these requirements to 
recreational vehicles.
    The following sections describe the state of technology and 
regulatory requirements for the different types of recreational 
vehicles.
(a) All-Terrain Vehicles
    The regulations for all-terrain vehicles (ATV) specify testing 
based on a chassis-based transient procedure. However, on an interim 
basis, we are permitting manufacturers the option to use a steady-state 
engine-based procedure to allow manufacturers an opportunity to develop 
the field operating data needed to determine if ATV operation is 
dominantly steady state or transient in nature and to develop an 
appropriate emission test cycle from that information. The emissions 
test procedure and duty cycle are critical to getting the degree of 
emission control expected from these engines. We are continuing to work 
toward a resolution of this test cycle development initiative in a 
separate action. The anticipated changes to the test cycle raise new 
questions we will need to work through before we are prepared to change 
the existing regulation and perhaps pursue new emission control 
requirements. In particular, we will need to further explore the extent 
to which the new duty cycle represents in-use operation and whether 
engine or chassis testing is more appropriate in simulating in-use 
operation for accurate emission characterization and measurements. We 
believe it is appropriate to consider more stringent exhaust emission 
standards for these engines after we have had the opportunity to 
address the emission test cycle issue and to thus establish a long-term 
testing protocols and related requirements.
(b) Off-Highway Motorcycles
    For off-highway motorcycles, manufacturers are in many cases making 
a substantial transition to move away from two-stroke engines in favor 
of four-stroke engines. This transition is now underway. While it may 
eventually be appropriate to apply aftertreatment or other additional 
emission control technologies to off-highway motorcycles, we need more 
time for this transition to be completed and to assess the success of 
aftertreatment technologies such as catalysts on similar applications 
such as highway motorcycles. As EPA and manufacturers learn more in 
implementing emission standards, we would expect to be able to better 
judge the potential for broadly applying new technology to achieve 
further emission reductions from off-highway motorcycles.
(c) Snowmobiles
    In our November 8, 2002 final rule we set three phases of exhaust 
emission standards for snowmobiles (67 FR

[[Page 28103]]

68242). Environmental and industry groups challenged the third phase of 
these standards. The court decision upheld much of EPA's reasoning for 
the standards, but vacated the NOX standard and remanded the 
CO and HC standards to clarify the analysis and evidence upon which the 
standards are based. See Bluewater Network, et al v. EPA, 370 F 3d 1 
(D.C. Cir. 2004). A large majority of snowmobile engines are rated 
below 50 hp and there is still a fundamental need for time to pass to 
allow us to assess the success of 4 stroke engine technology in the 
market place. This is an important of the assessment we need to conduct 
with regard to 2012 and later model year emission standards. Thus we 
believe is appropriate to address this in a separate rulemaking.\9\ We 
expect to complete that work with sufficient lead time for 
manufacturers to meet any revised Phase 3 standards that we might adopt 
for the 2012 model year, consistent with the original rulemaking 
requirements.
---------------------------------------------------------------------------

    \9\ Only about 3 percent of snowmobiles are rated below 50 
horsepower.
---------------------------------------------------------------------------

(5) Nonroad Diesel Engines
    The 2004 Consolidated Appropriations Act providing the specific 
statutory direction for this rulemaking focuses on nonroad spark-
ignition engines. Nonroad diesel engines are therefore not included 
within the scope of that Congressional mandate. However, we have gone 
through several rulemakings to set standards for these engines under 
the broader authority of Clean Air Act section 213. In particular, we 
have divided nonroad diesel engines into three groups for setting 
emission standards. We adopted a series of standards for locomotives on 
April 16, 1998, including requirements to certify engines to emission 
standards when they are rebuilt (63 FR 18978). We also adopted emission 
standards for marine diesel engines over several different rulemakings, 
as described in Table I-2. These included separate actions for engines 
below 37 kW, engines installed in oceangoing vessels, engines installed 
in commercial vessels involved in inland and coastal waterways, and 
engines installed in recreational vessels. We have recently proposed 
new emission standards for both locomotive and marine diesel engines 
(72 FR 15938, April 3, 2007).
    Finally, all other nonroad diesel engines are grouped together for 
EPA's emission standards. We have adopted multiple tiers of 
increasingly stringent standards in three separate rulemakings, as 
described in Table I-2. We most recently adopted Tier 4 standards based 
on the use of ultra-low sulfur diesel fuel and the application of 
exhaust aftertreatment technology (69 FR 38958, June 29, 2004).

D. Putting This Proposal Into Perspective

    Most manufacturers that will be subject to this rulemaking are also 
affected by regulatory developments in California and in other 
countries. Each of these is described in more detail below.
(1) State Initiatives
    Clean Air Act section 209 prohibits California and other states 
from setting emission standards for new motor vehicles and new motor 
vehicle engines, but authorizes EPA to waive this prohibition for 
California, in which case other states may adopt California's 
standards. Similar preemption and waiver provisions apply for emission 
standards for nonroad engines and vehicles, whether new or in-use. 
However for new locomotives, new engines used in locomotives, and new 
engines used in farm or construction equipment with maximum power below 
130 kW, California and other states are preempted and there is no 
provision for a waiver of preemption. In addition, in section 428 of 
the amendment to the 2004 Consolidated Appropriations Act, Congress 
further precluded other states from adopting new California standards 
for nonroad spark-ignition engines below 50 horsepower. In addition, 
the amendment required that we specifically address the safety 
implications of any California standards for these engines before 
approving a waiver of federal preemption. We are proposing to codify 
these changes to preemption in this rule.
    California ARB has adopted requirements for five groups of nonroad 
engines: (1) Diesel- and Otto-cycle small off-road engines rated under 
19 kW; (2) spark-ignition engines used for marine propulsion; (3) land-
based nonroad recreational engines, including those used in all-terrain 
vehicles, off-highway motorcycles, go-carts, and other similar 
vehicles; (4) new nonroad spark-ignition engines rated over 19 kW not 
used in recreational applications; and (5) new land-based nonroad 
diesel engines rated over 130 kW. They have also approved a voluntary 
registration and control program for existing portable equipment.
    In the 1990s California ARB adopted Tier 1 and Tier 2 standards for 
Small SI engines consistent with the federal requirements. In 2003, 
they moved beyond the federal program by adopting exhaust 
HC+NOX emission standards of 10 g/kW-hr for Class I engines 
starting in the 2007 model year and 8 g/kW-hr for Class II engines 
starting in the 2008 model year. In the same rule they adopted 
evaporative emission standards for nonhandheld equipment, requiring 
control of fuel tank permeation, fuel line permeation, diurnal 
emissions, and running losses.
    California ARB has adopted two tiers of exhaust emission standards 
for outboard and personal watercraft engines beyond EPA's original 
standards. The most recent standards, which apply starting in 2008, 
require HC+NOX emission levels as low as 16 g/kW-hr. For 
sterndrive and inboard engines, California has adopted a 5 g/kW-hr 
HC+NOX emission standard for 2008 and later model year 
engines, with testing underway to confirm the feasibility of standards. 
California ARB's marine programs include no standards for exhaust CO 
emissions or evaporative emissions.
    The California emission standards for recreational vehicles have a 
different form than the comparable EPA standards but are roughly 
equivalent in stringency. The California standards include no standards 
for controlling evaporative emissions. Another important difference 
between the two programs is California ARB's reliance on a provision 
allowing noncompliant vehicles to be used in certain areas that are 
less environmentally sensitive as long as they have a specified red 
sticker that would identify their lack of emission controls to prevent 
them from operating in other areas.
    California ARB in 1998 adopted requirements that apply to new 
nonroad engines rated over 25 hp produced for California, with 
standards phasing in from 2001 through 2004. Texas has adopted these 
initial California ARB emission standards statewide starting in 2004. 
More recently, California ARB has proposed exhaust emission standards 
and new evaporative emission standards for these engines, consistent 
with EPA's 2007 model year standards. Their proposal also included an 
additional level of emission control for Large SI engines starting with 
the 2010 model year. However, their proposed standards would not 
increase overall stringency beyond that reflected in the federal 
standards. Rather, they aim to achieve reductions in HC+NOX 
emissions by removing the flexibility incorporated into the federal 
standards allowing manufacturers to have higher HC+NOX 
emissions by certifying to a more stringent CO standard.

[[Page 28104]]

(2) Actions in Other Countries
    While the proposed emission standards will apply only to engines 
sold in the United States, we are aware that manufacturers in many 
cases are selling the same products into other countries. To the extent 
that we have the same emission standards as other countries, 
manufacturers can contribute to reducing air emissions without being 
burdened by the costs associated with meeting differing or inconsistent 
regulatory requirements. The following discussion describes our 
understanding of the status of emission standards in countries outside 
the United States.

    Regulations for spark ignition engines in handheld and 
nonhandheld equipment are included in the ``Directive 97/68/EC of 
the European Parliament and of the Council of 16 December 1997 on 
the approximation of the laws of the Member States relating to 
measures against the emission of gaseous and particulate pollutants 
from internal combustion engines to be installed in non-road mobile 
machinery (OJ L 59, 27.2.1998, p. 1)'', as amended by ``Directive 
2002/88/EC of the European Parliament and of the Council of 9 
December 2002''. The Stage I emission standards are to be met by all 
handheld and nonhandheld engines by 24 months after entry into force 
of the Directive (as noted in a December 9, 2002 amendment to 
Directive 97/68/EC). The Stage I emission standards are similar to 
the U.S. EPA's Phase 1 emission standards for handheld and 
nonhandheld engines. The Stage II emission standards are implemented 
over time for the various handheld and nonhandheld engine classes 
from 2005 to 2009 with handheld engines >= 50cc on August 1, 2008. 
The Stage II emission standards are similar to EPA's Phase 2 
emission standards for handheld and nonhandheld engines. Six months 
after these dates Member States shall permit placing on the market 
of engines, whether or not already installed in machinery, only if 
they meet the requirements of the Directive.

    The European Commission has adopted emission standards for 
recreational marine engines, including both diesel and gasoline 
engines. These requirements apply to all new engines sold in member 
countries and began in 2006 for four-stroke engines and in 2007 for 
two-stroke engines. Table I-3 presents the European standards for 
diesel and gasoline recreational marine engines. The numerical emission 
standards for NOX are based on the applicable standard from 
MARPOL Annex VI for marine diesel engines (See Table I-3). The European 
standards are roughly equivalent to the nonroad diesel Tier 1 emission 
standards for HC and CO. Emission measurements under the European 
standards rely on the ISO D2 duty cycle for constant-speed engines and 
the ISO E5 duty cycle for other engines.

                     Table I-3.--European Emission Standards for Recreational Marine Engines
                                                    [g/kW-hr]
----------------------------------------------------------------------------------------------------------------
                 Engine Type                           HC               NOX             CO              PM
----------------------------------------------------------------------------------------------------------------
Two-Stroke Spark-Ignition....................   30 + 100/P\0.75\            10.0     150 + 600/P  ..............
Four-Stroke Spark-Ignition...................     6 + 50/P\0.75\            15.0     150 + 600/P  ..............
Compression-Ignition.........................     1.5 + 2/P\0.5\             9.8             5.0            1.0
----------------------------------------------------------------------------------------------------------------
\*\ P = rated power in kilowatts (kW)

E. What Requirements Are We Proposing?

    EPA's emission control provisions require engine, vessel and 
equipment manufacturers to design and produce their products to meet 
the emission standards we adopt. To ensure that engines, vessels and 
equipment meet the expected level of emission control, we also require 
compliance with a variety of additional requirements, such as 
certification, labeling engines, and meeting warranty requirements. The 
following sections provide a brief summary of the new requirements we 
are proposing in this rulemaking. See the later sections for a full 
discussion of the proposal.
(1) Marine SI Engines and Vessels
    We are proposing a more stringent level of emission standards for 
outboard and personal watercraft engines starting with the 2009 model 
year. The proposed standards for engines above 40 kW are 16 g/kW-hr for 
HC+NOX and 200 g/kW-hr for CO. For engines below 40 kW, the 
standards increase gradually based on the engine's maximum power. We 
expect manufacturers to meet these standards with improved fueling 
systems and other in-cylinder controls. The levels of the standards are 
consistent with the requirements recently adopted by California ARB 
with the advantage of a simplified form of the standard for different 
power ratings and with a CO emission standard. We are not pursuing 
catalyst-based emission standards for outboard and personal watercraft 
engines. As is discussed later in this preamble, the application of 
catalyst-based standards to the marine environment creates special 
technology challenges that must be addressed. Unlike the sterndrive/
inboard engines discussed in the next paragraph, outboard and personal 
watercraft engines are not built from automotive engine blocks and are 
not as easily amenable to the fundamental engine modifications, fuel 
system upgrades, and other engine control modifications needed to get 
acceptable catalyst performance. This proposal is an appropriate next 
step in the evolution of technology-based standards for outboard and 
personal watercraft engines as they are likely to lead to the 
elimination of carbureted two-stroke engines in favor of direct-
injection two-stroke engines and to encourage the fuel system upgrades 
and related engine modifications needed to achieve the required 
reductions and to potentially set the stage for future considerations.
    We are proposing new exhaust emission standards for sterndrive and 
inboard marine engines. The proposed standards are 5.0 g/kW-hr for 
HC+NOX and 75.0 g/kW-hr for CO starting with the 2009 model 
year. We expect manufacturers to meet these standards with three-way 
catalysts and closed-loop fuel injection. To ensure proper functioning 
of these emission control systems in use, we are proposing a 
requirement that engines have a diagnostic system for detecting a 
failure in the emission control system. For sterndrive and inboard 
marine engines at or above 373 kW with high-performance characteristics 
(generally referred to as ``SD/I high-performance engines''), we are 
proposing an HC+NOX emission standard of 5.0 g/kW-hr and a 
CO standard of 350 g/kW-hr. We are also proposing a variety of other 
special provisions for these engines to reflect unique operating 
characteristics and to make it feasible to meet emission standards 
using emission credits. These standards are consistent with the 
requirements recently adopted by California ARB, with some adjustment 
to the provisions for SD/I high-performance engines and with a CO 
emission standard.
    The emission standards described above relate to engine operation 
over a

[[Page 28105]]

prescribed duty cycle for testing in the laboratory. We are also 
proposing not-to-exceed (NTE) standards that establish emission limits 
when engines operate under normal speed-load combinations that are not 
included in the duty cycles for the other engine standards.
    We are proposing new standards to control evaporative emissions for 
all Marine SI vessels. The new standards include requirements to 
control fuel tank permeation, fuel line permeation, and diurnal 
emissions, including provisions to ensure that refueling emissions do 
not increase.
    We are proposing to place these new regulations for Marine SI 
engines in 40 CFR part 1045 rather than changing the current 
regulations in 40 CFR part 91. This new part will allow us to improve 
the clarity of regulatory requirements and update our regulatory 
compliance program to be consistent with the provisions we have 
recently adopted for other nonroad programs. We are also making a 
variety of changes to 40 CFR part 91 to make minor adjustments to the 
current regulations and to prepare for the transition to 40 CFR part 
1045.
(2) Small SI Engines and Equipment
    We are proposing HC+NOX exhaust emission standards of 
10.0 g/kW-hr for Class I engines starting in the 2012 model year and 
8.0 g/kW-hr for Class II engines starting in the 2011 model year. For 
both classes of nonhandheld engines, we are proposing to maintain the 
existing CO standard of 610 g/kW-hr. We expect manufacturers to meet 
these standards by improving engine combustion and adding catalysts. 
These standards are consistent with the requirements recently adopted 
by California ARB.
    For spark-ignition engines used in marine generators, we are 
proposing a more stringent Phase 3 CO emission standard of 5.0 g/kW-hr. 
This would apply equally to all sizes of engines subject to the Small 
SI standards.
    We are proposing new evaporative emission standards for both 
handheld and nonhandheld engines. The new standards include 
requirements to control permeation from fuel tanks and fuel lines. For 
nonhandheld engines we are also proposing to require control of 
diffusion emissions and running losses.
    We are proposing to place the new regulations for Small SI engines 
from 40 CFR part 90 to 40 CFR part 1054. This new part will allow us to 
improve the clarity of regulatory requirements and update our 
regulatory compliance program to be consistent with the provisions we 
have recently adopted for other nonroad programs.

F. How Is This Document Organized?

    Since this proposal covers a broad range of engines and equipment 
that vary in design and use, many readers may be interested only in 
certain aspects of the proposal. We have therefore attempted to 
organize this preamble in a way that allows each reader to focus on the 
material of particular interest. The Air Quality discussion in Section 
II, however, is general in nature and applies to all the categories 
covered by this proposal.
    The next several sections contain our proposal for Small SI engines 
and equipment and Marine SI engines and vessels. Sections III through V 
describe the proposed requirements related to exhaust emission 
standards for each of the affected engine categories, including 
standards, effective dates, testing information, and other specific 
requirements. Section VI details the proposed requirements related to 
evaporative emission requirements for all categories. Sections VII 
through IX contain some general concepts that are relevant to all of 
the engines, vessels and equipment covered by this proposal, such as 
certification requirements and general testing procedures and 
compliance provisions. Section X discusses how we took energy, noise, 
and safety factors into consideration for the proposed standards.
    Section XI describes a variety of proposed provisions that affect 
other categories of engines besides those that are the primary subject 
of this proposal. This includes the following changes:
     We are proposing to reorganize the regulatory language 
related to preemption of state standards and to clarify certain 
provisions. We are also requesting comment regarding a petition to 
reconsider some of the provisions including the extent to which states 
may regulate the use and operation of nonroad engines and vehicles.
     We are incorporating new provisions related to 
certification fees for newly regulated products covered by this 
proposal. This involves some restructuring of the regulatory language. 
We are also proposing various technical amendments, such as identifying 
an additional payment method, that would apply broadly to our 
certification programs.
     We are proposing changes to 40 CFR part 1068 to clarify 
how the provisions apply with respect to evaporative emission 
standards. We are also proposing various technical amendments. These 
changes would apply to all types of nonroad engines that are subject to 
the provisions of part 1068.
     We are proposing several technical amendments for Large SI 
engines and recreational vehicles, largely to maintain consistency 
across programs for different categories of engines and vehicles.
     We are proposing to amend provisions related to the 
delegated-assembly exemption for heavy-duty highway engines as part of 
the effort to apply these provisions to Small SI engines, as described 
in Section V.E.2.
     We are proposing to apply the new standards for Small SI 
engines to the comparable stationary engines.
    Section XII summarizes the projected impacts and benefits of this 
proposal. Finally, Sections XIII and XIV contain information about 
public participation and how we satisfy our various administrative 
requirements.

II. Public Health and Welfare Effects

    The engines, vessels and equipment that would be subject to the 
proposed standards generate emissions of hydrocarbons (HC), nitrogen 
oxides (NOX), particulate matter (PM) and carbon monoxide 
(CO) that contribute to nonattainment of the National Ambient Air 
Quality Standards (NAAQS) for ozone, PM and CO. These engines, vessels 
and equipment also emit hazardous air pollutants (air toxics) that are 
associated with a host of adverse health effects. Emissions from these 
engines, vessels and equipment also contribute to visibility impairment 
and other welfare and environmental effects.
    The health and environmental effects associated with emissions from 
Small SI engines and equipment and Marine SI engines and vessels are a 
classic example of a negative externality (an activity that imposes 
uncompensated costs on others). With a negative externality, an 
activity's social cost (the cost on society imposed as a result of the 
activity taking place) exceeds its private cost (the cost to those 
directly engaged in the activity). In this case, as described in this 
section, emissions from Small SI engines and equipment and Marine SI 
engines and vessels impose public health and environmental costs on 
society. The market system itself cannot correct this externality. The 
end users of the equipment and vessels are often unaware of the 
environmental impacts of their use for lawn care or recreation. Because 
of this, consumers fail to send the market a signal to provide cleaner 
equipment and vessels. In addition, producers of these engines, 
equipment, and vessels are rewarded for emphasizing other aspects of 
these

[[Page 28106]]

products (e.g., total power). To correct this market failure and reduce 
the negative externality, it is necessary to give producers social cost 
signals. The standards EPA is proposing will accomplish this by 
mandating that Small SI engines and equipment and Marine SI engines and 
vessels reduce their emissions to a technologically feasible limit. In 
other words, with this proposed rule the costs of the services provided 
by these engines and equipment will account for social costs more 
fully.
    This section summarizes the general health and welfare effects of 
these emissions. Interested readers are encouraged to refer to the 
Draft RIA for more in-depth discussions.

A. Ozone

    Ground-level ozone pollution is formed by the reaction of volatile 
organic compounds (VOC), of which HC are the major subset, and 
NOX in the lower atmosphere in the presence of heat and 
sunlight. These pollutants, often referred to as ozone precursors, are 
emitted by many types of pollution sources, such as highway and nonroad 
motor vehicles and engines (including those subject to this proposed 
rule), power plants, chemical plants, refineries, makers of consumer 
and commercial products, industrial facilities, and smaller area 
sources. The engine, vessel and equipment controls being proposed will 
reduce VOCs and NOX.
    The science of ozone formation, transport, and accumulation is 
complex.\10\ Ground-level ozone is produced and destroyed in a cyclical 
set of chemical reactions, many of which are sensitive to temperature 
and sunlight. When ambient temperatures and sunlight levels remain high 
for several days and the air is relatively stagnant, ozone and its 
precursors can build up and result in more ozone than typically would 
occur on a single high-temperature day. Ozone also can be transported 
into an area from pollution sources found hundreds of miles upwind, 
resulting in elevated ozone levels even in areas with low VOC or 
NOX emissions.
---------------------------------------------------------------------------

    \10\ U.S. EPA. Air Quality Criteria for Ozone and Related 
Photochemical Oxidants (Final). U.S. Environmental Protection 
Agency, Washington, DC, EPA/600/R-05/004aF-cF, 2006. This document 
is available in Docket EPA-HQ-OAR-2004-0008.
---------------------------------------------------------------------------

    The current ozone NAAQS, established by EPA in 1997, has an 8-hour 
averaging time.\11\ The 8-hour ozone NAAQS is based on well-documented 
science demonstrating that more people were experiencing adverse health 
effects at lower levels of exertion, over longer periods, and at lower 
ozone concentrations than addressed by the previous one-hour ozone 
NAAQS. The current ozone NAAQS addresses ozone exposures of concern for 
the general population and populations most at risk, including children 
active outdoors, outdoor workers, and individuals with pre-existing 
respiratory disease, such as asthma. The 8-hour ozone NAAQS is met at 
an ambient air quality monitoring site when the average of the annual 
fourth-highest daily maximum 8-hour average ozone concentration over 
three years is less than or equal to 0.084 parts per million (ppm).
---------------------------------------------------------------------------

    \11\ EPA's review of the ozone NAAQS is underway and a proposal 
is scheduled for June 2007 with a final rule scheduled for March 
2008.
---------------------------------------------------------------------------

(1) Health Effects of Ozone
    The health and welfare effects of ozone are well documented and are 
assessed in the EPA's 2006 ozone Air Quality Criteria Document (ozone 
AQCD) and staff paper.12 13 Ozone can irritate the 
respiratory system, causing coughing, throat irritation, and/or 
uncomfortable sensation in the chest. Ozone can reduce lung function 
and make it more difficult to breathe deeply, and breathing may become 
more rapid and shallow than normal, thereby limiting a person's 
activity. Ozone can also aggravate asthma, leading to more asthma 
attacks that require a doctor's attention and/or the use of additional 
medication. Animal toxicologic evidence indicates that with repeated 
exposure, ozone can inflame and damage the lining of the lungs, which 
may lead to permanent changes in lung tissue and irreversible 
reductions in lung function. People who are more susceptible to effects 
associated with exposure to ozone include children, the elderly, and 
individuals with respiratory disease such as asthma. There is also 
suggestive evidence that certain people may have greater genetic 
susceptibility. Those with greater exposures to ozone, for instance due 
to time spent outdoors (e.g., outdoor workers), are also of concern.
---------------------------------------------------------------------------

    \12\ U.S. EPA. Air Quality Criteria for Ozone and Related 
Photochemical Oxidants (Final). U.S. Environmental Protection 
Agency, Washington, DC, EPA/600/R-05/004aF-cF, 2006. This document 
is available in Docket EPA-HQ-OAR-2004-0008.
    \13\ U.S. EPA (2007) Review of National Ambient Air Quality 
Standards for Ozone, Assessment of Scientific and Technical 
Information, OAQPS Staff Paper, EPA-452/R-07-003. This document is 
available in Docket EPA-HQ-OAR-2004-0008.
---------------------------------------------------------------------------

    The recent ozone AQCD also examined relevant new scientific 
information that has emerged in the past decade, including the impact 
of ozone exposure on such health effects as changes in lung structure 
and biochemistry, inflammation of the lungs, exacerbation and causation 
of asthma, respiratory illness-related school absence, hospital 
admissions and premature mortality. Animal toxicologic studies have 
suggested potential interactions between ozone and PM with increased 
responses observed to mixtures of the two pollutants compared to either 
ozone or PM alone. The respiratory morbidity observed in animal studies 
along with the evidence from epidemiologic studies supports a causal 
relationship between acute ambient ozone exposures and increased 
respiratory-related emergency room visits and hospitalizations in the 
warm season. In addition, there is suggestive evidence of a 
contribution of ozone to cardiovascular-related morbidity and non-
accidental and cardiopulmonary mortality.
    EPA typically quantifies ozone-related health impacts in its 
regulatory impact analyses (RIAs) when possible. In the analysis of 
past air quality regulations, ozone-related benefits have included 
morbidity endpoints and welfare effects such as damage to commercial 
crops. EPA has not recently included a separate and additive mortality 
effect for ozone, independent of the effect associated with fine 
particulate matter. For a number of reasons, including (1) Advice from 
the Science Advisory Board (SAB) Health and Ecological Effects 
Subcommittee (HEES) that EPA consider the plausibility and viability of 
including an estimate of premature mortality associated with short-term 
ozone exposure in its benefits analyses and (2) conclusions regarding 
the scientific support for such relationships in EPA's 2006 Air Quality 
Criteria for Ozone and Related Photochemical Oxidants (the CD), EPA is 
in the process of determining how to appropriately characterize ozone-
related mortality benefits within the context of benefits analyses for 
air quality regulations. As part of this process, we are seeking advice 
from the National Academy of Sciences (NAS) regarding how the ozone-
mortality literature should be used to quantify the reduction in 
premature mortality due to diminished exposure to ozone, the amount of 
life expectancy to be added and the monetary value of this increased 
life expectancy in the context of health benefits analyses associated 
with regulatory assessments. In addition, the Agency has sought advice 
on characterizing and communicating the uncertainty associated with 
each of these aspects in health benefit analyses.
    Since the NAS effort is not expected to conclude until 2008, the 
agency is currently deliberating how best to

[[Page 28107]]

characterize ozone-related mortality benefits in its rulemaking 
analyses in the interim. We do not quantify an ozone mortality benefit 
for the analysis of the proposed emission standards. So that we do not 
provide an incomplete picture of all of the benefits associated with 
reductions in emissions of ozone precursors, we have chosen not to 
include an estimate of total ozone benefits in the proposed RIA. By 
omitting ozone benefits in this proposal, we acknowledge that this 
analysis underestimates the benefits associated with the proposed 
standards. For more information regarding the quantified benefits 
included in this analysis, please refer to Chapter 8 of the Draft RIA.
(2) Plant and Ecosystem Effects of Ozone
    Ozone contributes to many environmental effects, with impacts to 
plants and ecosystems being of most concern. Ozone can produce both 
acute and chronic injury in sensitive species depending on the 
concentration level and the duration of the exposure. Ozone effects 
also tend to accumulate over the growing season of the plant, so that 
even lower concentrations experienced for a longer duration have the 
potential to create chronic stress on vegetation. Ozone damage to 
plants includes visible injury to leaves and a reduction in food 
production through impaired photosynthesis, both of which can lead to 
reduced crop yields, forestry production, and use of sensitive 
ornamentals in landscaping. In addition, the reduced food production in 
plants and subsequent reduced root growth and storage below ground, can 
result in other, more subtle plant and ecosystems impacts. These 
include increased susceptibility of plants to insect attack, disease, 
harsh weather, interspecies competition and overall decreased plant 
vigor. The adverse effects of ozone on forest and other natural 
vegetation can potentially lead to species shifts and loss from the 
affected ecosystems, resulting in a loss or reduction in associated 
ecosystem goods and services. Lastly, visible ozone injury to leaves 
can result in a loss of aesthetic value in areas of special scenic 
significance like national parks and wilderness areas. The 2006 ozone 
AQCD presents more detailed information on ozone effects on vegetation 
and ecosystems.
(3) Current and Projected 8-Hour Ozone Levels
    Currently, ozone concentrations exceeding the level of the 8-hour 
ozone NAAQS occur over wide geographic areas, including most of the 
nation's major population centers.\14\ As of October, 2006 there are 
approximately 157 million people living in 116 areas designated as not 
in attainment with the 8-hour ozone NAAQS. There are 461 full or 
partial counties that make up the 116 8-hour ozone nonattainment areas. 
These numbers do not include the people living in areas where there is 
a potential risk of failing to maintain or achieve the 8-hour ozone 
NAAQS in the future.
---------------------------------------------------------------------------

    \14\ A map of the 8-hour ozone nonattainment areas is included 
in the RIA for this proposed rule.
---------------------------------------------------------------------------

    EPA has already adopted many emission control programs that are 
expected to reduce ambient ozone levels. These control programs include 
the Clean Air Interstate Rule (70 FR 25162, May 12, 2005), as well as 
many mobile source rules, some of which are described in Section I of 
this preamble. As a result of these programs, the number of areas that 
fail to meet the 8-hour ozone NAAQS in the future is expected to 
decrease.
    Based on the recent ozone modeling performed for the CAIR analysis, 
barring additional local ozone precursor controls, we estimate 37 
eastern counties (where 24 million people are projected to live) will 
exceed the 8-hour ozone NAAQS in 2010.15 16 An additional 
148 eastern counties (where 61 million people are projected to live) 
are expected to be within 10 percent of the 8-hour ozone NAAQS in 2010.
---------------------------------------------------------------------------

    \15\ Technical Support Document for the Final Clean Air 
Interstate Rule Air Quality Modeling. This document is available in 
Docket EPA-HQ-OAR-2004-0008, Document  EPA-HQ-OAR-2004-
0008-0484.
    \16\ We expect many of the 8-hour ozone nonattainment areas to 
adopt additional emission reduction programs but we are unable to 
quantify or rely upon future reductions from additional state and 
local programs that have not yet been adopted.
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    States with 8-hour ozone nonattainment areas will be required to 
take action to bring those areas into compliance in the future. Based 
on the final rule designating and classifying 8-hour ozone 
nonattainment areas (69 FR 23951, April 30, 2004), most 8-hour ozone 
nonattainment areas will be required to attain the 8-hour ozone NAAQS 
in the 2007 to 2014 time frame and then be required to maintain the 8-
hour ozone NAAQS thereafter.\17\ Emissions of ozone precursors from the 
engines, vessels and equipment subject to the proposed standards 
contribute to ozone in many, if not all, of these areas. Therefore, the 
expected HC and NOX reductions from the standards proposed 
in this action will be useful to states in attaining or maintaining the 
8-hour ozone NAAQS.
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    \17\ The Los Angeles South Coast Air Basin 8-hour ozone 
nonattainment area will have until June 15, 2021 to reach 
attainment.
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    EPA's review of the ozone NAAQS is currently underway and a 
proposed decision in this review is scheduled for June 2007 with a 
final rule scheduled for March 2008. If the ozone NAAQS is revised then 
new nonattainment areas could be designated. While EPA is not relying 
on it for purposes of justifying this rule, the emission reductions 
from this rulemaking would also be helpful to states if there is an 
ozone NAAQS revision.
(4) Air Quality Modeling for Ozone
    To model the ozone air quality benefits of this rule we used the 
Comprehensive Air Quality Model with Extension (CAMx). CAMx simulates 
the numerous physical and chemical processes involved in the formation, 
transport, and destruction of ozone. This model is commonly used in 
developing attainment demonstration State Implementation Plans (SIPs) 
as well as estimating the ozone reductions expected to occur from a 
reduction in emitted pollutants. Meteorological data are developed by a 
separate program, the Regional Atmospheric Modeling System (RAMS), and 
input into CAMx. The simulation periods modeled by CAMx include several 
multi-day periods when ambient measurements were representative of 
ozone episodes over the eastern United States: June 12-24, July 5-15 
and August 7-21, 1995. The modeling domain we used includes the 37 
eastern states modeled in the Clean Air Interstate Rule (CAIR). More 
detailed information is included in the Air Quality Modeling Technical 
Support Document (TSD), which is located in the docket for this rule.
    Note that the emission control scenarios used in the air quality 
and benefits modeling are slightly different than the emission control 
program in this proposal reflecting further refinement of the 
regulatory program since we performed the air quality modeling for this 
proposal. Additional detail on the difference between the modeled and 
proposed inventories is included in Section 3.6 of the Draft RIA.
(5) Results of the Air Quality Modeling for Ozone
    According to air quality modeling performed for this proposal, the 
proposed controls for emissions from the engines, vessels and equipment 
subject to the proposed standards are expected to provide nationwide 
improvements in ozone levels. On a population-weighted basis, the 
average modeled future-year 8-hour ozone design values would decrease 
by 0.7

[[Page 28108]]

ppb in 2020 and 0.8 ppb in 2030.\18\ Within areas predicted to have 
design values greater than 85 ppb the average decrease would be 
somewhat higher: 0.8 ppb in 2020 and 1.0 ppb in 2030.
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    \18\ A design value is the monitored reading used by EPA to 
determine an area's air quality status; e.g., for ozone, the fourth 
highest reading measured over the most recent three years is the 
design value. (http://www.epa.gov/OCEPAterms/dterms.html).
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B. Particulate Matter

    Particulate matter (PM) represents a broad class of chemically and 
physically diverse substances. It can be principally characterized as 
discrete particles that exist in the condensed (liquid or solid) phase 
spanning several orders of magnitude in size. PM is further described 
by breaking it down into size fractions. PM10 refers to 
particles generally less than or equal to 10 micrometers ([mu]m) in 
diameter. PM2.5 refers to fine particles, those particles 
generally less than or equal to 2.5 [mu]m in diameter. Inhalable (or 
``thoracic'' ) coarse particles refer to those particles generally 
greater than 2.5 [mu]m but less than or equal to 10 [mu]m in diameter. 
Ultrafine PM refers to particles with diameters generally less than 100 
nanometers (0.1 [mu]m). Larger particles (>10 [mu]m) tend to be removed 
by the respiratory clearance mechanisms, whereas smaller particles are 
deposited deeper in the lungs.
    Fine particles are produced primarily by combustion processes and 
by transformations of gaseous emissions (e.g., SOx, 
NOX and VOCs) in the atmosphere. The chemical and physical 
properties of PM2.5 may vary greatly with time, region, 
meteorology and source category. Thus, PM2.5, may include a 
complex mixture of different pollutants including sulfates, nitrates, 
organic compounds, elemental carbon and metal compounds. These 
particles can remain in the atmosphere for days to weeks and travel 
through the atmosphere hundreds to thousands of kilometers.
    EPA's final rule to amend the PM NAAQS addressed revisions to the 
primary and secondary NAAQS for PM to provide increased protection of 
public health and welfare, respectively (71 FR 61144, October 17, 
2006). The primary PM2.5 NAAQS include a short-term (24-
hour) and a long-term (annual) standard. The level of the 24-hour 
PM2.5 NAAQS has been revised from 65[mu]g/m 3 to 
35[mu]g/m 3 to provide increased protection against health 
effects associated with short-term exposures to fine particles. The 
current form of the 24-hour PM2.5 standard was retained 
(e.g., based on the 98th percentile concentration averaged over three 
years). The level of the annual PM2.5 NAAQS was retained at 
15[mu]g/m 3, continuing protection against health effects 
associated with long-term exposures. The current form of the annual 
PM2.5 standard was retained as an annual arithmetic mean 
averaged over three years, however, the following two aspects of the 
spatial averaging criteria were narrowed: (1) The annual mean 
concentration at each site shall be within 10 percent of the spatially 
averaged annual mean, and (2) the daily values for each monitoring site 
pair shall yield a correlation coefficient of at least 0.9 for each 
calendar quarter. With regard to the primary PM10 standards, 
the 24-hour PM10 NAAQS was retained at a level of 150[mu]g/m 
3 not to be exceeded more than once per year on average over 
a three-year period. Given that the available evidence does not suggest 
an association between long-term exposure to coarse particles at 
current ambient levels and health effects, EPA has revoked the annual 
PM10 standard.
    With regard to the secondary PM standards, EPA has revised these 
standards to be identical in all respects to the revised primary 
standards. Specifically, EPA has revised the current 24-hour 
PM2.5 secondary standard by making it identical to the 
revised 24-hour PM2.5 primary standard, retained the annual 
PM2.5 and 24-hour PM10 secondary standards, and 
revoked the annual PM10 secondary standards. This suite of 
secondary PM standards is intended to provide protection against PM-
related public welfare effects, including visibility impairment, 
effects on vegetation and ecosystems, and material damage and soiling.
(1) Health Effects of PM
    Scientific studies show ambient PM is associated with a series of 
adverse health effects. These health effects are discussed in detail in 
the 2004 EPA Particulate Matter Air Quality Criteria Document (PM AQCD) 
as well as the 2005 PM Staff Paper.19 20 Further discussion 
of health effects associated with PM can also be found in the Draft 
RIA.
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    \19\ U.S. EPA (2004) Air Quality Criteria for Particulate Matter 
(Oct 2004), Volume I Document No. EPA600/P-99/002aF and Volume II 
Document No. EPA600/P-99/002bF. This document is available in Docket 
EPA-HQ-OAR-2004-0008. This document is available electronically at: 
http://cfpub2.epa.gov/ncea/cfm/recordisplay.cfm?deid=87903.
    \20\ U.S. EPA (2005) Review of the National Ambient Air Quality 
Standard for Particulate Matter: Policy Assessment of Scientific and 
Technical Information, OAQPS Staff Paper. EPA-452/R-05-005. This 
document is available electronically at http://www.epa.gov/ttn/naaqs/standards/pm/s_pm_cr_sp.html and in Docket EPA-HQ-OAR-2004-
0008.
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    Health effects associated with short-term exposures (e.g. hours to 
days) in ambient PM2.5 include premature mortality, 
increased hospital admissions, heart and lung diseases, increased 
cough, adverse lower-respiratory symptoms, decrements in lung function 
and changes in heart rate rhythm and other cardiac effects. Studies 
examining populations exposed to different levels of air pollution over 
a number of years, including the Harvard Six Cities Study and the 
American Cancer Society Study, show associations between long-term 
exposure to ambient PM2.5 and both total and 
cardiorespiratory mortality. In addition, the reanalysis of the 
American Cancer Society Study shows an association between fine 
particle and sulfate concentrations and lung cancer mortality. The 
engines, vessels and equipment covered in this proposal contribute to 
both acute and chronic PM2.5 exposures. Additional 
information on acute exposures is available in Section 2.5 of the Draft 
RIA.
    Recently, several studies have highlighted the adverse effects of 
PM specifically from mobile sources.21 22 Studies have also 
focused on health effects due to PM exposures on or near roadways.\23\ 
Although these studies include all air pollution sources, including 
both spark-ignition (gasoline) and diesel powered vehicles, they 
indicate that exposure to PM emissions near roadways, thus dominated by 
mobile sources, are associated with health effects. The proposed 
controls may help to reduce exposures, and specifically exposures near 
the source, to mobile source related PM2.5.
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    \21\ Laden, F.; Neas, L.M.; Dockery, D.W.; Schwartz, J. (2000) 
Association of Fine Particulate Matter from Different Sources with 
Daily Mortality in Six U.S. Cities. Environmental Health 
Perspectives 108: 941-947.
    \22\ Janssen, N.A.H.; Schwartz, J.; Zanobetti, A.; Suh, H.H. 
(2002) Air Conditioning and Source-Specific Particles as Modifiers 
of the Effect of PM10 on Hospital Admissions for Heart 
and Lung Disease. Environmental Health Perspectives 110: 43-49.
    \23\ Riediker, M.; Cascio, W.E.; Griggs, T.R..; Herbst, M.C.; 
Bromberg, P.A.; Neas, L.; Williams, R.W.; Devlin, R.B. (2003) 
Particulate Matter Exposures in Cars is Associated with 
Cardiovascular Effects in Healthy Young Men. Am. J. Respir. Crit. 
Care Med. 169: 934-940.
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(2) Visibility
    Visibility can be defined as the degree to which the atmosphere is 
transparent to visible light.\24\ Visibility impairment

[[Page 28109]]

manifests in two principal ways: as local visibility impairment and as 
regional haze.\25\ Local visibility impairment may take the form of a 
localized plume, a band or layer of discoloration appearing well above 
the terrain as a result from complex local meteorological conditions. 
Alternatively, local visibility impairment may manifest as an urban 
haze, sometimes referred to as a ``brown cloud.'' This urban haze is 
largely caused by emissions from multiple sources in the urban areas 
and is not typically attributable to only one nearby source or to long-
range transport. The second type of visibility impairment, regional 
haze, usually results from multiple pollution sources spread over a 
large geographic region. Regional haze can impair visibility over large 
regions and across states.
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    \24\ National Research Council, 1993. Protecting Visibility in 
National Parks and Wilderness Areas. National Academy of Sciences 
Committee on Haze in National Parks and Wilderness Areas. National 
Academy Press, Washington, DC. This document is available in Docket 
EPA-HQ-OAR-2004-0008. This book can be viewed on the National 
Academy Press Website at http://www.nap.edu/books/0309048443/html/.
    \25\ See discussion in U.S. EPA , National Ambient Air Quality 
Standards for Particulate Matter; Proposed Rule; January 17, 2006, 
Vol71 p 2676. This information is available electronically at http://epa.gov/fedrgstr/EPA-AIR/2006/January/Day-17/a177.pdf.
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    Visibility is important because it has direct significance to 
people's enjoyment of daily activities in all parts of the country. 
Individuals value good visibility for the well-being it provides them 
directly, where they live and work, and in places where they enjoy 
recreational opportunities. Visibility is also highly valued in 
significant natural areas such as national parks and wilderness areas, 
and special emphasis is given to protecting visibility in these areas. 
For more information on visibility see the 2004 PM AQCD as well as the 
2005 PM Staff Paper.26 27
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    \26\ U.S. EPA (2004) Air Quality Criteria for Particulate Matter 
(Oct 2004), Volume I Document No. EPA600/P-99/002aF and Volume II 
Document No. EPA600/P-99/002bF. This document is available in Docket 
EPA-HQ-OAR-2004-0008.
    \27\ U.S. EPA (2005) Review of the National Ambient Air Quality 
Standard for Particulate Matter: Policy Assessment of Scientific and 
Technical Information, OAQPS Staff Paper. EPA-452/R-05-005. This 
document is available in Docket EPA-HQ-OAR-2004-0008.
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    Fine particles are the major cause of reduced visibility in parts 
of the United States. To address the welfare effects of PM on 
visibility, EPA set secondary PM2.5 standards that would act 
in conjunction with the establishment of a regional haze program. In 
setting this secondary standard, EPA concluded that PM2.5 
causes adverse effects on visibility in various locations, depending on 
PM concentrations and factors such as chemical composition and average 
relative humidity. The secondary (welfare-based) PM2.5 NAAQS 
was established as equal to the suite of primary (health-based) NAAQS. 
Furthermore, section 169 of the Act provides additional authorities to 
remedy existing visibility impairment and prevent future visibility 
impairment in the 156 national parks, forests and wilderness areas 
categorized as mandatory class I Federal areas (62 FR 38680-81, July 
18, 1997).\28\ In July 1999 the regional haze rule (64 FR 35714) was 
put in place to protect the visibility in mandatory class I federal 
areas. Visibility can be said to be impaired in both PM2.5 
nonattainment areas and mandatory class I federal areas.
---------------------------------------------------------------------------

    \28\ These areas are defined in section 162 of the Act as those 
national parks exceeding 6,000 acres, wilderness areas and memorial 
parks exceeding 5,000 acres, and all international parks which were 
in existence on August 7, 1977.
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(a) Current Visibility Impairment
    Recently designated PM2.5 nonattainment areas indicate 
that, as of October 2006, almost 90 million people live in 
nonattainment areas for the 1997 PM2.5 NAAQS. Thus, at least 
these populations would likely be experiencing visibility impairment, 
as well as many thousands of individuals who travel to these areas. In 
addition, while visibility trends have improved in mandatory Class I 
federal areas, the most recent data show that these areas continue to 
suffer from visibility impairment. In summary, visibility impairment is 
experienced throughout the U.S., in multi-state regions, urban areas, 
and remote mandatory class I federal areas.29 30 The 
mandatory class I federal areas are listed in Chapter 2 of the RIA for 
this action. The areas that have design values above the 1997 
PM2.5 NAAQS are also listed in Chapter 2 of the RIA for this 
action.
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    \29\ US EPA, Air Quality Designations and Classifications for 
the Fine Particles (PM2.5) National Ambient Air Quality 
Standards, December 17, 2004. (70 FR 943, Jan 5. 2005) This document 
is also available on the web at: http://www.epa.gov/pmdesignations/.
    \30\ US EPA. Regional Haze Regulations, July 1, 1999. (64 FR 
35714, July 1, 1999).
---------------------------------------------------------------------------

(b) Future Visibility Impairment
    Recent modeling for the CAIR was used to project visibility 
conditions in mandatory class I federal areas across the country in 
2015. The results for the mandatory class I federal areas suggest that 
these areas are predicted to continue to have annual average deciview 
levels above background in the future.\31\ Modeling done for the PM 
NAAQS projected PM2.5 levels in 2015. These projections 
include all sources of PM2.5, including the engines, vessels 
and equipment covered in this rule, and suggest that PM2.5 
levels above the NAAQS will persist into the future.
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    \31\ The deciview metric describes perceived visual changes in a 
linear fashion over its entire range, analogous to the decibel scale 
for sound. A deciview of 0 represents pristine conditions. The 
higher the deciview value, the worse the visibility, and an 
improvement in visibility is a decrease in deciview value.
---------------------------------------------------------------------------

    The engines, vessels and equipment that would be subject to these 
proposed standards contribute to visibility concerns in these areas 
through both their primary PM emissions and their VOC and 
NOX emissions, which contribute to the formation of 
secondary PM2.5. Reductions in these direct and secondary PM 
emissions will help to improve visibility across the nation, including 
mandatory class I federal areas.
(3) Atmospheric Deposition
    Wet and dry deposition of ambient particulate matter delivers a 
complex mixture of metals (e.g., mercury, zinc, lead, nickel, aluminum, 
cadmium), organic compounds (e.g., POM, dioxins, furans) and inorganic 
compounds (e.g., nitrate, sulfate) to terrestrial and aquatic 
ecosystems. The chemical form of the compounds deposited is impacted by 
a variety of factors including ambient conditions (e.g., temperature, 
humidity, oxidant levels) and the sources of the material. Chemical and 
physical transformations of the particulate compounds occur in the 
atmosphere as well as the media onto which they deposit. These 
transformations in turn influence the fate, bioavailability and 
potential toxicity of these compounds. Atmospheric deposition has been 
identified as a key component of the environmental and human health 
hazard posed by several pollutants including mercury, dioxin and 
PCBs.\32\
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    \32\ U.S. EPA (2000) Deposition of Air Pollutants to the Great 
Waters: Third Report to Congress. Office of Air Quality Planning and 
Standards. EPA-453/R-00-0005.
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    Adverse impacts on water quality can occur when atmospheric 
contaminants deposit to the water surface or when material deposited on 
the land enters a waterbody through runoff. Potential impacts of 
atmospheric deposition to waterbodies include those related to both 
nutrient and toxic inputs. Adverse effects to human health and welfare 
can occur from the addition of excess particulate nitrate nutrient 
enrichment, which contributes to toxic algae blooms and zones of 
depleted oxygen, which can lead to fish kills, frequently in coastal 
waters. Particles contaminated with heavy metals or other toxins may 
lead to the ingestion of contaminated fish, ingestion of contaminated 
water, damage to the marine ecology, and limited recreational uses. 
Several

[[Page 28110]]

studies have been conducted in U.S. coastal waters and in the Great 
Lakes Region in which the role of ambient PM deposition and runoff is 
investigated.33 34 35 36 37
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    \33\ U.S. EPA (2004) National Coastal Condition Report II. 
Office of Research and Development/ Office of Water. EPA-620/R-03/
002.
    \34\ Gao, Y., E.D. Nelson, M.P. Field, et al. 2002. 
Characterization of atmospheric trace elements on PM2.5 
particulate matter over the New York-New Jersey harbor estuary. 
Atmos. Environ. 36: 1077-1086.
    \35\ Kim, G., N. Hussain, J.R. Scudlark, and T.M. Church. 2000. 
Factors influencing the atmospheric depositional fluxes of stable 
Pb, 210Pb, and 7Be into Chesapeake Bay. J. Atmos. Chem. 36: 65-79.
    \36\ Lu, R., R.P. Turco, K. Stolzenbach, et al. 2003. Dry 
deposition of airborne trace metals on the Los Angeles Basin and 
adjacent coastal waters. J. Geophys. Res. 108(D2, 4074): AAC 11-1 to 
11-24.
    \37\ Marvin, C.H., M.N. Charlton, E.J. Reiner, et al. 2002. 
Surficial sediment contamination in Lakes Erie and Ontario: A 
comparative analysis. J. Great Lakes Res. 28(3): 437-450.
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    Adverse impacts on soil chemistry and plant life have been observed 
for areas heavily impacted by atmospheric deposition of nutrients, 
metals and acid species, resulting in species shifts, loss of 
biodiversity, forest decline and damage to forest productivity. 
Potential impacts also include adverse effects to human health through 
ingestion of contaminated vegetation or livestock (as in the case for 
dioxin deposition), reduction in crop yield, and limited use of land 
due to contamination.
(4) Current and Projected PM2.5 Levels
    In 2005 EPA designated 39 nonattainment areas for the 1997 
PM2.5 NAAQS based on air quality design values (using 2001-
2003 or 2002-2004 measurements) and a number of other factors (70 FR 
943, January 5, 2005).\38\ These areas are comprised of 208 full or 
partial counties with a total population exceeding 88 million. As 
mentioned in Section II.B.2, the 1997 PM2.5 NAAQS was 
recently revised and the 2006 PM2.5 NAAQS became effective 
on December 18, 2006. Table II-1 presents the number of counties in 
areas currently designated as nonattainment for the 1997 
PM2.5 NAAQS as well as the number of additional counties 
that have monitored data that is violating the 2006 PM2.5 
NAAQS. Nonattainment areas will be designated with respect to the new 
2006 PM2.5 NAAQS in early 2010.
---------------------------------------------------------------------------

    \38\ The full details involved in calculating a PM2.5 
design value are given in Appendix N of 40 CFR part 50.

  Table II-1.--Fine Particle Standards: Current Nonattainment Areas and
                        Other Violating Counties
------------------------------------------------------------------------
 Nonattainment areas/other violating      Number of
              counties                    counties       Population \1\
------------------------------------------------------------------------
1997 PM2.5 Standards: 39 areas                     208        88,394,000
 currently designated...............
2006 PM2.5 Standards: counties with                 49        18,198,676
 violating monitors \2\.............
                                     -----------------------------------
    Total...........................               257      106,592,676
------------------------------------------------------------------------
\1\ Population numbers are from 2000 census data.
\2\ This table provides an estimate of the counties violating the 2006
  PM2.5 NAAQS based on 2003-05 air quality data. The areas designated as
  nonattainment for the 2006 PM2.5 NAAQS will be based on 3 years of air
  quality data from later years. Also, the county numbers in the summary
  table include only the counties with monitors violating the 2006 PM2.5
  NAAQS. The monitored county violations may be an underestimate of the
  number of counties and populations that will eventually be included in
  areas with multiple counties designated nonattainment.

    Based on modeling performed for the PM NAAQS analysis, we estimate 
that 52 counties (where 53 million people are projected to live) will 
exceed the 2006 PM2.5 standard in 2015.\39\ In addition, 54 
counties (where 27 million people are projected to live) are expected 
to be within 10 percent of the 2006 PM2.5 NAAQS in 2015.
---------------------------------------------------------------------------

    \39\ US EPA (2006). Regulatory Impact Analysis for the 2006 
NAAQS for Particle Pollution. This document is available in Docket 
EPA-HQ-OAR-2004-0008.
---------------------------------------------------------------------------

    Areas designated as not attaining the 1997 PM2.5 NAAQS 
will need to attain these standards in the 2010 to 2015 time frame, and 
then be required to maintain the NAAQS thereafter. The attainment dates 
associated with the potential new 2006 PM2.5 nonattainment 
areas would likely be in the 2015 to 2020 timeframe. The emission 
standards being proposed in this action would become effective as early 
as 2009 making the expected HC, NOX and PM inventory 
reductions from this rulemaking useful to states in attaining or 
maintaining the PM2.5 NAAQS.
(5) Current PM10 Levels
    As of October 2006 approximately 28.5 million people live in 46 
designated PM10 nonattainment areas, which include all or 
part of 46 counties. These population numbers do not include the people 
living in areas where there is a potential risk of failing to maintain 
or achieve the PM10 NAAQS in the future. The expected PM, HC 
and NOX inventory reductions from these proposed standards 
would be useful to states in maintaining the PM10 NAAQS.

C. Air Toxics

    Emissions from the engines, vessels and equipment subject to the 
proposed standards contribute to ambient levels of gaseous air toxics 
known or suspected as human or animal carcinogens, or that have non-
cancer health effects. These compounds include benzene, 1,3-butadiene, 
formaldehyde, acetaldehyde, acrolein, polycyclic organic matter (POM), 
and naphthalene. All of these compounds, except acetaldehyde, were 
identified as national or regional risk drivers in the 1999 National-
Scale Air Toxics Assessment (NATA) and have significant inventory 
contributions from mobile sources. That is, for a significant portion 
of the population, these compounds pose a significant portion of the 
total cancer risk from breathing outdoor air toxics. The reductions in 
the emissions from these engines, vessels and equipment would help 
reduce exposure to these harmful substances.
    Air toxics can cause a variety of cancer and noncancer health 
effects. A number of the mobile source air toxic pollutants described 
in this section are known or likely to pose a cancer hazard in humans. 
Many of these compounds also cause adverse noncancer health effects 
resulting from chronic,\40\ subchronic,\41\ or acute \42\ inhalation 
exposures. These include neurological, cardiovascular, liver, kidney, 
and respiratory effects as well as effects on the immune and 
reproductive systems.
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    \40\ Chronic exposure is defined in the glossary of the 
Integrated Risk Information (IRIS) database (http://www.epa.gov/iris) as repeated exposure by the oral, dermal, or inhalation route 
for more than approximately 10% of the life span in humans (more 
than approximately 90 days to 2 years in typically used laboratory 
animal species).
    \41\ Defined in the IRIS database as exposure to a substance 
spanning approximately 10 of the lifetime of an organism.
    \42\ Defined in the IRIS database as exposure by the oral, 
dermal, or inhalation route for 24 hours or less.

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[[Page 28111]]

    Benzene. The EPA's Integrated Risk Information (IRIS) database 
lists benzene as a known human carcinogen (causing leukemia) by all 
routes of exposure, and that exposure is associated with additional 
health effects, including genetic changes in both humans and animals 
and increased proliferation of bone marrow cells in 
mice.43 44 45 EPA states in its IRIS database that data 
indicate a causal relationship between benzene exposure and acute 
lymphocytic leukemia and suggests a relationship between benzene 
exposure and chronic non-lymphocytic leukemia and chronic lymphocytic 
leukemia. A number of adverse noncancer health effects including blood 
disorders, such as preleukemia and aplastic anemia, have also been 
associated with long-term exposure to benzene.46 47 The most 
sensitive noncancer effect observed in humans, based on current data, 
is the depression of the absolute lymphocyte count in 
blood.48 49 In addition, recent work, including studies 
sponsored by the Health Effects Institute (HEI), provides evidence that 
biochemical responses are occurring at lower levels of benzene exposure 
than previously known.50 51 52 53 EPA's IRIS program has not 
yet evaluated these new data.
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    \43\ U.S. EPA (2000). Integrated Risk Information System File 
for Benzene. This material is available electronically at http://www.epa.gov/iris/subst/0276.htm.
    \44\ International Agency for Research on Cancer, IARC 
monographs on the evaluation of carcinogenic risk of chemicals to 
humans, Volume 29, Some industrial chemicals and dyestuffs, 
International Agency for Research on Cancer, World Health 
Organization, Lyon, France, p. 345-389, 1982.
    \45\ Irons, R.D.; Stillman, W.S.; Colagiovanni, D.B.; Henry, 
V.A. (1992) Synergistic action of the benzene metabolite 
hydroquinone on myelopoietic stimulating activity of granulocyte/
macrophage colony-stimulating factor in vitro, Proc. Natl. Acad. 
Sci. 89:3691-3695.
    \46\ Aksoy, M. (1989). Hematotoxicity and carcinogenicity of 
benzene. Environ. Health Perspect. 82: 193-197.
    \47\ Goldstein, B.D. (1988). Benzene toxicity. Occupational 
medicine. State of the Art Reviews. 3: 541-554.
    \48\ Rothman, N., G.L. Li, M. Dosemeci, W.E. Bechtold, G.E. 
Marti, Y.Z. Wang, M. Linet, L.Q. Xi, W. Lu, M.T. Smith, N. Titenko-
Holland, L.P. Zhang, W. Blot, S.N. Yin, and R.B. Hayes (1996) 
Hematotoxicity among Chinese workers heavily exposed to benzene. Am. 
J. Ind. Med. 29: 236-246.
    \49\ EPA 2005 ``Full IRIS Summary for Benzene (CASRN 71-43-2)'' 
Environmental Protection Agency, Integrated Risk Information System 
(IRIS), Office of Health and Environmental Assessment, Environmental 
Criteria and Assessment Office, Cincinnati, OH http://www.epa.gov/iris/subst/0276.htm.
    \50\ Qu, O.; Shore, R.; Li, G.; Jin, X.; Chen, C.L.; Cohen, B.; 
Melikian, A.; Eastmond, D.; Rappaport, S.; Li, H.; Rupa, D.; 
Suramaya, R.; Songnian, W.; Huifant, Y.; Meng, M.; Winnik, M.; Kwok, 
E.; Li, Y.; Mu, R.; Xu, B.; Zhang, X.; Li, K. (2003). HEI Report 
115, Validation & Evaluation of Biomarkers in Workers Exposed to 
Benzene in China.
    \51\ Qu, Q., R. Shore, G. Li, X. Jin, L.C. Chen, B. Cohen, et 
al. (2002). Hematological changes among Chinese workers with a broad 
range of benzene exposures. Am. J. Industr. Med. 42: 275-285.
    \52\ Lan, Qing, Zhang, L., Li, G., Vermeulen, R., et al. (2004). 
Hematotoxically in Workers Exposed to Low Levels of Benzene. Science 
306: 1774-1776.
    \53\ Turtletaub, K.W. and Mani, C. (2003). Benzene metabolism in 
rodents at doses relevant to human exposure from Urban Air. Research 
Reports Health Effect Inst. Report No.113.
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    1,3-Butadiene. EPA has characterized 1,3-butadiene as carcinogenic 
to humans by inhalation.54 55 The specific mechanisms of 
1,3-butadiene-induced carcinogenesis are unknown. However, it is 
virtually certain that the carcinogenic effects are mediated by 
genotoxic metabolites of 1,3-butadiene. Animal data suggest that 
females may be more sensitive than males for cancer effects, but there 
are insufficient data in humans from which to draw conclusions about 
sensitive subpopulations. 1,3-Butadiene also causes a variety of 
reproductive and developmental effects in mice; no human data on these 
effects are available. The most sensitive effect was ovarian atrophy 
observed in a lifetime bioassay of female mice.\56\
---------------------------------------------------------------------------

    \54\ U.S. EPA. (2002). Health Assessment of 1,3-Butadiene. 
Office of Research and Development, National Center for 
Environmental Assessment, Washington Office, Washington, DC. Report 
No. EPA600-P-98-001F.
    \55\ U.S. EPA (1998). A Science Advisory Board Report: Review of 
the Health Risk Assessment of 1,3-Butadiene. EPA-SAB-EHC-98.
    \56\ Bevan, C.; Stadler, J.C.; Elliot, G.S.; et al. (1996) 
Subchronic toxicity of 4-vinylcyclohexene in rats and mice by 
inhalation. Fundam. Appl. Toxicol. 32:1-10.
---------------------------------------------------------------------------

    Formaldehyde. Since 1987, EPA has classified formaldehyde as a 
probable human carcinogen based on evidence in humans and in rats, 
mice, hamsters, and monkeys.\57\ EPA is currently reviewing recently 
published epidemiological data. For instance, recently released 
research conducted by the National Cancer Institute (NCI) found an 
increased risk of nasopharyngeal cancer and lymphohematopoietic 
malignancies such as leukemia among workers exposed to 
formaldehyde.58 59 NCI is currently performing an update of 
these studies. A recent National Institute of Occupational Safety and 
Health (NIOSH) study of garment workers also found increased risk of 
death due to leukemia among workers exposed to formaldehyde.\60\ Based 
on the developments of the last decade the working group of the 
International Agency for Research on Cancer (IARC) concluded in 2004 
that formaldehyde is carcinogenic to humans (Group 1), a higher 
classification than previous IARC evaluations, on the basis of 
sufficient evidence in humans and sufficient evidence in experimental 
animals.
---------------------------------------------------------------------------

    \57\ U.S. EPA (1987). Assessment of Health Risks to Garment 
Workers and Certain Home Residents from Exposure to Formaldehyde, 
Office of Pesticides and Toxic Substances, April 1987.
    \58\ Hauptmann, M.; Lubin, J.H.; Stewart, P.A.; Hayes, R.B.; 
Blair, A. 2003. Mortality from lymphohematopoetic malignancies among 
workers in formaldehyde industries. Journal of the National Cancer 
Institute 95: 1615-1623.
    \59\ Hauptmann, M.; Lubin, J.H.; Stewart, P.A.; Hayes, R.B.; 
Blair, A. 2004. Mortality from solid cancers among workers in 
formaldehyde industries. American Journal of Epidemiology 159: 1117-
1130.
    \60\ Pinkerton, L.E. 2004. Mortality among a cohort of garment 
workers exposed to formaldehyde: an update. Occup. Environ. Med. 61: 
193-200.
---------------------------------------------------------------------------

    Formaldehyde exposure also causes a range of noncancer health 
effects, including irritation of the eyes (tearing of the eyes and 
increased blinking) and mucous membranes.
    Acetaldehyde. Acetaldehyde is classified in EPA's IRIS database as 
a probable human carcinogen, based on nasal tumors in rats, and is 
considered toxic by the inhalation, oral, and intravenous routes.\61\ 
The primary acute effect of exposure to acetaldehyde vapors is 
irritation of the eyes, skin, and respiratory tract.\62\ The agency is 
currently conducting a reassessment of the health hazards from 
inhalation exposure to acetaldehyde.
---------------------------------------------------------------------------

    \61\ U.S. EPA (1988). Integrated Risk Information System File of 
Acetaldehyde. This material is available electronically at http://www.epa.gov/iris/subst/0290.htm.
    \62\ U.S. EPA (1988). Integrated Risk Information System File of 
Acetaldehyde. This material is available electronically at http://www.epa.gov/iris/subst/0290.htm.
---------------------------------------------------------------------------

    Acrolein. Acrolein is intensely irritating to humans when inhaled, 
with acute exposure resulting in upper respiratory tract irritation and 
congestion. EPA determined in 2003 using the 1999 draft cancer 
guidelines that the human carcinogenic potential of acrolein could not 
be determined because the available data were inadequate. No 
information was available on the carcinogenic effects of acrolein in 
humans and the animal data provided inadequate evidence of 
carcinogenicity.\63\
---------------------------------------------------------------------------

    \63\ U.S. EPA. 2003. Integrated Risk Information System File of 
Acrolein. Research and Development, National Center for 
Environmental Assessment, Washington, DC. This material is available 
electronically at http://www.epa.gov/iris/subst/0364.htm.
---------------------------------------------------------------------------

    Polycyclic Organic Matter (POM). POM is generally defined as a 
large class of organic compounds with multiple benzene rings and a 
boiling point greater than 100 degrees Celsius. One of these compounds, 
naphthalene, is discussed separately below. Polycyclic aromatic 
hydrocarbons (PAH) are a class of POM that contain only hydrogen and 
carbon atoms. A number of PAHs are known or suspected carcinogens.

[[Page 28112]]

    Recent studies have found that maternal exposures to PAHs in a 
population of pregnant women were associated with several adverse birth 
outcomes, including low birth weight and reduced length at birth, as 
well as impaired cognitive development at age three.64 65 
EPA has not yet evaluated these recent studies.
---------------------------------------------------------------------------

    \64\ Perera, F.P.; Rauh, V.; Tsai, W-Y.; et al. (2002) Effect of 
transplacental exposure to environmental pollutants on birth 
outcomes in a multiethnic population. Environ Health Perspect. 111: 
201-205.
    \65\ Perera, F.P.; Rauh, V.; Whyatt, R.M.; Tsai, W.Y.; Tang, D.; 
Diaz, D.; Hoepner, L.; Barr, D.; Tu, Y.H.; Camann, D.; Kinney, P. 
(2006) Effect of prenatal exposure to airborne polycyclic aromatic 
hydrocarbons on neurodevelopment in the first 3 years of life among 
inner-city children. Environ Health Perspect 114: 1287-1292.
---------------------------------------------------------------------------

    Naphthalene. Naphthalene is found in small quantities in gasoline 
and diesel fuels but is primarily a product of combustion. EPA recently 
released an external review draft of a reassessment of the inhalation 
carcinogenicity of naphthalene.\66\ The draft reassessment recently 
completed external peer review.\67\ Based on external peer review 
comments, additional analyses are being considered. California EPA has 
released a new risk assessment for naphthalene, and the IARC has 
reevaluated naphthalene and re-classified it as Group 2B: possibly 
carcinogenic to humans.\68\ Naphthalene also causes a number of chronic 
non-cancer effects in animals, including abnormal cell changes and 
growth in respiratory and nasal tissues.\69\
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    \66\ U.S. EPA. 2004. Toxicological Review of Naphthalene 
(Reassessment of the Inhalation Cancer Risk), Environmental 
Protection Agency, Integrated Risk Information System, Research and 
Development, National Center for Environmental Assessment, 
Washington, DC. This material is available electronically at http://www.epa.gov/iris/subst/0436.htm.
    \67\ Oak Ridge Institute for Science and Education. (2004). 
External Peer Review for the IRIS Reassessment of the Inhalation 
Carcinogenicity of Naphthalene. August 2004. http://cfpub2.epa.gov/ncea/cfm/recordisplay.cfm?deid=86019.
    \68\ International Agency for Research on Cancer (IARC). (2002). 
Monographs on the Evaluation of the Carcinogenic Risk of Chemicals 
for Humans. Vol. 82. Lyon, France.
    \69\ U.S. EPA. 1998. Toxicological Review of Naphthalene, 
Environmental Protection Agency, Integrated Risk Information System, 
Research and Development, National Center for Environmental 
Assessment, Washington, DC. This material is available 
electronically at http://www.epa.gov/iris/subst/0436.htm.
---------------------------------------------------------------------------

    In addition to reducing VOC, NOX, CO and 
PM2.5 emissions from these engines, vessels and equipment, 
the standards proposed in this document would also reduce air toxics 
emitted from these engines, vessels and equipment, thereby helping to 
mitigate some of the adverse health effects associated with operation 
of these engines, vessels and equipment.

D. Carbon Monoxide

    Carbon monoxide (CO) is a colorless, odorless gas produced through 
the incomplete combustion of carbon-based fuels. The current primary 
NAAQS for CO are 35 ppm for the 1-hour average and nine ppm for the 8-
hour average. These values are not to be exceeded more than once per 
year.
    We have already found that emissions from nonroad engines 
contribute significantly to CO concentrations in more than one 
nonattainment area (59 FR 31306, June 17, 1994). We have also 
previously found that emissions from Small SI engines contribute to CO 
concentrations in more than one nonattainment area. We propose to find 
here, based on the information in this section of the preamble and 
Chapters 2 and 3 of the Draft RIA, that emissions from Marine SI 
engines and vessels likewise contribute to CO concentrations in more 
than one CO nonattainment area.
    Carbon monoxide enters the bloodstream through the lungs, forming 
carboxyhemoglobin and reducing the delivery of oxygen to the body's 
organs and tissues. The health threat from CO is most serious for those 
who suffer from cardiovascular disease, particularly those with angina 
or peripheral vascular disease. Healthy individuals also are affected, 
but only at higher CO levels. Exposure to elevated CO levels is 
associated with impairment of visual perception, work capacity, manual 
dexterity, learning ability and performance of complex tasks. Carbon 
monoxide also contributes to ozone nonattainment since carbon monoxide 
reacts photochemically in the atmosphere to form ozone.\70\ Additional 
information on CO related health effects can be found in the Carbon 
Monoxide Air Quality Criteria Document (CO AQCD).\71\
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    \70\ U.S. EPA (2000). Air Quality Criteria for Carbon Monoxide, 
EPA/600/P-99/001F. This document is available in Docket EPA-HQ-OAR-
2004-0008.
    \71\ U.S. EPA (2000). Air Quality Criteria for Carbon Monoxide, 
EPA/600/P-99/001F. This document is available in Docket EPA-HQ-OAR-
2004-0008.
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    In addition to health effects from chronic exposure to ambient CO 
levels, acute exposures to higher levels are also a problem, see the 
Draft RIA for additional information. In recent years a substantial 
number of CO poisonings and deaths have occurred on and around 
recreational boats across the nation.\72\ The actual number of deaths 
attributable to CO poisoning while boating is difficult to estimate 
because CO-related deaths in the water may be labeled as drowning. An 
interagency team consisting of the National Park Service, the U.S. 
Department of the Interior, and the National Institute for Occupational 
Safety and Health maintains a record of published CO-related fatal and 
nonfatal poisonings.\73\ Between 1984 and 2004, 113 CO-related deaths 
and 458 non-fatal CO poisonings have been identified based on hospital 
records, press accounts and other information. Deaths have been 
attributed to exhaust from both onboard generators and propulsion 
engines. Houseboats, cabin cruisers, and ski boats are the most common 
types of boats associated with CO poisoning cases. These incidents have 
prompted other federal agencies, including the United States Coast 
Guard and National Park Service, to issue advisory statements and other 
interventions to boaters to avoid excessive CO exposure.\74\
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    \72\ Mott, J.S.; Wolfe, M.I.; Alverson, C.J.; Macdonald, S.C.; 
Bailey, C.R.; Ball, L.B.; Moorman, J.E.; Somers, J.H.; Mannino, 
D.M.; Redd, S.C. (2002) National Vehicle Emissions Policies and 
Practices and Declining US Carbon Monoxide-Related Mortality. JAMA 
288:988-995.
    \73\ National Park Service; Department of the Interior; National 
Institute for Occupational Safety and Health. (2004) Boat-related 
carbon monoxide poisonings. This document is available 
electronically at http://safetynet.smis.doi.gov/thelistbystate10-19-04.pdf and in docket EPA-HQ-OAR-2004-0008.
    \74\ U.S Department of the Interior. (2004) Carbon monoxide 
dangers from generators and propulsion engines. On-board boats--
compilation of materials. This document is available online at 
http://safetynet.smis.doi.gov/COhouseboats.htm and in docket EPA-HQ-
OAR-2004-0008.
---------------------------------------------------------------------------

    As of October 2006, there were approximately 15 million people 
living in 6 areas (which include 10 counties) designated as 
nonattainment for CO. The CO nonattainment areas are presented in the 
Draft RIA.
    EPA previously determined that emissions from nonroad engines and 
equipment contribute significantly to ozone and CO concentrations in 
more than one nonattainment area (59 FR 31306, June 17, 1994). EPA also 
determined that the categories of small land-based SI engines cause or 
contribute to ambient ozone and CO in more than one nonattainment area 
(65 FR 76790, Dec. 7, 2000). With regard to Marine SI engines and 
vessels, our NONROAD model indicates that these engines are present in 
each of the CO nonattainment areas and thus contribute to CO 
concentrations in those nonattainment areas. The CO contribution from 
Marine SI engines in classified CO nonattainment areas is presented in 
Table II-2.

[[Page 28113]]



        Table II-2.--CO Emissions from Marine SI Engines and Vessels in Classified CO Nonattainment Areas
----------------------------------------------------------------------------------------------------------------
                                                                                                 CO (short tons
                  Area                             County                     Category              in 2005)
----------------------------------------------------------------------------------------------------------------
Missoula, MT...........................  Missoula..................  Marine SI................                94
Las Vegas, NV..........................  Clark.....................  Marine SI................             3,016
Reno, NV...............................  Washoe....................  Marine SI................             3,494
El Paso, TX............................  El Paso...................  Marine SI................                37
South Coast Air Basin..................  Los Angeles...............  Marine SI................             4,615
                                         Riverside.................  Marine SI................             1,852
                                         Orange....................  Marine SI................             5,360
                                         San Bernardino............  Marine SI................            2,507
----------------------------------------------------------------------------------------------------------------
Source: U.S. EPA, NONROAD 2005 model.

    Based on the national inventory numbers in Chapter 3 of the Draft 
RIA and the local inventory numbers described in this section of the 
preamble, we propose to find that emissions of CO from Marine SI 
engines and vessels contribute to CO concentrations in more than one CO 
nonattainment area.

III. Sterndrive and Inboard Marine Engines

A. Overview

    This section applies to sterndrive and inboard marine (SD/I) 
engines. Sterndrive and inboard engines are spark-ignition engines 
typically derived from automotive engine blocks for which a 
manufacturer will take steps to ``marinize'' the engine for use in 
marine applications. This marinization process includes choosing and 
optimizing the fuel management system, configuring a marine cooling 
system, adding intake and exhaust manifolds, and adding accessory 
drives and units. These engines typically have water-jacketed exhaust 
systems to keep surface temperatures low. Ambient surface water 
(seawater or freshwater) is generally added to the exhaust gases before 
the mixture is expelled under water.
    As described in Section I, the initial rulemaking to set standards 
for Marine SI engines did not include final emission standards for SD/I 
engines. In that rulemaking, we finalized the finding under Clean Air 
Act section 213(a)(3) that all Marine SI engines cause or contribute to 
ozone concentrations in two or more ozone nonattainment areas in the 
United States. However, because uncontrolled SD/I engines appeared to 
be a low-emission alternative to outboard and personal watercraft 
engines in the marketplace, even after the emission standards for these 
engines were fully phased in, we decided to set emission standards only 
for outboard and personal watercraft engines. At that time, outboard 
and personal watercraft engines were almost all two-stroke engines with 
much higher emission rates compared to the SD/I engines, which were all 
four-stroke engines. We pointed out in that initial rulemaking that we 
wanted to avoid imposing costs on SD/I engines that could cause a 
market shift to increased use of the higher-emitting outboard engines, 
which would undermine the broader goal of achieving the greatest degree 
of emission control from the full set of Marine SI engines.
    We believe now is an appropriate time to set standards for SD/I 
engines, for several reasons. First, the available technology for SD/I 
engines has developed significantly, so we are now able to anticipate 
substantial emission reductions. With the simultaneous developments in 
technology for outboard and personal watercraft engines, we can set 
standards that achieve substantial emission reductions from all Marine 
SI engines. Second, now that California has adopted standards for SD/I 
engines, the cost impact of setting new standards for manufacturers 
serving the California market is generally limited to the hardware 
costs of adding emission control technology; these manufacturers will 
be undergoing a complete redesign effort for these engines to meet the 
California standards. Third, we believe SD/I engines meeting the 
proposed standards will in many cases have performance advantages over 
pre-control engines, which will allow manufacturers of SD/I engines to 
promote their engines as having a greater value to justify any price 
increases. As a result, we believe we can achieve the maximum emission 
reductions from Marine SI engines by setting standards for SD/I engines 
based on the use of catalyst technology at the same time that we adopt 
more stringent standards for outboard and personal watercraft engines.
    As described in Section II, we are proposing to make the finding 
under Clean Air Act section 213(a)(3) that Marine SI engines cause or 
contribute to CO concentrations in two or more nonattainment areas of 
the United States. We believe the proposed CO standards will also 
reduce the exposure of individual boaters and bystanders to potentially 
dangerous CO levels.
    We believe catalyst technology is available for achieving these 
proposed standards. Catalysts have been used for decades in automotive 
applications to reduce emissions, and catalyst manufacturers have 
continued to develop and improve this technology. Design issues for 
using catalysts in marine applications are primarily centered on 
packaging catalysts in the water-jacketed, wet exhaust systems seen on 
most SD/I engines. Section III.G discusses recent development work that 
has shown success in packaging catalysts in SD/I applications. In 
addition, there are ongoing efforts in evaluating catalyst technology 
in SD/I engines being sponsored by the marine industry, U.S. Coast 
Guard, and California ARB.

B. Engines Covered by This Rule

(1) Definition of Sterndrive and Inboard Engines
    For the purpose of this regulation, SD/I engines encompass all 
spark-ignition marine propulsion engines that are not outboard or 
personal watercraft engines. A discussion of the proposed new 
definitions for outboard and personal watercraft engines is in Section 
IV.B. We consider all the following to be SD/I engines: inboard, 
sterndrive (also known as inboard/outboard), airboat engines, and jet 
boat engines.
    The existing definitions for sterndrive and inboard engines from 40 
CFR part 91 are presented below:
     Sterndrive engine means a four stroke Marine SI engine 
that is designed such that the drive unit is external to the hull of 
the marine vessel, while the engine is internal to the hull of the 
marine vessel.
     Inboard engine means a four stroke Marine SI engine that 
is designed such that the propeller shaft penetrates the

[[Page 28114]]

hull of the marine vessel while the engine and the remainder of the 
drive unit is internal to the hull of the marine vessel.
    We are proposing to amend the above definitions for determining 
which exhaust emission standards apply to spark-ignition marine engines 
in 2009. The new proposed definition would be a single term to include 
sterndrive and inboard engines together as a single engine category. 
The proposed definition for sterndrive/inboard also is drafted to 
include all engines not otherwise classified as outboard or personal 
watercraft engines. Note that we are proposing to revise the 
definitions of outboard and personal watercraft engines as described in 
Section IV.B.
    The proposed definition has several noteworthy impacts. First, it 
removes a requirement that only four-stroke engines can qualify as 
sterndrive/inboard engines. We believe limiting the definition to 
include only four-stroke engines is unnecessarily restrictive and could 
create an incentive to use two-stroke (or rotary) engines to avoid the 
proposed catalyst-based standards. Second, it removes limitations 
caused by reference to propellers. The definition should not refer 
specifically to propellers, because there are other propulsion drives 
on marine vessels, such as jet drives, that could be used with SD/I 
engines. Third, as explained in the section on the OB/PWC definitions, 
the proposed definitions treat engines installed in open-bay vessels 
(e.g. jet boats) and in vessels over 4 meters long as SD/I engines. 
Finally, the existing definition does not clearly specify how to treat 
specialty vessels such as airboats or hovercraft that use engines that 
are similar to those in conventional SD/I applications. Under the 
discretion in the regulation allowing EPA to make judgments about the 
scope of the SD/I engine definition, we have classified airboats as SD/
I engines. See 40 CFR 91.3 for the existing definitions of the marine 
engine classes. We continue to believe these engines share fundamental 
characteristics with traditional SD/I engines and should therefore be 
treated the same way. However, we believe the definitions should 
address these applications expressly to make clear which standards 
apply.
    We request comment on the following proposed definition:
     Sterndrive/inboard engine means a spark-ignition engine 
that is used to propel a marine vessel, but is not an outboard engine 
or a personal watercraft engine. This includes engines on propeller-
driven vessels, jet boats, airboats, and hovercraft.
    High-performance SD/I engines are generally characterized by high-
speed operation, supercharged air intake, customized parts, very high 
power densities, and a short time until rebuild (50 to 200 hours). 
Based on current SD/I product offerings, we are proposing to define a 
high-performance engine as an SD/I engine with maximum power at or 
above 373 kW (500 hp) that has design features to enhance power output 
such that the expected operating time until rebuild is substantially 
shorter than 480 hours.
(2) Exclusions and Exemptions
    We are proposing to extend our basic nonroad exemptions to the SD/I 
engines and vessels covered by this proposal. These include the testing 
exemption, the manufacturer-owned exemption, the display exemption, and 
the national-security exemption. If the conditions for an exemption are 
met, then the engine is not subject to the exhaust emission standards. 
These exemptions are described in more detail under Section VIII.
    In the rulemaking for recreational vehicles, we chose not to apply 
standards to hobby products by exempting all reduced-scale models of 
vehicles that are not capable of transporting a person (67 FR 68242, 
November 8, 2002). We are proposing to extend that same provision to 
SD/I marine engines (see Sec.  1045.5).
    The Clean Air Act provides for different treatment of engines used 
solely for competition. Rather than relying on engine design features 
that serve as inherent indicators of dedicated competitive use, as 
specified in the current regulations, we have taken the approach in 
more recent programs of more carefully differentiating competition and 
noncompetition models in ways that reflect the nature of the particular 
products. In the case of Marine SI engines, we do not believe there are 
engine design features that allow us to differentiate between engines 
that are used in high-performance recreational applications and those 
that are used solely for competition. We are therefore proposing that, 
starting January 1, 2009, Marine SI engines meeting all the following 
criteria would be considered to be used solely for competition, except 
in other cases where information is available indicating that engines 
are not used solely for competition (see Sec.  1045.620):
     The engine (or a vessel in which the engine is installed) 
may not be displayed for sale in any public dealership or otherwise 
offered for sale to the general public.
     Sale of the vessel in which the engine is installed must 
be limited to professional racers or other qualified racers.
     The engine must have performance characteristics that are 
substantially superior to noncompetitive models (e.g. higher power-to-
weight ratio).
     The engines must be intended for use only in racing events 
sanctioned (with applicable permits) by the Coast Guard or other public 
organization, with operation limited to racing events, speed record 
attempts, and official time trials.
    Engine manufacturers would make their request for each new model 
year, and we would deny a request for future production if there are 
indications that some engines covered by previous requests are not 
being used solely for competition. Competition engines are produced and 
sold in very small quantities, so manufacturers should be able to 
identify which engines qualify for this exemption. We are also 
proposing to apply the same criteria to outboard and personal 
watercraft engines and vessels. We request comment on this approach to 
qualifying for a competition exemption.
    We are proposing a new exemption to address individuals who 
manufacture recreational marine vessels for personal use (see Sec.  
1045.630). Under the proposed exemption, these vessels and their 
engines could be exempt from standards, subject to certain limitations. 
For example, an individual may produce one such vessel over a ten-year 
period, the vessel may not be used for commercial purposes, and any 
exempt engines may not be sold for at least five years. The vessel must 
generally be built from unassembled components, rather than simply 
completing assembly of a vessel that is otherwise similar to one that 
will be certified to meet emission standards. This proposal addresses 
the concern that hobbyists who make their own vessels could otherwise 
be a manufacturer subject to the full set of emission standards by 
introducing these vessels into commerce. We expect this exemption to 
involve a very small number of vessels.

C. Proposed Exhaust Emission Standards

    We are proposing technology-based exhaust emission standards for 
new SD/I engines. These standards are similar to the exhaust emission 
standards that California ARB recently adopted (see Section I). This 
section describes the proposed requirements for SD/I engines for 
controlling exhaust emissions. See

[[Page 28115]]

Section V for a description of the proposed requirements related to 
evaporative emissions.
(1) Standards and Dates
    We are proposing exhaust emission standards of 5 g/kW-hr 
HC+NOX and 75 g/kW-hr CO for SD/I engines, starting with the 
2009 model year (see Sec.  1045.105). On average, this represents about 
a 70 percent reduction in HC+NOX and a 50 percent reduction 
in CO from baseline engine configurations. Due to the challenges of 
controlling CO emissions at high load, the expected reduction in CO 
emissions from low to mid-power operation is expected to be more than 
80 percent. We are proposing additional lead time for small businesses 
as discussed in Section III.F.2. The proposed standards would be based 
on the same duty cycle that currently is in place for outboard and 
personal watercraft engines, as described in Section III.D. Section 
III.F discusses the technological feasibility of these standards in 
more detail. We request comment on the feasibility and appropriateness 
of the proposed standards.
    The proposed standards are largely based on the use of small 
catalytic converters that can be packaged in the water-cooled exhaust 
systems typical for these applications. California ARB also adopted an 
HC+NOX standard of 5 g/kW-hr, but they did not adopt a 
standard for CO emissions. We believe the type of catalyst used to 
achieve the HC+NOX standard will also be effective in 
reducing CO emissions enough to meet the proposed standard, so no 
additional technology will be needed to control CO emissions.
    Manufacturers have expressed concern that the proposed 
implementation dates may be difficult to meet, for certain engines, due 
to anticipated changes in engine block designs produced by General 
Motors. As described in the Draft RIA and in the docket, the vast 
majority of SD/I engines are based on automotive engine blocks sold by 
General Motors.\75\ There are five basic engine blocks used, and 
recently GM has announced that it will discontinue production of the 
4.3L and 8.1L engine blocks in 2009. GM anticipates that it will offer 
a 4.1L engine block and a 6.0L supercharged engine block to the marine 
industry as replacements. Full run production of these new blocks is 
anticipated in mid to late 2009. SD/I engine manufacturers have 
expressed concern that they will not be able to begin the engineering 
processes related to marinizing these engines, including the 
development of catalyst-equipped exhaust manifolds, until mid-2007, 
when they are expecting to see the first prototypes of the two 
replacement engine models. In addition, they are concerned that they do 
not have enough remaining years of sales of the 4.3L and 8.1L engines 
to justify the cost of developing catalyst-equipped exhaust manifolds 
for these engines and amortizing the costs of the required tooling 
while also developing the two new engine models.
---------------------------------------------------------------------------

    \75\ ``GM Product Changes Affecting SD/I Engine Marinizers,'' 
memo from Mike Samulski, EPA, to Docket EPA-HQ-QAR-2004-0008-0528.
---------------------------------------------------------------------------

    The SD/I requirements begin in earnest in California in the 2008 
model year. Manufacturers have indicated that they plan to use 
catalysts to meet the California standards in 2008 for three or four of 
the five engine models used in SD/I applications but to potentially 
have limited availability of the 4.3L or 8.1L engines until the 
catalyst-equipped versions of the two new engine models (4.1L and 6.0L) 
have been marinized and meet the new California emission standards. At 
this point, the manufacturers project that the two new engine models 
would be available for sale in California in 2010. Some 4.3L and 8.1L 
engines may be available in California during the phase-out based on 
the possibility of some use of catalyst for one or both of these 
displacements and the use of transitional flexibilities.
    These are unique circumstances because the SD/I engine 
manufacturers' plans and products depend on the manufacture of the base 
engine by a company not directly involved in marine engine 
manufacturing. The SD/I sales represent only a small fraction of total 
engine sales and thus did not weigh heavily in GM's decision to replace 
the existing engine blocks with two comparable versions during the 
timeframe when the SD/I manufacturers are facing new emission 
standards. SD/I manufacturers have stated that alternative engine 
blocks that meet their are not available in the interim, and that it 
would be cost-prohibitive for them to produce their own engine blocks.
    EPA is proposing that the Federal SD/I standards take effect for 
the 2009 model year, one year after the same standards apply in 
California. We believe a requirement to extend the California standards 
nationwide after a one-year delay allows manufacturers adequate time to 
incorporate catalysts across their product lines as they are doing in 
California. Once the technology is developed for use in California, it 
would be available for use nationwide soon thereafter. In fact, one 
company currently certified to the California standards is already 
offering catalyst-equipped SD/I engines nationwide. However, we request 
comment on whether an additional year of lead time would be appropriate 
for engines not using catalysts in California in 2008. This is 
potentially the 4.3L or 8.1L SD/I engines. Under this alternative, 
engines based on the three engine blocks not being changed would be 
required to meet the standards in 2009. Also, engines built from the 
4.3L and/or the 8.1L GM blocks would be required to meet the EPA 
standards if sold in California in 2008 or 2009. Otherwise the new 
standards for these engines could be delayed for an additional model 
year (until 2010). Assuming product plans follow through as projected, 
the two new engine blocks would be required to meet the standards in 
the 2010 model year.
    Another possibility would be to address this issue through the 
combination of the flexibilities provided through an ABT program and a 
phase-in of the standards over two model years (2009/2010) instead of 
implementation in one model year (2009). Under this approach, 
manufacturers could certify and sell the 4.3L and 8.1L engines in the 
2009 model year without catalysts or with limited use of catalysts 
through emissions averaging. This approach would have the advantage of 
giving manufacturers flexibility in how they choose to phase in their 
catalyst-equipped engines. However, engine manufacturers have expressed 
concern that, even though they will be offering limited configurations 
of catalyzed engines in California in 2008, that the lead time is short 
and they will not have the ability to fully catalyze their entire line 
of engines for 2009. Thus, if the rule is structured in a manner to 
permit it, marine engine manufacturers would sell a mix of catalyzed 
and non-catalyzed engines in 2009. Since boat builders can determine 
which engines are purchased and can choose either catalyzed or non-
catalyzed versions of the engines if available, manufacturers are 
concerned that it would be difficult for SD/I engine manufacturers to 
ensure compliance with standards based on sales and horsepower 
weightings. Engine manufacturers, not boat builders, are subject to 
exhaust emission standards. Thus, a phase-in approach, which would be 
based on a projection that a certain number of catalyzed engines would 
be sold, may not be a feasible approach for this industry. The industry 
would thus prefer a mandatory implementation date as discussed below 
without a phase-in that uses averaging. The industry's concerns 
notwithstanding, there are benefits to

[[Page 28116]]

this approach. Therefore, we are requesting comment on phasing in the 
proposed standards over the 2009-2010 timeframe. Under this approach, 
the standards would be 10 g/kW-hr HC+NOX and 100 g/kW-hr CO 
in 2009. The proposed standards would then go into effect in 2010. 
During the phase-in period, the proposed family emission limit (FEL) 
caps (see Section III.C.3) would still apply.
    A third alternative, preferred by the two large SD/I manufacturers, 
would be full compliance with the 5 g/kW-hr standard in 2010 except for 
the 4.1L engine and the 6.0L supercharged engine and requiring those 
engines to comply with the standards in 2011. Manufacturers have 
expressed the view that there is value in limiting production volumes 
of catalyst-equipped engines only to California for two years to gain 
in-use experience before selling these engines nationwide. Under this 
approach, any technical issues that may arise with catalyst designs or 
in-use performance would affect only a small portion of the fleet, 
which would help minimize in-use concerns and costs associated with 
warranty claims. This approach would also provide additional lead time 
for those configurations not modified for California and the two new 
engine displacements. In addition, as discussed above, manufacturers 
stated that an averaging-based phase-in program that required the 
introduction of catalyst-equipped engines outside of California before 
2010 is problematic because of marketplace and competitive issues as 
discussed above. For these reasons, we request comment on whether the 
proposed standards for SD/I engines should be delayed to 2010 for the 
three engine models that are not being modified and with an additional 
model year (2011) for the 4.1L and 6.0L supercharged engines.
    Under stoichiometric or lean conditions, catalysts are effective at 
oxidizing CO in the exhaust. However, under very rich conditions, 
catalysts are not effective for reducing CO emissions. In contrast, 
NOX emissions are effectively reduced under rich conditions. 
SD/I engines often run at high power modes for extended periods of 
time. Under high-power operation, engine marinizers must calibrate the 
engine to run rich as an engine-protection strategy. If the engine were 
calibrated for a stoichometric air-fuel ratio at high power, high 
temperatures could lead to failures in exhaust valves and engine heads. 
In developing the proposed CO standard for SD/I engines, we considered 
an approach where test Mode 1 (full power) would be excluded from the 
weighted CO test level and the other four test modes would be re-
weighted accordingly. Under this approach, the measured CO emissions 
from catalyst-equipped engines were observed to be 65-85 percent lower 
without Mode 1, even though the weighting factor for Mode 1 is only 6 
percent of the total cycle weighting. These test results are presented 
in Chapter 4 of the Draft RIA. We request comment on finalizing a CO 
standard of 25 g/kW-hr based on a four-mode duty cycle that excludes 
Mode 1 instead of the proposed CO standard. Under this approach, we 
also request comment on CO cap, such as 350 g/kW-hr, specific to Mode 
1. Manufacturers would still measure CO emissions at Mode 1 to 
demonstrate compliance with this cap.
    Controlling CO emissions at high power may be a more significant 
issue with supercharged 6.0L engines due to uncertainty with regard to 
the air fuel ratio of the engine at high power. Engine manufacturers 
have not yet received prototype engines; however, they have expressed 
concern that these engines may need to be operated with a rich air-fuel 
ratio even at Mode 2 as an engine-protection strategy.\76\ This concern 
is based on previous experience with other supercharged engines. If 
this is the case, it may affect the potential CO emission reductions 
from these engines. To address the uncertainties related to the two new 
SD/I engines (4.1L and 6.0L supercharged) we are asking for comment on 
a CO averaging standard with a maximum family emission limit to cap 
high CO emissions. Specifically, we request comment on averaging 
standard of 25 g/kW-hr CO based on a four-mode test, as discussed 
above, with a maximum family emission limit for the four-mode test of 
75 g/kW-hr.
---------------------------------------------------------------------------

    \76\ 80 percent of maximum engine test speed and 71.6 percent of 
maximum torque at maximum test speed.
---------------------------------------------------------------------------

    Engines used on jet boats may have been classified under the 
existing definitions as personal watercraft engines. As described 
above, engines used in jet boats or personal watercraft-like vessels 4 
meters or longer would be classified as SD/I engines under the proposed 
definitions. Such engines subject to part 91 today would therefore need 
to continue meeting EPA emission standards as personal watercraft 
engines through the 2008 model year under part 91, after which they 
would need to meet the new SD/I standards under the proposed part 1045. 
This is another situation where the transition period discussed above 
may be helpful. In contrast, as discussed above, air boats have been 
classified as SD/I engines under EPA's discretionary authority and are 
not required to comply with part 91.
    As described above, engines used solely for competition would not 
be subject to the proposed regulations, but many SD/I high-performance 
engines are sold for recreational use. High-performance SD/I engines 
have very high power outputs, large exhaust gas flow rates, and 
relatively high concentrations of hydrocarbons and carbon monoxide in 
the exhaust gases. From a conceptual perspective, the application of 
catalytic converter technology to these engines is feasible. As is the 
case in similar heavy-duty highway gasoline engines, these catalytic 
converters would have to be quite large in volume, perhaps on the order 
of the same volume as the engine displacement, and would involve 
significant heat rejection issues. Highway heavy-duty gasoline engine 
certification information from the late 1970s and early 1980s suggests 
that it is possible to achieve HC and CO emission reductions around 20 
to 40 percent by adding an air pump to increase the level of oxygen in 
the exhaust stream. This would be a relatively low-cost and durable 
method of oxidizing HC and CO when the exhaust gases are hot enough to 
support further oxidation reactions. California ARB has implemented the 
same HC+NOX standards we are proposing but is expecting 
manufacturers to rely on emissions averaging within the SD/I class. 
This is not viable for small business manufacturers who do not have 
other products with which to average.
    Even if manufacturers use catalysts to control HC+NOX 
emissions from high-performance engines, controlling CO emissions 
continues to present a technological challenge. Since these engines 
generally operate with fuel-rich combustion, there is little or no 
oxygen in the exhaust stream. As a result, any oxidation of hydrocarbon 
compounds in the catalyst would likely increase CO levels, rather than 
oxidizing all the way to CO2. We are therefore proposing a 
CO standard for high-performance engines of 350 g/kW-hr. We believe 
this is achievable with more careful control of fueling under idle 
conditions. Control of air-fuel ratios at idle should result in 
improved emission control even after multiple rebuilds. Basing 
standards on non-catalyst hardware such as an air pump could enable 
lower CO levels.
    We are proposing a variety of provisions to simplify the 
requirements for exhaust emission certification and compliance for 
these engines, as described in Section IV.F. We are also proposing not 
to apply the not-to-exceed

[[Page 28117]]

emission standards to high-performance SD/I marine engines.
    We also request comment on two alternative approaches to define 
emission standards for high-performance engines. First, we could set 
the HC+NOX standard at 5 g/kW-hr and allow for emission 
credits as described above, but allow small-volume manufacturers of 
high-performance engines to meet a HC+NOX emission standard 
in the range of 15 to 22 g/kW-hr. See Section III.F.2 for our proposed 
definition of small-volume SD/I engine manufacturers. We would also 
need to adopt an FEL cap of 22 g/kW-hr for HC+NOX for all 
manufacturers under this approach to avoid the situation where only 
small-volume manufacturers of high-performance engines need to make 
design changes to reduce these emissions. Our concern is that a large 
manufacturer would otherwise be able to use emission credits to avoid 
making design changes to their high-performance engines. This emission 
level is consistent with measured HC+NOX emission values 
from these engines showing a range of emission levels with different 
types of fuel systems and different calibrations, as shown in the Draft 
RIA. Treating small-volume manufacturers of high-performance engines 
differently may be appropriate because they have little or no access to 
emission credits.
    Second, we could alternatively set the high-performance engine 
HC+NOX standard in the range of 15 to 22 g/kW-hr for all 
companies and disallow the use of emission credits for meeting this 
standard. This would require all companies to redesign their engines, 
rather than use emission credits, to reduce emissions to a standard 
that is tailored to high-performance engines.
    We request comment on the primary approach as well as the two 
alternatives for high-performance engine standards. Comment is 
requested on the costs and general positives and negatives of each 
approach. Comment is also requested on the technology required if a 
level above the proposed standards is supported, as well as information 
on safety and energy implications of the alternative emission 
standards. If a commenter supports either of the two alternative 
approaches, information and data are requested to assist EPA in setting 
the appropriate HC+NOX and CO emission standards within the 
15 to 22 g/kW-hr range.
    We are also aware that there may be some very small sterndrive or 
inboard engines. In particular, sailboats may have small propulsion 
engines for backup power. These engines would fall under the proposed 
definition of sterndrive/inboard engines, even though they are much 
smaller and may experience very different in-use operation. These 
engines may have more in common with marine auxiliary engines that are 
subject to land-based standards. Nevertheless, these engines share some 
important characteristics with bigger SD/I engines, such as reliance on 
four-stroke technology and access to water-based cooling. It is also 
true that emission standards are based on specific emission levels 
expected from engines of comparable sizes, so the standards adjust 
automatically with the size of the engine to require a relatively 
constant level of stringency. These engines are not like the very small 
outboard engines that are subject to less stringent standards because 
of their technical limitations in controlling emissions. Accordingly, 
we believe these engines can incorporate the same technologies as the 
bigger marine propulsion engines and meet the same emission standards. 
However, we request comment on the need for adjusting the emission 
standards for these engines to accommodate any technology constraints 
related to their unique designs. Specifically, we request comment on 
allowing manufacturers the option of certifying small SD/I engines to 
the proposed standards for auxiliary marine engines discussed in 
Section V.C.1. We also request comment on the possibility that some 
other small engines may inappropriately fall into the category of 
sterndrive/inboard engines. We request comment on the engine size for 
which any special accommodations must be made. Such comments should 
also address any issues that may exist for these engines with regard to 
meeting the proposed standards, or identify any other appropriate way 
of differentiating these engines from conventional sterndrive/inboard 
engines.
(2) Not-To-Exceed Standards
    We are proposing emission standards for an NTE zone representing a 
multiplier times the duty cycle standard for HC+NOX and for 
CO (see Sec.  1045.105). Section III.D.2 describes the proposed NTE 
test procedures and gives an overview of the proposed NTE provisions. 
In addition, Section III.D.2 presents the specific multipliers for the 
proposed NTE standards.
    The NTE approach is consistent with the concept of a weighted modal 
emission test such as the steady-state tests included in this rule. The 
proposed duty cycle standard itself is intended to represent the 
average emissions under steady-state conditions. Because it is an 
average, manufacturers design their engines with emission levels at 
individual points varying as needed to maintain maximum engine 
performance and still meet the engine standard. The NTE limit would be 
an additional requirement. It is intended to ensure that emission 
controls function with relative consistency across the full range of 
expected operating conditions.
(3) Emission Credit Programs
(a) Averaging, Banking, and Trading
    We are proposing averaging, banking, and trading of emission 
credits for sterndrive and inboard marine engines for meeting 
HC+NOX and CO standards (see Sec.  1045.105 and part 1045, 
subpart H). See Section VII.C.5 for a description of general provisions 
related to averaging, banking, and trading programs. Emission credit 
calculations would be based on the maximum engine power for an engine 
family, as described in Section IV.F.
    As with previous emission control programs, we are also proposing 
not to allow an emission family to earn credits for one pollutant if it 
is using credits to meet the standard for another pollutant. In other 
words, an engine family that does not meet the CO standard would not be 
able to earn HC+NOX emission credits, or vice versa. This 
should rarely be an issue for SD/I engines, because the same catalyst 
technology is effective for controlling HC+NOX and CO 
emissions. In addition, as with previous emission control programs, we 
are proposing that engines sold in California would not be included in 
this ABT program because they are already subject to California 
HC+NOX requirements.
    Credit generation and use is calculated based on the family 
emission limit (FEL) of the engine family and the standard. We are 
proposing FEL caps to prevent the sale of very-high emitting engines. 
For HC+NOX, the proposed FEL cap is 16 g/kW-hr for 
HC+NOX emissions from engines below 373 kW; this emission 
level is equal to the first phase of the California SD/I standards. We 
are proposing an FEL cap of 150 g/kW-hr for CO emissions from engines 
below 373 kW. These FEL caps represent the average baseline emission 
levels of SD/I engines, based on data described in the Draft RIA. The 
analogous figures for high-performance engines are 30 g/kW-hr for 
HC+NOX and 350 g/kW-hr for CO, as described in Section 
III.C.(d).
    Except as specified below for jet boat engines, we are proposing to 
keep OB/PWC engines and SD/I engines in separate averaging sets. This 
means that credits earned by SD/I and OB/PWC engines are counted 
separately and may not be exchanged to demonstrate

[[Page 28118]]

compliance with emission standards. Most of the engine manufacturers 
building SD/I engines do not also build OB/PWC engines. The exception 
to this is the largest manufacturer in both categories. We are 
concerned that allowing averaging, banking, or trading between OB/PWC 
engines and SD/I engines would not provide the greatest achievable 
reductions, because the level of the standard we are proposing is 
premised on the use of aftertreatment technology in SD/I engines, and 
is based on what is feasible for SD/I engines. We did not set the SD/I 
level based on the reductions achievable between OB/PWC and SD/I, but 
instead based on what is achievable by SD/I engines alone. The proposed 
limitation on ABT credits is consistent with this approach to setting 
the level of the SD/I standard. In addition, allowing such credit usage 
could provide an incentive to avoid the use of aftertreatment 
technologies in SD/I engines. This could create a competitive 
disadvantage for the many small manufacturers of SD/I engines that do 
not also produce OB/PWC engines.
    We propose that emission credits for SD/I engines have an unlimited 
credit life with no discounting. We consider these emission credits to 
be part of the overall program for complying with the proposed 
standards. Given that we may consider further reductions beyond these 
standards in the future, we believe it will be important to assess the 
ABT credit situation that exists at the time any further standards are 
considered. We would need to set such future emission standards based 
on the statutory direction that emission standards must represent the 
greatest degree of emission control achievable, considering cost, 
safety, lead time, and other factors. Emission credit balances will be 
part of the analysis for determining the appropriate level and timing 
of new standards. If we were to allow the use of credits generated 
under this proposed program for future, more stringent, standards, we 
may, depending on the level of emission credit banks, need to adopt 
emission standards at more stringent levels or with an earlier start 
date than we would absent the continued or limited use of existing 
emission credits. Alternatively, we could adopt future standards 
without allowing the use of existing emission credits.
    We are requesting comment on one particular issue regarding credit 
life. As proposed, credits earned under the exhaust ABT program would 
have an unlimited lifetime. This could result in a situation where 
credits generated by an engine sold in a model year are not used until 
many years later when the engines generating the credits have been 
scrapped and are no longer part of the fleet. EPA believes there may be 
value to limiting the use of credits to the period that the credit-
generating engines exist in the fleet. For this reason, EPA requests 
comment on limiting the lifetime of the credits to five years or, 
alternatively, to the regulatory useful life of the engine.
(b) Early-Credit Approaches
    We are proposing an early-credit program in which a manufacturer 
could earn emission credits before 2009 with early introduction of 
emission controls designed to meet the proposed standards (see Sec.  
1045.145). For engines produced by small-volume SD/I manufacturers that 
are eligible for the proposed two-year delay described in Section 
III.F.2, early credits could be earned before 2011. While we believe 
adequate lead time is provided to meet the proposed standards, we 
recognize that flexibility in timing could help some manufacturers--
particularly small manufacturers--to meet the new standards. Other 
manufacturers that are able to comply early on certain models would be 
better able to transition their full product line to the new standards 
by spreading out the transition over two years or more. Under this 
approach, we anticipate that manufacturers would generate credits 
through the use of catalysts.
    Manufacturers would generate these credits based on the difference 
between the measured emission level of the clean engines and an 
assigned baseline level (16 g/kW-hr HC+NOX and 150 g/kW-hr 
CO). These assigned baseline levels are based on data presented in 
Chapter 4 of the Draft RIA representing the average level observed for 
uncontrolled engines. We are also proposing to provide bonus credits to 
any manufacturer that certifies early to the proposed standard to 
provide a further incentive for introducing catalysts in SD/I engines. 
The bonus credits would take the form of a multiplier times the earned 
credits. The proposed multipliers are 1.25 for one year early, 1.5 for 
two years early, and 2.0 for three years early. For example, a small-
volume manufacturer certifying an engine to 5.0 g/kW-hr 
HC+NOX in 2009 (2 years early) would get a bonus multiplier 
of 1.5. Therefore, early HC+NOX credits would be calculated 
using the following equation: credits [grams] = (16-5) x Power [kW] x 
Useful Life [hours] x Load Factor x 1.5. We are proposing to use a load 
factor of 0.207, that is currently used in the OB/PWC calculations.
    To earn these credits, the engine would have to meet both the 
proposed HC+NOX and CO standards. These early credits would 
be treated the same as emission credits generated after the emission 
standards start to apply. This approach would provide an incentive for 
manufacturers to pull ahead significantly cleaner technologies. We 
believe such an incentive would lead to early introduction of catalysts 
on SD/I and help promote earlier market acceptance of this technology. 
Because of the proposed credit life, these credits would only be able 
to be used during the transition period to the new standards. We 
believe this proposed early credit program will allow manufactures to 
comply to the proposed standards in an earlier time frame than they 
would otherwise because it allows them to spread out their development 
resources over multiple years. To ensure that manufacturers do not 
generate credits for already required activities, no credits would be 
generated for the proposed federal program for engines that are 
produced for sale in California. We request comment on this approach.
    Alternatively, we request comment on the alternative of an early 
``family banking'' approach. Under this approach, we would allow 
manufacturers to certify an engine family early to the proposed 
standards. For each year of certifying engines early, the manufacturer 
would be able to delay certification of a comparable number of engines 
by one year, taking into account the relative power ratings of the 
different engine families. This would be based on the actual sales and 
would require no calculation or accounting of emission credits. This 
approach would not provide the same degree of precision as the early-
credit program described above, but it may be an effective way of 
helping manufacturers make the transition to new emission standards. 
See 40 CFR 1048.145(a) for an example of regulations that implement 
such a family banking program.
    We request comment on the above early-credit approaches or any 
other approach that would help manufacturers bring the product lines 
into compliance with the proposed standards without compromising 
overall emission reductions. Any allowance for high-emitting or late-
compliant engines should be offset by emission controls that achieve 
emission reductions beyond that required by the new standards. We 
request comment on the merits of the various approaches noted above and 
others that commenters may wish to suggest. We request that commenters 
provide detailed comments on how the approaches described above

[[Page 28119]]

should be set up, enhanced, or constrained to ensure that they serve 
their purpose without diminishing the overall effectiveness of the 
standards.
(c) Jet Boats
    Sterndrive and inboard vessels are typically propelled by 
traditional SD/I engines based on automotive engine blocks. As 
explained in Section IV, we are proposing to amend the definition of 
personal watercraft engine to ensure that engines used on jet boats 
would no longer be classified as personal watercraft engines but 
instead as SD/I engines because jet boats are more comparable to SD/I 
vessels. However, manufacturers in some cases make these jet boats by 
installing an engine also used in outboard or personal watercraft 
applications (less than 4 meters in length) and coupling the engine to 
a jet drive for propelling the jet boat. Thus, manufacturers of 
outboard or personal watercraft engines may also manufacture the same 
or similar engine for use on what we would propose here to be 
considered a jet boat (whose engine we would therefore proposed to be 
subject to SD/I standards).
    We are proposing to allow some flexibility in meeting new emission 
standards for jet boat engines because they are currently designed to 
use engines derived from OB/PWC applications and because of their 
relatively low sales volumes. We are also proposing to allow 
manufacturers to use emission credits generated from outboard and 
personal watercraft engines to demonstrate that their jet boat engines 
meet the proposed HC+NOX and CO standards for SD/I engines 
(see Sec.  1045.660 and Sec.  1045.701). We further propose that such 
engine manufacturers may only use this provision if the engines are 
certified as outboard or personal watercraft engines, and if the 
majority of units sold in the United States from those related engine 
families are sold for use as outboard or personal watercraft engines. 
We would decide whether a majority of engine units are sold for use as 
outboard or personal watercraft engines based on projected sales 
volumes from the application for certification. Manufacturers would 
need to group SD/I engines used for jet boats in a separate engine 
family from the outboard or personal watercraft engine to ensure proper 
labeling and calculation of emission credits, but manufacturers could 
rely on emission data from the same prototype engine for certifying 
both engine families. Finally, we propose that manufacturers of jet 
boat engines subject to SD/I standards and using credits from outboard 
or personal watercraft engines must certify these jet boat engines to 
an FEL that meets or exceed the standards for outboard and personal 
watercraft engines. This limits the degree to which manufacturers may 
take advantage of emission credits to produce engines that are emitting 
at higher levels than competitive engines. As such, the FELs for these 
engines must therefore be at or below the proposed emission standards 
for outboard and personal watercraft engines.
(d) SD/I High-Performance Engines
    We are proposing that the ABT program described above (III.C.3(a) 
through (c)) would also include SD/I high-performance engines. 
Manufacturers would be able to use emission credits from conventional 
SD/I engines to offset credit deficits from higher-emitting SD/I high-
performance engines. Although SD/I high-performance engines represent 
fewer than 1 percent of total SD/I engine sales, there are many more 
companies producing SD/I high-performance engines than conventional SD/
I engines. Because of the relatively small sales of these engines, a 
large manufacturer with a broad product line could readily offset a 
potential credit deficit by using credits from high-volume SD/I 
engines. In contrast, most manufacturers of SD/I high-performance 
engines are small businesses that do not also produce conventional SD/I 
engines. Section III.F discusses special provisions intended to reduce 
the burden for small businesses to meet the proposed standards. We 
request comment on whether this ABT program would create a competitive 
disadvantage for small businesses.
    We are proposing an approach in which manufacturers can use default 
emission factor of 30 g/kW-hr for HC+NOX emissions and 350 
g/kW-hr for CO emissions in lieu of testing for certification. For 
purposes of this ABT program these default emission factors, if used in 
lieu of testing, would be used for certification to an FEL at these 
levels. Thus, the emission credits needed would be the difference 
between the default levels and the applicable standard (see Sec.  
1045.240). These default emission levels represent the highest emission 
rates observed on uncontrolled engines. Manufacturers would always have 
the option of conducting tests to establish a measured emission rate to 
reduce or eliminate the need to use emission credits. While this 
testing may require additional setup and preparation, we believe it 
would be possible even for the most high-powered engines. To avoid the 
possibility of manufacturers selectively taking advantage of the 
default values, we would require them to rely on measured values for 
both HC+NOX and CO emissions if they do testing.
    For the purposes of the credit calculations, we are proposing to 
use an hours term longer than the proposed useful life for these 
engines. The proposed useful life for traditional SD/I engines is 
intended to reflect the full useable life of the engine. For high-
performance engines the proposed useful life is intended to reflect the 
expected time until the engine is rebuilt. High-performance engines are 
typically rebuilt several times. In fact, manufacturers have indicated 
that it is common for the boat owner to own two pairs of engines so 
that they can use one pair while the other is being rebuilt. Therefore, 
the proposed useful life does not reflect the full life of the engine, 
including rebuilds, over which emission credits would be used (or 
generated). We are proposing, for purposes of the credit calculations, 
that a life of 480 hours would be used for high-performance SD/I 
engines at or below 485 kW and 250 hours for engines above 485 kW. We 
request comment on the number of times that high-performance engines 
are typically rebuilt and how the number of rebuilds should be 
addressed in the credit calculations.
(4) Crankcase Emissions
    Due to blowby of combustion gases and the reciprocating action of 
the piston, exhaust emissions can accumulate in the crankcase. 
Uncontrolled engine designs route these vapors directly to the 
atmosphere. Closed crankcases have become standard technology for 
automotive engines and for outboard and personal watercraft engines. 
Manufacturers generally do this by routing crankcase vapors through a 
valve into the engine's air intake system. We propose to require 
manufacturers to prevent crankcase emissions from SD/I marine engines 
(see Sec.  1045.115). Because automotive engine blocks are already 
tooled for closed crankcases, the cost of adding a valve for positive 
crankcase ventilation is small for SD/I engines. Even with non-
automotive blocks, the tooling changes necessary for closing the 
crankcase are straight-forward.
(5) Durability Provisions
    We rely on pre-production certification, and other programs, to 
ensure that engines control emissions throughout their intended 
lifetime of operation. Section VII describes how we are proposing to 
require manufacturers to incorporate laboratory aging in the 
certification process, how we limit the

[[Page 28120]]

extent of maintenance that manufacturers may specify to keep engines 
operating as designed, and other general provisions related to 
certification. The following sections describe additional provisions 
that are specific to SD/I engines.
(a) Useful Life
    We are proposing to specify a useful life period of 480 hours or 
ten years, whichever comes first. The engines would be subject to the 
emission standards during this useful life period. This is consistent 
with the requirements adopted by California ARB (see Sec.  1045.105). 
We are further proposing that the 480-hour useful life period is a 
baseline value, which may be extended if data show that the average 
service life for engines in the family is longer. For example, we may 
require that the manufacturer certify the engine over a longer useful 
life period that more accurately represents the engines' expected 
operating life if we find that in-use engines are typically operating 
substantially more than 480 hours. This approach is similar to what we 
adopted for recreational vehicles.
    For high-performance SD/I engines (at or above 373 kW), we are 
proposing a useful life of 150 hours or 3 years for engines at or below 
485 kW and a useful life of 50 hours or 1 year for engines above 485 
kW. Due to the high power and high speed of these engines, mechanical 
parts are often expected to wear out quickly. For instance, one 
manufacturer indicated that some engines above 485 kW have scheduled 
head rebuilds between 50 and 75 hours of operation. These proposed 
useful life values are consistent with the California ARB regulations 
for high-performance SD/I engines. We request comment on the proposed 
useful life requirements for high performance marine engines.
    Some SD/I engines below 373 kW may be designed for high power 
output even though they do not reach the power threshold to qualify as 
SD/I high-performance engines. Because they do not qualify for the 
shorter useful life that applies to SD/I high-performance engines, they 
would be subject to the default value of 480 hours for other SD/I 
engines. However, to address the limited operating life for engines 
that are designed for especially high power output, we are proposing to 
allow manufacturers to request a shorter useful life for such an engine 
family based on information showing that engines in the family rarely 
operate beyond the requested shorter period. For example, if engines 
designed for extremely high performance are typically rebuilt after 250 
hours of operation, this would form the basis for establishing a 
shorter useful life period for those engines. See the proposed 
regulations for additional detail in establishing a shorter useful 
life.
(b) Warranty Periods
    We are proposing that manufacturers must provide an emission-
related warranty during the first 3 years or 480 hours of engine 
operation, whichever comes first (see Sec.  1045.120). This warranty 
period would apply equally to emission-related electronic components on 
SD/I high-performance engines. However, we are proposing shorter 
warranty periods for emission-related mechanical components on SD/I 
high-performance engines because these parts are expected to wear out 
more rapidly than comparable parts on traditional SD/I engines. 
Specifically, we are proposing a warranty period for emission-related 
mechanical components of 3 years or 150 hours for engines between 373 
and 485 kW, and 1 year or 50 hours for engines above 485 kW. These 
proposed warranty periods are the same as those adopted by the 
California ARB.
    If the manufacturer offers a longer warranty for the engine or any 
of its components at no additional charge, we propose that the 
emission-related warranty for the respective engine or component must 
be extended by the same amount. The emission-related warranty includes 
components related to controlling exhaust, evaporative, and crankcase 
emissions from the engine. This approach to setting warranty 
requirements is consistent with provisions that apply in most other 
programs for nonroad engines.
(6) Engine Diagnostics
    We are proposing to require that manufacturers design their SD/I 
engines to diagnose malfunctioning emission control systems starting 
with the introduction of the proposed standards (see Sec.  1045.110). 
As discussed in the Draft RIA, three-way catalyst systems with closed-
loop fueling control work well only when the air-fuel ratios are 
controlled to stay within a narrow range around stoichiometry. Worn or 
broken components or drifting calibrations over time can prevent an 
engine from operating within the specified range. This increases 
emissions and can lead to significantly increased fuel consumption and 
engine wear. The operator may or may not notice the change in the way 
the engine operates. We are not proposing to require similar diagnostic 
controls for OB/PWC or Small SI engines because the anticipated 
emission control technologies for these other applications are 
generally less susceptible to drift and gradual deterioration. We have 
adopted similar diagnostic requirements for Large SI engines operating 
in forklifts and other industrial equipment that also use three-way 
catalysts to meet emission standards.
    This diagnostic requirement focuses solely on maintaining 
stoichiometric control of air-fuel ratios. This kind of design detects 
problems such as broken oxygen sensors, leaking exhaust pipes, fuel 
deposits, and other things that require maintenance to keep the engine 
at the proper air-fuel ratio.
    Diagnostic monitoring provides a mechanism to help keep engines 
tuned to operate properly, with benefits for both controlling emissions 
and maintaining optimal performance. There are currently no inspection 
and maintenance programs for marine engines, so the most important 
variable in making the emission control and diagnostic systems 
effective is in getting operators to repair the engine when the 
diagnostic light comes on. This calls for a relatively simple design to 
avoid signaling false failures as much as possible. The diagnostic 
requirements in this rule therefore focus on detecting inappropriate 
air-fuel ratios, which is the most likely failure mode for three-way 
catalyst systems. The malfunction indicator light must go on when an 
engine runs for a full minute under closed-loop operation without 
reaching a stoichiometric air-fuel ratio.
    California ARB has adopted diagnostic requirements for SD/I engines 
that involve a more extensive system for monitoring catalyst 
performance and other parameters. We would accept a California-approved 
system as meeting EPA requirements. However, we believe the simpler 
system described above is better matched to the level of emission 
control involved, and is more appropriate in the context of 
recreational boating by consumers who are not subject to any systematic 
requirements for inspecting or maintaining their engines.
    The proposed regulations direct manufacturers to follow standard 
practices defined in documents adopted by the International 
Organization for Standardization (ISO) that establish protocols for 
automotive systems. The proposed regulations also state that we may 
approve variations from these industry standards, because individual 
manufacturers may have systems with unique operating parameters that 
warrant a deviation from the automotive approach. Also, if a new 
voluntary consensus standard is adopted to define appropriate practices 
for marine

[[Page 28121]]

engines, we would expect to incorporate that new standard into our 
regulations. See Sec.  1045.110 of the draft regulations for more 
information.

D. Test Procedures for Certification

(1) General Provisions
    The proposed test procedures are generally the same for both SD/I 
and OB/PWC engines. This involves laboratory measurement of emissions 
while the engine operates on the ISO E4 duty cycle. This is a five-mode 
steady-state duty cycle including an idle mode and four modes lying on 
a propeller curve with an exponent of 2.5, as shown in Appendix II to 
part 1045 of the draft regulations. The International Organization for 
Standardization (ISO) intended for this cycle to be used for 
recreational spark-ignition marine engines installed in vessels up to 
24 m in length. Because most or all vessels over 24 m have diesel 
engines, we believe the E4 duty cycle is most appropriate for SD/I 
engines covered by this rule. There may be some spark-ignition engines 
installed in vessels somewhat longer than 24 m, but we believe the E4 
duty cycle is no less appropriate in these cases. See Section IV.D for 
a discussion of adjustments to the test procedures related to the 
migration to 40 CFR part 1065, testing with a ramped-modal cycle, 
determining maximum test speed for denormalizing the duty cycle, and 
testing at higher altitudes.
    The E4 duty cycle is gives a weighting of 40 percent for idle. 
High-performance engine manufacturers have expressed their belief that 
the E4 duty cycle overstates the idle fraction of operation of high-
performance engines. They stated that these engines are rarely operated 
at idle and are therefore primarily designed for mid-range and high-
power operation at the expense of rough idle operation. We request 
comment on whether the modes for the proposed duty cycle should be 
reweighted toward higher power for high-performance engines. Commenters 
should support their assertions with data on high-performance engine 
use. If constructive data are forthcoming, we may finalize an 
alternative cycle weighting for high-performance engines based on this 
data.
(2) Not-to-Exceed Test Procedures and Standards
    We are proposing not-to-exceed (NTE) requirements similar to those 
established for marine diesel engines. Engines would be required to 
meet the NTE standards during normal in-use operation. We request 
comment on applying the proposed NTE requirements to spark-ignition 
marine engines and on the application of the requirements to these 
engines.
(a) Concept
    Our goal is to achieve control of emissions over a wide range of 
ambient conditions and over the broad range of in-use speed and load 
combinations that can occur on a marine engine. This would ensure real-
world emission control, rather than just controlling emissions under 
certain laboratory conditions. An important tool for achieving this 
goal is an in-use testing program with an objective standard and an 
easily implemented test procedure. Our traditional approach has been to 
set a numerical standard on a specified test procedure and rely on the 
additional prohibition of defeat devices to ensure in-use control over 
a broad range of operation not included in the test procedure.
    We are proposing to apply the same prohibition on defeat devices 
for OB/PWC and SD/I engines (see Sec.  1045.115).
    No single test procedure or test cycle can cover all real-world 
applications, operations, or conditions. Yet to ensure that emission 
standards are providing the intended benefits in use, we must have a 
reasonable expectation that emissions under real-world conditions 
reflect those measured on the test procedure. The defeat device 
prohibition is designed to ensure that emission controls are employed 
during real-world operation, not just under laboratory testing 
conditions. However, the defeat device prohibition is not a quantified 
standard and does not have an associated test procedure, so it does not 
have the clear objectivity and ready enforceability of a numerical 
standard and test procedure. We believe using the traditional approach, 
i.e., using only a standardized laboratory test procedure and test 
cycle, makes it difficult to ensure that engines will operate with the 
same level of control in use as in the laboratory.
    Because the proposed duty cycle uses only five modes on an average 
propeller curve to characterize marine engine operation, we are 
concerned that an engine designed to the proposed duty cycle would not 
necessarily perform the same way over the range of speed and load 
combinations seen on a boat. This proposed duty cycle is based on an 
average propeller curve, but a marine propulsion engine may never be 
fitted with an ``average propeller.'' For instance, an engine fit to a 
specific boat may operate differently based on how heavily the boat is 
loaded.
    To ensure that engines control emissions over the full range of 
speed and load combinations seen on boats, we propose to establish a 
zone under the engine's power curve where the engine may not exceed a 
specified emission limit (see Sec.  1045.105 and Sec.  1045.515). This 
limit would apply to all regulated pollutants during steady-state 
operation. In addition, we propose that a wide range of real ambient 
conditions be included in testing with this NTE zone. The NTE zone, 
limit, and ambient conditions are described below.
    We believe there are significant advantages to establishing NTE 
standards. The proposed NTE test procedure is flexible, so it can 
represent the majority of in-use engine operation and ambient 
conditions. The NTE approach thus takes all the benefits of a numerical 
standard and test procedure and expands it to cover a broad range of 
conditions. Also, laboratory testing makes it harder to perform in-use 
testing because either the engines would have to be removed from the 
vessel or care would have to be taken to achieve laboratory-type 
conditions on the vessel. With the NTE approach, in-use testing and 
compliance become much easier since emissions may be sampled during 
normal boating. By establishing an objective measurement, this approach 
makes enforcement of defeat device provisions easier and provides more 
certainty to the industry.
    Even with the NTE requirements, we believe it is still appropriate 
to retain standards based on the steady-state duty cycle. This is the 
standard that we expect the certified marine engines to meet on average 
in use. The NTE testing is focused more on maximum emissions for 
segments of operation and, in most cases, would not require additional 
technology beyond what is used to meet the proposed standards. In some 
cases, the calibration of the engine may need to be adjusted. We 
believe that basing the emission standards on a distinct cycle and 
using the NTE zone to ensure in-use control creates a comprehensive 
program.
    We believe the technology used to meet the standards over the five-
mode duty cycle will meet the caps that apply across the NTE zone. We 
therefore do not expect the proposed NTE standards to cause 
manufacturers to need additional technology. We believe the NTE 
standard will not result in a large amount of additional testing, 
because these engines should be designed to perform as well in use as 
they do over the five-mode test. However, our cost analysis in the 
Draft RIA accounts for some additional testing, especially in the early 
years, to provide

[[Page 28122]]

manufacturers with assurance that their engines would meet the proposed 
NTE requirements.
(b) Shape of NTE Zone
    Figure III-1 illustrates our proposed NTE zone for SD/I engines. We 
developed this zone based on the range of conditions that these engines 
typically see in use. Manufacturers collected data on several engines 
installed on vessels and operated under light and heavy load. Chapter 4 
of the Draft RIA presents this data and describes the development of 
the boundaries and conditions associated with the proposed NTE zone. 
Although significant in-use engine operation occurs at low speeds, we 
are excluding operation below 40 percent of maximum test speed because 
brake-specific emissions increase dramatically as power approaches 
zero. An NTE limit for low-speed or low-power operation would be very 
hard for manufacturers and EPA to implement in a meaningful way. We are 
proposing NTE limits for the subzones shown in Figure III-1, as 
described below. We request comment on the proposed NTE zone and 
subzones.
[GRAPHIC] [TIFF OMITTED] TP18MY07.000

    We propose to allow manufacturers to request approval for 
adjustments to the size and shape of the NTE zone for certain engines, 
if they can show that the engine will not see operation outside of the 
revised NTE zone in use (see Sec.  1045.515). We would not want 
manufacturers to go to extra lengths to design and test their engines 
to control emissions for operation that will not occur in use. However, 
manufacturers would still be responsible for all operation of an engine 
on a vessel that would reasonably be expected to be seen in use, and 
they would be responsible for ensuring that their specified operation 
is indicative of real-world operation. In addition, if a manufacturer 
designs an engine for operation at speeds and loads outside of the 
proposed NTE zone, the manufacturer would be responsible for notifying 
us so the NTE zone can be modified appropriately to include this 
operation for that engine family.
(c) Excluded Operation
    As with marine diesel engines, we are proposing that only steady-
state operation be included for NTE testing (see Sec.  1045.515). 
Steady-state operation would generally mean setting the throttle (or 
speed control) in a fixed position. We believe most operation with 
Marine SI engines involves nominally steady-state operator demand. It 
is true that boats often experience rapid accelerations, such as with 
water skiing. However, boats are typically designed for planing 
operation at relatively high speeds. This limits the degree to which we 
would expect engines to experience frequent accelerations during 
extended operation. Also, because most of the transient events involve 
acceleration from idle to reach a planing condition, most transient 
engine operation is outside the NTE zone and would therefore not be 
covered by NTE testing anyway. Moreover, we believe OB/PWC and SD/I 
engines designed to comply with steady-state NTE requirements will be 
using technologies that also work effectively under the changing speed 
and load conditions that may occur. If we find there is substantial 
transient operation within the NTE zone that causes significantly 
increased emissions from installed engines, we will revisit

[[Page 28123]]

this provision in the future. We request comment on the appropriateness 
of excluding transient operation from NTE requirements.
    We are aware that SD/I engines may not be able to meet emission 
standards under all conditions, such as times when emission control 
must be compromised for startability or safety. We are proposing to 
specify that NTE testing excludes engine starting and warm-up. We would 
allow manufacturers to design their engines to utilize engine 
protection strategies that would not be covered by defeat device 
provisions or NTE standards. This is analogous to the tampering 
exemptions incorporated into 40 CFR 1068.101(b)(1) to address 
emergencies. We believe it is appropriate to allow manufacturers to 
design their engines with ``limp-home'' capabilities to prevent a 
scenario where an engine fails to function, leaving an operator on the 
water without any means of propulsion.
(d) NTE Emission Limits
    We are proposing NTE limits for the subzones shown in Figure III-1 
above based on data collected from several SD/I engines equipped with 
catalysts. These data and our analysis are presented in Chapter 4 of 
the Draft RIA. See Section IV.C for a discussion of NTE limits for OB/
PWC engines.
    Because the proposed NTE zone does not include the idle point, 
which is weighted at 40 percent of the certification duty cycle, brake-
specific emissions throughout most of the proposed NTE zone are less 
than the weighted average from the steady-state testing. For most of 
the NTE zone, we are therefore proposing a limit equal to the duty 
cycle standard (i.e., NTE multiplier = 1.0). However, data on low-
emission engines show that brake-specific emissions increase for engine 
speeds below 50 percent of maximum test speed (Subzone 4). We are 
therefore proposing an HC+NOX cap of 1.5 times the 
certification level in Subzone 4. Emission data on catalyst-equipped 
engines also show higher emissions near full-power operation. We 
understand that richer air-fuel ratios are needed under high-power 
operation to protect the engines from overheating. We are therefore 
proposing higher NTE limits for engine speeds at or above 90 percent of 
rated test speed and at or above 100 percent of peak torque measured at 
the rated test speed (Subzone 1). Specifically, we are proposing an 
HC+NOX cap of 1.5 times the duty cycle standard and a CO cap 
of 3.5 times the duty cycle standard for Subzone 1. We request comment 
on the proposed NTE limits for SD/I engines. These limits are 
summarized in Table III-1.

                          Table III-1.--Proposed NTE Limits by Subzone for SD/I Engines
----------------------------------------------------------------------------------------------------------------
                    Pollutant                        Subzone 1       Subzone 2       Subzone 3       Subzone 4
----------------------------------------------------------------------------------------------------------------
HC+NOX..........................................             1.5             1.0             1.0             1.5
CO..............................................             3.5             1.0             1.0             1.0
----------------------------------------------------------------------------------------------------------------

    SD/I engine manufacturers have begun developing prototype engines 
with catalysts, and one manufacturer is currently selling SD/I engines 
equipped with catalysts. These manufacturers have indicated that they 
begin moving to richer air-fuel ratio calibrations at torque values 
greater than 80 percent of maximum. These richer air-fuel ratios give 
more power but because more fuel is burned also lead to higher 
hydrocarbon and carbon monoxide emission rates. Part of the 
manufacturers' rationale in selecting the appropriate air-fuel ratio in 
this type of operation is to protect the engine by minimizing excess 
air, which would lead to greater engine temperatures as increased 
combustion of fuel and exhaust gases. To avoid the adverse effects of 
this potential for overheating, we request comment on whether subzone 1 
should be expanded to accommodate the engine-protection strategies 
needed for SD/I engines at high power. In addition, we request comment 
on the proposed NTE limits in subzone 1 with respect to open-loop 
engine operation, especially for carbon monoxide.
    Marine engine manufacturers have suggested alternative approaches 
to setting NTE limits for marine engines, which are discussed in 
Section IV.C.2. Largely, these suggestions have been made to address 
the emission variability between test modes seen in direct-injection 
two-stroke outboard and PWC engines. However, we request comment on 
alternative approaches for SD/I engines as well.
(e) Ambient Conditions
    Variations in ambient conditions can affect emissions. Such 
conditions include air temperature, water temperature, and barometric 
pressure, and humidity. We are proposing to apply the comparable ranges 
for these variables as for marine diesel engines (see Sec.  1045.515). 
Within the ranges, there is no calculation to correct measured 
emissions to standard conditions. Outside of the ranges, emissions 
could be corrected back to the nearest end of the range using good 
engineering practice. The proposed ranges are 13 to 35 [deg]C (55 to 95 
[deg]F) for ambient air temperature, 5 to 27 [deg]C (41 to 80 [deg]F) 
for ambient water temperature, and 94.0 to 103.325 kPa for atmospheric 
pressure. We do not specify a range of humidity values, but propose 
only to require that laboratory testing be conducted at humidity levels 
representing in-use conditions.
(f) Measurement Methods
    While it may be easier to test outboard engines in the laboratory, 
there is a strong advantage to using portable measurement equipment to 
test SD/I engines and personal watercraft without removing the engine 
from the vessel. Field testing would also provide a much better means 
of measuring emissions to establish compliance with the NTE standards, 
because it is intended to ensure control of emissions during normal in-
use operation that may not occur during laboratory testing over the 
specified duty cycle. We propose to apply the field testing provisions 
for all SD/I engines. These field-testing procedures are described 
further in Section IV.E.2.d. We request comment on any ways the field 
testing procedures should be modified to address the unique operating 
characteristics of marine engines.
    A parameter to consider is the minimum sampling time for field 
testing. A longer period allows for greater accuracy, due mainly to the 
smoothing effect of measuring over several transient events. On the 
other hand, an overly long sampling period can mask areas of engine 
operation with poor emission control characteristics. To balance these 
concerns, we are applying a minimum sampling period of 30 seconds. This 
is consistent with the requirement for marine diesel engines. Spark-
ignition engines generally don't have turbochargers and they control 
emissions largely by maintaining air-fuel ratio. Spark-ignition engines 
are therefore much less prone to consistent

[[Page 28124]]

emission spikes from off-cycle or unusual engine operation. We believe 
the minimum 30 second sampling time will ensure sufficient measurement 
accuracy and will allow for meaningful measurements.
    We do not specify a maximum sampling time. We expect manufacturers 
testing in-use engines to select an approximate sampling time before 
measuring emissions; however, the standards apply for any sampling time 
that meets the minimum.
(g) Certification
    We propose to require that manufacturers state in their application 
for certification that their engines will comply with the NTE standards 
under any nominally steady-state combination of speeds and loads within 
the proposed NTE zone (see Sec.  1045.205). The manufacturer would also 
provide a detailed description of all testing, engineering analysis, 
and other information that forms the basis for the statement. This 
statement would be based on testing and, if applicable, other research 
that supports such a statement, consistent with good engineering 
judgment. We would be able to review the basis for this statement 
during the certification process. For marine diesel engines, we have 
provided guidance that manufacturers may demonstrate compliance with 
NTE standards by testing their engines at a number of standard points 
throughout the NTE zone. In addition, manufacturers must test at a few 
random points chosen by EPA prior to the testing. We request comment on 
this approach for Marine SI engines.

E. Additional Certification and Compliance Provisions

(1) Production Line Testing
    We are proposing to require that manufacturers routinely test 
engines at the point of production to ensure that production 
variability does not affect the engine family's compliance with 
emission standards (see part 1045, subpart D). These proposed testing 
requirements are the same as we are proposing for outboard and personal 
watercraft engines and are very similar to those already in place in 
part 91. See Section VII.C.7 and the draft regulations for a detailed 
description of these requirements. We may also require manufacturers to 
perform production line testing under the selective enforcement 
auditing provisions described in Section VIII.E.
(2) In-Use Testing
    Manufacturers of OB/PWC engines have been required to test in-use 
engines to show that they continue to meet emission standards. We 
contemplated a similar requirement for SD/I engines, but have decided 
not to propose a requirement for a manufacturer-run in-use testing 
program at this time. Manufacturers have pointed out that it would be 
very difficult to identify a commercial fleet of boats that could be 
set up to operate for hundreds of hours, because it is very uncommon 
for commercial operators to have significant numbers of SD/I vessels. 
Where there are commercial fleets of vessels that may be conducive to 
accelerated in-use service accumulation, these vessels generally use 
outboard engines. Manufacturers could instead hire drivers to operate 
the boats, but this may be cost-prohibitive. We request comment on any 
other alternative approaches that might be available for accumulating 
operating hours with SD/I engines. For example, to the extent that boat 
builders maintain a fleet of boats for product development or 
employees' recreational use, those engines may be available for 
emission testing after in-use operation.
    There is also a question about access to the engines for testing. 
If engines need to be removed from vessels for testing in the 
laboratory, it is unlikely that owners would cooperate. However, we are 
proposing test procedures with specified portable equipment that would 
potentially allow for testing engines that remain installed in boats. 
This is described in Section IV.E.2.d.
    While we are not proposing a program to require manufacturers to 
routinely test in-use engines, the Clean Air Act allows us to perform 
our own testing at any time with in-use engines to evaluate whether 
they continue to meet emission standards throughout the useful life. 
This may involve either laboratory testing or in-field testing with 
portable measurement equipment. For laboratory tests, we could evaluate 
compliance with either the duty cycle standards or the not-to-exceed 
standards. For testing with engines that remain installed on marine 
vessels, we would evaluate compliance with the not-to-exceed standards. 
In addition, we may require the manufacturer to conduct a reasonable 
degree of testing under Clean Air Act section 208 if we have reason to 
believe that an engine family does not conform to the regulations. This 
testing may take the form of a Selective Enforcement Audit, or we may 
require the manufacturer to test in-use engines.
(3) Certification Fees
    Under our current certification program, manufacturers pay a fee to 
cover the costs for various certification and other compliance 
activities associated with implementing the emission standards. As 
explained below, we are proposing to assess EPA's compliance costs 
associated with SD/I engines based on EPA's existing fees regulation. 
Section VI describes our proposal to establish a new fees category, 
based on the cost study methodology used in establishing EPA's existing 
fees regulation, for costs related to the proposed evaporative emission 
standards for both vessels and equipment that would be subject to 
standards under this proposal.
    EPA established a fee structure by grouping together various 
manufacturers and industries into fee categories, with an explanation 
that separation of industries into groups was appropriate to tailor the 
applicable fee to the level of effort expected for EPA to oversee the 
range of certification and compliance responsibilities (69 FR 26222, 
May 11, 2004). As part of this process, EPA conducted a cost analysis 
to determine the various compliance activities associated with each fee 
category and EPA's associated annual cost burden. Once the total EPA 
costs were determined for each fee category, the total number of 
certificates involved within a fee category was added together and 
divided into the total costs to determine the appropriate assessment 
for each anticipated certificate.\77\ One of the fee categories created 
was for ``Other Engines and Vehicles,'' which includes marine engines 
(both compression-ignition and spark-ignition), nonroad spark-ignition 
engines (above and below 19 kW), locomotive engines, recreational 
vehicles, heavy-duty evaporative systems, and heavy-duty engines 
certified only for sale in California. These engine and vehicle types 
were grouped together because EPA planned a more basic certification 
review than, for example, light-duty vehicles.
---------------------------------------------------------------------------

    \77\ See Cost Analysis Document at p. 21 associated with the 
proposed fees rule (http://www.epa.gov/otaq/fees.htm).
---------------------------------------------------------------------------

    EPA determined in the final fees rulemaking that it would be 
premature to assess fees for the SD/I engines since they were not yet 
subject to emission standards. The fee calculation nevertheless 
includes a projection that there will eventually be 25 certificates of 
conformity annually for SD/I engines. We are proposing to now formally 
include SD/I engines in the ``Other Engines and Vehicles'' category and

[[Page 28125]]

assess a fee of $839 for each certificate of conformity in 2006. Note 
that we will continue to update assessed fees each year, so the actual 
fee in 2009 and later model years will depend on these annual 
calculations (see Sec.  1027.105).
(4) Special Provisions Related to Partially Complete Engines
    It is common practice for Marine SI engines for one company to 
produce the base engine for a second company to modify for the final 
application. Since our regulations prohibit the sale of uncertified 
engines, we are proposing provisions to clarify the status of these 
engines and defining a path by which these engines can be handled 
without violating the regulations. See Section XI for more information.
(5) Use of Engines Already Certified to Other Programs
    In some cases, manufacturers may want to use engines already 
certified under our other programs. Engines certified to the emission 
standards for highway applications in part 86 or Large SI applications 
in part 1048 are meeting more stringent standards. We are therefore 
proposing to allow the pre-existing certification to be valid for 
engines used in marine applications, on the condition that the engine 
is not changed from its certified configuration in any way (see Sec.  
1045.605). Manufacturers would need to demonstrate that fewer than five 
percent of the total sales of the engine model are for marine 
applications. There are also a few minor notification and labeling 
requirements to allow for EPA oversight of this provision.
(6) Import-Specific Information at Certification
    We are proposing to require additional information to improve our 
ability to oversee compliance related to imported engines (see Sec.  
1045.205). In the application for certification, we are proposing to 
require the following additional information: (1) The port or ports at 
which the manufacturer will import the engines, (2) the names and 
addresses of the agents the manufacturer has authorized to import the 
engines, and (3) the location of the test facilities in the United 
States where the manufacturer will test the engines if we select them 
for testing under a selective enforcement audit.

F. Small-Business Provisions

(1) Small Business Advocacy Review Panel
    On June 7, 1999, we convened a Small Business Advocacy Review Panel 
under section 609(b) of the Regulatory Flexibility Act as amended by 
the Small Business Regulatory Enforcement Fairness Act of 1996. The 
purpose of the Panel was to collect the advice and recommendations of 
representatives of small entities that could be affected by this 
proposed rule and to report on those comments and the Panel's findings 
and recommendations as to issues related to the key elements of the 
Initial Regulatory Flexibility Analysis under section 603 of the 
Regulatory Flexibility Act. We convened a Panel again on August 17, 
2006 to update our review for this new proposal. The Panel reports have 
been placed in the rulemaking record for this proposal. Section 609(b) 
of the Regulatory Flexibility Act directs the review Panel to report on 
the comments of small entity representatives and make findings as to 
issues related to identified elements of an initial regulatory 
flexibility analysis (IRFA) under RFA section 603. Those elements of an 
IRFA are:
     A description of, and where feasible, an estimate of the 
number of small entities to which the proposed rule will apply;
     A description of projected reporting, recordkeeping, and 
other compliance requirements of the proposed rule, including an 
estimate of the classes of small entities that will be subject to the 
requirements and the type of professional skills necessary for 
preparation of the report or record;
     An identification, to the extent practicable, of all 
relevant Federal rules that may duplicate, overlap, or conflict with 
the proposed rule; and
     A description of any significant alternative to the 
proposed rule that accomplishes the stated objectives of applicable 
statutes and that minimizes any significant economic impact of the 
proposed rule on small entities.
    In addition to the EPA's Small Business Advocacy Chairperson, the 
Panel consisted of the Director of the Assessment and Standards 
Division of the Office of Transportation and Air Quality, the 
Administrator of the Office of Information and Regulatory Affairs 
within the Office of Management and Budget, and the Chief Counsel for 
Advocacy of the Small Business Administration.
    Using definitions provided by the Small Business Administration 
(SBA), companies that manufacture internal-combustion engines and that 
employ fewer than 1000 employees are considered small businesses for a 
Small Business Advocacy Review (SBAR) Panel. Equipment manufacturers, 
boat builders, and fuel system component manufacturers that employ 
fewer than 500 people are considered small businesses for the SBAR 
Panel. Based on this information, we asked 25 companies that met the 
SBA small business thresholds to serve as small entity representatives 
for the duration of the Panel process. Of these 25 companies, 13 were 
involved in the marine industry. These companies represented a cross-
section of SD/I engine manufacturers, boat builders, and fuel system 
component manufacturers.
    With input from small entity representatives, the Panel reports 
provide findings and recommendations on how to reduce potential burden 
on small businesses that may occur as a result of this proposed rule. 
The Panel reports are included in the rulemaking record for this 
proposal. In light of the Panel reports, and where appropriate, the 
agency has made changes to the provisions anticipated for the proposed 
rule. The proposed options recommended to us by the Panel are described 
below.
(2) Proposed Burden Reduction Approaches for Small-Volume SD/I Engine 
Manufacturers
    We are proposing several options for small-volume SD/I engine 
manufacturers. For purposes of determining which engine manufacturers 
are eligible for the small business provisions described below for SD/I 
engine manufacturers, we are proposing criteria based on a production 
cut-off of 5,000 SD/I engines per year. Under this approach, we would 
allow engine manufacturers that exceed the production cut-off level 
noted above to request treatment as a small business if they have fewer 
than the number of employees specified above. In such a case, the 
manufacturer would provide information to EPA demonstrating the number 
of employees in their employ. The proposed options would be used at the 
manufacturers' discretion. We request comment on the appropriateness of 
these options, which are described in detail below.
(a) Additional Lead Time
    One small business marine engine manufacturer is already using 
catalytic converters on some of its production SD/I marine engines 
below 373 kW. These engines have been certified to meet standards 
adopted by California ARB that are equivalent to the proposed 
standards. However, other small businesses producing SD/I engines have 
stated that they are not as far along in their catalyst development 
efforts. These manufacturers support the concept of receiving 
additional time for

[[Page 28126]]

compliance, beyond the implementation date for large manufacturers.
    High-performance SD/I engine manufacturers are typically smaller 
businesses than other SD/I engine manufacturers. The majority of high-
performance engine manufacturers produce fewer than 100 engines per 
year for sale in the United States, and some produce only a few engines 
per year. Due to these very low sales volumes, additional lead time may 
be useful to the manufacturers to help spread out the compliance 
efforts and costs.
    As recommended in the SBAR Panel report, EPA is proposing an 
implementation date of 2011 for SD/I engines below 373 kW produced by 
small business marine engine manufacturers and a date of 2013 for small 
business manufacturers of high-performance (at or above 373 kW) marine 
engines (see Sec.  1045.145). As discussed earlier, we have requested 
comment on alternative non-catalyst based standard of 22 g/kW-hr for 
high-performance SD/I marine engines. In the case of an alternative 
non-catalyst based standard, less lead time may be necessary. EPA 
requests comments on the proposed additional lead time in the 
implementation of the proposed SD/I exhaust emission standards for 
small businesses.
(b) Exhaust Emission ABT
    As discussed above, we are proposing an averaging, banking, and 
trading (ABT) credit program for exhaust emissions from SD/I marine 
engines (see part 1045, subpart H). Small businesses expressed some 
concern that ABT could give a competitive advantage to large 
businesses. Specifically, there was an equity concern that if credits 
generated by SD/I engines below 373 kW could be used for high-
performance SD/I engines, that one large manufacturer could use these 
credits to meet the high-performance SD/I engine standards without 
making any changes to their engines. EPA requests comment on the 
desirability of credit trading between high-performance and other SD/I 
marine engines and the impact it could have on small businesses.
(c) Early Credit Generation for ABT
    The SBAR Panel recommended an early banking program and expressed 
belief that bonus credits will provide greater incentive for more small 
business engine manufacturers to introduce advanced technology earlier 
across the nation than would otherwise occur. As discussed above, we 
are proposing an early banking program in which bonus credits could be 
earned for certifying early (see Sec.  1045.145). This program, 
combined with the additional lead time for small businesses, would give 
small-volume SD/I engine manufacturers ample opportunity to bank 
emission credits prior to the proposed implementation date of the 
standards.
(d) Assigned Emission Rates for High-Performance SD/I Engines
    Small businesses commented that certification may be too costly to 
amortize effectively over the small sales volumes for high-performance 
SD/I engines. One significant part of certification costs is engine 
testing. This includes testing for emissions over the specified duty 
cycle, deterioration testing, and not to exceed (NTE) zone testing. 
Even in the case where an engine manufacturer is using emission credits 
to comply with the standard, the manufacturer would still need to test 
engines to calculate how many emission credits are needed. One way of 
minimizing this testing burden would be to allow manufacturers to use 
assigned baseline emission rates for certification based on previously 
generated emission data. As discussed earlier in this preamble, we are 
proposing assigned baseline HC+NOX and CO emission rates for 
all high-performance SD/I engines. These assigned emission rates are 
based on test data presented in Chapter 4 of the Draft RIA.
(e) Alternative Standards for High-Performance SD/I Engines
    Small businesses expressed concern that catalysts have not been 
demonstrated on high-performance engines and that they may not be 
practicable for this application. In addition, the concern was 
expressed that emission credits may not be available at a reasonable 
price. As discussed earlier, we are requesting comment on the need for 
and level of alternative standards for high-performance marine engines.
    The proposed NTE standards discussed above would likely require 
additional certification and development testing. The SBAR Panel 
recommended that NTE standards not apply to any high-performance SD/I 
engines, as it would minimize the costs of compliance testing for small 
businesses. For these reasons, we are not proposing to apply NTE 
standards to high-performance SD/I engines (See Sec.  1045.105).
(f) Broad Engine Families for High-Performance SD/I Engines
    Testing burden could be reduced by using broader definitions of 
engine families. Typically in EPA engine and equipment programs, 
manufacturers are able to group their engine lines into engine families 
for certification to the standards. Engines in a given family must have 
many similar characteristics including the combustion cycle, cooling 
system, fuel system, air aspiration, fuel type, aftertreatment design, 
number of cylinders and cylinder bore sizes. A manufacturer would then 
perform emission tests only on the engine in that family that would be 
most likely to exceed an emission standard. We are proposing to allow 
small businesses to group all of their high performance SD/I engines 
into a single engine family for certification, subject to good 
engineering judgment (see Sec.  1045.230).
(g) Simplified Test Procedures for High-Performance SD/I Engines
    Existing testing requirements include detailed specifications for 
the calibration and maintenance of testing equipment and tolerances for 
performing the actual tests. For laboratory equipment and testing, 
these specifications and tolerances are intended to achieve the most 
repeatable results feasible given testing hardware capabilities. For 
in-use testing, EPA allows for different equipment than is specified 
for the laboratory and with arguably less restrictive specifications 
and tolerances. The purpose of separate requirements for in-use testing 
is to account for the variability inherent in testing outside of the 
laboratory. These less restrictive specifications allow for lower cost 
emission measurement devices, such as portable emission measurement 
units. For high performance SD/I engines, it may be difficult to hold 
the engine at idle or high power within the tolerances currently 
specified by EPA in the laboratory test procedure. Therefore, we are 
proposing less restrictive specifications and tolerances, for testing 
high performance SD/I engines, which would allow the use of portable 
emission measurement equipment (see Sec.  1065.901(b)). This would 
facilitate less expensive testing for these small businesses without 
having a negative effect on the environment.
(h) Reduced Testing Requirements
    We are proposing that small-volume engine manufacturers may rely on 
an assigned deterioration factor to demonstrate compliance with the 
standards for the purposes of certification rather than doing service 
accumulation and additional testing to measure deteriorated emission 
levels at the end of the regulatory useful life (see Sec.  1045.240). 
EPA is not proposing actual

[[Page 28127]]

levels for the assigned deterioration factors with this proposal. EPA 
intends to analyze available emission deterioration information to 
determine appropriate deterioration factors for SD/I engines. The data 
will likely include durability information from engines certified to 
California ARB's standards and may also include engines certified early 
to EPA's standards. Prior to the implementation date for the SD/I 
standards, EPA will provide guidance to engine manufacturers specifying 
the levels of the assigned deterioration factors for small-volume 
engine manufacturers.
    We are also proposing that small-volume engine manufacturers would 
be exempt from the production-line testing requirements (see Sec.  
1045.301). While we are proposing to exempt small-volume engine 
manufacturers from production line testing, we believe requiring 
limited production-line testing could be beneficial to implement the 
ongoing obligation to ensure that production engines are complying with 
the standards. Therefore, we request comment on the alternative of 
applying limited production-line testing to small-volume engine 
manufacturers with a requirement to test one production engine per 
year.
(i) Hardship Provisions
    We are proposing two types of hardship provisions for SD/I engine 
manufacturers consistent with the Panel recommendations. The first type 
of hardship is an unusual circumstances hardship, which would be 
available to all businesses regardless of size. The second type of 
hardship is an economic hardship provision, which would be available to 
small businesses only. Sections VIII.C.8 and VIII.C.9 provide a 
description of the proposed hardship provisions that would apply to SD/
I engine manufacturers.
    Because boat builders in many cases will depend on engine 
manufacturers to supply certified engines in time to produce complying 
boats, we are also proposing a hardship provision for all boat 
builders, regardless of size, that would allow the builder to request 
more time if they are unable to obtain a certified engine and they are 
not at fault and would face serious economic hardship without an 
extension (see Sec.  1068.255). Section VIII.C.10 provides a 
description of the proposed hardship provisions that would apply to 
boat builders.

G. Technological Feasibility

(1) Level of Standards
    Over the past few years, developmental programs have demonstrated 
the capabilities of achieving significant reductions in exhaust 
emissions from SD/I engines. California ARB has acted on this 
information to set an HC+NOX emission standard of 5 g/kW-hr 
for SD/I engines, starting in 2008. Chapter 4 of the Draft RIA presents 
data from several SD/I engines with catalysts packaged within water-
cooled exhaust manifolds. Four of these engines were operated with 
catalysts in vessels for 480 hours. The remaining engines were tested 
with catalysts that had been subjected to a rapid-aging cycle in the 
laboratory. Data from these catalyst-equipped engines generally show 
emission levels below the proposed standards.
(2) Implementation Dates
    We anticipate that manufacturers will use the same catalyst designs 
to meet the proposed standards that they will use to meet the 
California ARB standards for SD/I engines in 2008. We believe a 
requirement to extend the California standards nationwide after a one-
year delay allows manufacturers adequate time to incorporate catalysts 
across their product lines. Once the technology is developed for use in 
California, it would be available for use nationwide. In fact, one 
company currently certified to the California standards is already 
offering catalyst-equipped SD/I engines nationwide. As discussed above, 
we request comment on the effect that anticipated product changes for 
specific General Motors engine blocks may have on the proposed 
implementation dates.
(3) Technological Approaches
    Engine manufacturers can adapt readily available technologies to 
control emissions from SD/I engines. Electronically controlled fuel 
injection gives manufacturers more precise control of the air/fuel 
ratio in each cylinder, thereby giving them greater flexibility in how 
they calibrate their engines. With the addition of an oxygen sensor, 
electronic controls give manufacturers the ability to use closed-loop 
control, which is especially valuable when using a catalyst. In 
addition, manufacturers can achieve HC+NOX reductions 
through the use of exhaust gas recirculation. However, the most 
effective technology for controlling emissions is a three-way catalyst 
in the exhaust stream.
    In SD/I engines, the exhaust manifolds are water-jacketed and the 
water mixes with the exhaust stream before exiting the vessel. 
Manufacturers add a water jacket to the exhaust manifold to meet 
temperature-safety protocol. They route this cooling water into the 
exhaust to protect the exhaust couplings and to reduce engine noise. 
Catalysts must therefore be placed upstream of the point where the 
exhaust and water mix--this ensures the effectiveness and durability of 
the catalyst. Because the catalyst must be small enough to fit in the 
exhaust manifold, potential emission reductions are not likely to 
exceed 90 percent, as is common in land-based applications. However, as 
discussed in Chapter 4 of the Draft RIA, demonstration programs have 
shown that emissions may be reduced by 70 to 80 percent for 
HC+NOX and 30 to 50 percent for CO over the proposed test 
cycle. Larger reductions, especially for CO, have been achieved at 
lower-speed operation.
    There have been concerns that aspects of the marine environment 
could result in unique durability problems for catalysts. The primary 
aspects that could affect catalyst durability are sustained operation 
at high load, saltwater effects on catalyst efficiency, and thermal 
shock from cold water coming into contact with a hot catalyst. Modern 
catalysts perform well at temperatures up to 1100[deg] C, which is much 
higher than would be seen in a marine exhaust manifold. These catalysts 
have also been shown to withstand the thermal shock of being immersed 
in water. More detail on catalyst durability is presented in the Draft 
RIA. In addition, use of catalysts in automotive, motorcycle, and 
handheld equipment has shown that catalysts can be packaged to 
withstand vibration in the exhaust manifold.
    Manufacturers already strive to design their exhaust systems to 
prevent water from reaching the exhaust ports. If too much water 
reaches the exhaust ports, significant durability problems would result 
from corrosion or hydraulic lock. As discussed in the Draft RIA, 
industry and government worked on a number of cooperative test programs 
in which several SD/I engines were equipped with catalysts and 
installed in vessels to prove out the technology. Early in the 
development work, a study was performed on an SD/I engine operating in 
a boat to see if water was entering the part of the manifold where 
catalysts would be installed. Although some water was collected in the 
exhaust manifold, it was found that this water came from water vapor 
that condensed out of the combustion products. This was easily 
corrected using a thermostat

[[Page 28128]]

to prevent overcooling from the water jacket.
    Four SD/I engines equipped with catalysts were operated in vessels 
for 480 hours on fresh water. This time period was intended to 
represent the full expected operating life of a typical SD/I engine. No 
significant deterioration was observed on any of these catalysts, nor 
was there any evidence of water reaching the catalysts. In addition, 
the catalysts were packaged such that the exhaust system met industry 
standards for maximum surface temperatures.
    Testing has been performed on one engine in a vessel on both fresh 
water and saltwater over a test protocol designed by industry to 
simulate the worst-case operation for water reversion. No evidence was 
found of water reaching the catalysts. After the testing, the engine 
had emission rates below the proposed HC+NOX standard. We 
later engaged in a test program to evaluate three additional engines 
with catalysts in vessels operating on saltwater for extended periods. 
Early in the program, two of the three manifolds experienced corrosion 
in the salt-water environment resulting in water leaks and damage to 
the catalyst. These manifolds were rebuilt with guidance from experts 
in the marine industry and additional hours have been accumulated on 
the boats. Although the accumulated hours are well below the 480 hours 
performed on fresh water, the operation completed has shown no visible 
evidence of water reversion or damage to the catalysts.
    One SD/I engine manufacturer began selling engines equipped with 
catalysts in Summer 2006. They have certified their engines to the 
California ARB standards, and are selling their catalyst-equipped 
engines nationwide. This manufacturer indicated that they have 
successfully completed durability testing, including extended in-use 
testing on saltwater. Other manufacturers have indicated that they will 
have catalyst-equipped SD/I engines for sale in California by the end 
of this year.
(4) Regulatory Alternatives
    In developing the proposed emission standards, we considered both 
what was achievable without catalysts and what could be achieved with 
larger, more efficient catalysts than those used in our test programs. 
Chapter 4 of the Draft RIA presents data on SD/I engines equipped with 
exhaust gas recirculation (EGR). HC+NOX emission levels 
below 10 g/kW-hr were achieved for each of the engines. CO emissions 
ranged from 25 to 185 g/kW-hr. We believe EGR would be a 
technologically feasible and cost-effective approach to reducing 
emissions from SD/I marine engines. However, we believe greater 
reductions could be achieved through the use of catalysts. We 
considered basing an interim standard on EGR, but were concerned that 
this would divert manufacturers' resources away from catalyst 
development and could have the effect of delaying emission reductions 
from this sector.
    Several of the marine engines with catalysts that were tested as 
part of the development of the proposed standards had HC+NOX 
emission rates in the 3-4 g/kW-hr range, even with consideration of 
expected in-use emissions deterioration associated with catalyst aging. 
However, we believe a standard of 5 g/kW-hr is still appropriate given 
the potential variability in in-use performance and in test data. The 
test programs described in Chapter 4 of the Draft RIA did not 
investigate larger catalysts for SD/I applications. The goal of the 
testing was to demonstrate catalysts that would work within the 
packaging constraints associated with water jacketing the exhaust and 
fitting the engines into engine compartments on boats. However, we did 
perform testing on engines equipped with both catalysts and EGR. These 
engines showed emission results in the 2-3 g/kW-hr range. We expect 
that these same reductions could be achieved more simply through the 
use of larger catalysts or catalysts with higher precious metal 
loading. Past experience indicates that most manufacturers will strive 
to achieve emission reductions well below the proposed standards to 
give them certainty that they will pass the standards in-use, 
especially as catalysts on SD/I engines are a new technology. 
Therefore, we do not believe it is necessary at this time to set a 
lower standard for these engines.
(5) Our Conclusions
    We believe the proposed 2009 exhaust emission standards for SD/I 
engines represent the greatest degree of emission reduction feasible in 
this time frame. Manufacturers could meet the proposed standards 
through the use of three-way catalysts packaged in the exhaust systems 
upstream of where the water and exhaust mix. One manufacture is already 
selling engines with this technology and by 2009 many other 
manufacturers will have experience in producing engines with catalysts 
for sale in California.
    As discussed in Section X, we do not believe the proposed standards 
would have negative effects on energy, noise, or safety and may lead to 
some positive effects.

IV. Outboard and Personal Watercraft Engines

A. Overview

    This section applies to spark-ignition outboard and personal 
watercraft (OB/PWC) marine engines and vessels. OB/PWC engines are 
currently required to meet the HC+NOX exhaust emissions and 
other related requirements under 40 CFR part 91. As a result of these 
standards, manufacturers have spent the last several years developing 
new technologies to replace traditional, carbureted, two-stroke engine 
designs. Many of these technologies are capable of emission levels well 
below the current standards. We are proposing new HC+NOX and 
CO exhaust emission standards for OB/PWC marine engines.
    For outboard and personal watercraft engines, the current emission 
standards regulate only HC+NOX emissions. As described in 
Section II, we are proposing in this notice to make the finding under 
Clean Air Act section 213(a)(3) that Marine SI engines cause or 
contribute to CO nonattainment in two or more areas of the United 
States.
    We believe manufacturers can use readily available technological 
approaches to design their engines to meet the proposed standards. In 
fact, as discussed in Chapter 4 of the Draft RIA, manufacturers are 
already producing several models of four-stroke engines and direction-
injection two-stroke engines that meet the proposed standards. The most 
important compliance step for the proposed standards will be to retire 
high-emitting designs that are still available and replace them with 
these cleaner engines. We are not proposing standards based on the use 
of catalytic converters in OB/PWC engines. While this may be an 
attractive technology in the future, we do not believe there has been 
sufficient development work on the application of catalysts to OB/PWC 
engines to use as a basis for standards at this time.
    Note that we are proposing to migrate the regulatory requirements 
for marine spark-ignition engines from 40 CFR part 91 to 40 CFR part 
1045. This gives us the opportunity to update the details of our 
certification and compliance program to be consistent with the 
comparable provisions that apply to other engine categories and 
describe regulatory requirements in plain language. Most of the change 
in regulatory text provides improved clarity without substantially 
changing procedures or compliance obligations. Where there is a change 
that warrants further attention, we describe the need for the change 
below.

[[Page 28129]]

B. Engines Covered by This Rule

(1) Definition of Outboard and Personal Watercraft Engines and Vessels
    The proposed standards are intended to apply to outboard marine 
engines and engines used to propel personal watercraft. We are 
proposing to change the existing definitions of outboard and personal 
watercraft to reflect this intent. The existing definitions of outboard 
engine and personal watercraft marine engine are presented below:
     Outboard engine is a Marine SI engine that, when properly 
mounted on a marine vessel in the position to operate, houses the 
engine and drive unit external to the hull of the marine vessel.
     Personal watercraft engine (PWC) is a Marine SI engine 
that does not meet the definition of outboard engine, inboard engine, 
or sterndrive engine, except that the Administrator in his or her 
discretion may classify a PWC as an inboard or sterndrive engine if it 
is comparable in technology and emissions to an inboard or sterndrive 
engine.
    With the proposed implementation of catalyst-based standards for 
sterndrive and inboard marine engines, we believe the above definitions 
could be problematic. Certain applications using SD/I engines and able 
to apply catalyst control would not be categorized as SD/I under the 
existing definitions in at least two cases. First, an airboat engine, 
which is often mounted well above the hull of the engine and used to 
drive an aircraft-like propeller could be misconstrued as an outboard 
engine. However, like traditional sterndrive and inboard engines, 
airboat engines are typically derived from automotive-based engines 
without substantial modifications for marine application. Airboat 
engines can use the same technologies that are available to sterndrive 
and inboard engines, so we believe they should be subject to the same 
standards. To address the concerns about classifying airboats, we are 
proposing to change the outboard definition to specify that the engine 
and drive unit be a single, self-contained unit that is designed to be 
lifted out of the water. This clarifies that air boats are not outboard 
engines; air boats do not have engines and drive units that are 
designed to be lifted out of the water. We are proposing the following 
definition:
     Outboard engine means an assembly of a spark-ignition 
engine and drive unit used to propel a marine vessel from a properly 
mounted position external to the hull of the marine vessel. An outboard 
drive unit is partially submerged during operation and can be tilted 
out of the water when not in use.
    Second, engines used on jet boats (with an open bay for passengers) 
have size, power, and usage characteristics that are very similar to 
sterndrive and inboard applications, but these engines may be the same 
as OB/PWC engines, rather than the marinized automotive engines 
traditionally used on sterndrive vessels. We believe classifying such 
engines as personal watercraft engines is inappropriate because it 
would subject the jet boats to less stringent emission standards than 
other boats with similar size and power characteristics. This different 
approach could lead to increased use of high-emitting engines in these 
vessels. Under the current regulations, engines powering jet boats 
could be treated as SD/I engines at the discretion of the Agency, 
because they are comparable in technology to conventional SD/I engines. 
We are proposing definitions that would explicitly exclude jet boats 
and their engines from being treated as personal watercraft engines or 
vessels. Instead, we are proposing to classify jet boat engines as SD/
I.
    The proposed definitions conform to the existing definition of 
personal watercraft established by the International Organization for 
Standardization (ISO 13590). This ISO standard excludes open-bay 
vessels and specifies a maximum vessel length of 4 meters. The ISO 
standard therefore excludes personal watercraft-like vessels 4 meters 
or greater and jet boats. Thus, engines powering such vessels would be 
classified as sterndrive/inboard engines. We believe this definition 
effectively serves to differentiate vessels in a way that groups 
propulsion engines into categories that are appropriate for meeting 
different emission standards. This approach is shown below with the 
corresponding proposed definition of personal watercraft engine. We are 
proposing one change to the ISO definition for domestic regulatory 
purposes; we propose to remove the word ``inboard'' to prevent 
confusion between PWC and inboard engines and state specifically that a 
vessel powered by an outboard marine engine is not a PWC. We are 
proposing the following definition:
     Personal watercraft means a vessel less than 4.0 meters 
(13 feet) in length that uses an installed internal combustion engine 
powering a water jet pump as its primary source of propulsion and is 
designed with no open load carrying area that would retain water. The 
vessel is designed to be operated by a person or persons positioned on, 
rather than within, the confines of the hull. A vessel using an 
outboard engine as its primary source of propulsion is not a personal 
watercraft.
     Personal watercraft engine means a spark-ignition engine 
used to propel a personal watercraft.
    Section III.C.2 describes special provisions that would allow 
manufacturers extra flexibility with emission credits if they want to 
continue using outboard or personal watercraft engines in jet boats. 
These engines would need to meet the standards for sterndrive/inboard 
engines, but we believe it is appropriate for them to make this 
demonstration using emission credits generated by other outboard and 
personal watercraft engines because these vessels are currently using 
these engine types. We request comment on this approach to defining 
personal watercraft, especially as it relates to vessels 4 meters or 
longer and jet boats.
(2) Exclusions and Exemptions
    We are proposing to maintain the existing exemptions for OB/PWC 
engines. These include the testing exemption, the manufacturer-owned 
exemption, the display exemption, and the national-security exemption. 
If the conditions for an exemption are met, the engine is not subject 
to the exhaust emission standards. These exemptions are described in 
more detail under Section VIII.
    The Clean Air Act provides for different treatment of engines used 
solely for competition. In the initial rulemaking to set standards for 
OB/PWC engines, we adopted the conventional definitions that excluded 
engines from the regulations if they had features that would be 
difficult to remove and that would make it unsafe, impractical, or 
unlikely to be used for noncompetitive purposes. We have taken the 
approach in other programs of more carefully differentiating 
competition and noncompetition models, and are proposing these kinds of 
changes in this rule. The proposed changes to the existing provisions 
relating to competition engines would apply equally to all types of 
Marine SI engines. See Section III and Sec.  1045.620 of the 
regulations for a full discussion of the proposed approach.
    We are proposing a new exemption to address individuals who 
manufacture recreational marine vessels for personal use (see Sec.  
1045.630). Under the proposed exemption, these vessels and their 
engines could be exempt from standards, subject to certain limitations. 
For example, an individual may produce one such vessel over a ten-year

[[Page 28130]]

period, the vessel may not be used for commercial purposes, and any 
exempt engines may not be sold for at least five years. The vessel must 
generally be built from unassembled components, rather than simply 
completing assembly of a vessel that is otherwise similar to one that 
will be certified to meet emission standards. This proposal addresses 
the concern that hobbyists who make their own vessels would otherwise 
be manufacturers subject to the full set of emission standards by 
introducing these vessels into commerce. We expect this exemption to 
involve a very small number of vessels.
    In the rulemaking for recreational vehicles, we chose not to apply 
standards to hobby products by exempting all reduced-scale models of 
vehicles that are not capable of transporting a person (67 FR 68242, 
November 8, 2002). We are proposing to extend that same provision to 
OB/PWC marine engines (see Sec.  1045.5).

C. Proposed Exhaust Emission Standards

    We are proposing more stringent exhaust emission standards for new 
OB/PWC marine engines. These proposed standards can be met through the 
expanded reliance on four-stroke engines and two-stroke direct-
injection engines. This section describes the proposed requirements for 
OB/PWC engines for controlling exhaust emissions. See Section V for a 
description of the proposed requirements related to evaporative 
emissions.
(1) Standards and Dates
    We are proposing new HC+NOX standards for OB/PWC engines 
starting in model year 2009 that would achieve more than a 60 percent 
reduction from the existing 2006 standards. We are also proposing new 
CO emission standards. These proposed standards would result in 
meaningful CO reductions from many engines and prevent CO from 
increasing from engines that already use technologies with lower CO 
emissions. The proposed emission standards are largely based on 
certification data from cleaner-burning Marine SI engines, such as 
four-stroke engines and two-stroke direct-injection engines. Section 
IV.F discusses the technological feasibility of these standards in more 
detail. Table IV-1 presents the proposed exhaust emission standards for 
OB/PWC. We are also proposing to apply not-to-exceed emission standards 
over a range of engine operating conditions, as described in Section 
IV.C.2. (See Sec.  1045.103.)

  Table IV-1--Proposed OB/PWC Exhaust Emission Standards [g/kW-hr] for
                             2009 Model Year
------------------------------------------------------------------------
             Pollutant                P\a\ <= 40 kW       P\a\ > 40 kW
------------------------------------------------------------------------
HC+NOX............................         28-0.3 x P                 16
CO................................        500-5.0 x P               300
------------------------------------------------------------------------
\a\ P = maximum engine power in kilowatts (kW).

    The proposed emission standards for HC+NOX are similar 
in stringency to the 2008 model year standards adopted in California, 
and we expect that the same technology anticipated to be used in 
California can be used to meet these proposed standards. However, we 
are proposing to simplify the form of the standards. The existing EPA 
2006 and California ARB 2008 requirements use a functional relationship 
to set the emission standard for each engine family depending on the 
power rating--the numerical value of the standard increases with 
decreasing power ratings, especially for the smallest engines. However, 
as described in Chapter 4 of the Draft RIA, certification data show 
that brake-specific emission rates (in g/kW-hr) are relatively constant 
for engines with maximum engine power above 40 kW. We are therefore 
proposing a single standard for engines with maximum engine power above 
40 kW. For smaller engines, the relationship between brake-specific 
emissions and maximum engine power is pronounced. We are proposing a 
simple linear function for the standards for these engines, as shown in 
Table IV-1. While this approach differs slightly from the California 
ARB standards, we believe it provides a good match for establishing a 
comparable level of stringency while simplifying the form of the 
regulatory standard.
    The proposed implementation date gives an additional year beyond 
the implementation date of the California standards of similar 
stringency. Manufacturers generally sell their lower-emission engines, 
which are already meeting the 2008 California standards, nationwide. 
However, the additional year would give manufacturers time to address 
any models that may not meet the upcoming California standards or are 
not generally sold in California. We request comment on additional 
regulatory flexibility that manufacturers may need to transition to the 
proposed standards. For instance, a modest phase-in of the standards 
may be useful to manufacturers to complete an orderly turnover of high-
emitting engines. This phase-in could take the form of giving an extra 
year for compliance with the proposed standards for a small percentage 
of engines (e.g., 10 percent of projected sales) or phasing-in the 
level of the standard (e.g., 20-25 g/kW-hr HC+NOX). Any 
comments on proposed transitional flexibility should give details that 
fully describe the recommended program.
    The proposed standards include the same general provisions that 
apply today. For example, engines must control crankcase emissions. The 
regulations also require compliance over the full range of adjustable 
parameters and prohibit the use of defeat devices. (See Sec.  
1045.115.)
(2) Not-to-Exceed Standards
    Section III.D.2 describes NTE standards for sterndrive and inboard 
engines. We are proposing to apply the same NTE testing provisions to 
OB/PWC engines, including the same NTE zone and subzones and ambient 
conditions (see Sec.  1045.515). However, data presented in Chapter 4 
of the Draft RIA suggest that different emission limits would be 
appropriate for OB/PWC engines. For instance, we are proposing higher 
limits at full power for SD/I engines equipped with catalysts because 
the engines must operate rich at this mode to protect catalysts and 
exhaust valves. Because we are not anticipating the use of catalysts on 
OB/PWC to meet the exhaust emission standards, we believe it is not 
necessary to adopt such high limits for OB/PWC engines.
    The Draft RIA describes the available emission data that allow us 
to specify appropriate modal caps for OB/PWC engines based on four-
stroke engine technology. The available data for direct-injection two-
stroke engines showed two different distinct patterns in modal emission 
rates. We are therefore proposing two alternative sets of NTE limits--
manufacturers could use either set of NTE limits for their OB/PWC 
engines. To offset the relaxed

[[Page 28131]]

limits for certain subzones, we are proposing more stringent limits for 
other subzones for these alternative approaches. Table IV-2 presents 
the proposed sets of NTE limits for the subzones described in Section 
III.D.2. We request comment on the proposed NTE limits for OB/PWC 
engines.

                          Table IV-2--Proposed NTE Limits by Subzone for OB/PWC Engines
----------------------------------------------------------------------------------------------------------------
           Approach                 Pollutant        Subzone 4       Subzone 3       Subzone 2       Subzone 1
----------------------------------------------------------------------------------------------------------------
Primary.......................  HC+NOX..........             1.6             1.2             1.2             1.2
                                CO..............             1.5             1.5             1.5             1.5
Alternative 1.................  HC+NOX..........             2.0             0.8             0.8             2.0
                                CO..............             1.0             1.0             1.5             3.0
Alternative 2.................  HC+NOX..........             3.0             1.0             1.0             1.0
                                CO..............             2.0             1.0             1.0             1.5
----------------------------------------------------------------------------------------------------------------

    Marine engine manufacturers indicated that they are concerned that 
the differences in engine designs, especially for direct-injection two-
stroke engines, may result in emission variation that would make it 
difficult to meet a fixed set of NTE limits for all engines. To address 
this variability, they have suggested two alternative approaches to 
setting NTE limits for marine engines. The first approach would be to 
base the NTE limits on the modal test results from the certification 
test rather than fixed values that would apply to all engines. NTE 
limits would then be linearly interpolated between the modes as a 
function of speed and load. For example, if the modal results were 2.0 
g/kW-hr at Mode 3 and 4.0 g/kW-hr at Mode 4, the interpolated value 
half way between these modal test points would be 3 g/kW-hr. A 
multiplier would then be applied to this interpolated value to create 
the NTE limit. This multiplier would be intended to account for testing 
and production variability. The multiplier would not likely need to be 
as large as the proposed general multipliers for the subzones presented 
above because it would be applied to a surface generated from each 
manufacturer's actual modal data. Because the NTE cap would be 
calculated from the individual test modes in the steady-state test, it 
may be necessary for the manufacturers to assign family emission limits 
for each of the test modes in the proposed NTE zone.
    The second conceptual approach would be to use a weighted average 
approach to the NTE limit rather than to have individual NTE limits for 
each subzone. Under this approach, an emission measurement would be 
made in each of the subzones plus idle. These measurements could be 
made at any operation point within each subzone. The measured emissions 
would then be combined using the weighting factors for the modal test. 
This weighted average emission level would be required to be below the 
standard (or family emission limit) times a multiplier (under this 
approach, only a single multiplier would be needed). The purpose of the 
multiplier would be to allow for some variability within each subzone. 
Because the weighted average emissions from the subzones would have the 
tendency of approaching the steady-state test value, this multiplier 
would not be expected to be much higher than 1.0. However, one drawback 
to this approach is that there is no specific cap for each mode and a 
weighted average approach may not be as effective in capping modal 
emissions as would be specific limits for each subzone. More detail on 
this concept is available in the docket.\78\
---------------------------------------------------------------------------

    \78\ ``Marine NTE Zones,'' Presentation to EPA by BRP on October 
26, 2006, Docket EPA-HQ-OAR-2004-0008-0508.
---------------------------------------------------------------------------

    We request comment on the two alternative NTE limit approaches 
described above. Specifically, commenters should provide detail on what 
advantages (and disadvantages) these alternatives may provide and what 
effect they may have on in-use emissions and the potential for 
improving the manufacturer in-use testing program. In addition, 
commenters should describe what emission limits or multipliers would be 
appropriate for the alternative approaches and provide test data 
supporting these conclusions.
(3) Emission Credit Programs
    Engine manufacturers may use emission credits to meet OB/PWC 
standards under part 91. See Section VII.C.5 for a description of 
general provisions related to averaging, banking, and trading programs.
    We propose to adopt an ABT program for the new HC+NOX 
emission standards that is similar to the existing program (see part 
1045, subpart H). Credits may be used interchangeably between outboard 
and personal watercraft engine families. Credits earned under the 
current program may also be used to comply with the new OB/PWC 
standards as described below.
    We are proposing an unlimited life for emission credits earned 
under the proposed new standards for OB/PWC engines. We consider these 
emission credits to be part of the overall program for complying with 
proposed standards. Given that we may consider further reductions 
beyond the proposed standards in the future, we believe it will be 
important to assess the ABT credit situation that exists at the time 
any future standards are considered. We would need to set such future 
emission standards based on the statutory direction that emission 
standards must represent the greatest degree of emission control 
achievable, considering cost, safety, lead time, and other factors. 
Emission credit balances will be part of the analysis for determining 
the appropriate level and timing of new standards. If we were to allow 
the use of existing emission credits for meeting future standards, we 
may, depending on the level of emission credit banks, need to adopt 
emission standards at more stringent levels or with an earlier start 
date than we would absent the continued or limited use of existing 
emission credits. Alternatively, we could adopt future standards 
without allowing the use existing credits. The proposal described in 
this notice describes a middle path in which we allow the use of 
existing credits to meet the proposed new standards, with provisions 
that limit the use of these credits based on a three-year credit life.
    We are requesting comment on one particular issue regarding credit 
life. As proposed, credits earned under the new exhaust ABT program 
would have an unlimited lifetime. This could result in a situation 
where credits generated by an engine sold in a model year are not used 
until many years later when the engines generating the credits have 
been scrapped and are no longer part of the fleet. EPA believes there 
may be value to limiting the use of credits to the period that the 
credit-generating engines

[[Page 28132]]

exist in the fleet. For this reason, EPA requests comment on limiting 
the lifetime of the credits generated under the proposed exhaust ABT 
program to five years or, alternatively, to the regulatory useful life 
of the engine.
    We are interested in using a common emission credit calculation 
methodology across our programs. Therefore, we are proposing to use the 
same emission credit equation for OB/PWC engines that is common in many 
of our other programs. This equation results in a simpler calculation 
than is currently used for OB/PWC engines. The primary difference is 
that the regulatory useful life would be used in the credit calculation 
rather than a discounted useful life function based on engine type and 
power rating. In addition, the emission credits would be reported in 
units of kilograms rather than grams. We anticipate that this change in 
the credit calculation would directionally increase the relative value 
of emission credits generated under the existing ABT program. However, 
due to the proposed limit on credit life and the proposed FEL cap for 
OB/PWC engines, we do not believe that this increase in relative value 
will significantly hamper the introduction of clean engine technology. 
We request comment on the new credit calculation and on whether credits 
generated under the existing OB/PWC standards should be adjusted to be 
more equivalent to credits generated under the proposed ABT program.
    We are proposing an averaging program for CO emissions. Under this 
program, manufacturers could generate credits with engine families that 
have FELs below the CO emission standard to be used for engine families 
in their product line in the same model year that are above the CO 
standard. However, we are proposing to disallow banking for CO 
emissions. We are concerned that a banking program could result in a 
large accumulation of credits based on a given company's mix of engine 
technologies. If banking were allowed, the proposed CO standard would 
need to be substantially more stringent to reflect the capability for 
industry-wide average CO emission levels. We generally allow trading 
only with banked credits, so we are also proposing to disallow trading 
of CO emission credits.
    As with previous emission control programs, we are also proposing 
not to allow manufacturers to earn credits for one pollutant for an 
emission family that is using credits to meet the standard for another 
pollutant. In other words, an engine family that does not meet the CO 
standard would not be able to earn HC+NOX emission credits, 
or vice versa. In addition, as with the current standards, we are 
proposing that engines sold in California would not be included in this 
ABT program because they are already subject to California 
requirements.
    Under the existing standards, no cap is set on FELs for certifying 
engine families. This was intended to allow manufacturers to sell old-
technology two-stroke engines by making up the emissions deficit with 
credits under the ABT program. For engines subject to the new emission 
standards, we are proposing FEL caps to prevent the sale of very high-
emitting engines. For HC+NOX, the proposed FEL cap is based 
on the existing 2006 standards. For CO, the proposed FEL cap is 150 g/
kW-hr above the proposed standard. We believe this will still allow a 
great deal of flexibility for manufacturers using credits, but will 
require manufacturers to stop producing engines that emit pollutants at 
essentially uncontrolled levels.
    Except as specified in Section III.C.2 for jet boats, we are 
proposing to specify that OB/PWC engines and SD/I engines are in 
separate averaging sets. This means that credits earned by OB/PWC 
engines may be used only to offset higher emissions from other OB/PWC 
engines, and credits earned by SD/I engines may be used only to offset 
higher emissions from other SD/I engines. We are allowing jet boats to 
use OB/PWC credits because there are currently small sales of these 
engines currently using OB/PWC engines. Most of the engine 
manufacturers building SD/I engines do not also build OB/PWC engines. 
The exception to this is the largest manufacturer in both categories. 
We are concerned that allowing averaging, banking, and trading between 
OB/PWC engines and SD/I engines would not provide the greatest 
achievable reductions, because the level of the standard we are 
proposing is premised on the technology used in OB/PWC engines, and is 
based on what is feasible for these engines. We did not set the OB/PWC 
level based on the reductions achievable between OB/PWC and SD/I, but 
instead based on what is achievable by OB/PWC itself. The proposed 
limitation on ABT credits is consistent with this approach to setting 
the level of the OB/PWC standards. We are also concerned that allowing 
trading between OB/PWC and SD/I could create a competitive disadvantage 
for the many small manufacturers of SD/I engines that do not also 
produce OB/PWC engines. In addition, we are proposing SD/I emission 
standards that would likely require the use of aftertreatment. We would 
not want to provide an incentive to use credits from the OB/PWC marine 
sector to avoid the use of aftertreatment technologies in SD/I engines.
    We request comment on the structure of the proposed ABT program, 
including the new provisions related to CO emissions. For any 
commenters suggesting that we include banking or trading for CO 
emissions, we solicit further comment on what the appropriate CO 
standard should be to account for the greater regulatory flexibility 
and therefore greater degree of control achievable using emissions 
credits. We also request comment on the use and level of the proposed 
FEL caps and on the approach to defining averaging sets.
(4) Durability Provisions
    We are proposing to keep the existing useful life periods from 40 
CFR part 91. The specified useful life for outboard engines is 10 years 
or 350 hours of operation, whichever comes first. The useful life for 
personal watercraft engines is 5 years or 350 hours of operation, 
whichever comes first. (See Sec.  1045.103.)
    We are proposing to update the specified emissions warranty periods 
for outboard and personal watercraft engines to align with our other 
emission control programs (see Sec.  1045.120). Most nonroad engines 
have emissions warranty periods that are half of the total useful life 
period. As a result, we are proposing a warranty period for outboard 
engines of five years or 175 hours of operation, whichever comes first. 
The proposed warranty period for personal watercraft engines is 30 
months or 175 hours, whichever comes first. This contrasts somewhat 
with the currently specified warranty period of 200 hours or two years 
(or three years for specified major emission control components). The 
proposed approach would slightly decrease the warranty period in terms 
of hours, but would somewhat increase the period in terms of calendar 
years (or months). We request comment on this revised approach to 
defining warranty periods.
    If the manufacturer offers a longer mechanical warranty for the 
engine or any of its components at no additional charge, we propose 
that the emission-related warranty for the respective engine or 
component must be extended by the same amount. The emission-related 
warranty includes components related to controlling exhaust, 
evaporative, and crankcase emissions from the engine. This approach to 
setting warranty requirements is consistent with provisions that apply 
in

[[Page 28133]]

most other programs for nonroad engines.
    We are proposing to keep the existing requirements related to 
demonstrating the durability of emission controls for purposes of 
certification (see Sec.  1045.235, Sec.  1045.240, and Sec.  1045.245). 
Manufacturers must run engines long enough to develop and justify full-
life deterioration factors. This allows manufacturers to generate a 
deterioration factor that helps ensure that the engines will continue 
to control emissions over a lifetime of operation. The new requirement 
to generate deterioration factors for CO emissions is the same as that 
for HC+NOX emissions. For the HC+NOX standard, we 
propose to specify that manufacturers use a single deterioration factor 
for the sum of HC and NOX emissions. However, if 
manufacturers get our approval to establish a deterioration factor on 
an engine that is tested with service accumulation representing less 
than the full useful life for any reason, we would require separate 
deterioration factors for HC and NOX emissions. The 
advantage of a combined deterioration factor is that it can account for 
an improvement in emission levels with aging. However, for engines that 
have service accumulation representing less than the full useful life, 
we believe it is not appropriate to extrapolate measured values 
indicating that emission levels for a particular pollutant will 
decrease.
    Under the current regulations, emission-related maintenance is not 
allowed during service accumulation to establish deterioration factors. 
The only maintenance that may be done must be (1) Regularly scheduled, 
(2) unrelated to emissions, and (3) technologically necessary. This 
typically includes changing engine oil, oil filter, fuel filter, and 
air filter. In addition, we are proposing to specify that manufacturers 
may not schedule critical emission-related maintenance during the 
useful life period (see Sec.  1045.125). This would prevent 
manufacturers from designing engines with emission controls that depend 
on scheduled maintenance that is not likely to occur with in-use 
engines. We request comment on all aspects of our provisions related to 
manufacturers' prescribed maintenance.

D. Changes to Existing OB/PWC Test Procedures

    We are proposing a number of minor changes to the test procedures 
for OB/PWC to make them more consistent with the test procedures for 
other nonroad spark-ignition engines. These test provisions would apply 
to SD/I marine engines as well.
(1) Duty Cycle
    A duty cycle is the set of modes (engine speed and load) over which 
an engine is operated during a test. For purposes of exhaust emission 
testing, we are proposing to keep the existing duty cycle specified for 
OB/PWC engines, with two adjustments (see Sec.  1045.505). First, we 
are proposing that manufacturers may choose to run the specified duty 
cycle as a ramped-modal cycle, as described in Section IX.B. Second, we 
are proposing to change the low-power test mode from a specified 25 
percent load condition to 25.3 percent load, which would complete the 
intended alignment with the E4 duty cycle adopted by the International 
Organization for Standardization.
    We request comment on the appropriateness of changing part 91 to 
include the correction to the duty cycle described above. We request 
comment regarding whether a change in the specification for the current 
standards may cause some existing test data to be considered invalid. 
For example, testing from an earlier model year may have involved 
measurements that were slightly below 25 percent load, but within the 
specified tolerance for testing. These measurements may be used for 
carryover engine families today, but increasing the load point in the 
regulation could cause some measurements to be outside the tolerance 
once it shifts to a nominal value of 25.3 percent.
(2) Maximum Test Speed
    The definition of maximum test speed, where speed is the angular 
velocity of an engine's crankshaft (usually expressed in revolutions 
per minute, or rpm), is an important aspect of the duty cycles for 
testing. Engine manufacturers currently declare the rated speeds for 
their engines and then used the rated speed as the maximum speed for 
testing. However, we have established an objective procedure for 
measuring this engine parameter to have a clearer reference point for 
an engine's maximum test speed. This is important to ensure that 
engines are tested at operating points that correspond with in-use 
operation. This also helps ensure that the NTE zone is appropriately 
matched to in-use operating conditions.
    We propose to define the maximum test speed for any engine to be 
the single point on an engine's maximum-power versus speed curve that 
lies farthest away from the zero-power, zero-speed point on a 
normalized maximum-power versus speed plot. In other words, consider 
straight lines drawn between the origin (speed = 0, load = 0) and each 
point on an engine's normalized maximum-power versus speed curve. 
Maximum test speed is defined at that point where the length of this 
line reaches its maximum value. This change would apply to testing of 
OB/PWC engines as well as SD/I engines. We request comment on the use 
and definition of maximum test speed.
(3) 40 CFR Part 1065
    We are proposing to specify that OB/PWC engines certified to the 
proposed exhaust emission standards use the test procedures in 40 CFR 
part 1065 instead of those in 40 CFR part 91.\79\ We are proposing that 
the new procedures would apply starting with the introduction of 
proposed exhaust standards, though we allow manufacturers to start 
using these new procedures earlier as an alternative procedure. The 
procedures in part 1065 include updated provisions to account for newer 
measurement technologies and improved calculation and corrections 
procedures. Part 1065 also specifies more detailed provisions related 
to alternate procedures, including a requirement to conduct testing 
representative of in-use operation. In many cases, we allow carryover 
of emission test data from one year to another. After the 
implementation of the proposed standards, we are proposing to allow 
carryover of any test data generated prior to 2009 under the test 
procedures in 40 CFR part 91.
---------------------------------------------------------------------------

    \79\ See our previous rulemakings related to 40 CFR part 1065 
for more information about the changes in test provisions (70 FR 
40420, July 13, 2005 and 67 FR 68242, November 8, 2002).
---------------------------------------------------------------------------

(4) Altitude
    EPA emission standards generally apply at a wide range of 
altitudes, as reflected in the range of barometric pressures in the 
specified test procedures. For marine spark-ignition engines, it is 
clear that the large majority of operation is at sea level or at inland 
lakes that are not at high altitude. We are therefore proposing a 
specific range of barometric pressures from 94.0 to 103.325 kPa, which 
corresponds to all altitudes up to about 2,000 feet (see Sec.  
1045.501). Manufacturers are expected to design emission control 
systems that continue to function effectively at lower barometric 
pressures (i.e., higher altitudes), but we would not require that 
engines meet emission standards when tested at altitudes more than 
2,000 feet above sea level.
(5) Engine Break-in
    Testing new engines requires a period of engine operation to 
stabilize emission

[[Page 28134]]

levels. The regulations specify two separate figures for break-in 
periods. First, for certification, we establish a limit on how much an 
engine may operate and still be considered a ``low-hour'' engine. The 
results of testing with the low-hour engine are compared with a 
deteriorated value after some degree of service accumulation to 
establish a deterioration factor. For Large SI engines, we require that 
low-hour test engines have no more than 300 hours of engine operation. 
However, given the shorter useful life for marine engines, this would 
not make for a meaningful process for establishing deterioration 
factors, even if there is a degree of commonality between the two types 
of engines. We are proposing for all marine spark-ignition engines that 
low-hour engines generally have no more than 30 hours of engine 
operation (see Sec.  1045.801). This allows some substantial time for 
break-in, stabilization, and running multiple tests, without 
approaching a significant fraction of the useful life. The current 
regulation in part 91 specifies that manufacturers perform the low-hour 
measurement after no more than 12 hours of engine operation (see Sec.  
91.408(a)(1)). The proposed approach, 30 hours of engine operation, is 
consistent with what we have done for recreational vehicles and would 
give manufacturers more time to complete a valid low-hour test.
    For production-line testing there is also a concern about how long 
an engine should operate to reach a stabilized emission level. We are 
proposing to keep the provision in part 91 that allows for a presumed 
stabilization period of 12 hours (see Sec.  90.117(a)). We believe 12 
hours is sufficient to stabilize the emissions from the engine.
    We request comment on these specified values for stabilizing new 
engines for emission measurements.

E. Additional Certification and Compliance Provisions

(1) Production-Line Testing
    We are proposing to continue to require that manufacturers 
routinely test engines at the point of production to ensure that 
production variability does not affect the engine family's compliance 
with emission standards. This is largely based on the existing test 
requirements, but includes a variety of changes. See Section VII.C.7 
for a detailed description of these requirements. We may also require 
manufacturers to perform production line testing under the selective 
enforcement auditing provisions described in Section VIII.E.
(2) In-Use Testing
    We are also proposing to continue the requirements related to the 
manufacturer-run in-use testing program. Under this program, 
manufacturers test field-aged engines to determine whether they 
continue to meet emission standards (see part 1045, subpart E). We are 
proposing to make a variety of changes and clarifications to the 
existing requirements, as described in the following sections.
(a) Adjustments Related to Engine Selection
    Both EPA and manufacturers have gained insights from implementing 
the current program. Manufacturers have expressed a concern that engine 
families are selected rather late in the model year, which makes it 
harder to prepare a test fleet for fulfilling testing obligations. On 
the other hand, we have seen that manufacturers certify some of their 
engine families well into the model year. By making selections early in 
the model year, we would generally be foregoing the opportunity to 
select engine families for which manufacturers don't apply for 
certification until after the selections occur.
    To address these competing interests, we are proposing an approach 
that allows for early selection of engine families, while preserving 
the potential to require testing for engines that are certified later 
in the model year. For applications we receive by December 31 of a 
given calendar year for the following model year, we would expect to 
select engine families for testing by the end of February of the 
following year. If we have not made a complete selection of engine 
families by the end of February, manufacturers would have the option of 
making their own selections for in-use testing. The proposed 
regulations include criteria to serve as guidance for manufacturers to 
make appropriate selections. For example, we would expect manufacturers 
to most strongly consider those engine families with the highest 
projected sales volume and the smallest compliance margins. 
Manufacturers may also take into account past experience with engine 
families if they have already passed an in-use testing regimen and have 
not undergone significant design changes since that time.
    We propose to treat engine families differently for in-use testing 
if we receive the application after December 31. This would apply, for 
example, if manufacturers send an application for a 2009 engine family 
in February 2009. In these cases, we are proposing that all these 
engine families are automatically subject to in-use testing, without 
regard to the 25 percent limitation that would otherwise dictate our 
selections. This may appear to increase the potential test burden, but 
the clear majority of applications for certification are completed 
before the end of the calendar year for the following model year. This 
proposed provision would eliminate the manufacturers' ability to game 
the testing system by delaying a family of potential concern until the 
next calendar year. We would expect to receive few new applications 
after the end of the calendar year. This would be consistent with the 
manufacturers' interest in early family selections, without 
jeopardizing EPA's interest in being able to select from a 
manufacturer's full product lineup.
    We request comment on the approach to selecting engine families for 
in-use testing.
(b) Crankcase Emissions
    Because the crankcase requirements are based on a design 
specification rather than emission measurements, the anticipated 
crankcase technologies are best evaluated simply by checking whether or 
not they continue to function as designed. As a result, we intend for 
an inspection of in-use engines to show whether these systems continue 
to function properly throughout the useful life, but are not proposing 
to require manufacturers to include crankcase measurements as part of 
the in-use testing program described in this section. This is 
consistent with the approach we have taken in other programs.
(c) In-Use Emission Credits
    Clean Air Act section 213 requires engines to comply with emission 
standards throughout their regulatory useful lives, and section 207 
requires a manufacturer to remedy in-use nonconformity when we 
determine that a substantial number of properly maintained and used 
engines fail to conform with the applicable emission standards (42 
U.S.C. 7541). As described in the original rulemaking, manufacturers 
could use a calculation of emission credits generated under the in-use 
testing program to avoid a recall determination if an engine family's 
in-use testing results exceeded emission standards (61 FR 52095, 
October 4, 1996).
    We are proposing a more general approach to addressing potential 
noncompliance under the in-use testing program than is specified in 40 
CFR part 91. The proposed regulations do not specify how manufacturers 
would

[[Page 28135]]

generate emission credits to offset a nonconforming engine family. The 
proposed approach is preferred for two primary reasons. First, 
manufacturers will be able to use emission data generated from field 
testing to characterize an engine family's average emission level. This 
becomes necessarily more subjective, but allows us to consider a wider 
range of information in evaluating the degree to which manufacturers 
are complying with emission standards across their product line. 
Second, this approach makes clearer the role of the emission credits in 
our consideration to recall failing engines. We plan to consider, among 
other information, average emission levels from multiple engine 
families in deciding whether to recall engines from a failing engine 
family. We therefore believe it is not appropriate to have a detailed 
emission credit program defining precisely how and when to calculate, 
generate, and use credits that do not necessarily have value elsewhere.
    Not specifying how manufacturers generate emission credits under 
the in-use testing program gives us the ability to consider any 
appropriate test data in deciding what action to take. In generating 
this kind of information, some general guidelines would apply. For 
example, we would expect manufacturers to share test data from all 
engines and all engine families tested under the in-use testing 
program, including nonstandard tests that might be used to screen 
engines for later measurement. This allows us to understand the 
manufacturers' overall level of performance in controlling emissions to 
meet emission standards. Average emission levels should be calculated 
over a running three-year period to include a broad range of testing 
without skewing the results based on old designs. Emission values from 
engines certified to different tiers of emission standards or tested 
using different measurement procedures should not be combined to 
calculate a single average emission level. Average emission levels 
should be calculated according to the following equation, rounding the 
results to 0.1 g/kW-hr:

Average EL = [Sigma]i[(STD-CL)i x 
(UL)i x (Sales)i x Poweri x 
LFi] / [Sigma]i [(UL)i x 
(Sales)i x Poweri x LFi]

Where:

Average EL = Average emission level in g/kW-hr.
Salesi = The number of eligible sales, tracked to the 
point of first retail sale in the U.S., for the given engine family 
during the model year.
(STD-CL)i = The difference between the emission standard 
(or Family Emission Limit) and the average emission level for an in-
use testing family in g/kW-hr.
ULi = Useful life in hours.
Poweri = The sales-weighted average maximum engine power 
for an engine family in kW.
LFi = Load factor or fraction of maximum engine power 
utilized in use; use 0.50 for engine families used only in constant-
speed applications and 0.32 for all other engine families.
    We have adopted this same approach for the in-use testing program 
that applies for Large SI engines in 40 CFR part 1048.
(3) Optional Procedures for Field Testing
    Outboard engines are inherently portable, so it may be easier to 
test them in the laboratory than in the field. However, there is a 
strong advantage to using portable measurement equipment to test 
personal watercraft and SD/I engines while the engine remains installed 
to avoid the effort of taking the engine out and setting it up in a 
laboratory. Field testing would also provide a much better means of 
measuring emissions to establish compliance with the NTE standards, 
because it is intended to ensure control of emissions during normal in-
use operation that may not occur during laboratory testing over the 
specified duty cycle. We propose to apply the field testing provisions 
described below as an option for all OB/PWC and SD/I engines. We 
request comment on any ways the field testing procedures should be 
modified to address the unique operating characteristics of OB/PWC or 
SD/I engines.
    The regulations at 40 CFR part 1065, subpart J, specify how to 
measure emissions using portable measurement equipment. To test engines 
while they remain installed, analyzers are connected to the engine's 
exhaust to detect emission concentrations during normal operation. 
Exhaust volumetric flow rate and continuous power output are also 
needed to convert the analyzer responses to units of g/kW-hr for 
comparing to emission standards. These values can be calculated from 
measurements of the engine intake flow rate, the exhaust air-fuel ratio 
and the engine speed, and from torque information.
    Available small analyzers and other equipment may be adapted for 
measuring emissions from field equipment. A portable flame ionization 
detector can measure total hydrocarbon concentrations. A portable 
analyzer based on zirconia technology can measure NOX 
emissions. A nondispersive infrared (NDIR) unit can measure CO. We are 
proposing to require manufacturers to specify how they would allow for 
drawing emission samples from in-use engines for testing installed 
engines. For example, emission samples can be drawn from the exhaust 
flow directly upstream of the point at which water is mixed into the 
exhaust flow. This should minimize collection of water in the extracted 
sample, though a water separator may be needed to maintain a 
sufficiently dry sample. Mass flow rates also factor into the torque 
calculation; this may be measured either in the intake or exhaust 
manifold.
    Calculating brake-specific emissions depends on determining 
instantaneous engine speed and torque levels. We propose to require 
that manufacturers must therefore design their engines to be able to 
continuously monitor engine speed and torque. We have already adopted 
this requirement for other mobile source programs where electronic 
engine control is used. Monitoring speed values is straightforward. For 
torque, the onboard computer needs to convert measured engine 
parameters into useful units. Manufacturers generally will need to 
monitor a surrogate value such as intake manifold pressure or throttle 
position (or both), then rely on a look-up table programmed into the 
onboard computer to convert these torque indicators into Newton-meters. 
Manufacturers may also want to program the look-up tables for torque 
conversion into a remote scan tool. Part 1065 specifies the performance 
requirements for accuracy, repeatability, and noise related to speed 
and torque measurements. These tolerances are taken into account in the 
selection of the proposed NTE standards.
(4) Other Changes for In-use Testing
    A question has been raised regarding the extent of liability if an 
engine family is found to be noncompliant during in-use testing. 
Because it can take up to two years to complete the in-use testing 
regimen for an engine family, we want to clarify the status of engines 
produced under that engine family's certificate, and under the 
certificates of earlier and later engine families that were effectively 
of the same design. For example, manufacturers in many cases use 
carryover data to continue certifying new engine families for a 
subsequent model year; this avoids the need to produce new test data 
for engines whose design does not change from year to year. For these 
cases, absent any contrary information from the manufacturer, we will 
maintain the discretion to include other applicable

[[Page 28136]]

engine families in the scope of any eventual recall, as allowed by the 
Act.
    There are a variety of smaller changes to the in-use testing 
provisions as a result of updating the regulatory language to reflect 
the language changes that we adopted for similar testing with Large SI 
engines. First, we are proposing to remove the requirement to select 
engines that have had service accumulation representing less than 75 
percent of the useful life. This will allow manufacturers the 
flexibility to test somewhat older engines if they want to. Second, we 
are proposing to slightly adjust the description of the timing of the 
test program, specifying that the manufacturer must submit a test plan 
within 12 months of EPA selecting the family for testing, with a 
requirement to complete all testing within 24 months. This contrasts 
with the current requirement to complete testing within 12 months after 
the start of testing, which in turn must occur within 12 months of 
family selection. We believe the modified approach allows additional 
flexibility without delaying the conclusion of testing. Third, we are 
proposing to require that manufacturers explain why they excluded any 
particular engines from testing. Finally, we are proposing to require 
manufacturers to report any noncompliance within 15 days after 
completion of testing for a family, rather than 15 days after an 
individual engine fails. This has the advantage for manufacturers and 
the Agency of a more unified reporting after testing is complete, 
rather than piecemeal reporting before conclusions can be drawn.
(5) Use of Engines Already Certified to Other Programs
    In some cases, manufacturers may want to use engines already 
certified under our other programs. Engines certified to the emission 
standards for highway applications in part 86 or Large SI applications 
in part 1048 are meeting more stringent standards. We are therefore 
proposing to allow the pre-existing certification to be valid for 
engines used in marine applications, on the condition that the engine 
is not changed from its certified configuration in any way (see Sec.  
1045.605). For outboard and personal watercraft engines, we are also 
proposing to allow this for engines certified to the Phase 3 emission 
standards for Small SI engines. Manufacturers would need to demonstrate 
that fewer than five percent of the total sales of the engine model are 
for marine applications. There are also a few minor notification and 
labeling requirements to allow for EPA oversight of this provision.
(6) Import-Specific Information at Certification
    We are proposing to require additional information to improve our 
ability to oversee compliance related to imported engines (see Sec.  
1045.205). In the application for certification, we are proposing to 
require the following additional information: (1) The port or ports at 
which the manufacturer will import the engines, (2) the names and 
addresses of the agents the manufacturer has authorized to import the 
engines, and (3) the location of the test facilities in the United 
States where the manufacturer will test the engines if we select them 
for testing under a selective enforcement audit.

F. Other Adjustments to Regulatory Provisions

    We are proposing to migrate the regulatory requirements for marine 
spark-ignition engines from 40 CFR part 91 to 40 CFR part 1045. This 
gives us the opportunity to update the details of our certification and 
compliance program to be consistent with the comparable provisions that 
apply to other engine categories. The following paragraphs highlight 
some of the changes in the new language that may involve noteworthy 
changes from the existing regulations. All these provisions apply 
equally to SD/I engines, except that they are not subject to the 
current requirements in 40 CFR part 91.
    We are proposing some adjustments to the criteria for defining 
engine families (see Sec.  1045.230). The fundamental principle behind 
engine families is to group together engines that will have similar 
emission characteristics over the useful life. We are proposing that 
engines within an engine family must have the same approximate bore 
diameter and all use the same method of air aspiration (for example, 
naturally aspirated vs. turbocharged). Under the current regulation, 
manufacturers may consider bore and stroke dimensions and aspiration 
method if they want to subdivide engine families beyond what would be 
required under the primary criteria specified in Sec.  91.115. We 
believe engines with substantially different bore diameters will have 
combustion and operating characteristics that must be taken into 
account with unique engineering. Similarly, adding a turbocharger or 
supercharger to an engine changes the engine's combustion and emission 
control in important ways. Finally, we are proposing that all the 
engines in an engine family use the same type of fuel. This may have 
been a simple oversight in the current regulations, since all OB/PWC 
engines operate on gasoline. However, if a manufacturer would produce 
an engine model that runs on natural gas or another alternative fuel, 
that engine model should be in its own engine family.
    The proposed regulatory language related to engine labels remains 
largely unchanged (see Sec.  1045.135). However, we are including a 
provision to allow manufacturers to print labels that have a different 
company's trademark. Some manufacturers in other programs have 
requested this flexibility for marketing purposes.
    The proposed warranty provisions are described above. We are 
proposing to add an administrative requirement to describe the 
provisions of the emission-related warranty in the owners manual (see 
Sec.  1045.120). We expect that many manufacturers already do this, but 
believe it is appropriate to require this as a routine practice.
    Certification procedures depend on establishing deterioration 
factors to predict the degradation in emission controls that occurs 
over the course of an engine's useful life. This typically involves 
service accumulation in the laboratory to simulate in-use operation. 
Since manufacturers do in-use testing to further characterize this 
deterioration rate, we are proposing to specify that deterioration 
factors for certification must take into account any available data 
from in-use testing with similar engines. This provision applies in 
most of our emission control programs that involve in-use testing. To 
the extent that this information is available, it should be factored 
into the certification process. For example, if in-use testing shows 
that emission deterioration is substantially higher than that 
characterized by the deterioration factor, we would expect the 
manufacturer to factor the in-use data into a new deterioration factor, 
or to revise durability testing procedures to better represent the 
observed in-use degradation.
    Maximum engine power for an engine family is an important 
parameter. For engines below 40 kW, the maximum engine power determines 
the applicable standard. For bigger engines, emission credits are 
calculated based on total power output. As a result, we are proposing 
to specify that manufacturers determine their engines' maximum engine 
power as the point of maximum engine power on the engine map the 
manufacturers establish with their test engines (see Section VII.C.6 
and

[[Page 28137]]

Sec.  1045.140). This value would be based on the measured maximum 
engine power, without correction to some standard ambient conditions.
    The proposed requirements related to the application for 
certification would involve some new information, most of which is 
described above, such as installation instructions and a description of 
how engines comply with not-to-exceed standards (see Sec.  1045.205). 
In addition, we are proposing to require that manufacturers submit 
projected sales volumes for each family, rather than requiring that 
manufacturers keep these records and make them available upon request. 
Manufacturers already do this routinely and it is helpful to have ready 
access to this information to maintain compliance oversight of the 
program for Marine SI engines for such things as emission credit 
calculations. We are also proposing that each manufacturer identify an 
agent for service in the United States. For companies based outside the 
United States, this ensures that we will be able to maintain contact 
regarding any official communication that may be required. We have 
adopted these same requirements for other nonroad programs.
    We are proposing to require that manufacturers use good engineering 
judgment in all aspects of their effort to comply with regulatory 
requirements. The regulations at Sec.  1068.5 describe how we would 
apply this provision and what we would require of manufacturers where 
we disagree with a manufacturer's judgment.
    We are also proposing new defect-reporting requirements. These are 
requirements are described in Section VIII.
    It is common practice for Marine SI engines for one company to 
produce the base engine for a second company to modify for the final 
application. Since our regulations prohibit the sale of uncertified 
engines, we are proposing provisions to clarify the status of these 
engines and defining a path by which these engines can be handled 
without violating the regulations. See Section XI for more information.
    We request comment on all these changes to the regulations. Where 
there is an objection to any of the proposed provisions, we request 
comment on alternative provisions that would best address the concern 
on which the proposed provisions are based. Also, aside from the items 
described in this section, there are many minor adjustments in the 
regulatory text. While most of these changes are intended to improve 
the clarity of the regulations without imposing new requirements, we 
request comment on any of these changes that may be inappropriate. We 
also request comment on any additional changes that may be helpful in 
making the regulations clear or addressing the administration or 
implementation of the regulatory requirements.

G. Small-Business Provisions

    The OB/PWC market has traditionally been made up of large 
businesses. In addition, we anticipate that the OB/PWC standards will 
be met through the expanded use of existing cleaner engine 
technologies. Small businesses certifying to standards today are 
already using technologies that could be used to meet the proposed 
standards. As a result, we are proposing only three small business 
regulatory relief provisions for small business manufacturers of OB/PWC 
engines. We are proposing to allow small business OB/PWC engine 
manufacturers to be exempt from PLT testing and to use assigned 
deterioration factors for certification. (EPA will provide guidance to 
engine manufacturers on the assigned deterioration factors prior to 
implementation of the new OB/PWC standards.) We are also proposing to 
extend the economic hardship relief for small businesses described in 
Section VIII.C.9 to small-business OB/PWC engine manufacturers (see 
Sec.  1068.250). We are proposing small business eligibility criteria 
for OB/PWC engine manufacturers based on a production cut-off of 5,000 
OB/PWC engines per year. We would also allow OB/PWC engine 
manufacturers that exceed the production cut-off level noted above but 
have fewer than 1,000 employees to request treatment as a small 
business.
    In addition to the flexibilities noted above, all OB/PWC engine 
manufacturers, regardless of size, would be able to apply for the 
unusual circumstances hardship described in Section VIII.C.8 (see Sec.  
1068.245). Finally, all OB/PWC vessel manufacturers, regardless of 
size, that rely on other companies to provide certified engines or fuel 
system components for their product would be able to apply for the 
hardship provisions described in Section VIII.C.10 (see Sec.  
1068.255).

H. Technological Feasibility

(1) Level of Standards
    Over the past several years, manufacturers have demonstrated their 
ability to achieve significant HC+NOX emission reductions 
from outboard and personal watercraft engines. This has largely been 
accomplished through the introduction of two-stroke direct injection 
engines and conversion to four-stroke engines. Current certification 
data for these types of engines show that these technologies may be 
used to achieve emission levels significantly below the existing 
exhaust emission standards. In fact, California has adopted standards 
requiring a 65 percent reduction beyond the current federal standards 
beginning in 2008.
    Our own analysis of recent certification data show that most four-
stroke outboard engines and many two-stroke direct injection outboard 
engines can meet the proposed HC+NOX standard. Similarly, 
although PWC engines tend to have higher HC+NOX emissions, 
presumably due to their higher power densities, many of these engines 
can also meet the proposed HC+NOX standard. Although there 
is currently no CO standard for OB/PWC engines, OB/PWC manufacturers 
are required to report CO emissions from their engines (see Sec.  
91.107(d)(9)). These emissions are based on test data from new engines 
and do not consider deterioration or compliance margins. Based on this 
data, all of the two-stroke direct injection engines show emissions 
well below the proposed standards. In addition, the majority of four-
stroke engines would meet the proposed CO standards as well.
    We therefore believe the proposed HC+NOX and CO emission 
standards can be achieved by phasing out conventional carbureted two-
stroke engines and replacing them with four-stroke engines or two-
stroke direct injection engines. This has been the market-driven trend 
over the last five years. Chapter 4 of the Draft RIA presents charts 
that compare certification data to the proposed standards.
(2) Implementation Dates
    We are proposing to implement the new emission standards beginning 
with the 2009 model year. This gives an additional year beyond the 
implementation date of the California standards of similar stringency. 
This additional year may be necessary for manufacturers that don't sell 
engine models in California or that sell less than their full product 
lineup into the California market. We believe the same technology used 
to meet the 2008 standards in California could be used nationwide with 
the additional year allowed for any engine models not sold in 
California. Low-emission engines sold in California are generally sold 
nationwide as part of manufacturer compliance strategies for the 
Federal 2006 standards. Manufacturers have

[[Page 28138]]

indicated that they are calibrating their four-stroke and direct-
injection two-stroke engines to meet the California requirements. To 
meet the proposed standards, manufacturers' efforts would primarily 
center on phasing out their higher-emission carbureted two-stroke 
engines and producing more of their lower emission engines.
(3) Technological Approaches
    Conventional two-stroke engines add a fuel-oil mixture to the 
intake air with a carburetor, and use the crankcase to force this mixed 
charge air into the combustion chamber. In the two-stroke design, the 
exhaust gases must be purged from the cylinder while the fresh charge 
enters the cylinder. With traditional two-stroke designs, the fresh 
charge, with unburned fuel and oil, would push the exhaust gases out of 
the combustion chamber as the combustion event concludes. As a result, 
25 percent or more of the fresh fuel-oil could pass through the engine 
unburned. This is known as scavenging losses. Manufacturers have phased 
out sales of the majority of their traditional two-stroke engines to 
meet the federal 2006 OB/PWC exhaust emission standards. However, many 
of these engines still remain in the product mix as a result of 
emission credits.
    One approach to minimizing scavenging losses in a two-stroke engine 
is through the use of direct fuel injection into the combustion 
chamber. The primary advantage of direct injection for a two-stroke is 
that the exhaust gases can be scavenged with fresh air and fuel can be 
injected into the combustion chamber after the exhaust port closes. As 
a result, hydrocarbon emissions, fuel economy, and oil consumption are 
greatly improved. Some users prefer two-stroke direct injection engines 
over four-stroke engines due to the higher power-to-weight ratio. Most 
of the two-stroke direct injection engines currently certified to the 
current OB/PWC emission standards have HC+NOX emissions 
levels somewhat higher than certified four-stroke engines. However, 
these engines also typically have lower CO emissions due to the nature 
of a heterogeneous charge. By injecting the fuel directly into a charge 
of air in the combustion chamber, localized areas of lean air/fuel 
mixtures are created where CO is efficiently oxidized.
    OB/PWC manufacturers are also achieving lower emissions through the 
use of four-stroke engine designs. Because the combustion cycle takes 
place over two revolutions of the crankshaft, the fresh fuel-air charge 
can enter the combustion chamber after the exhaust valve is closed. 
This prevents scavenging losses. Manufacturers currently offer four-
stroke marine engines with maximum engine power ranging from 1.5 to 224 
kW. These engines are available with carburetion, throttle-body fuel 
injection, or multi-point fuel injection. Based on the certification 
data, whether the engine is carbureted or fuel-injected does not have a 
significant effect on combined HC+NOX emissions. For PWC 
engines, the HC+NOX levels are somewhat higher, primarily 
due to their higher power-to-weight ratio. CO emissions from PWC 
engines are similar to those for four-stroke outboard engines.
    One manufacturer has certified two PWC engine models with oxidation 
catalysts. One engine model uses the oxidation catalyst in conjunction 
with a carburetor while the other uses throttle-body fuel injection. In 
this application, the exhaust system is shaped in such a way to protect 
the catalyst from water. The exhaust system is relatively large 
compared to the size of the engine. We are not aware of any efforts to 
develop a three-way catalyst system for PWC engines. We are also not 
aware of any development efforts to package a catalyst into the exhaust 
system of an outboard marine engine. In current designs, water and 
exhaust are mixed in the exhaust system to help cool the exhaust and 
tune the engine. Water can work its way up through the exhaust system 
because the lower end is under water and varying pressures in the 
exhaust stream can draw water against the prevailing gas flow. As 
discussed in Chapter 4 of the Draft RIA, saltwater can be detrimental 
to catalyst performance and durability. In addition, outboard engines 
are designed with lower units that are designed to be as thin as 
possible to improve the ability to turn the engine on the back of the 
boat and to reduce drag on the lowest part of the unit. This raises 
concerns about the placement and packaging of catalysts in the exhaust 
stream. Certainly, the success of packaging catalysts in sterndrive and 
inboard boats in recent development efforts (see Section III) suggests 
that catalysts may be feasible for outboards with additional effort. 
However, this has not yet been demonstrated and significant development 
efforts would be necessary. We request comment on the feasibility of 
using catalysts on OB and PWC engines.
(4) Regulatory Alternatives
    We considered a level of 10 g/kW-hr HC+NOX for OB/PWC 
engines above 40 kW with an equivalent percent reduction below the 
proposed standards for engines below 40 kW. This second tier of 
standards could apply in the 2012 or later time frame. Such a standard 
would be consistent with currently certified emission levels from a 
significant number of four-stroke outboard engines. We have three 
concerns with adopting this second tier of OB/PWC standards. First, 
while some four-stroke engines may be able to meet a 10 g/kW-hr 
standard with improved calibrations, it is not clear that all engines 
could meet this standard without applying catalyst technology. As 
described in Section IV.H.3, we believe it is not appropriate to base 
standards in this rule on the use of catalysts for OB/PWC engines. 
Second, certification data for personal watercraft engines show 
somewhat higher exhaust emission levels, so setting the standard at 10 
g/kW-hr would likely require catalysts for many models. Third, it is 
not clear that two-stroke engines would be able to meet the more 
stringent standard, even with direct injection and catalysts. These 
engines operate with lean air-fuel ratios, so reducing NOX 
emissions with any kind of aftertreatment is especially challenging.
    Therefore, unlike the proposed standards for sterndrive and inboard 
engines, we are not adopting OB/PWC standards that will require the use 
of catalysts. Catalyst technology would be necessary for significant 
additional control of HC+NOX and CO emissions. While there 
is good potential for eventual application of catalyst technology to 
outboard and personal watercraft engines, we believe the technology is 
not adequately demonstrated at this point. Much laboratory and in-water 
work is needed.
(5) Our Conclusions
    We believe the proposed emission standards can be achieved by 
phasing out conventional carbureted two-stroke engines in favor of 
four-stroke engines or two-stroke direct injection engines. The four-
stroke engines or two-stroke direct injection engines are already 
widely available from marine engine manufacturers. One or both of these 
technologies are currently in place for the whole range of outboard and 
personal watercraft engines.
    The proposed exhaust emission standards represent the greatest 
degree of emission control achievable in the contemplated time frame. 
While manufacturers can meet the proposed standards with their full 
product line in 2009, requiring full compliance with a nationwide 
program earlier, such as in the same year that California introduces 
new emission standards, would pose an unreasonable requirement. 
Allowing

[[Page 28139]]

one year beyond California's requirements is necessary to allow 
manufacturers to certify their full product line to the new standards, 
not only those products they will make available in California. Also, 
as described above, we believe the catalyst technology that would be 
required to meet emission standards substantially more stringent than 
we are proposing has not been adequately demonstrated for outboard or 
personal watercraft engines. As such, we believe the proposed standards 
for HC+NOX and CO emissions are the most stringent possible 
in this rulemaking. More time to gain experience with catalysts on 
sterndrive and inboard engines and a substantial engineering effort to 
apply that learning to outboard and personal watercraft engines may 
allow us to pursue more stringent standards in a future rulemaking.
    As discussed in Section X, we do not believe the proposed standards 
would have negative effects on energy, noise, or safety and may lead to 
some positive effects.

V. Small SI Engines

A. Overview

    This section applies to new nonroad spark-ignition engines with 
rated power at or below 19 kW (``Small SI engines''). These engines are 
most often used in lawn and garden applications, typically by 
individual consumers; they are many times also used by commercial 
operators and they provide power for a wide range of other home, 
industrial, farm, and construction applications. The engines are 
typically air-cooled single-cylinder models, though Class II engines 
(with displacement over 225 cc) may have two or three cylinders, and 
premium models with higher power may be water-cooled.
    We have already adopted two phases of exhaust standards for Small 
SI engines. The first phase of standards for nonhandheld engines 
generally led manufacturers to convert any two-stroke engines to four-
stroke engines. These standards applied only to engines at the time of 
sale. The second phase of standards for nonhandheld engines generally 
led manufacturers to apply emission control technologies such as in-
cylinder controls and improved carburetion, with the additional 
requirement that manufacturers needed to meet emission standards over a 
useful life period.
    As described in Section I, this proposal is the result of a 
Congressional mandate that springs from the new California ARB 
standards. In 2003, the California ARB adopted more stringent standards 
for nonhandheld engines. These standards target emission reductions of 
approximately 35 percent below EPA's Phase 2 standards and are based on 
the expectation that manufacturers will use relatively low-efficiency 
three-way catalysts to control HC+NOX emissions. California 
ARB did not change the applicable CO emission standard.\80\
---------------------------------------------------------------------------

    \80\ California ARB also adopted new fuel evaporative emission 
standards for equipment using handheld and nonhandheld engines. 
These included tank permeation standards for both types of equipment 
and hose permeation, running loss, and diurnal emission standards 
for nonhandheld equipment. See Section VI for additional information 
related to evaporative emissions.
---------------------------------------------------------------------------

    We are proposing to place these new regulations for Small SI 
engines in 40 CFR part 1054 rather than changing the current 
regulations in 40 CFR part 90. This gives us the opportunity for 
proposing updates to the details of our certification and compliance 
program that are consistent with the comparable provisions that apply 
to other engine categories and describe regulatory requirements in 
plain language. Most of the change in regulatory text provides improved 
clarity without changing procedures or compliance obligations. Where 
there is a change that warrants further attention, we describe the need 
for the change below.

B. Engines Covered by This Rule

    This action includes proposed exhaust emission standards for new 
nonroad engines with rated power at or below 19 kW that are sold in the 
United States. The exhaust standards are for nonhandheld engines 
(Classes I and II). As described in Section I, handheld Small SI 
engines (Classes III, IV, and V) are also subject to standards, but we 
are not proposing changes to the level of exhaust emission standards 
for these engines. As described in Section VI, we are also proposing 
standards for controlling evaporative emissions from Small SI engines, 
including both handheld and nonhandheld engines. Certain of the 
provisions discussed in this Section V apply to both handheld and 
nonhandheld engines, as noted. Reference to both handheld and 
nonhandheld engines also includes marine auxiliary engines subject to 
the Small SI standards for that size engine.
(1) Engines Covered by Other Programs
    The Small SI standards do not apply to recreational vehicles 
covered by EPA emission standards in 40 CFR part 1051. The regulations 
in part 1051 apply to off-highway motorcycles, snowmobiles, all-terrain 
vehicles, and high-speed offroad utility vehicles. However, if an 
amphibious vehicle with an engine at or below 19 kW is not subject to 
standards under part 1051, its engine would need to meet the Small SI 
standards. We also do not consider vehicles such as go karts or golf 
carts to be recreational vehicles because they are not intended for 
high-speed operation over rough terrain; these engines are also subject 
to Small SI standards. The Small SI standards do not apply to engines 
used in scooters or other vehicles that qualify as motor vehicles.
    Consistent with the current regulation under 40 CFR part 90, Small 
SI standards apply to spark-ignition engines used as generators or for 
other auxiliary power on marine vessels, but not to marine propulsion 
engines. As described below, we are proposing more stringent exhaust 
emission standards that would apply uniquely to marine generator 
engines.
    Engines with rated power above 19 kW are subject to emission 
standards under 40 CFR part 1048. However, we adopted a special 
provision under part 1048 allowing engines with total displacement at 
or below 1000 cc and with rated power at or below 30 kW to meet the 
applicable Small SI standards instead of the standards in part 1048. 
For any engines that are certified using this provision, any emission 
standards that we adopt for Class II engines and equipment in this 
rulemaking will also apply at the same time. Since these engines are 
not required to meet the Small SI standards we have not included them 
in the analyses associated with this proposal.
(2) Maximum Engine Power and Engine Displacement
    Under the current regulations, rated power and power rating are not 
defined terms, which leaves manufacturers to determine their values. We 
are proposing to establish an objective approach to establishing 
``maximum engine power'' under the regulations (see Section VII.C.6 and 
Sec.  1054.140). This value has regulatory significance for Small SI 
engines only to establish whether or not engines are instead subject to 
Large SI standards. Determining maximum engine power is therefore 
relevant only for those engines that are approaching the line 
separating these two engine categories. We are proposing to require 
that manufacturers determine and report maximum engine power if their 
emission-data engine has a maximum modal power at or above 15 kW.
    Similarly, the regulations depend on engine displacement to 
differentiate engines for the applicability of different standards. The 
regulations currently provide no objective direction or

[[Page 28140]]

restriction regarding the determinations of engine displacement. We are 
proposing to define displacement as the intended swept volume of the 
engine to the nearest cubic centimeter, where the engine's swept volume 
is the product of the internal cross-section area of the cylinders, the 
stroke length, and the number of cylinders. As described Section 
VII.C.6 for maximum engine power, we are proposing that the intended 
swept volume must be within the range of the actual swept volumes of 
production engines considering normal production variability. If 
production engines are found to have different swept volumes, this 
should be noted in a change to the application for certification.
(3) Exempted or Excluded Engines
    Under the Clean Air Act, engines that are used in stationary 
applications are not nonroad engines. States are generally preempted 
from setting emission standards for nonroad engines but this preemption 
does not apply to stationary engines. EPA recently adopted emission 
standards for stationary compression-ignition engines sold or used in 
the United States (71 FR 39154, July 11, 2006). In addition, EPA has 
proposed emission standards for stationary spark-ignition engines in a 
separate action (71 FR 33804, June 12, 2006). In pursuing emission 
standards for stationary engines, we have attempted to maintain 
consistency between stationary and nonroad requirements as much as 
possible. As explained in the proposal for stationary spark-ignition 
engines, since stationary spark-ignition engines below 19 kW are almost 
all sold into residential applications, we believe it is not 
appropriate to include requirements for owners or operators that would 
normally be part of a program for implementing standards for stationary 
engines. As a result, in that proposal we indicated that it is most 
appropriate to set exhaust and evaporative emission standards for 
stationary spark-ignition engines below 19 kW as if they were nonroad 
engines. This would allow manufacturers to make a single product that 
meets all applicable EPA standards for both stationary and nonroad 
applications.
    The Clean Air Act provides for different treatment of engines used 
solely for competition. Rather than relying on engine design features 
that serve as inherent indicators of dedicated competitive use, we have 
taken the approach in other programs of more carefully differentiating 
competition and noncompetition models in ways that reflect the nature 
of the particular products. In the case of Small SI engines, we do not 
believe there are engine design features that allow us to differentiate 
between engines that are used solely for competition from those with 
racing-type features that are not used solely for competition. We are 
proposing that handheld and nonhandheld equipment with engines meeting 
all the following criteria would be considered to be used solely for 
competition, except in other cases where information is available 
indicating that engines are not used solely for competition:
     The engine (or equipment in which the engine is installed) 
may not be displayed for sale in any public dealership;
     Sale of the equipment in which the engine is installed 
must be limited to professional competitors or other qualified 
competitors;
     The engine must have performance characteristics that are 
substantially superior to noncompetitive models;
     The engines must be intended for use only in competition 
events sanctioned (with applicable permits) by a state or federal 
government agency or other widely recognized public organization, with 
operation limited to competition events, performance-record attempts, 
and official time trials.
    Engine manufacturers would make their request for each new model 
year and we would deny a request for future production if there are 
indications that some engines covered by previous requests are not 
being used solely for competition. Competition engines are produced and 
sold in very small quantities so manufacturers should be able to 
identify which engines qualify for this exemption. We request comment 
on this approach to qualifying for a competition exemption. (See Sec.  
1054.620.)
    In the rulemaking for recreational vehicles, we chose not to apply 
standards to hobby products by exempting all reduced-scale models of 
vehicles that were not capable of transporting a person (67 FR 68242, 
November 8, 2002). We are proposing to extend that same provision to 
handheld and nonhandheld Small SI engines. (See Sec.  1054.5.)
    In the rulemaking to establish Phase 2 emission standards, we 
adopted an exemption for handheld and nonhandheld engines used in 
rescue equipment. The regulation does not require any request, 
approval, or recordkeeping related to the exemption but we discovered 
while conducting the SBAR Panel described in Section VI.F that some 
companies are producing noncompliant engines under this exemption. We 
are proposing to keep this exemption but add several provisions to 
allow us to better monitor how it is used (see Sec.  1054.625). We are 
proposing to keep the requirement that equipment manufacturers use 
certified engines if they are available. We are proposing to update 
this provision by adding a requirement that equipment manufacturers use 
an engine that has been certified to less stringent Phase 1 or Phase 2 
standards if such an engine is available. We are proposing to 
explicitly allow engine manufacturers to produce engines for this 
exemption (with permanent labels identifying the particular exemption), 
but only if they have a written request for each equipment model from 
the equipment manufacturer. We are further proposing that the equipment 
manufacturer notify EPA of the intent to produce emergency equipment 
with exempted engines. Also, to clarify the scope of this provision, we 
are proposing to define ``emergency rescue situations'' as firefighting 
or other situations in which a person is retrieved from imminent 
danger. Finally, we are proposing to clarify that EPA may discontinue 
the exemption on a case-by-case basis if we find that engines are not 
used solely for emergency and rescue equipment or if we find that a 
certified engine is available to power the equipment safely and 
practically. We propose to apply the provisions of this section for new 
equipment built on or after January 1, 2009.
    The current regulations also specify an exemption allowing 
individuals to import up to three nonconforming handheld or nonhandheld 
engines one time. We are proposing to keep this exemption with three 
adjustments (see Sec.  1054.630). First, we are proposing to allow this 
exemption only for used equipment. Allowing importation of new 
equipment under this exemption is not consistent with the intent of the 
provision, which is to allow people to move to the United States from 
another country and continue to use lawn and garden equipment that may 
already be in the person's possession. Second, we are proposing to 
allow such an importation once every five years but require a statement 
that the person importing the exempted equipment has not used this 
provision in the preceding five years. The current regulations allow 
only one importation in a person's lifetime without including any way 
of making that enforceable. We believe the proposed combination of 
provisions represents an appropriate balance between preserving the 
enforceability of the exemption within the normal flow

[[Page 28141]]

of personal property for people coming into the country. Third, we are 
proposing to no longer require submission of the taxpayer 
identification number since this is not essential for ensuring 
compliance.

C. Proposed Requirements

    A key element of the proposed new requirements for Small SI engines 
is the more stringent exhaust emission standards for nonhandheld 
engines. We are also proposing several changes to the certification 
program that would apply to both handheld and nonhandheld engines. For 
example, we are proposing to clarify the process for selecting an 
engine family's useful life, which defines the length of time over 
which manufacturers' are responsible for meeting emission standards. We 
are also proposing several provisions to update the program for 
allowing manufacturers to use emission credits to show that they meet 
emission standards. The following sections describe the elements of 
this proposed rule.
    The timing for implementation of the new exhaust emission standards 
is described below. Unless we specify otherwise, all the additional 
proposed regulatory changes would apply when engines are subject to the 
emission standards and the other provisions under 40 CFR part 1054. 
This would be model year 2012 for Class I engines and model year 2011 
for Class II engines. For handheld engines, we propose to require 
compliance with the provisions of part 1054, including the 
certification provisions, starting in the 2010 model year. These 
proposed requirements apply to handheld engines unless stated 
otherwise. For convenience we refer to the handheld emission standards 
in part 1054 as Phase 3 standards even though the numerical values 
remain unchanged.
(1) Emission Standards
    Extensive testing and dialogue with manufacturers and other 
interested parties has led us to a much better understanding of the 
capabilities and limitations of applying emission control technologies 
to Small SI nonhandheld engines. As described in the Draft RIA, we have 
collected a wealth of information related to the feasibility, 
performance characteristics, and safety implications of applying 
catalyst technology to these engines. We have concluded within the 
context of Clean Air Act section 213 that it is appropriate to propose 
emission standards that are consistent with those adopted by California 
ARB. We are proposing HC+NOX emission standards of 10.0 g/
kW-hr for Class I engines starting in the 2012 model year, and 8.0 g/
kW-hr for Class II engines starting in the 2011 model year (see Sec.  
1054.105). For both classes of nonhandheld engines we are proposing to 
maintain the existing CO standard of 610 g/kW-hr.
    We are proposing to eliminate the defined subclasses for the 
smallest sizes of nonhandheld engines starting with implementation of 
the Phase 3 standards. Under the current regulations in part 90, Class 
I-A is designated for engines with displacement below 66 cc that may be 
used in nonhandheld applications. To address the technological 
constraints of these engines, all the current requirements for these 
engines are the same as for handheld engines. Class I-B is similarly 
designated for engines with displacement between 66 and 100 cc that may 
be used in nonhandheld applications. These engines are currently 
subject to a mix of provisions that result in an overall stringency 
that lies between handheld and nonhandheld engines. We are proposing to 
revise the regulations such that engines below 80 cc are subject to the 
Phase 3 handheld engine standards in part 1054 starting in the 2010 
model year. We are also proposing to allow engines below 80 cc to be 
used without restriction in nonhandheld equipment. Identifying the 
threshold at 80 cc aligns with the California ARB program. For 
nonhandheld engines at or above 80 cc, we are proposing to treat them 
in every way as Class I engines. Based on the fact that it is more 
difficult for smaller displacement engines to achieve the same g/kW-hr 
emission level as larger displacement engines, it will be more of a 
challenge for manufacturers to achieve a 10.0 g/kW-hr HC+NOX 
level on these smallest Class I engines. However, for those engines 
unable to achieve the level of the proposed standards (either with or 
without a catalyst), manufacturers may elect to rely on emissions 
averaging to comply with emission standards. We believe all 
manufacturers producing engines formerly included in Class I-B also 
have a wide enough range of engine models that they should be able to 
generate sufficient credits to meet standards across the full product 
line. (See Sec.  1054.101 and Sec.  1054.801.)
    We are proposing another slight change to the definition of 
handheld engines that may affect whether an engine is subject to 
handheld or nonhandheld standards. The handheld definition relies on a 
weight threshold for certain engines. As recently as 1999, we affirmed 
that the regulation should allow for the fact that switching to a 
heavier four-stroke engine to meet emission standards might 
inappropriately cause an engine to no longer qualify as a handheld 
engine (64 FR 5252, February 3, 1999). The regulation accordingly 
specifies that the weight limit is 20 kilograms for one-person augers 
and 14 kilograms for other types of equipment, based on the weight of 
the engine that was in place before applying emission control 
technologies. We believe it is impractical to base a weight limit on 
product specifications that have become difficult to establish. We are 
therefore proposing to increase each of the specified weight limits by 
1 kilogram, representing the approximate additional weight related to 
switching to a four-stroke engine, and applying the new weight limit to 
all engines and equipment (see Sec.  1054.801). We request comment on 
this adjustment to the handheld engine definition.
    The regulations in part 90 allow manufacturers to rely on altitude 
kits to comply with emission requirements at high altitude. We are 
proposing to continue with this approach but to clarify that all 
nonhandheld engines must comply with Phase 3 standards without altitude 
kits at barometric pressures above 94.0 kPa, which corresponds to 
altitudes up to about 2,000 feet above sea level (see Sec.  1054.115). 
This would ensure that all areas east of the Rocky Mountains and most 
of the populated areas in Pacific Coast states would have compliant 
engines without depending on engine modifications. This becomes 
increasingly important as we anticipate manufacturers relying on 
technologies that are sensitive to controlling air-fuel ratio for 
reducing emissions. Engine manufacturers must identify the altitude 
ranges for proper engine performance and emission control that are 
expected with and without the altitude kit in the owners manual. The 
owners manual must also state that operating the engine with the wrong 
engine configuration at a given altitude may increase its emissions and 
decrease fuel efficiency and performance. See Section V.E.5 for further 
discussion related to the deployment of altitude kits where the 
manufacturers rely on them for operation at higher altitudes.
    We are proposing a slightly different approach for handheld engines 
with respect to altitude. Since we are not adopting more stringent 
exhaust emission standards, we believe it is appropriate to adopt 
provisions that are consistent with current practice at this time. We 
are therefore proposing to require handheld engines to comply with the 
current standards without altitude kits at barometric pressures

[[Page 28142]]

above 96.0 kPa, which would allow for testing in most weather 
conditions at all altitudes up to about 1,100 feet above sea level.
    Spark-ignition engines used for marine auxiliary power are covered 
by the same regulations as land-based engines of the same size. 
However, the marine versions of Small SI engines are able to make use 
of ambient water for enhanced cooling of the engine and exhaust system. 
Exhaust systems for these engines are water-jacketed to maintain low 
surface temperatures to minimize the risk of fires on boats where the 
generator is often installed in small compartments within the boat. 
Recently, auxiliary marine engine manufacturers have developed advanced 
technology in an effort to improve fuel consumption and CO emission 
rates for marine generators. This advanced technology includes the use 
of electronic fuel injection and three-way catalysts. As a result, 
manufacturers are offering new products with more than a 99 percent 
reduction in CO and have expressed their intent to offer only these 
advanced technology engines in the near future. They have stated that 
these low CO engines are due to market demand. We are proposing a CO 
standard of 5.0 g/kW-hr CO for marine generator engines to reflect the 
recent trend in marine generator engine design (see Sec.  1054.105). 
For other auxiliary marine engines, we are proposing the same CO 
emission limits as for land-based engines. We believe this cap is 
necessary to prevent backsliding in CO emissions that could occur if 
new manufacturers were to attempt to enter the market with cheaper, 
high-CO designs. See Section II for a discussion of air quality 
concerns related to CO emissions. We request comment on the 
appropriateness of setting a separate standard for marine auxiliary 
engines and on the most appropriate level of such a standard.
    At this time, we are planning to continue the current regulatory 
approach for wintertime engines (e.g., engines used exclusively to 
power equipment such as snowthrowers and ice augers). Under this 
proposal, the HC+NOX exhaust emission standards would be 
optional for wintertime engines. However, if a manufacturer chooses to 
certify its wintertime engines to such standards, those engines would 
be subject to all the requirements as if the optional standards were 
mandatory. We are adding a definition of wintertime engines to clarify 
which engines qualify for these special provisions. We are also 
proposing to require that manufacturers identify these as wintertime 
engines on the emission control information label to prevent someone 
from inappropriately installing these engines (either new or used) in 
equipment that would not qualify for the wintertime exemption.
    All engines subject to standards must continue to control crankcase 
emissions.
(2) Useful Life
    The Phase 2 standards for Small SI engines included the concept 
that manufacturers are responsible for meeting emission standards over 
a useful life period. The useful life defines the design target for 
ensuring the durability of emission controls under normal in-use 
operation for properly maintained engines. Given the very wide range of 
engine applications, from very low-cost consumer products to commercial 
models designed for continuous operation, we determined that a single 
useful life value for all products, which is typical for other engine 
programs, was not appropriate for Small SI engines. We proposed at that 
time to determine the useful life for an engine family based on 
specific criteria, but commenters suggested that such a requirement was 
overly rigid and unnecessary. The final rule instead specified three 
alternative useful life values, giving manufacturers the responsibility 
to select the useful life that was most appropriate for their engines 
and the corresponding types of equipment. The preamble to the final 
rule expressed a remaining concern that manufacturers might not select 
the most appropriate useful life value, both for ensuring effective in-
use emission control and for maintaining the integrity of emission-
credit calculations. The preamble also stated our intent to 
periodically review the manufacturers' decisions to determine whether 
modifications to these rules are appropriate.
    The regulations in Sec.  90.105 provide a benchmark for determining 
the appropriate useful life value for an engine family. The regulations 
direct manufacturers to select the useful life value that ``most 
closely approximates the expected useful lives of the equipment into 
which the engines are anticipated to be installed.'' To maintain a 
measure of accountability, we included a requirement that manufacturers 
document the basis for their selected useful life values. The suggested 
data included, among other things: (1) Surveys of the life spans of the 
equipment in which the subject engines are installed; (2) engineering 
evaluations of field-aged engines to ascertain when engine performance 
deteriorates to the point where utility and/or reliability is impacted 
to a degree sufficient to necessitate overhaul or replacement; and (3) 
failure reports from engine customers. These regulatory provisions 
identify the median time to retirement for in-use equipment as the 
marker for defining the useful life period. This allows manufacturers 
to consider that equipment models may fail before the engine has 
reached the point of failure and that engines may be installed in 
different types of equipment with varying usage patterns. Engines used 
in different types of equipment, or even engines used in the same 
equipment models used by different operators, may experience widely 
varying usage rates. The manufacturer is expected to make judgments 
that take this variability into account when estimating the median life 
of in-use engines and equipment.
    Several manufacturers have made a good faith effort to select 
appropriate useful life values for their engine families, either by 
selecting only the highest value, or by selecting higher values for 
families that appear more likely to be used in commercial applications. 
At the same time, we have observed several instances in which engine 
models are installed in commercial equipment and marketed as long-life 
products but are certified to the minimum allowable useful life period. 
As described in the Phase 2 final rule, we are considering 
modifications to the regulations to address this recurring problem.
    After assessing several ideas, we are proposing an approach that 
preserves the fundamental elements of the current provisions related to 
useful life but clarifies and enhances its implementation (see Sec.  
1054.107). Manufacturers will continue to select the most appropriate 
useful life from the same nominal values to best match the expected in-
use lifetime of the equipment into which the engines in the engine 
family will be installed. Manufacturers must continue to document the 
information supporting their selected useful life. We are considering 
three approaches to address remaining concerns with the process of 
selecting useful life values.
    First, for manufacturers not selecting the highest available 
nominal value for useful life, we would expect to routinely review the 
information to confirm that it complies with the regulation. Where our 
review indicates that the selected useful life may not be appropriate 
for an engine family, we may request further justification. If we 
determine from available information that a longer useful life is 
appropriate, the manufacturer must either provide additional 
justification or select a longer

[[Page 28143]]

useful life for that engine family. We would encourage manufacturers to 
use the proposed provisions related to preliminary approval in Sec.  
1054.210 if there is any uncertainty related to the useful life 
selection. We would rather work to establish this together early in the 
certification process rather than reviewing a completed application for 
certification to evaluate whether the completed durability 
demonstration is sufficient.
    Second, we believe it is appropriate to modify the regulations to 
allow nonhandheld engine manufacturers to select a useful life value 
that is longer than the three specified nominal values. Manufacturers 
may choose to do this for the marketing advantage of selling a long-
life product or they may want to generate emission credits that 
correspond to an expected lifetime that is substantially longer than we 
would otherwise allow. We are proposing to allow manufacturers to 
select longer useful life values in 100-hour increments. Durability 
testing for certification would need to correspond to the selected 
useful life period. We have considered the possibility that a 
manufacturer might overstate an engine family's useful life to generate 
emission credits while knowing that engines may not operate that long. 
We believe the inherent testing burden and compliance liability is 
enough to avoid such a problem, but we are specifying maximum values 
corresponding with the applicable useful life for comparable diesel 
engines or Large SI engines. We are not proposing to allow for longer 
useful life values for handheld engines.
    We are also proposing to require that engines and equipment be 
labeled to identify the applicable useful life period. The current 
requirement allows manufacturers to identify the useful life with code 
letters on the engine's emission control information label, with the 
numerical value of the useful life spelled out in the owners manual. We 
believe it is important for equipment manufacturers and consumers to be 
able to find an unambiguous designation showing the manufacturer's 
expectations about the useful life of the engine. There has also been 
some interest in using descriptive terms to identify the useful life on 
the label. We believe any terminology would communicate less 
effectively than the numerical value of the useful life. However, we 
request comment on allowing or requiring manufacturers to also include 
descriptive terms. We believe it would be most appropriate to 
characterize the three useful life values in increasing order as 
Residential, Premium Residential (or General Purpose), and Commercial. 
Any useful life values beyond the three nominal values would 
appropriately be identified as Heavy Commercial. Handheld engine 
manufacturers have suggested using the terms Light Use, Medium Use, and 
Heavy Use to characterize the three useful life categories applicable 
to handheld engines.
    In all of our other engine programs, useful life is defined in 
terms of years of use or extent of engine operation, whichever comes 
first. Under the current regulations, manufacturers are responsible for 
meeting emission standards for any in-use engine that is properly 
maintained and used over the full useful life period. Since the useful 
life is defined in operating hours without regard to calendar years, 
some engines that accumulate operating hours very slowly could remain 
within the useful life period for ten years or more. We request comment 
regarding the appropriateness of revising the useful life to limit the 
useful life period to five years or the specified number of operating 
hours, whichever comes first. Adding a five-year limit on the useful 
life would not change the certification process.
(3) Averaging, Banking, and Trading
    EPA has included averaging, banking, and trading (ABT) programs in 
almost all of its recent mobile source emissions control programs. 
EPA's existing Phase 2 regulations for Small SI engines include an 
exhaust ABT program (40 CFR 90.201 through 90.211). We propose to adopt 
an ABT program for the Phase 3 HC+NOX exhaust emission 
standards that is similar to the existing program (see part 1054, 
subpart H in the proposed regulations). The proposed exhaust ABT 
program is intended to enhance the ability of engine manufacturers to 
meet the emission standards for the proposed model years. The proposed 
exhaust ABT program is also structured to avoid delay of the transition 
to the new exhaust emission controls. As described in Section VI, we 
are proposing a separate evaporative ABT program for fuel tanks used in 
Small SI equipment (and for fuel lines used in handheld equipment). We 
are proposing that credits cannot be exchanged between the exhaust ABT 
program and the evaporative ABT program.
    The exhaust ABT program has three main components. Averaging means 
the exchange of emission credits between engine families within a given 
engine manufacturer's product line for a specific model year. Engine 
manufacturers divide their product line into ``engine families'' that 
are comprised of engines expected to have similar emission 
characteristics throughout their useful life. Averaging allows a 
manufacturer to certify one or more engine families at levels above the 
applicable emission standard, but below a set upper limit. This level 
then becomes the applicable standard for all of the engines in that 
engine family, for purposes of certification, in-use testing, and the 
like. However, the increased emissions must be offset by one or more 
engine families within that manufacturer's product line that are 
certified below the same emission standard, such that the average 
standard from all the manufacturer's engine families, weighted by 
engine power, regulatory useful life, and production volume, is at or 
below the level of the emission standard. Banking means the retention 
of emission credits by the engine manufacturer for use in future model 
year averaging or trading. Trading means the exchange of emission 
credits between engine manufacturers which can then be used for 
averaging purposes, banked for future use, or traded to another engine 
manufacturer.
    Because we are not proposing any change in the general equation 
under which emission credits are calculated, EPA is proposing to allow 
manufacturers to use Phase 2 credits generated under the part 90 ABT 
program for engines that are certified in the Phase 3 program under 
part 1054, within the limits described below. As with the existing 
exhaust ABT program for Phase 2 engines in part 90, we are proposing 
that engines sold in California which are subject to the California ARB 
standards would not be included in the proposed exhaust ABT program 
because they are subject to California's requirements and not EPA's 
requirements. Furthermore, even though we are not proposing new exhaust 
emission standards for handheld engines, the handheld engine 
regulations are migrating to part 1054. Therefore, handheld engines 
will be included in the proposed ABT program under part 1054 with one 
change in the overall program as described below.
    Under an ABT program, averaging is allowed only between engine 
families in the same averaging set, as defined in the regulations. For 
the exhaust ABT program, we are proposing to separate handheld engines 
and nonhandheld engines into two distinct averaging sets starting with 
the 2011 model year. Under the proposed program, credits may generally 
be used interchangeably between Class I and Class II engine families, 
with a limited restriction on Phase 3 credits during model years 2011

[[Page 28144]]

and 2012 as noted below. Likewise, credits will be able to be used 
interchangeably between all three handheld engine classes (Classes III, 
IV, and V). Because the Phase 2 exhaust ABT program allowed exchange 
across all engine classes (i.e., allowing exchanges between handheld 
engines and nonhandheld engines), manufacturers using credits beginning 
with the 2011 model year would need to show that the credits were 
generated within the allowed category of engines. For many companies, 
especially those in the handheld market, this will potentially be 
straightforward since they are primarily in the handheld market. For 
companies that have a commingled pool of emission credits generated by 
both handheld engines and nonhandheld engines, this will take some more 
careful accounting. Because manufacturers are aware of this already at 
the time of this proposal, keeping records to distinguish handheld 
credits and nonhandheld credits will be relatively straightforward for 
2006 and later model years.
    We are proposing two exceptions to the provision restricting credit 
exchanges between handheld engines and nonhandheld engines. Currently, 
some companies that are primarily nonhandheld engine manufacturers also 
sell a relatively limited number of handheld engines. Under the Phase 2 
program, these engine manufacturers can use credits from nonhandheld 
engines to offset the higher emissions of their handheld engines. 
Because we are not proposing new exhaust requirements for handheld 
engines, we are proposing to address this existing practice by 
specifying that an engine manufacturer may use emission credits from 
their nonhandheld engines for their handheld engines under the 
following conditions. A manufacturer may use credits from their 
nonhandheld engines for their handheld engines but only where the 
handheld engine family is certified in 2008 and later model years 
without any design changes from the 2007 model year and the FEL of the 
handheld engine family does not increase above the level that applied 
in the 2007 model year unless such an increase is based on emission 
data from production engines. We believe this allows for engine 
manufacturers to continue producing these handheld engines for use in 
existing handheld models of low-volume equipment applications while 
preventing new high-emitting handheld engine families from entering the 
market through the use of nonhandheld engine credits. As discussed 
below, we are proposing to prohibit the use of Phase 2 nonhandheld 
engine credits after 2013 to demonstrate compliance with the Phase 3 
nonhandheld engine standards. For this reason, we request comment on 
whether we should allow only Phase 3 nonhandheld engine credits to be 
used under this handheld engine credit provision after 2013 as well.
    A second exception to the provision restricting credit exchanges 
between handheld engines and nonhandheld engines arises because of our 
proposed handling of engines below 80cc. Under the proposed Phase 3 
program, all engines below 80cc are considered handheld engines for the 
purposes of the emission standards. However, a few of these engines are 
used in nonhandheld applications. Therefore, EPA will allow a 
manufacturer to generate nonhandheld ABT credits from engines below 
80cc for those engines a manufacturer has determined are used in 
nonhandheld applications. (The credits would be generated against the 
applicable handheld engine standard.) These nonhandheld credits could 
be used within the Class I and Class II engine classes to demonstrate 
compliance with the Phase 3 exhaust standards (subject to applicable 
restrictions). The credits generated by engines below 80cc used in 
handheld applications could only be used for other handheld engines.
    Under an ABT program, a manufacturer establishes a ``family 
emission limit'' (FEL) for each participating engine family. This FEL 
may be above or below the standard. The FEL becomes the enforceable 
emissions limit for all the engines in that family for purposes of 
compliance testing. FELs that are established above the standard may 
not exceed an upper limit specified in the ABT regulations. For 
nonhandheld engines we are proposing FEL caps to prevent the sale of 
very high-emitting engines. Under the proposed FEL cap, manufacturers 
would need to establish FELs at or below the levels of the Phase 2 
HC+NOX emission standards of 16.1 g/kW-hr for Class I 
engines and 12.1 g/kW-hr for Class II engines. (The Phase 3 FEL cap for 
Class I engines with a displacement between 80 cc and 100 cc would be 
40.0 g/kW-hr since these engines would have been Class I-B engines 
under the Phase 2 regulations and subject to this higher level.) For 
handheld engines, where we are not proposing new exhaust emission 
standards, we are maintaining the FEL caps as currently specified in 
the part 90 ABT regulations.
    For nonhandheld engines we are proposing two special provisions 
related to the transition from Phase 2 to Phase 3 standards. First, we 
are proposing incentives for manufacturers to produce and sell engines 
certified at or below the Phase 3 standards before the standards are 
scheduled to be implemented. Second, we are proposing provisions to 
allow the use of Phase 2 credits for a limited period of time under 
specific conditions. The following discussions describes each of these 
provisions in more detail for Class I engines and Class II engines 
separately.
    For Class I, engine manufacturers could generate early Phase 3 
credits by producing engines with an FEL at or below 10.0 g/kW-hr prior 
to 2012. These early Phase 3 credits would be calculated and 
categorized into two distinct types of credits, Transitional Phase 3 
credits and Enduring Phase 3 credits. For engines certified with an FEL 
at or below 10.0 g/kW-hr, the manufacturer would earn Transitional 
Phase 3 credits. The Transitional Phase 3 credits would be calculated 
based on the difference between 10.0 g/kW-hr and 15.0 g/kW-hr. (The 
15.0 g/kW-hr level is the production-weighted average of Class I FEL 
values under the Phase 2 program.) Manufacturers could use the 
Transitional Phase 3 credits from Class I engines in 2012 through 2014 
model years. For engines certified with an FEL below 10.0 g/kW-hr, 
manufacturers would earn Enduring Phase 3 credits in addition to the 
Transitional Phase 3 credits described above. The Enduring Phase 3 
credits would be calculated based on the difference between the FEL for 
the engine family and 10.0 g/kW-hr (i.e., the applicable Phase 3 
standard). The Enduring Phase 3 credits could be used once the Phase 3 
standards are implemented without the model year restriction noted 
above for Transitional Phase 3 credits.
    For Class I, engine manufacturers may use Phase 2 credits generated 
by nonhandheld engines for the first two years of the Phase 3 standards 
(i.e., model years 2012 and 2013) under certain conditions. The 
manufacturer must first use all of its available Phase 3 credits to 
demonstrate compliance with the Phase 3 standards. This would include 
all early Phase 3 credits (Transitional and Enduring) as well as all 
other Phase 3 credits, subject to the cross-class credit restriction 
noted below which applies prior to model year 2013. If these Phase 3 
credits are sufficient to demonstrate compliance, the manufacturer may 
not use Phase 2 credits. If these Phase 3 credits are insufficient to 
demonstrate compliance, the manufacturer could use Phase 2 credits to a 
limited degree (under the conditions described below) to cover the

[[Page 28145]]

remaining amount of credits needed to demonstrate compliance.
    The maximum number of Phase 2 HC+NOX exhaust emission 
credits a manufacturer could use for their Class I engines would be 
calculated based on the characteristics of Class I engines produced 
during the 2007, 2008, and 2009 model years. For each of those years, 
the manufacturer would calculate a Phase 2 credit allowance using the 
ABT credit equation and inserting 1.6 g/kW-hr for the ``Standard--FEL'' 
term, and basing the rest of the values on the total production of 
Class I engines, the production-weighted power for all Class I engines, 
and production-weighted useful life value for all Class I engines 
produced in each of those years. Manufacturers would not include their 
wintertime engines in the calculations unless the engines are certified 
to meet the otherwise applicable HC+NOX emission standard. 
The maximum number of Phase 2 HC+NOX exhaust emission 
credits a manufacturer could use for their Class I engines (calculated 
in kilograms) would be the average of the three values calculated for 
model years 2007, 2008, and 2009. The calculation described above 
allows a manufacturer to use Phase 2 credits to cover a cumulative 
shortfall over the first two years for their Class I engines of 1.6 g/
kW-hr above the Phase 3 standard.
    The Phase 2 credit allowance for Class I engines could be used all 
in 2012, all in 2013, or partially in either or both model year's ABT 
compliance calculations. Because ABT compliance calculations must be 
done annually, the manufacturer will know its 2013 remaining allowance 
based on its 2012 calculation. For example, if a manufacturer uses all 
of its Phase 2 credit allowance in 2012, it will have no use of Phase 2 
credits for 2013. Conversely, if a manufacturer doesn't use any Phase 2 
credits in 2012, it will have all of its Phase 2 credit allowance 
available for use in 2013. And of course, if a manufacturer uses less 
than its calculated total credits based on the 1.6 g/kW-hr limit in 
2012, the remainder would be available for use in 2013. This provision 
allows for some use of Phase 2 emission credits to address the 
possibility of unanticipated challenges in reaching the Phase 3 
emission levels in some cases or selling Phase 3 compliant engines 
early nationwide, without creating a situation that would allow 
manufacturers to substantially delay the introduction of Phase 3 
emission controls.
    For Class II, engine manufacturers could generate early Phase 3 
credits by producing engines with an FEL at or below 8.0 g/kW-hr prior 
to 2011. These early Phase 3 credits would be calculated and 
categorized as Transitional Phase 3 credits and Enduring Phase 3 
credits. For engines certified with an FEL at or below 8.0 g/kW-hr, the 
manufacturer would earn Transitional Phase 3 credits. The Transitional 
Phase 3 credits would be calculated based on the difference between 8.0 
g/kW-hr and 11.0 g/kW-hr. (The 11.0 g/kW-hr level is the production-
weighted average of Class II FEL values under the Phase 2 program.) 
Manufacturers could use the Transitional Phase 3 credits from Class II 
engines in 2011 through 2013 model years. For engines certified with an 
FEL below 8.0 g/kW-hr, manufacturers would earn Enduring Phase 3 
credits in addition to the Transitional Phase 3 credits described 
above. The Enduring Phase 3 credits would be calculated based on the 
difference between the FEL for the engine family and 8.0 g/kW-hr (i.e., 
the applicable Phase 3 standard). The Enduring Phase 3 credits could be 
used once the Phase 3 standards are implemented without the model year 
restriction noted above for Transitional Phase 3 credits.
    For Class II, engine manufacturers may use Phase 2 credits 
generated by nonhandheld engines for the first three years of the Phase 
3 standards (i.e., model years 2011, 2012 and 2013) under certain 
conditions. The manufacturer must first use all of its available Phase 
3 credits to demonstrate compliance with the Phase 3 standards. This 
would include all early Phase 3 credits (Transitional and Enduring) as 
well as all other Phase 3 credits, subject to the cross-class credit 
restriction noted below which applies prior to model year 2013. If 
these credits are sufficient to demonstrate compliance, the 
manufacturer may not use Phase 2 credits. If these Phase 3 credits are 
insufficient to demonstrate compliance, the manufacturer could use 
Phase 2 credits to a limited degree (under the conditions described 
below) to cover the remaining amount of credits needed to demonstrate 
compliance.
    The maximum number of Phase 2 HC+NOX exhaust emission 
credits a manufacturer could use for their Class II engines would be 
calculated based on the characteristics of Class II engines produced 
during the 2007, 2008, and 2009 model years. For each of those years, 
the manufacturer would calculate a Phase 2 credit allowance using the 
ABT credit equation and inserting 2.1 g/kW-hr for the ``Standard--FEL'' 
term, and basing the rest of the values on the total production of 
Class II engines, the production-weighted power for all Class II 
engines, and production-weighted useful life value for all Class II 
engines produced in each of those years. Manufacturers would not 
include their wintertime engines in the calculations unless the engines 
are certified to meet the otherwise applicable HC+NOX 
emission standard. The maximum number of Phase 2 HC+NOX 
exhaust emission credits a manufacturer could use for their Class II 
engines (calculated in kilograms) would be the average of the three 
values calculated for model years 2007, 2008, and 2009. The calculation 
described above allows a manufacturer to use Phase 2 credits to cover a 
cumulative shortfall over the first three years for their Class II 
engines of 2.1 g/kW-hr above the Phase 3 standard.
    The Phase 2 credit allowance for Class II engines could be used all 
in 2011, all in 2012, all in 2013, or partially in any or all three 
model year's ABT compliance calculations. Because ABT compliance 
calculations must be done annually, the manufacturer will know its 
remaining allowance based on its previous calculations. For example, if 
a manufacturer uses all of its Phase 2 credit allowance in 2011, it 
will have no Phase 2 credits for 2012 or 2013. However, if a 
manufacturer uses less than its calculated total credits based on the 
2.1 g/kW-hr limit in 2011, it will have the remainder of its allowance 
available for use in 2012 and 2013. This provision allows for some use 
of Phase 2 emission credits to address the possibility of unanticipated 
challenges in reaching the Phase 3 emission levels in some cases or 
selling Phase 3 engines nationwide, without creating a situation that 
would allow manufacturers to substantially delay the introduction of 
Phase 3 emission controls.
    Engine manufacturers have raised concerns that despite all of their 
planning, they may not be able to accurately predict their use of 
credits at the beginning of the year. They are concerned that they may 
end up in a credit deficit situation if sales do not materialize as 
projected, potentially needing to use more Phase 2 credits than they 
have available to them. In order to prevent such a non-compliance 
situation from occurring, manufacturers have suggested that we allow 
manufacturers to carry a limited credit deficit during the initial 
years of the Phase 3 program. EPA has allowed such provisions in other 
rules, including deficit provisions for handheld engines in the Phase 2 
regulations in which the manufacturer was required to cover the deficit 
in the next four model years with a penalty applied that increased over 
time depending how soon the deficit

[[Page 28146]]

was repaid. EPA requests comment on providing some type of credit 
deficit provisions for the Phase 3 exhaust standards for nonhandheld 
engines including what limits and penalties would be appropriate if 
such provisions were adopted.
    To avoid the use of credits to delay the introduction of Phase 3 
technologies, we are also proposing that manufacturers may not use 
Phase 3 credits from Class I engines to demonstrate compliance with 
Class II engines in the 2011 and 2012 model years. Similarly, we are 
proposing that manufacturers may not use Phase 3 credits from Class II 
engines to demonstrate compliance with Class I engines in the 2012 
model year. The 1.6 kW-hr and 2.1 g/kW-hr allowances discussed above 
may not be traded across engine classes or among manufacturers.
    We are proposing to make two additional adjustments related to the 
exhaust ABT program for engines subject to the new emission standards. 
As with all our other emission control programs, we are proposing that 
engine manufacturers identify an engine's FEL on the emission control 
information label (see Sec.  1054.135). This is important for readily 
establishing the enforceable level of emission control that applies for 
each engine. Recent experience has shown that this is also necessary in 
cases where the engine's build date is difficult to determine. We are 
proposing to require that lowering an FEL after the start of production 
may occur only if the manufacturer has emission data from production 
engines justifying the lower FEL (see Sec.  1054.225). This prevents 
manufacturers from making FEL changes late in the model year to 
generate more emission credits (or use fewer emission credits) when 
there is little or no opportunity to verify whether the revised FEL is 
appropriate for the engine family. This provision is common in EPA's 
emission control programs for other engine categories. We are also 
proposing that the any revised FEL can apply only for engines produced 
after the FEL change. This is necessary to prevent manufacturers from 
recalculating emission credits in a way that leaves no way of verifying 
that the engines produced prior to the FEL change met the applicable 
requirements. It is also consistent with the proposal to require 
identification of the FEL on the emission control information label. 
Manufacturers have raised concerns that this approach sets up an 
inappropriate incentive to set FELs with the smallest possible 
compliance margin to avoid foregone emission credits in case 
production-line testing shows that actual emission levels were below 
that represented by the emission-data engine for certification. 
However, it is not clear why manufacturers should not perform 
sufficient testing early in the model year to be confident that the FEL 
is properly matched to the emission levels from production engines. 
Nevertheless, we request comment on any appropriate methods to use the 
results of production-line testing to revise FELs retroactively such 
that the past production is clearly compliant with respect to the 
modified FEL. An important element of our compliance program involves 
the responsibility to meet standards with production-line testing, not 
just with a backward-looking calculation, but with a real-time 
evaluation at the point of testing. We would therefore not consider 
allowing revised FELs to apply for more than the first half of the 
production for a given model year.
    As described below in Section V.E.3., we are proposing that a 
limited number of Class II engines certified by engine manufacturers 
with a catalyst as Phase 3 engines, may be installed by equipment 
manufacturers in equipment without the catalyst. (This would only be 
allowed when the engine is shipped separately from the exhaust system 
under the provisions described in Section V.E.2.) Because engine 
manufacturers may be generating emission credits from these catalyst-
equipped engines, EPA is concerned that engine manufacturers could be 
earning exhaust ABT credits for engines that are sold but never have 
the catalyst installed. In discussions with EPA, engine manufacturers 
expressed concern about the difficulty of tracking the eventual use of 
these engines by equipment manufacturers (i.e., whether the catalyst-
equipped exhaust system was installed or not). Therefore, instead of 
requiring engine manufacturers to track whether equipment manufacturers 
install the catalyst-equipped exhaust system into the equipment, EPA is 
proposing for model years 2011 through 2014 that all Class II engine 
families which are offered for sale under the separate shipment 
provisions must decrease the number of ABT credits generated by the 
engine family by 10 percent. This adjustment would only apply to 
engines generating credits because those are the engines most likely to 
be equipped with catalysts. We believe the 10 percent decrease from 
credit generating engines should provide an emission adjustment 
commensurate with the potential use of the equipment manufacturer 
flexibility provisions described in Section V.E.3. We request comment 
on this approach to addressing the concern related to engines involving 
delegated-assembly provisions. In particular, we request comment 
regarding the amount of the credit adjustment, and whether there might 
be alternative approaches that would address this concern.
    For all emission credits generated by engines under the Phase 3 
exhaust ABT program, we are proposing an unlimited credit life. We 
consider these emission credits to be part of the overall program for 
complying with Phase 3 standards. Given that we may consider further 
reductions beyond the Phase 3 standards in the future, we believe it 
will be important to assess the ABT credit situation that exists at the 
time any post-Phase 3 standards are considered. We will need to set 
such future emission standards based on the statutory direction that 
emission standards must represent the greatest degree of emission 
control achievable, considering cost, safety, lead time, and other 
factors. Emission credit balances will be part of the analysis for 
determining the appropriate level and timing of new standards. If we 
were to allow the use of Phase 3 credits for meeting post-Phase 3 
standards, we may, depending on the level of Phase 3 credit banks, need 
to adopt emission standards at more stringent levels or with an earlier 
start date than we would absent the continued or limited use of Phase 3 
credits. Alternatively, we could adopt future standards without 
allowing the use of Phase 3 credits. The proposal described in this 
notice describes a middle path in which we allow the use of Phase 2 
credits to meet the Phase 3 standards, with provisions that limit the 
extent and timing of using these credits.
    We are requesting comment on one particular issue regarding credit 
life. As proposed, credits earned under the Phase 3 exhaust ABT program 
would have an unlimited lifetime. This could result in a situation 
where credits generated by an engine sold in a model year are not used 
until many years later when the engines generating the credits have 
been scrapped and are no longer part of the fleet. EPA believes there 
may be value to limiting the use of credits to the period that the 
credit-generating engines exist in the fleet. For this reason, EPA 
requests comment on limiting the lifetime of the credits generated 
under the Phase 3 exhaust ABT program to five years. The five-year 
period is intended to be similar to the typical median life of Small SI 
equipment and is consistent with the contemplated specification for 
defining the useful life in years in addition to

[[Page 28147]]

operating hours (see Section V.C.2 for more information).

D. Testing Provisions

    The test procedures provide an objective measurement for 
establishing whether engines comply with emission standards. The 
following sections describe a variety of proposed changes to the 
current test procedures. Except as identified in the following 
sections, we are proposing to preserve the testing-related regulatory 
provisions that currently apply under 40 CFR part 90. Note that we will 
approve any appropriate alternatives, deviations, or interpretations of 
the new testing requirements on a case-by-case basis rather than 
operating under any presumption that any such judgments made under the 
Phase 1 or Phase 2 programs will continue to apply.
(1) Migrating Procedures to 40 CFR Part 1065
    Manufacturers have been using the procedures in 40 CFR part 90 to 
test their engines for certification of Phase 1 and Phase 2 engines. As 
part of a much broader effort, we have adopted comprehensive testing 
specifications in 40 CFR part 1065 that are intended to serve as the 
basis for testing all types of engines. The procedures in part 1065 
include updated information reflecting the current state of available 
technology. We are proposing to apply the procedures in part 1065 to 
nonhandheld engines starting with the applicability of the Phase 3 
standards as specified in 40 CFR part 1054, subpart F. As described in 
Section IX, the procedures in part 1065 identifies new types of 
analyzers and updates a wide range of testing specifications, but 
leaves intact the fundamental approach for measuring exhaust emissions. 
There is no need to shift to the part 1065 procedures for nonhandheld 
engines before the proposed Phase 3 standards apply. See Section IX for 
additional information.
    We are not proposing new exhaust emission standards for handheld 
engines so there is no natural point in time for shifting to the part 
1065 procedures. For the reasons described above and in Section IX, we 
nevertheless believe handheld engines should also use the part 1065 
procedures for measuring exhaust emissions. We propose to require 
manufacturers to start using the part 1065 procedures in the 2012 model 
year. Manufacturers would be allowed to continue certifying engines 
using carryover data generated under the part 90 procedures, but any 
new certification testing would be subject to the part 1065 procedures.
    Engine manufacturers have raised one issue related to the specified 
test procedures in part 1065. The calculations for determining mass 
emissions depend on a simplifying assumption that combustion is at 
stoichiometry or is in fuel-lean environment. This is not the case for 
many Small SI engines. The equation with the simplifying assumption 
does not take into account the equilibrium reaction between hydrogen 
and water. As a result, engines with fuel-rich operation would have 
detectable hydrogen concentrations in the exhaust, which would cause 
the analyzers to have a reading for hydrocarbon emissions that is 
somewhat higher than the actual value. To the extent there is a 
concern, we believe it would always be appropriate to rely on the 
reference equations without the simplifying assumptions made for the 
equations published in part 1065. We request comment on this approach 
to measurements from Small SI engines.
(2) Duty Cycle
    The regulations under part 90 currently specify duty cycles for 
testing engines for exhaust emissions. The current requirements specify 
how to control speeds and loads and describe the situations in which 
the installed engine governor controls engine speed. We are proposing 
to extend these provisions to testing under the new standards with a 
few adjustments described below. For engines equipped with an engine 
speed governor, the current regulations at 40 CFR 90.409(a)(3) state:

    For Phase 2 Class I, Phase 2 Class I-B, and Phase 2 Class II 
engines equipped with an engine speed governor, the governor must be 
used to control engine speed during all test cycle modes except for 
Mode 1 or Mode 6, and no external throttle control may be used that 
interferes with the function of the engine's governor; a controller 
may be used to adjust the governor setting for the desired engine 
speed in Modes 2-5 or Modes 7-10; and during Mode 1 or Mode 6 fixed 
throttle operation may be used to determine the 100 percent torque 
value.

    In addition the current regulations at 40 CFR 90.410(b) state:

    For Phase 2 Class I, I-B, and II engines equipped with an engine 
speed governor, during Mode 1 or Mode 6 hold both the specified 
speed and load within  five percent of point, during 
Modes 2-3, or Modes 7-8 hold the specified load with  
five percent of point, during Modes 4-5 or Modes 9-10, hold the 
specified load within the larger range provided by  0.27 
Nm ( 0.2 lb-ft), or  ten (10) percent of 
point, and during the idle mode hold the specified speed within 
 ten percent of the manufacturer's specified idle engine 
speed (see Table 1 in Appendix A of this subpart for a description 
of test Modes).

    Manufacturers have raised some questions about the interpretation 
of these provisions. Our intent is that the current requirements 
specify that testing be conducted as follows:
     Full-load testing (Mode 1) occurs at wide-open throttle to 
maintain engines at rated speed, which is defined as the speed at which 
the engine's maximum power occurs (as declared by the manufacturer).
     Idle testing (Mode 6) occurs at the manufacturer's 
specified idle speed with a maximum load of five percent of maximum 
torque. The regulation allows adjustment to control speeds that are 
different than would be maintained by the installed governor.
     The installed governor must be used to control engine 
speed for testing at all modes with torque values between idle and 
full-load modes. The regulation allows adjustments for nominal speed 
settings that are different than would be maintained by the installed 
governor without modification.
    We are proposing adjustments to the current regulatory requirements 
in 40 CFR part 90 (see Sec.  1054.505). Since each of these proposed 
adjustments may have some effect on measured emission levels, we 
believe it is appropriate to implement these changes concurrent with 
the Phase 3 standards. To the extent the proposed adjustments apply to 
handheld engines, we believe it is appropriate to apply the changes for 
new testing with 2012 and later model year engines for the reasons 
described above for adopting the test procedures in part 1065.
    First, we are proposing to require engine speed during the idle 
mode to be controlled by the engine's installed speed governor. We 
believe there is no testing limitation that would call for engine 
operation at idle to depart from the engine's governed speed. Allowing 
manufacturers to arbitrarily declare an idle speed only allows 
manufacturers to select an idle speed that gives them an advantage in 
achieving lower measured emission results, but not in a way that 
corresponds to in-use emission control. We are also aware that some 
production engines have a user-selectable control for selecting high-
speed or low-speed idle (commonly identified as ``rabbit/turtle'' 
settings). We believe this parameter adjustment may have a significant 
effect on emissions that should be captured in the certification test 
procedure. As a result, we are proposing a requirement that 
manufacturers conduct testing with user-selectable controls set to keep 
the

[[Page 28148]]

engine operating at low-speed idle if any production engines in the 
engine family have such an option.
    Second, we are proposing an option in which manufacturers would 
test their nonhandheld engines using a ramped-modal version of the 
specified duty cycle, as described in Section IX. We expect this 
testing to be equivalent to the modal testing described above but would 
have advantages for streamlining test efforts by allowing for a single 
result for the full cycle instead of relying on a calculation from 
separate modal results. Under the proposal we would allow manufacturers 
the option to select this type of testing. EPA's testing would 
generally involve ramped-modal testing only if the engine manufacturer 
selected this option for certification.
    Third, the part 90 regulations currently specify two duty cycles 
for nonhandheld engines: (1) Testing at rated speed; and (2) testing at 
85 percent of rated speed. The regulations direct manufacturers simply 
to select the most appropriate cycle and declare the rated speed for 
their engines. We believe it is appropriate to make this more objective 
by stating that rated speed is 3600 rpm and intermediate speed is 3060 
rpm, unless the manufacturer demonstrates that a different speed better 
represents the in-use operation for their engines. This is consistent 
with the most common in-use settings and most manufacturers' current 
practice.
    In addition, we are proposing regulatory provisions to clarify how 
nonhandheld engines are operated to follow the prescribed duty cycle. 
As described in part 90, we are proposing to require that the engines 
operate ungoverned at wide-open throttle for the full-power mode. This 
test mode is used to denormalize the rest of the duty cycle. Testing at 
other modes occurs with the governor controlling engine speed. Before 
each test mode, manufacturers may adjust the governor to target the 
same nominal speed used for the full-power mode, with a tolerance 
limiting the variation in engine speed at each mode. Alternatively, 
testing may be done by letting the installed governor control engine 
speed, in which case only the torque value would need to be controlled 
within an established range.
    A different duty cycle applies to handheld engines, which are 
generally not equipped with governors to control engine speed. The 
current regulations allow manufacturers to name their operating speed 
for testing at each of the test modes. We are proposing to continue the 
allowance for manufacturers to select an appropriate engine speed for 
idle operation. However, we are concerned that this approach allows 
manufacturers too much discretion for selecting a rated speed for high-
load testing. Manufacturers are encouraged to select a speed that best 
represents in-use operation for the engine family, but there is no 
requirement to prevent a manufacturer from selecting a rated speed that 
results in lower emissions, independent of the speeds at which in-use 
engines operate. We are proposing to specify that manufacturers select 
a value for rated speed that matches the most common speed for full-
load operation within the engine family. Engine manufacturers generally 
also make their own equipment, so this information should be readily 
available. We would expect manufacturers to identify the range of 
equipment models covered by a given engine family, identify the in-use 
operating speeds for those models, and select the full-load speed 
applicable for the greatest number of projected unit sales. We further 
propose to require manufacturers to describe in their application for 
certification how they selected the value for rated speed.
(3) Test Fuel
    We are proposing to require Phase 3 testing with a standard test 
fuel consistent with the requirements under 40 CFR part 90 (see 40 CFR 
part 1065, subpart H). In particular, we do not believe it is 
appropriate to create a flexibility to allow for testing using 
oxygenated fuel since this could affect an engine's air-fuel ratio, 
which in turn could affect the engine's combustion and emission 
characteristics. However, we understand that engine manufacturers may 
have emission data from some model years before the Phase 3 standards 
take effect. We would allow for continued use of this pre-existing data 
as long as it is appropriate to use carryover data for demonstrating 
compliance with current standards.
    Ethanol is commonly blended into in-use gasoline and is anticipated 
to be more widely used in the future. However, we are not proposing a 
test fuel containing ethanol for two reasons. First, the technical 
feasibility of this rule is based on certification gasoline. If an 
ethanol fuel blend were used as the certification fuel, the standards 
would need to be adjusted to account for the effects of this fuel on 
emissions. Second, manufacturers may not use ethanol blends to certify 
Small SI engines in California. The use of an ethanol blend would 
require manufacturers to test their engines separately for the 
California and Federal testing.
    The test fuel specifications apply to all testing. However, we may 
be able to allow for testing with oxygenated fuel for production-line 
testing if manufacturers first establish the appropriate correction to 
account for the fuel's effect on emissions. We request comment on an 
appropriate approach that would allow for production-line testing with 
oxygenated fuel.
    We are similarly proposing test fuel specifications for liquefied 
petroleum gas (LPG) and natural gas. Since natural gas has a very high 
methane content and methane is generally nonreactive in the atmosphere, 
we are proposing to apply the same emission standards for natural gas 
engines but not count methane emissions toward the total hydrocarbon 
measurement.

E. Certification and Compliance Provisions for Small SI Engines and 
Equipment

(1) Deterioration Factors
    As part of the certification process, manufacturers generate 
deterioration factors to demonstrate that their engines meet emission 
standards over the full useful life. We are proposing some changes from 
the procedures currently included in part 90 (see Sec.  1054.240 and 
Sec.  1054.245). Much of the basis for these changes comes from the 
experience gained in testing many different engines in preparation for 
this proposal. First, we are proposing to discontinue bench aging of 
emission components. Testing has shown that operating and testing the 
complete engine is necessary to get accurate deterioration factors. 
Second, we are proposing to allow for assigned deterioration factors 
for a limited number of small-volume nonhandheld engine families. 
Manufacturers could use assigned deterioration factors for multiple 
small-volume nonhandheld engine families as long as the total 
production for all of the nonhandheld engine families for which the 
manufacturer is using assigned deterioration factors is estimated at 
the time of certification to be no more than 10,000 units per year. 
Third, we are proposing to allow for assigned deterioration factors for 
all engines produced by small-volume nonhandheld engine manufacturers.
    For the HC+NOX standard, we propose to specify that 
manufacturers use a single deterioration factor for the sum of HC and 
NOX emissions. However, if manufacturers get approval to 
establish a deterioration factor on an engine that is tested with 
service accumulation representing less than the full useful life for 
any reason, we would require separate deterioration factors for

[[Page 28149]]

HC and NOX emissions. The advantage of a combined 
deterioration factor is that it can account for an improvement in 
emission levels with aging. However, for engines that have service 
accumulation representing less than the full useful life, we believe it 
is not appropriate to extrapolate measured values indicating that 
emission levels for a particular pollutant will decrease. This is the 
same approach we adopted for recreational vehicles.
    EPA is not proposing the values for the assigned deterioration 
factors for small-volume nonhandheld engine manufacturers in this 
proposal. In an effort to develop deterioration factors that are 
appropriate for Small SI engines, we plan to evaluate certification 
data from Phase 3 engines certified early with EPA and from engines 
certified under California ARB's Tier 3 standards (which begin in 2007 
and 2008). Because we are not proposing new exhaust standards for 
handheld engines, the assigned deterioration factor provisions adopted 
for Phase 2 handheld engines are being retained.
    Although we are not proposing new exhaust standards for handheld 
engines, handheld engine manufacturers noted that California ARB has 
approved certain durability cycles for accumulating hours on engines 
for the purpose of demonstrating emissions durability. The durability 
cycles approved by California ARB vary from a 30-second cycle for 
chainsaws to a 20-minute cycle for blowers, with 85 percent of the time 
operated at wide open throttle and 15 percent of the time operated at 
idle. Engine manufacturers can run the durability cycles over and over 
until they accumulate the hours of operation equivalent to the useful 
life of the engine family. Our current regulations state that ``service 
accumulation is to be performed in a manner using good judgment to 
ensure that emissions are representative of production engines.'' While 
we are not proposing to change the regulatory language regarding 
service accumulation, we believe the California ARB-approved durability 
cycles are appropriate and acceptable to EPA for accumulating hours on 
handheld engines for demonstrating emissions durability.
    Manufacturers have pointed out that they are developing a testing 
protocol that would allow manufacturers to develop deterioration 
factors for catalysts through a bench-aging procedure. A fundamental 
factor in evaluating the appropriateness of any bench-aging procedure 
is the extent to which it simulates representative exhaust gas 
composition and other in-use operating parameters. We request comment 
on any appropriate procedures, or limitations on the use of such 
procedures, for certifying Small SI engines.
(2) Delegated Final Assembly
    The current practice of attaching exhaust systems to engines 
varies. Class I engines are typically designed and produced by the 
engine manufacturer with complete emission control systems. Equipment 
manufacturers generally buy these engines and install them in their 
equipment, adjusting equipment designs if necessary to accommodate the 
mufflers and the rest of the exhaust system from the engine 
manufacturer.
    Engine manufacturers generally produce Class II engines without 
exhaust systems, relying instead on installation instructions to ensure 
that equipment manufacturers get mufflers that fall within a specified 
range of backpressures that is appropriate for a given engine model. 
Equipment manufacturers are free to work with muffler manufacturers to 
design mufflers that fit into the space available for a given equipment 
model, paying attention to the need to stay within the design 
specifications from the engine manufacturers. A similar situation 
applies for air filters, where equipment manufacturers in some cases 
work with component manufacturers to use air filters that are tailored 
to the individual equipment model while staying within the design 
specifications defined by the engine manufacturer.
    The existing regulations require that certified engines be in their 
certified configuration when they are introduced into commerce. We 
therefore need special provisions to address the possibility that 
engines will need to be produced and shipped without exhaust systems or 
air intake systems that are part of the certified configuration. We 
have adopted such provisions for heavy-duty highway engines and for 
other nonroad engines in 40 CFR 85.1713 and 40 CFR 1068.260, 
respectively. These provisions generally require that engine 
manufacturers establish a contractual arrangement with equipment 
manufacturers and take additional steps to ensure that engines are in 
their certified configuration before reaching the ultimate purchaser.
    We are proposing to apply delegated-assembly provisions for 
nonhandheld engines that are similar to those adopted for heavy-duty 
highway engines, with a variety of adjustments to address the unique 
situation for Small SI engines (see Sec.  1054.610). This would require 
that engine manufacturers apply for certification in the normal way, 
identifying all the engine parts that make up the engine configurations 
covered by the certification. Equipment manufacturers would be able to 
work with muffler manufacturers to get mufflers with installed 
catalysts as specified in the engine manufacturer's application for 
certification. If equipment manufacturers would need a muffler or 
catalyst that is not covered by the engine manufacturer's 
certification, the engine manufacturer would need to amend the 
application for certification. This may require new testing if the data 
from the original emission-data engine are not appropriate for showing 
that the new configuration will meet emission standards, as described 
in Sec.  1054.225. (Alternatively, the equipment manufacturer may take 
on the responsibility for certifying the new configuration, as 
described in Sec.  1054.612.) Engine manufacturers would also identify 
in the application for certification their plans to sell engines 
without emission-related components. We are proposing several 
provisions to ensure that engines will eventually be in their certified 
configuration. For example, engine manufacturers would establish 
contracts with affected equipment manufacturers, include installation 
instructions to make clear how engine assembly should be completed, 
keep records of the number of engines produced under these provisions, 
and obtain annual affidavits from affected equipment manufacturers to 
confirm that they are installing the proper emission-related components 
on the engines and that they have ordered a number of components that 
corresponds to the number of engines involved.
    While the delegated-assembly provisions are designed for direct 
shipment of engines from engine manufacturers to equipment 
manufacturers, we are aware that distributors play an important role in 
providing engines to large numbers of equipment manufacturers. We are 
proposing that these provisions apply to distributors in one of two 
ways. First, engine manufacturers may have an especially close working 
relationship with primary distributors. In such a case, the engine 
manufacturer would be able to establish a contractual arrangement 
allowing the distributor to act as the engine manufacturer's agent for 
all matters related to compliance with the delegated-assembly 
provisions. This would allow the distributor to make arrangements with 
equipment manufacturers to address design needs

[[Page 28150]]

and perform oversight functions. We would hold the engine manufacturer 
directly responsible if the distributor failed to meet the regulatory 
obligations that would otherwise apply to the engine manufacturer. 
Second, other distributors may receive shipment of engines without 
exhaust systems, but they would need to add any aftertreatment 
components before sending the engines on to equipment manufacturers. 
Engine manufacturers would treat these distributors as equipment 
manufacturers for the purposes of delegated assembly. Equipment 
manufacturers buying engines from such a distributor would not have the 
option of separately obtaining mufflers from muffler manufacturers. In 
both of these scenarios, the engine manufacturer continues to be 
responsible for the in-use compliance of all their engines.
    Engine manufacturers would need to affix a label to the engine to 
clarify that it needs certain emission-related components before it is 
in its certified configuration. This labeling information is important 
for alerting assembly personnel to select mufflers with installed 
catalysts; the label would also give in-house inspectors or others with 
responsibility for quality control a tool for confirming that all 
engines have been properly assembled and installed. Given the large 
numbers of engine and equipment models and the interchangeability of 
mufflers with and without catalysts, we believe proper labeling will 
reduce the possibility that engines will be misbuilt.
    This labeling may be done with any of three approaches. First, a 
temporary label may be applied such that it would not be removed 
without a deliberate action on the part of the equipment manufacturer. 
We believe it is not difficult to create a label that will stay on the 
engine until it is deliberately removed. Second, manufacturers may add 
the words ``delegated assembly'' to the engine's permanent emission 
control information label. Third, manufacturers may create a unique 
alphanumeric code to apply to the engine's permanent emission control 
information label. This code would be identified in the application for 
certification. Creating a unique code would not provide a clear enough 
communication to equipment manufacturers that they are responsible for 
bringing the engine into its certified configuration. Engine 
manufacturers taking this approach would therefore need to add features 
to the label to make this clear. For example, creating labels with a 
different color or shading would make it easy to identify that an 
engine needs to be properly assembled before it is in its certified 
configuration.
    Any of these labeling approaches would properly identify the 
engines as needing emission-related components from the equipment 
manufacturer. We have a remaining concern that the approaches involving 
permanent labels do not identify that an engine is not yet in its 
certified configuration. Since there is no change in the label to show 
the engine's status, we believe these approaches may not be as 
effective as the temporary labels in preventing misbuilt engines. We 
are also concerned that imported engines with manufacturer-specific 
codes will lead to confusion with Customs inspectors. With no 
standardized approach for identifying which engines do not need 
catalysts, there is a significant risk that engines will be held up 
while inspectors confirm their status. We request comment on the best 
way of requiring labeling information for these engines. For example, 
we request comment on adding a requirement for equipment manufacturers 
to add some identifying mark to the permanent label to show that the 
engine is in its certified configuration. We also request comment on 
replacing the provision allowing for a manufacturer-specific code to 
some standardized abbreviation for ``delegated assembly'' that would 
allow for unambiguous identification of the engine's status with a 
minimum burden in terms of requiring larger labels.
    In addition, engine manufacturers would need to perform or arrange 
for audits to verify that equipment manufacturers are properly 
assembling engines. Engine manufacturers may rely on third-party agents 
to perform auditing functions. Since the purpose of the audit is to 
verify that equipment manufacturers are properly assembling products, 
they may not perform audits on behalf of engine manufacturers. We are 
proposing to require that audits must involve at a minimum reviewing 
the equipment manufacturer's production records and procedures, 
inspecting the equipment manufacturer's production operations, or 
inspecting the final assembled products. Inspection of final assembled 
products may occur at any point in the product distribution system. For 
example, products may be inspected at the equipment manufacturer's 
assembly or storage facilities, at regional distribution centers, or at 
retail locations. The audit must also include confirmation that the 
number of aftertreatment devices shipped was sufficient for the number 
of engines involved. We would typically expect engine manufacturers to 
perform more than the minimum auditing steps identified above. For 
example, equipment manufacturers with low order volumes, an unclear 
history of compliance, or other characteristics that would cause some 
concern may prompt us to require a more extensive audit to ensure 
effective oversight in confirming that engines are always built 
properly. Moreover, in the early years of this program, engine 
manufacturers should consider nearly all participating equipment 
manufacturers to be unfamiliar with the regulatory requirements and the 
mechanics of meeting their responsibilities and obligations as 
contracted manufacturers of certified engines. Engine manufacturers 
would describe in the application for certification their plan for 
taking steps to ensure that all engines will be in their certified 
configuration when installed by the equipment manufacturer. EPA 
approval of a manufacturer's plan for delegated assembly would be 
handled as part of the overall certification process. We request 
comment on appropriate requirements related to specific auditing 
procedures that would be appropriate to address these concerns and to 
provide adequate assurance that engines are routinely assembled in 
their certified configuration.
    We are proposing that engine manufacturers annually audit twelve 
equipment manufacturers, or fewer if they are able to audit all 
participating equipment manufacturers on average once every four years. 
These audits would be divided over different equipment manufacturers 
based on the number of engines sold to each equipment manufacturer. We 
further propose that these auditing rates may be reduced after the 
first eight years, or after the engine manufacturer has audited all 
affected equipment manufacturers. This reduced auditing rate would be 
based on an expectation that all participating equipment manufacturers 
would be audited on average once every ten years.
    To facilitate auditing related to catalysts, we are proposing to 
require engine manufacturers to establish an alphanumeric designation 
to identify each unique catalyst design (including size, washcoat, 
precious metal loading, supplier, and any other appropriate factors) 
and instruct equipment manufacturers to use stamping or other means to 
permanently display this designation on the external surface of the 
exhaust system, making it readily visible as much as possible when the 
equipment is fully assembled, consistent with the objective of 
verifying the identity of the installed

[[Page 28151]]

catalyst. This designation could be the same as the code applied to the 
emission control information label as described above.
    We are proposing that all the same requirements apply for separate 
shipment related to air filters if they are part of an engine's 
certified configuration, except for the auditing. We would require 
auditing related to air filters only if engine manufacturers are 
already performing audits related to catalysts. We believe there is 
much less incentive or potential for problems with equipment 
manufacturers producing engines with noncompliant air filters so we 
believe a separate auditing requirement for air filters would be 
unnecessary.
    The draft regulation specifies that the exemption expires when the 
equipment manufacturer takes possession of the engine and the engine 
reaches the point of final equipment assembly. We would understand the 
point of final equipment assembly for purposes of delegated assembly 
for aftertreatment components to be the point at which the equipment 
manufacturer attaches a muffler to the engine. Engines observed in 
production or inventory assembled with improper mufflers would be 
considered to have been built contrary to the engine manufacturer's 
installation instructions. Catalysts are invariably designed as part of 
the muffler, so we would understand that there would be no reason to 
install a different muffler once a given muffler has been installed 
using normal production procedures. If equipment manufacturers sell 
equipment without following these instructions, they would be 
considered in violation of the prohibited acts (i.e., selling 
uncertified engines). If there is a problem with any given equipment 
manufacturer, we would hold the engine manufacturer responsible for 
those noncompliant engines and require the engine manufacturer to 
discontinue the practice of delegated assembly for that equipment 
manufacturer. We request comment on the need to more explicitly 
identify the meaning of the point of final equipment assembly in the 
regulations, as described above.
    We are aware that the proposed approach of allowing equipment 
manufacturers to make their own arrangements to order mufflers results 
in a situation in which the equipment manufacturer must spend time and 
money to fulfill their responsibilities under the regulations. This 
introduces a financial incentive to install mufflers with inferior 
catalysts, or to omit the catalyst altogether. To address this concern 
for heavy-duty highway engines, we adopted a requirement for engine 
manufacturers to confirm that a vehicle manufacturer has ordered the 
appropriate aftertreatment devices before they ship an engine. 
Equipment manufacturers' purchasing practices for Small SI engines, 
especially considering the order volumes, makes this approach 
impractical. We are instead proposing to require that engine 
manufacturers get written confirmation from each equipment manufacturer 
before an initial shipment of engines in a given model year for a given 
engine model. This confirmation would document the equipment 
manufacturer's understanding that they are using the appropriate 
aftertreatment components. The written confirmation would be due within 
30 days after shipping the engines and would be required before 
shipping any additional engines from that engine family to that 
equipment manufacturer.
    The shipping confirmation included in the rule for heavy-duty 
highway engines is a very substantial provision to address the fact 
that vehicle manufacturers would gain a competitive advantage by 
producing noncompliant products, and that engines in commerce would be 
labeled as if they were fully compliant even though they are not yet in 
their certified configuration. This is especially problematic when a 
muffler with no catalyst can easily be installed and can perform 
without indicating a problem. To address this concern for Small SI 
engines, we are including a requirement that equipment manufacturers 
include in their annual affidavits an accounting for the number of 
aftertreatment components they have ordered relative to the number of 
engines shipped without the catalysts that the mufflers would otherwise 
require.
    Production-line testing normally involves building production 
engines using normal assembly procedures. For engines shipped without 
catalysts under the delegated-assembly provisions, it is not normally 
possible to do this at the engine manufacturer's facility, where such 
testing would normally occur. To address this, we are proposing to 
specify that engine manufacturers must arrange to get a randomly 
selected catalyst that will be used with the engine. The catalyst may 
come from any point in the normal distribution from the aftertreatment 
component manufacturer to the equipment manufacturer. The catalyst may 
not come from the engine manufacturer's own inventory. Engine 
manufacturers would keep records to show how they randomly selected 
catalysts.
    As described above, we believe this is a very significant 
compliance issue since it allows manufacturers to introduce into 
commerce engines that are labeled as meeting current emission standards 
even though they are not in their certified configuration. This is 
especially true for Small SI engines where many high-volume products 
are handled by many different manufacturers such that the final 
assembly requires equipment manufacturers to properly install otherwise 
indistinguishable products to keep products in the certified 
configuration. Also, an equipment manufacturer may install multiple 
engine models in a single type of equipment, some of which may need 
catalyzed mufflers while others would use a conventional muffler. The 
appearance and function of such mufflers with and without catalysts 
would be virtually indistinguishable, which increases the likelihood of 
accidentally installing the wrong muffler.
    The provisions described above are intended to minimize the risks 
associated with this practice. However, this concern is heightened for 
companies that would use the delegated-assembly provisions to import 
noncompliant engines with the expectation that equipment manufacturers 
in the United States would add catalyzed mufflers as specified in the 
engine manufacturer's application for certification. This raises two 
potential problems. First, this practice could create a loophole in 
EPA's enforcement program that would allow for widespread importation 
of noncompliant engines, with the financial incentive for equipment 
manufacturers to complete assembly with noncompliant mufflers. Since 
all engines have mufflers, and since proper catalyst installation 
generally can be confirmed only with an emission test or a destructive 
inspection, it would be very difficult to find and correct any problems 
that might occur. Second, engine manufacturers outside the United 
States may be willing to take risks with noncompliant products based on 
their limited exposure to EPA enforcement. As described in Section VI.F 
we are considering bonding requirements for imported engines to ensure 
that we will be able to fully resolve compliance or enforcement issues 
with companies that have little or no presence or selling history in 
the United States. We would expect to specify an increased bond payment 
for importation of engines using the delegated-assembly provisions. 
Increasing the per-engine bond value by 20 percent corresponds roughly 
with the

[[Page 28152]]

value of catalyzed mufflers that would be required. We believe this 
would be an appropriate additional bond value to address the concerns 
for noncompliance from imported engines.
    While this section describes the compliance provisions we believe 
are necessary for addressing the practice of delegating assembly of 
emission-related components to equipment manufacturers, providing a 
broader view of the context for delegated assembly is also appropriate 
for understanding our concern regarding the duplicative aspects of 
delegated assembly with other provisions in this rulemaking. Recent 
evaluation of a wide range of equipment models powered by Small SI 
engines has led to several important observations. Many equipment 
models have mufflers installed away from all other components such that 
they have no space or packaging constraints. Other equipment models 
with mufflers that are installed inside a cage or compartment generally 
include substantial space around the muffler, which is necessary to 
isolate the muffler's high surface temperatures and radiant heat from 
operators and any heat-sensitive components. Another important 
observation was the striking uniformity of muffler geometries, even 
where equipment manufacturers obtained mufflers directly from muffler 
manufacturers. Most mufflers on Class II engines are cylindrical models 
with the size varying to correspond with the size of the engines. Other 
Class II engine models use a box-shaped muffler design, but these 
mufflers also exhibited little variation across models. These 
observations have fundamental implications for the regulatory 
provisions we are proposing for ensuring a smooth transition to the 
Phase 3 emission standards.
    For example, in situations that limit equipment manufacturers to 
standardized muffler configurations, they would at most need to make 
modest changes to their equipment to accommodate somewhat different 
muffler geometries. We have taken these equipment design changes into 
account with the Transition Program for Equipment Manufacturers 
described below. We are therefore concerned that the proposed 
provisions for delegated assembly and the Transition Program for 
Equipment Manufacturers may be duplicative in providing additional time 
and/or flexibilities for equipment manufacturers to redesign their 
equipment for accommodating engines that meet the Phase 3 standards. If 
this is the case, the proposed provisions for delegated assembly merely 
serve to preserve the current business arrangements for the different 
types of manufacturers. We request comment on the need for these 
delegated-assembly provisions in light of the Transition Program for 
Equipment Manufacturers. We also request comment on the appropriateness 
of adopting these delegated-assembly provisions for Class I engines 
since these engine manufacturers already install complete exhaust 
systems for the large majority of their engines. Finally, we request 
comment on the need to allow for the use of the more restrictive 
delegated-assembly provisions in Sec.  1068.260 in the event that we do 
not finalize the delegated-assembly provisions described above.
(3) Transition Program for Equipment Manufacturers
    Given the level of the proposed Phase 3 exhaust emission standards 
for Class II engines, we believe there may be situations where the use 
of a catalyzed muffler could require equipment manufacturers to modify 
their equipment. We are therefore proposing a set of provisions to 
provide equipment manufacturers with reasonable lead time for 
transition to the proposed standards. The proposed provisions are 
similar to the program we adopted for nonroad diesel engines (69 FR 
38958, June 29, 2004).
    Equipment manufacturers would not be obligated to use any of these 
provisions, but all equipment manufacturers that produce Class II 
equipment would be eligible to do so. We are also proposing that all 
entities under the control of a common entity would have to be 
considered together for the purposes of applying these allowances. 
Manufacturers would be eligible for the allowances described below only 
if they have primary responsibility for designing and manufacturing 
equipment, and if their manufacturing procedures include installing 
engines in the equipment.
(a) General Provisions
    Under the proposed approach, beginning in the 2011 model year and 
lasting through the 2014 model year, each equipment manufacturer may 
install Class II engines not certified to the proposed Phase 3 emission 
standards in a limited number of equipment applications produced for 
the U.S. market (see Sec.  1054.625). We refer to these here as ``flex 
engines.'' These flex engines would need to meet the Phase 2 standards. 
The maximum number of ``allowances'' each manufacturer could use would 
be based on 30 percent of an average year's production of Class II 
equipment. The number of ``allowances'' would be calculated by 
determining the average annual U.S.-directed production of equipment 
using Class II engines produced from January 1, 2007 through December 
31, 2009. Thirty percent of this average annual production level would 
be the total number of ``allowances'' under this transition program 
over four years. Manufacturers could use these allowances for their 
Class II equipment over four model years from 2011 through 2014, with 
the usage spread over these model years as determined by the equipment 
manufacturer. Equipment produced under these provisions could use 
engines that meet the Phase 2 emission standards instead of the Phase 3 
standards. If an equipment manufacturer newly enters the Class II 
equipment market during 2007, 2008 or 2009, the manufacturer would 
calculate its average annual production level based only on the years 
during which it actually produced Class II equipment. Equipment 
manufacturers newly entering the Class II equipment market after 2009 
would not receive any allowances under the transition program and would 
need to incorporate Phase 3 compliant engines into the Class II 
equipment beginning in 2011.
    Equipment using engines built before the effective date of the 
proposed Phase 3 standards would not count toward an equipment 
manufacturer's allowances. Equipment using engines that are exempted 
from the Phase 3 standards for any reason would also not count toward 
an equipment manufacturer's allowances. For example, we are proposing 
that small-volume engine manufacturers may continue to produce Phase 2 
engines for two model years after the Phase 3 standards apply. All 
engines subject to the Phase 3 standards, including those engines that 
are certified to FELs at higher levels than the standard, but for which 
an engine manufacturer uses exhaust ABT credits to demonstrate 
compliance, would count as Phase 3 complying engines and would not be 
included in an equipment manufacturer's count of allowances.
    The choice of the allowances based on 30 percent of one year's 
production is based on our best estimate of the degree of reasonable 
lead time needed by the largest equipment manufacturers to modify their 
equipment designs as needed to accommodate engines and exhaust systems 
that have changed as a result of more stringent emission standards. We 
believe the proposed level of allowances responds to the need for lead 
time to accommodate the workload related to redesigning

[[Page 28153]]

equipment models to incorporate catalyzed mufflers while ensuring a 
significant level of emission reductions in the early years of the 
proposed program.
    Equipment manufacturers may face similar challenges in 
transitioning to rotational-molded fuel tanks that meet the proposed 
permeation standards. We are therefore proposing to allow equipment 
manufacturers to use noncompliant rotational-molded fuel tanks with any 
equipment that is counted under the allowances described in this 
section which use engines meeting Phase 2 exhaust emission standards 
(see Sec.  1054.627). As part of this expanded rotational-molded fuel 
tank allowance, we are requiring that equipment manufacturers first use 
up any available credits or allowances generated from early compliance 
with the fuel tank permeation requirements (see Section VI.D.4).
    A similar concern applies for controlling running losses. As 
described in Section VI, technologies for controlling running losses 
may involve a significant degree of integration between engine and 
equipment designs. In particular, routing a vapor line from the fuel 
tank to the engine's intake system depends on engine modifications that 
would allow for this connection. As a result, we are proposing that any 
equipment using flex engines would not need to meet running loss 
standards.
(b) Coordination Between Engine and Equipment Manufacturers
    We are proposing two separate paths for complying with 
administrative requirements related to the proposed transition program, 
depending on how the engine manufacturer chooses to make flex engines 
available under the transition program. Engine manufacturers choosing 
to use the delegated-assembly provisions described above would be 
enabling equipment manufacturers to make the decision whether to 
complete the engine assembly in the Phase 3 configuration or to use a 
noncatalyzed muffler such that the engine would meet Phase 2 standards 
and would therefore need to be counted as a flex engine. If engine 
manufacturers do not use the delegated-assembly provisions, equipment 
manufacturers would need to depend on engine manufacturers to produce 
and ship flex engines that are already in a configuration meeting Phase 
2 standards and labeled accordingly. Each of these scenarios involves a 
different set of compliance provisions, which we describe below.
    (i) Compliance based on engine manufacturers. Engine manufacturers 
will in many cases produce complete engines. This would be the case if 
the engine does not require a catalyst or if the engine manufacturer 
chooses to design their own exhaust systems and ship complete engine 
assemblies to equipment manufacturers.
    Under this scenario, we propose to require that equipment 
manufacturers request a certain number of flex engines from the engine 
manufacturer. The proposed regulatory provisions would specifically 
allow engine manufacturers to continue to build and sell Phase 2 
engines needed to meet the market demand created by the transition 
program for equipment manufacturers provided they receive the written 
assurance from the equipment manufacturer that such engines are being 
procured for this purpose. We are proposing to require that engine 
manufacturers keep copies of the written assurance from equipment 
manufacturers for at least five years after the final year in which 
allowances are available.
    Engine manufacturers are currently required to label their 
certified engines with a variety of information. We are proposing that 
engine manufacturers producing complete flex engines under this program 
identify on the engine label that they are flex engines. In addition, 
equipment manufacturers would be required to apply an Equipment 
Flexibility Label to the engine or piece of equipment that identifies 
the equipment as using an engine produced under the Phase 3 transition 
program for equipment manufacturers. These proposed labeling 
requirements would allow EPA to easily identify flex engines and 
equipment, verify which equipment manufacturers are using these flex 
engines, and more easily monitor compliance with the transition 
provisions. Labeling of the equipment could also help U.S. Customs to 
quickly identify equipment being imported lawfully using the Transition 
Program for Equipment Manufacturers.
    While manufacturers would need to meet Phase 2 standards with their 
flex engines, they would not need to certify them for the current model 
year. We are proposing instead to apply the requirements in 40 CFR 
1068.260, which requires that manufacturers keep records showing that 
they meet emission standards without requiring submission of an 
application for certification. We request comment on these requirements 
and whether these engines should be certified annually along with the 
Phase 3 engines.
    (ii) Compliance based on equipment manufacturers. We are proposing 
to set up a different set of compliance provisions for engine 
manufacturers that ship the engine separately from the exhaust system. 
Under this scenario, as discussed above, the engine manufacturers must 
establish a relationship with the equipment manufacturers allowing the 
equipment manufacturer to install catalysts to complete engine assembly 
for compliance with Phase 3 standards.
    In this case, engine manufacturers would design and produce their 
Phase 3 engines and label them accordingly. The normal path for these 
engines covered by the delegated-assembly provisions would involve 
shipment of the engine without an exhaust system to the equipment 
manufacturer, the equipment manufacturer would then follow the engine 
manufacturer's instructions to add the exhaust system including the 
catalyst to bring the engine into a certified Phase 3 configuration. 
Under the proposed transition program, equipment manufacturers would 
choose for each of these engines to either follow the engine 
manufacturer's instructions to install a catalyst to make it compliant 
with Phase 3 standards or follow a different set of instructions to 
install a non-catalyzed muffler to make it compliant with Phase 2 
standards. Any such engines downgraded to Phase 2 standards would count 
toward the equipment manufacturer's total number of allowances under 
the transition program.
    To make this work, engine manufacturers would need to take certain 
steps to ensure overall compliance. First, engine manufacturers would 
need to include emission data in the application for certification 
showing that the engine would meet Phase 2 standards without any 
modification other than installing a non-catalyzed exhaust system. This 
may include a specified range of backpressures that equipment 
manufacturers would need to meet in procuring a non-catalyst muffler. 
If the Phase 3 engine without a catalyst would otherwise still be 
covered by the emission data from engines produced in earlier model 
years under the Phase 2 standards, manufacturers could rely on 
carryover emission data to make this showing. Second, the installation 
instructions we specify under the delegated-assembly provisions would 
need to describe the steps equipment manufacturers would need to take 
to make either Phase 3 engines or Phase 2 flex engines. Third, for 
engine families that generate positive emission credits under the 
exhaust ABT

[[Page 28154]]

program, engine manufacturers must decrease the number of ABT credits 
generated by the engine family by 10 percent. We believe the 10 percent 
decrease should provide an emission adjustment commensurate with the 
potential use of the equipment manufacturer flexibility provisions.
    Equipment manufacturers using allowances under these provisions 
would need to keep records that would allow EPA or engine manufacturers 
to confirm that equipment manufacturers followed appropriate procedures 
and produced an appropriate number of engines without catalysts. In 
addition, we are proposing to require that equipment manufacturers 
place a label on the engine as close as possible to the engine 
manufacturer's emission control information label to identify it as a 
flex engine. This could be the full label described above or it could 
be a simplified label that has only the equipment manufacturer's name 
and a simple statement that this is a flex engine. The location of this 
label is important since it effectively serves as an extension of the 
engine manufacturer's label, clarifying that the engine meets Phase 2 
standards, not the Phase 3 standards referenced on the original label. 
This avoids the problematic situation of changing or replacing labels, 
or requiring engine manufacturers to send different labels. We request 
comment on an approach in which we would require the full label for 
equipment manufacturers to be placed on the engine adjacent to the 
engine manufacturer's label to prevent confusion and the risks 
associated with multiple labels.
    Engine manufacturers might choose to produce Phase 3 engines before 
the 2011 model year and set up arrangements for separate shipment of 
catalyzed mufflers as described in Section V.E.2. We would expect any 
engine manufacturers producing these early Phase 3 engines to continue 
production of comparable engine models that meet Phase 2 standards 
rather than forcing all equipment manufacturers to accommodate the new 
engine design early. We believe it would not be appropriate for 
equipment manufacturers to buy Phase 3 engines in 2010 or earlier model 
years and downgrade them to meet Phase 2 emission standards as 
described above. We are therefore proposing to allow the downgrading of 
Phase 3 engines only for 2011 and later model years.
    Because equipment manufacturers in many cases depend on engine 
manufacturers to supply certified engines in time to produce complying 
equipment, we are also proposing a hardship provision for all equipment 
manufacturers (see Sec.  1068.255). An equipment manufacturer would be 
required to use all of its allowances under the transition program 
described above before being eligible to use this hardship. See Section 
VIII.C.9 for further discussion of this proposed hardship provision for 
equipment manufacturers.
    As described in Section V.E.2, we are concerned that the Transition 
Program for Equipment Manufacturers and the provisions related to 
delegated assembly may be redundant approaches to address the need to 
design equipment models to accommodate upgraded engines. The transition 
program is intended to give equipment manufacturers four years to make 
the design changes needed to reach a point of being able to accommodate 
low-emission Phase 3 engines, even for the most challenging equipment 
models. If equipment manufacturers are able to continue to 
independently source their exhaust systems based on the catalyst 
specifications determined by the engine manufacturer, it is not clear 
that allowances for additional lead time would be needed. We request 
comment on the relative advantages of these two approaches and, more 
specifically, which approach we should adopt in the final rule to 
address equipment manufacturers' needs for designing and producing 
equipment with Phase 3 engines. We request comment on an alternative 
approach of relying on the delegated-assembly provisions in Sec.  
10654.610 and the equipment-manufacturer hardship provisions in Sec.  
1068.255. This combination of tools would still allow for substantial 
flexibility in helping equipment manufacturers transition to Phase 3 
engines. The hardship provisions of Sec.  1068.255 were an important 
element of the successful transition to new emission standards for 
Large SI engines.
    (iii) Reporting and recordkeeping requirements. Equipment 
manufacturers choosing to participate in the transition program would 
be required to keep records of the U.S-directed production volumes of 
Class II equipment in 2007 through 2009 broken down by equipment model 
and calendar year. Equipment manufacturers would also need to keep 
records of the number of flex engines they use under this program.
    We are also proposing some notification requirements for equipment 
manufacturers. Under this proposal, equipment manufacturers wishing to 
participate in the transition provisions would need to notify EPA by 
June 30, 2010 that they plan to participate. They must submit 
information on production of Class II equipment over the three-year 
period from 2007 through 2009, calculate the number of allowances 
available, and provide basic business information about the company. 
For example, we would want to know the names of related companies 
operating under the same parent company that would be required to count 
engines together under this program. This early notification will not 
be a significant burden to the equipment manufacturer and will greatly 
enhance our ability to ensure compliance. Indeed, equipment 
manufacturers would need to have the information required in the 
notification to know how to use the allowances.
    We are proposing an ongoing reporting requirement for equipment 
manufacturers participating in the Phase 3 transition program. Under 
this proposal, participating equipment manufacturers would be required 
to submit an annual report to EPA that shows its annual number of 
equipment produced with flex engines under the transition provisions in 
the previous year. Each report would include a cumulative count of the 
number of equipment produced with flex engines for all years. To ease 
the reporting burden on equipment manufacturers, EPA intends to work 
with the manufacturers to develop an electronic means for submitting 
information to EPA.
(c) Additional Allowances for Small- and Medium-Sized Companies
    We believe small-volume equipment manufacturers would need a 
greater degree of lead time than manufacturers that sell large volumes 
of equipment. The small companies are less likely to have access to 
prototype engines from engine manufacturers and generally have smaller 
engineering departments for making the necessary design changes. 
Allowances representing thirty percent of annual U.S.-directed 
production provide larger companies with substantial lead time to plan 
their product development for compliance but smaller companies may have 
a product mix that requires extensive work to redesign products in a 
short amount of time. We are therefore proposing to specify that small-
volume equipment manufacturers may use this same transition program 
with allowances totaling 200 percent of the average annual U.S.-
directed production of equipment using Class II engines from 2007 
through 2009. For purposes of this program, a small-volume equipment 
manufacturer would be a manufacturer that produces fewer than 5,000 
pieces of nonhandheld equipment

[[Page 28155]]

per year subject to EPA regulations in each of the three years from 
2007 through 2009 or meets the SBA definition of small business 
equipment manufacturer (i.e., generally fewer than 500 employees for 
manufacturers of most types of equipment). These allowances would be 
spread over the same four-year period between 2011 and 2014. For 
example, a small-volume equipment manufacturer could potentially use 
Phase 2 engines on all their Class II equipment for two years or they 
might sell half their Class II equipment with Phase 2 engines for four 
years assuming production stayed constant over the four years.
    Medium-sized equipment manufacturers, i.e., companies that produce 
too much equipment to be considered a small-volume equipment 
manufacturer but produce fewer than 50,000 pieces of Class II 
equipment, may also face difficulties similar to that of small-volume 
equipment manufacturers. These companies may be like small-volume 
manufacturers if they have numerous product lines with varied 
approaches to installing engines and mufflers. Other companies may be 
more like bigger companies if they produce most of their equipment in a 
small number of high-volume models or have consistent designs related 
to engine and muffler installations. We are therefore proposing to 
create special provisions that would enable us to increase the number 
of transition allowances that are available to these medium-sized 
companies that have annual U.S.-directed production of Class II 
equipment of between 5,000 and 50,000 in each of the three years from 
2007 through 2009. To obtain allowances greater than 30 percent of 
average annual production, a medium-sized manufacturer would need to 
notify us by January 31, 2010 if they believe the standard allowances 
based on 30 percent of average annual production of Class II equipment 
would not provide adequate lead time starting in the 2011 model year. 
Additional allowances could be requested only if the equipment 
manufacturer can show they are on track to produce a number of 
equipment models representing at least half of their total U.S.-
directed production volume of Class II equipment in the 2011 model year 
compliant with all exhaust and evaporative emission standards. As part 
of their request, the equipment manufacturer would need to describe why 
more allowances are needed to accommodate anticipated changes in engine 
designs resulting from engine manufacturers' compliance with changing 
exhaust emission standards. The equipment manufacturer would also 
request a specific number of additional allowances needed with 
supporting information to show why that many allowances are needed. We 
may approve additional allowances up to 70 percent of the average 
annual U.S.-directed production of Class II equipment from 2007 through 
2009. If a medium-sized company were granted the full amount of 
additional allowances, they would have allowances equivalent to 100 
percent of the average annual production volume of Class II equipment.
    As noted above, the determination of whether a company is a small- 
or medium-sized manufacturer will be based primarily on production data 
over the 2007 through 2009 period submitted to EPA during 2010. After a 
company's status as a small- or medium-sized company has been 
established based on that data, EPA is proposing that manufactures 
would keep that status even if a company's production volume grows 
during the next few years, such that the company would no longer 
qualify as a small- or medium-sized company. EPA believes that 
equipment manufacturers need to know at the beginning of the transition 
program (i.e., 2011) how many allowances they will receive under the 
program. Changing a company's size determination during the program, 
which could affect the number of allowances available, would make it 
difficult for companies to plan and could lead to situations where a 
company is in violation of the provisions based on the use of 
allowances that were previously allowed. Likewise, if a company is 
purchased by another company or merges with another company after the 
determination of small- or medium-size status is established in 2010, 
EPA is proposing that the combined company could, at its option, keep 
the status for the individual portions of the combined company. If the 
combined company chooses to keep the individual designations, the 
combined company would submit the annual reports on the use of 
allowances broken down for each of the previously separate companies.
    (i) Requirements for foreign equipment manufacturers and importers. 
Under this proposal, only companies that manufacture equipment would 
qualify for the relief provided under the Phase 3 transition 
provisions. Foreign equipment manufacturers who comply with the 
compliance related provisions discussed below would enjoy the same 
transition provisions as domestic manufacturers. Foreign equipment 
manufacturers that do not comply with the compliance-related provisions 
discussed below would not receive allowances. Importers that do not 
manufacture equipment would not receive any transition relief directly, 
but could import equipment with a flex engine if it is covered by an 
allowance or transition provision associated with a foreign equipment 
manufacturer. This would allow transition provisions to be used by 
foreign equipment manufacturers in the same way as domestic equipment 
manufacturers, at the option of the foreign manufacturer, while 
avoiding the potential for importers to inappropriately use allowances. 
For the purposes of this proposal, a foreign equipment manufacturer 
would include any equipment manufacturer that produces equipment 
outside of the United States that is eventually sold in the United 
States.
    All foreign equipment manufacturers wishing to use the transition 
provisions would have to comply with all requirements discussed above. 
Along with the equipment manufacturer's notification described earlier, 
a foreign equipment manufacturer would have to comply with various 
compliance related provisions similar to those adopted for nonroad 
diesel engines (see Sec.  1054.626).\81\ As part of the notification, 
the foreign equipment manufacturer would have to:
---------------------------------------------------------------------------

    \81\ See, for example, 40 CFR 80.410 concerning provisions for 
foreign refiners with individual gasoline sulfur baselines.
---------------------------------------------------------------------------

     Agree to provide EPA with full, complete and immediate 
access to conduct inspections and audits;
     Name an agent in the District of Columbia for service;
     Agree that any enforcement action related to these 
provisions would be governed by the Clean Air Act;
     Submit to the substantive and procedural laws of the 
United States;
     Agree to additional jurisdictional provisions;
     Agree that the foreign equipment manufacturer will not 
seek to detain or to impose civil or criminal remedies against EPA 
inspectors or auditors for actions performed within the scope of EPA 
employment related to the provisions of this program;
     Agree that the foreign equipment manufacturer becomes 
subject to the full operation of the administrative and judicial 
enforcement powers and provisions of the United States without 
limitation based on sovereign immunity; and
     Submit all reports or other documents in the English 
language, or include an English language translation.

[[Page 28156]]

    In addition to these proposed requirements, we are proposing to 
require foreign equipment manufacturers that participate in the 
transition program to comply with a bond requirement for equipment 
imported into the United States. We describe a bond program below that 
we believe could be an important tool for ensuring that foreign 
equipment manufacturers are subject to the same level of enforcement as 
domestic equipment manufacturers. Specifically, we believe a bonding 
requirement for the foreign equipment manufacturer is an important 
enforcement tool for ensuring that EPA has the ability to collect any 
judgments assessed against a foreign equipment manufacturer for 
violations of these transition provisions. We request comments on all 
aspects of the specific program we describe here, but also on 
alternative measures that would achieve the same goal.
    Under a bond program, the participating foreign equipment 
manufacturer would have to maintain a bond in the proper amount that is 
payable to satisfy judgments that result from U.S. administrative or 
judicial enforcement actions for conduct in violation of the Clean Air 
Act. The foreign equipment manufacturer would generally obtain a bond 
in the proper amount from a third party surety agent that has been 
listed with the Department of the Treasury. As discussed in Sections 
V.E.6.c and V.E.6.d, EPA is proposing other bond requirements as well. 
An equipment manufacturer required to post a bond under any of these 
provisions would be required to obtain only one bond of the amount 
specified for those sections.
    In addition to the foreign equipment manufacturer requirements 
discussed above, EPA also proposes to require importers of equipment 
with flex engines from a complying foreign equipment manufacturer to 
comply with certain provisions. EPA believes these importer provisions 
are essential to EPA's ability to monitor compliance with the 
transition provisions. EPA proposes that the regulations would require 
each importer to notify EPA prior to their initial importation of 
equipment with flex engines. Importers would be required to submit 
their notification prior to the first calendar year in which they 
intend to import equipment with flex engines from a complying foreign 
equipment manufacturer. The importer's notification would need to 
include the following information:
     The name and address of importer (and any parent company);
     The name and address of the manufacturers of the equipment 
and engines the importer expects to import; and
     Number of units of equipment with flex engines the 
importer expects to import for each year broken down by equipment 
manufacturer.
    In addition, EPA is proposing that any importer electing to import 
to the United States equipment with flex engines from a complying 
foreign equipment manufacturer would have to submit annual reports to 
EPA. The annual report would include the number of units of equipment 
with flex engines the importer actually imported to the United States 
in the previous calendar year; and identify the equipment manufacturers 
and engine manufacturers whose equipment and engines were imported.
(4) Equipment Manufacturer Recertification
    Generally, it has been engine manufacturers who certify with EPA 
for exhaust emissions because the standards are engine-based. However, 
because the Phase 3 nonhandheld standards under consideration are 
expected to result in the use of catalysts, a number of equipment 
manufacturers, especially those that make low-volume models, believe it 
may be necessary to produce their own unique engine/muffler designs, 
but using the same catalyst substrate already used in a muffler 
certified by the engine manufacturer. In this situation, the engine 
would not be covered by the engine manufacturer's certificate, as the 
engine/muffler design is not within the specifications for the 
certified engine. The equipment manufacturer is therefore producing a 
new distinct engine which is not certified and needs to be certified 
with EPA. In order to allow the possibility of an equipment 
manufacturer certifying an engine/muffler design with EPA, we are 
proposing a simplified engine certification process for nonhandheld 
equipment manufacturers (see Sec.  1054.612). Under this simplified 
certification process, the nonhandheld equipment manufacturer would 
need to demonstrate that it is using the same catalyst substrate as the 
approved engine manufacturer's engine family, provide information on 
the differences between their engine/exhaust system and the engine/
exhaust system certified by the engine manufacturer, and explain why 
the emissions deterioration data generated by the engine manufacturer 
would be representative for the equipment manufacturer's configuration. 
The equipment manufacturer would need to perform low-hour emission 
testing on an engine equipped with their modified exhaust system and 
demonstrate that it meets the emission standards after applying the 
engine manufacturer's deterioration factors for the certified engine 
family. We would not require production-line testing for these engines. 
The equipment manufacturer would be responsible to meet all of the 
other requirements of an engine manufacturer under the regulations, 
including labeling, warranty, defect reporting, payment of 
certification fees, and other things. EPA requests comments on the 
usefulness of such a provision. EPA also requests comments on whether 
such a simplified certification provision should expire after a period 
of time, for example, after five years. If the provision were to 
expire, an equipment manufacturer could continue to certify, but they 
would have to follow the general certification regulations at that 
point.
(5) Special Provisions Related to Altitude
    As described in Section V.C.1, we allow manufacturers of handheld 
and nonhandheld engines to comply with emission standards at high 
altitudes using an altitude kit. We are proposing to keep the 
provisions that already apply in part 90 related to descriptions of 
these altitude kits in the application for certification. This would 
include a description of how engines comply with emission standards at 
varying atmospheric pressures, a description of the altitude kits, and 
the associated part numbers. The manufacturer would also identify the 
altitude range for which it expects proper engine performance and 
emission control with and without the altitude kit, state that engines 
will comply with applicable emission standards throughout the useful 
life with the altitude kit installed according to instructions, and 
include any supporting information. Finally, manufacturers would need 
to describe a plan for making information and parts available such that 
altitude kits would reasonably be expected to be widely used in high-
altitude areas. For nonhandheld engines, this would involve all 
counties with elevations substantially above 4,000 feet (see Appendix 
III to part 1054). This includes all U.S. counties where 75 percent of 
the land mass and 75 percent of the population are above 4,000 feet 
(see 45 FR 5988, January 24, 1980 and 45 FR 14079, March 4, 1980). For 
handheld engines, this would involve all areas at an elevation at or 
above that which they identify in their application

[[Page 28157]]

for certification for needing an altitude kit to meet emission 
standards.
    We are also proposing to require information related to altitude 
kits to be on the emission control information label, unless space 
limitations prevent it. We believe it is important for operators to 
know that engines may need to be modified to run properly at high 
elevations.
    We request comment on all aspects of this approach for compliance 
at high-altitude conditions. (See Sec. Sec.  1054.115, 1054.135, 
1054.205, and 1054.655.)
(6) Special Provisions for Compliance Assurance
    EPA's experiences in recent years have highlighted the need for 
more effective tools for preventing the introduction into commerce of 
noncompliant engines. These include noncompliant engines sold without 
engine labels or with counterfeit engine labels. We are proposing the 
special provisions in the following sections to help us address these 
problems.
(a) Importation Form
    Importation of engines is regulated both by EPA and U.S. Customs. 
The current regulations for U.S. Customs specify that anyone importing 
a nonroad engine (or equipment containing a nonroad engine) must 
complete a declaration form before importation. EPA has created 
Declaration Form 3520-21 for this purpose. Customs requires this in 
many cases, but there are times when they allow engines to be imported 
without the proper form. It would be an important advantage for EPA's 
own compliance efforts to be able to enforce this requirement. We are 
therefore proposing to modify part 90 to mirror the existing Customs 
requirement (and the EPA requirement in Sec.  1068.301) for importers 
to complete and retain the declaration form before importing engines 
(see Sec.  90.601). This would facilitate a more straightforward 
processing of cases in which noncompliant products are brought to a 
U.S. port for importation because currently no requirement exists for 
measuring emissions or otherwise proving that engines are noncompliant 
at the port facility. Since this is already a federal requirement, we 
are proposing to make this effective immediately with the final rule.
(b) Assurance of Warranty Coverage
    Manufacturers of Small SI engines subject to the standards are 
required to provide an emission-related warranty so owners are able to 
have repairs done at no expense for emission-related defects during an 
initial warranty period. Established companies are able to do this with 
a network of authorized repair facilities that can access replacement 
parts and properly correct any defects. In contrast, we are aware that 
some manufacturers are selling certified engines in the United States 
without any such network for processing warranty claims. As such, 
owners who find that their engines have an emission-related defect are 
unable to properly file a warranty claim or get repairs that should be 
covered by the warranty. In effect, this allows companies to certify 
their engines and agree to provide warranty coverage without ever 
paying for legitimate repairs that should be covered by the warranty. 
We are therefore proposing to require that manufacturers demonstrate 
several things before we will approve certification for their engines 
(see Sec.  90.1103 and Sec.  1054.120). The following provisions would 
apply to manufacturers who certify engines, and would include importers 
who certify engines. First, we are proposing to require manufacturers 
to provide and monitor a toll-free telephone number and an e-mail 
address for owners to receive information about how to make a warranty 
claim and how to make arrangements for authorized repairs. Second, we 
are proposing to require manufacturers to provide a source of 
replacement parts within the United States. For imported parts, this 
would require at least one distributor within the United States.
    Finally, we are proposing to require manufacturers to have a 
network of authorized repair facilities or to take one of several 
alternate approaches to ensure that owners will be able to get free 
repair work done under warranty. If warranty-related repairs are 
limited to authorized repair facilities, we are proposing to require 
that manufacturers have enough such facilities that owners do not have 
to go more than 100 miles for repairs. An exception would be made for 
remote areas where we would allow for approval of greater travel 
distances for getting repairs as long as the longer travel distance 
applies to no more than 10 percent of affected owners. For small 
businesses, start-up companies, or importers, it may not be realistic 
to maintain a national repair network. We are proposing a variety of 
alternative methods for such companies to meet their warranty 
obligations. Manufacturers would be able to meet warranty obligations 
by informing owners that free shipping to and from an authorized 
service center is available, a service technician will be provided to 
come to the owner to make the warranty repair, or repair costs at a 
local nonauthorized service center will be reimbursed.
    We believe these proposed requirements are both necessary and 
effective for ensuring proper warranty coverage for all owners. At the 
same time, we are proposing a flexible approach that allows companies 
to choose from widely varying alternatives to provide warranty service. 
We therefore believe these proposed requirements are readily achievable 
for any company. We are therefore proposing to implement these 
requirements starting with the 2009 model year. This should allow time 
for the administrative steps necessary to arrange for any of the 
allowable compliance options described above. We request comment on 
these provisions to ensure proper warranty coverage. We also request 
comment on alternative means of demonstrating effective warranty 
coverage comparable to that described above.
(c) Bond Requirements Related to Enforcement and Compliance Assurance
    Certification initially involves a variety of requirements to 
demonstrate that engines and equipment are designed to meet applicable 
emission standards. After certification is complete, however, several 
important obligations apply to the certifying manufacturer or importer. 
For example, we require ongoing testing of production engines, warranty 
coverage for emission-related defects, reporting of recurring defects, 
and payment of penalties if there is a violation. For companies 
operating within the United States, we are generally able to take steps 
to communicate clearly and insist on compliance with applicable 
regulations. For companies without staff or assets in the United 
States, this is not the case. Accordingly, we have limited ability to 
enforce these requirements or recover any appropriate penalties, which 
increases the risk of environmental problems as well as problems for 
owners. This creates the potential for a company to gain a competitive 
advantage if they do not operate in the United States by avoiding some 
of the costs of complying with EPA regulations.
    We request comment on a requirement for importers of certified 
engines and equipment to post a bond to cover any potential compliance 
or enforcement actions under the Clean Air Act. Importers would be 
exempt from the bond requirement if they were able to sufficiently 
demonstrate an assurance that they would meet any compliance-or 
enforcement-related obligations. We

[[Page 28158]]

would consider adopting provisions to waive the bonding requirement 
based on a variety of specific criteria. For example, importers might 
show that they have physical assets in the United States with a value 
equal to the retail value of the engines that they will import during 
the model year (or equipment that they will import during the model 
year if they import equipment). Also, we may be able to establish an 
objective measure for a company to demonstrate long-term compliance 
with applicable regulations. Another alternative might involve a 
showing that an importer has been certified under certain industry 
standards for production quality and regulatory compliance. Finally, we 
may be able to rely on a company's commitment to periodically perform 
voluntary in-use testing in the United States to show that engines 
comply with emission standards. In addition to these specific criteria, 
we would consider adopting a provision that allows an individual 
importer to request a waiver from bonding requirements based on that 
importer's particular circumstances. If we adopt a bonding requirement, 
we would expect to apply that starting with the 2009 model year.
    We would expect the per-engine bond amount to be $25 for handheld 
engines and Class I engines. Class II engines cover a much wider range 
of applications, so we further differentiate the bond for those 
engines. The proposed per-engine bond amounts for Class II engines 
would be $50 for engines between 225 and 740 cc, $100 for engines 
between 740 and 1,000 cc, and $200 for engines above 1,000 cc. These 
values are generally scaled to be approximately 10 to 15 percent of the 
retail value. In the case of handheld engines, this is based on the 
retail value of equipment with installed engines, since these products 
are generally traded that way. Class II engines are very often sold as 
loose engines to equipment manufacturers, so the corresponding per-
engine bond values are based on the retail value of the engine alone. 
This approach is similar to the bond requirements that apply for 
nonroad diesel engines (see Sec.  1039.626).
    The total bond amount would be based on the value of imported 
products over a one-year period. If an importer's bond would be used to 
satisfy a judgment, the importer would then be required to increase the 
amount of the bond within 90 days of the date the bond is used to cover 
the amount that was used. Also, we would require the bond to remain in 
place for five years after the importer no longer imports Small SI 
engines.
    (d) Bond Requirements Related to Recall
    Recall is another potential compliance obligation. The Clean Air 
Act specifies that EPA must require the manufacturer to conduct a 
recall if EPA determines that a substantial number of engines do not 
conform to the regulations. We have experience with companies that have 
faced compliance-related problems where it was clear that they did not 
have the resources to conduct a recall if that were necessary. Such 
companies benefit from certification without bearing the full range of 
associated obligations. We believe it is appropriate again to add a 
requirement to post a bond to ensure that a company can meet their 
recall obligations. The concern for being able to meet these 
obligations applies similarly to domestic and foreign manufacturers. 
The biggest indicator of a manufacturer's ability to make recall 
repairs relates to the presence of repair facilities in the United 
States. We are therefore proposing a bond requirement starting with the 
2009 model year for all manufacturers (including importers) that do not 
have assembly facilities in the United States that are available for 
processing recall repairs or a repair network in the United States 
capable of processing recall repairs (see Sec.  90.1007 and Sec.  
1054.685). Note that a single bond payment would be required for 
companies that must post bond for compliance-related obligations, as 
described above, in addition to the recall-related obligations. Such a 
repair network would need to involve at least 100 authorized repair 
facilities in the United States or at least one such facility for each 
5,000 engines sold in the United States, whichever is less. Companies 
not meeting these criteria would need to post a bond as described above 
for compliance assurance. We would allow these companies to arrange for 
any applicable recall repairs to be done at independent facilities.
(e) Restrictions Related to Naming Model Years
    New exhaust emission standards apply based on the date of engine 
assembly. We similarly require that equipment manufacturers use engines 
meeting emission standards in the same model year as equipment based on 
the equipment assembly date. For example, a manufacturer of a 2007 
model year piece of equipment must generally use a 2007 model year 
engine. However, we allow equipment manufacturers to deplete their 
normal inventories of engines from the previous model year as long as 
there is no stockpiling of those earlier engines. We also note that 
this restriction does not apply if emission standards are unchanged for 
the current model year. We have found many instances where companies 
will import new engines usually installed in equipment and claim that 
the engine was built before emission standards took effect, even if the 
start date for emission standards was several years earlier. We believe 
many of these engines were in fact built later than the named model 
year, but it is difficult to prove the date of manufacture, which then 
makes it difficult to properly enforce these requirements. Now that 
emission standards have been in place for Small SI engines for almost 
ten years, we believe it is appropriate to implement a provision that 
prevents new engines manufactured several years previously to be 
imported when more recent emission standards have been adopted. This 
would prevent companies from importing noncompliant products by 
inappropriately declaring a manufacture date that precedes the point at 
which the current standards started to apply. It would also put a time 
limit on our existing provisions that allow for normal inventory 
management to use the supply of engines from previous model years when 
there has been a change in standards.
    Starting January 1, 2009, we are proposing to specify that engines 
and equipment will be treated as having a model year at most one year 
earlier than the calendar year in which the importation occurs when 
there is a change in emission standards (see Sec.  90.616 and Sec.  
1054.695). For example, for new standards starting in the 2011 model 
year, beginning January 1, 2012, all imported new products would be 
considered 2011 or later model year engines and would need to comply 
with new 2011 standards, regardless of the actual build date of the 
engines or equipment. (Engines or equipment would be considered new 
unless the importer demonstrates that the engine or equipment had 
already been placed into service, as described below.) This would allow 
a minimum of twelve months for manufactured engines to be shipped to 
equipment manufacturers, installed in equipment and imported into the 
United States. This time interval would be substantially longer for 
most engines because the engine manufacturer's model year typically 
ends well before the end of the calendar year. Also, engines produced 
earlier in the model year would have that much more time to be shipped, 
installed, and imported.
    Manufacturers have expressed concern that the one-year limitation 
on imported products may be too short

[[Page 28159]]

since there are often delays related to shipping, inventory, and 
perhaps most significantly, unpredictable fluctuations in actual sales 
volumes. We do not believe it is appropriate to maintain long-term 
inventories of these products outside the United States for eventual 
importation when it is clear several years ahead that the new standards 
are scheduled to take effect. Companies may be able to import these 
products shortly after manufacturing and keep their inventories in a 
U.S. distribution network to avoid the situation of being unable to 
sell these products. We request comment on the need to extend the one-
year limit to account for the business dynamics. We also request 
comment on any narrower provisions that would allow for exceptions in 
certain circumstances. For example, should we consider allowing an 
additional year for products if manufacturers let us know ahead of time 
that they have certain numbers of engines or equipment that will not be 
imported in time, and they can demonstrate that they are not 
stockpiling or circumventing regulatory requirements?
    In years where the standards do not change, this proposed provision 
would have no practical effect because, for example, a 2004 model year 
engine meets the 2006 model year standards. We would treat such an 
engine as compliant based on its 2004 emission label, any emission 
credit calculations for the 2004 model year, and so on. These engines 
could therefore be imported anytime until the end of the calendar year 
in which new standards take effect. Also, because the changes do not 
affect importation until there is a change in the standards, we are 
proposing to implement these provisions starting with the Phase 3 
standards.
    We do not intend for these proposed provisions to delay the 
introduction of emission standards by one year. It is still a violation 
to produce an engine in the 2011 calendar year and call it a 2010 model 
year engine to avoid being subject to 2011 standards.
    Importation of equipment that is not new is handled differently. 
These products would not be required to be upgraded to meet new 
emission standards that started to apply after the engine and equipment 
were manufactured. However, to avoid the situation where companies 
simply declare that they are importing used equipment to avoid new 
standards, we are proposing to require that they provide clear and 
convincing evidence that such engines have been placed into service 
prior to importation. Such evidence would generally include documentary 
evidence of purchase and maintenance history and visible wear that is 
consistent with the reported manufacture date. Importing products for 
resale or importing more than one engine or piece of equipment at a 
time would generally call for closer evaluation to determine that this 
degree of evidence has been met.
(f) Import-Specific Information at Certification
    We are proposing to require additional information to improve our 
ability to oversee compliance related to imported engines (see Sec.  
90.107 and Sec.  1054.205). In the application for certification, we 
are proposing to require the following additional information: (1) The 
port or ports at which the manufacturer intends to import the engines, 
(2) the names and addresses of the agents the manufacturer has 
authorized to import the engines, and (3) the location of the test 
facilities in the United States where the manufacturer would test the 
engines if we select them for testing under a selective enforcement 
audit. This information should be readily available so we propose to 
require it for the 2009 model year. The current regulations in part 90 
do not include these specific requirements; however, we do specify 
already that we may select imported engines at a port of entry. In such 
a case, we would generally direct the manufacturer to do testing at a 
facility in the United States. The proposed provision allows the 
manufacturers to make these arrangements ahead of time rather than 
relying on EPA's selection of a test lab. The current regulations also 
state clearly in Sec.  90.119 that EPA may conduct testing at any 
facility to determine whether engines meet emission standards.
(g) Counterfeit Emission Labels
    We have observed that some importers attempt to import noncompliant 
products by creating an emission control information label that is an 
imitation of a valid label from another company. We are not proposing 
to require that certifying manufacturers take steps to prevent this, 
but we are proposing to include a provision that specifically allows 
manufacturers to add appropriate features to prevent counterfeit 
labels. This may include the engine's serial number, a hologram, or 
some other unique identifying feature. We propose to apply this 
provision immediately upon completion of the final rule since it is an 
allowance and not a requirement (see Sec.  1054.135).
(h) Partially Complete Engines
    As described in Section XI, we are proposing to clarify engine 
manufacturers' responsibilities for certification with respect to 
partially complete engines. While this is intended to establish a path 
for secondary engine manufacturers to get their engines from the 
original engine manufacturer, we are aware that this will also prevent 
manufacturers from selling partially complete engines as a strategy to 
circumvent certification requirements. If long blocks or engines 
without fuel systems are introduced into U.S. commerce, either the 
original manufacturer or the company completing engine assembly would 
need to hold a certificate for that engine.
(7) Using Certified Small SI Engines in Marine Applications
    Manufacturers have described situations in which Small SI engines 
are used in marine applications. As described in Section III.E.5, we 
are proposing to allow certified Small SI engines to be used in 
outboard or personal watercraft applications without certifying to the 
Marine SI emission standards in part 1045. We request comment on the 
appropriateness of this provision. In particular, we request comment on 
the extent to which the proposed provisions will address the unique 
situations that apply for swamp boats and other unusual configurations.
(8) Other Provisions
    We are also proposing a variety of changes in the provisions that 
make up the certification and compliance program. Most of these changes 
serve primarily to align with the regulations we have started to apply 
to other types of engines.
    The proposed warranty provisions are based on the requirements that 
already apply under 40 CFR part 90. We are proposing to add an 
administrative requirement to describe the provisions of the emission-
related warranty in the owners manual. We expect that many 
manufacturers already do this but believe it is appropriate to require 
this as a routine practice. (See Sec.  1054.120.) Testing new engines 
requires a period of engine operation to stabilize emission levels. The 
regulations specify two separate figures for break-in periods for 
purposes of certification testing. First, engines are generally 
operated long enough to stabilize emission levels. Second, we establish 
a limit on how much an engine may operate and still be considered a 
``low-hour'' engine. The results of testing with the low-hour engine 
are compared with a deteriorated

[[Page 28160]]

value after some degree of service accumulation to establish a 
deterioration factor. For Marine SI engines, we are proposing that the 
engine can be presumed to have stabilized emission levels after 12 
hours of engine operation, with a provision allowing approval for more 
time if needed, and we generally require that low-hour test engines 
have no more than 30 hours of engine operation. However, given the 
shorter useful life for many Small SI engines, this would not make for 
a meaningful process for establishing deterioration factors. For 
example, emission levels in Small SI engines may not stabilize before 
deterioration begins to affect emission levels, which would prevent the 
engine from ever truly having stabilized emission levels. Also, the 
low-hour emission test should occur early enough to adequately 
represent the deterioration over the engine's lifetime.
    We are proposing that Small SI engines with a useful life above 300 
hours can be presumed stable after 12 hours with low-hour testing 
generally occurring after no more than 24 hours of engine operation. 
For Small SI engines with useful life below 300 hours, we are proposing 
a combination of provisions to address this concern. First, we are 
proposing to allow manufacturers to establish a stabilization period 
that is less than 12 hours without showing that emission levels have 
fully stabilized (see Sec.  1054.501). Second, we propose to specify 
that low-hour testing must generally occur after no more than 15 hours 
of engine operation (see Sec.  1054.801). This allows some substantial 
time for break-in, stabilization, and running multiple tests, without 
approaching a significant fraction of the useful life. Third, we are 
proposing that manufacturers consistently test low-hour production-line 
engines (and emission-data engines in the case of carryover 
deterioration factors for certification) using the same degree of 
service accumulation to avoid inaccurate application of deterioration 
factors (see Sec.  1054.301).
    As described in Section VII.C, we are proposing to clarify the 
maintenance that manufacturers may perform during service accumulation 
as part of the certification process. The general approach is to allow 
any amount of maintenance that is not emission-related, but to allow 
emission-related maintenance only if it is a routine practice with in-
use engines. In most of our emission control programs we specify that 
80 percent of in-use engines should undergo a particular maintenance 
step before manufacturers can do that maintenance during service 
accumulation for certification testing. We are aware that Small SI 
engines are predominantly operated by homeowners with widely varying 
practices in servicing their lawn and garden equipment. As such, 
achieving a rate of 80 percent may be possible only for the most 
obvious maintenance steps. We are therefore proposing a more 
accommodating approach for Small SI engines. In particular, we are 
proposing to allow manufacturers to perform a maintenance step during 
certification based on information showing that 60 to 80 percent of in-
use engines get the specified maintenance at the recommended interval. 
We would approve the use of such maintenance based on the relative 
effect on performance and emissions. For example, we may allow 
scheduled fuel-injector replacement if survey data show this is done at 
the recommended interval for 65 percent of engines and performance 
degradation is shown to be roughly proportional to the degradation in 
emission control for engines that do not have their fuel injectors 
replaced.
    One maintenance step of particular interest will be replacement of 
air filters. In larger spark-ignition engines, we don't treat 
replacement of air filters as critical emission-related maintenance, 
largely because those engines have feedback controls to compensate for 
changes in varying pressure drop across the air filter. However, for 
Small SI engines varying air flow through the air filter has a direct 
effect on the engine's air-fuel ratio, which in turn directly affects 
the engine's emission rates for each of the regulated pollutants. 
Service accumulation generally takes place in laboratory conditions 
with far less debris, dust, or other ambient particles that would cause 
filter loading, so filter changes should be unnecessary to address this 
conventional concern. We are concerned that the greater affect is from 
fuel and oil that may deposit on the back side of the filter, 
especially from crankcase ventilation into the intake. If filters are 
changed before an emission test, this effect will go undetected. If 
filter changes are disallowed before emission testing, manufacturers 
would need to design their intake systems to prevent internal filter 
contamination. We request comment on the need for replacing air 
filters, the effect on emission levels, and on the extent of change 
that would be needed to prevent filter contamination from recirculating 
crankcase gases. We also request comment on the extent to which air 
filters are changed with in-use engines. While this is clearly done 
with many engines, it is not clear that the experience is common enough 
that we would consider it to be routine, and therefore appropriate for 
certification engines. Since the cost of equipment, the types of jobs 
performed, and the operating lifetime varies dramatically for Class I 
and Class II engines, commenters should distinguish between in-use 
maintenance that is done by engine class as much as possible. We may, 
for example, conclude that owners of riding mowers and other Class II 
equipment routinely replace air filters to keep their equipment 
operating properly, while owners of walk-behind mowers and other Class 
I equipment are more likely to treat their equipment as a disposable 
product and therefore not replace the air filter.
    We are proposing to define criteria for establishing engine 
families that are very similar to what is currently specified in 40 CFR 
part 90. We are proposing to require that engines with turbochargers be 
in a different family than naturally aspirated engines since that would 
be likely to substantially change the engine's emission 
characteristics. Very few if any Small SI engines are turbocharged 
today so this change will not be disruptive. We are also specifying 
that engines must have the same number, arrangement, and approximate 
bore diameter of cylinders. This will help us avoid the situation where 
manufacturers argue that engines with substantially different engine 
blocks should be in the same engine family. We would expect to 
implement this provision consistent with the approach adopted by 
California ARB in which they limit engine families to include no more 
than 15 percent variation in total engine displacement. Similarly, the 
current regulations in part 90 do not provide a clear way of 
distinguishing engine families by cylinder dimensions (bore and stroke) 
so we are also proposing to change part 90 to limit the variation in 
displacement within an engine family to 15 percent. (See Sec.  1054.230 
and Sec.  90.116.)
    The test procedures for Small SI engines are designed for engines 
operating in constant-speed applications. This covers the large 
majority of affected equipment; however, we are aware that engines 
installed in some types of equipment, such as small utility vehicles or 
go carts, are not governed to operate only at a single rated speed. 
These engines would be certified based on their emission control over 
the constant-speed duty cycle even though they do not experience 
constant-speed operation in use. We are not prepared to propose a

[[Page 28161]]

new duty cycle for these engines but we are proposing to require engine 
manufacturers to explain how their emission control strategy is not a 
defeat device in the application for certification. For example, if 
engines will routinely experience in-use operation that differs from 
the specified duty cycle for certification, the manufacturer should 
describe how the fuel-metering system responds to varying speeds and 
loads not represented by the duty cycle. We are also proposing to 
require that engine distributors and equipment manufacturers that 
replace installed governors must have a reasonable technical basis for 
believing that the effectiveness of the modified engine's emission 
controls over the expected range of in-use operation will be similar to 
that measured over the specified duty cycle (see Sec.  1054.650). This 
may require test data. While this does not require a new certificate of 
conformity, it may require testing to confirm that the engine 
modification should not be considered tampering. In addition, we would 
require that engine distributors and equipment manufacturers notify the 
engine manufacturer before modifying the engine, follow any 
instructions from the engine manufacturer related to the emission 
control system, and avoid making any other changes to the engine that 
would remove it from its certified configuration. We request comment on 
these provisions.

F. Small Business Provisions

(1) Small Business Advocacy Review Panel
    On August 17, 2006, we convened a Small Business Advocacy Review 
Panel (SBAR Panel or the Panel) under section 609(b) of the Regulatory 
Flexibility Act (RFA), as amended by the Small Business Regulatory 
Enforcement Fairness Act of 1996 (SBREFA). The purpose of the Panel was 
to collect the advice and recommendations of representatives of small 
entities that could be affected by this proposed rule and to prepare a 
report containing the Panel's recommendations for small entity 
flexibilities based on those comments, as well as on the Panel's 
findings and recommendations regarding the elements of the Initial 
Regulatory Flexibility Analysis (IRFA) under section 603 of the RFA. 
Those elements of an IRFA are:
     A description of, and where feasible, an estimate of the 
number of small entities to which the proposed rule will apply;
     A description of projected reporting, recordkeeping, and 
other compliance requirements of the proposed rule, including an 
estimate of the classes of small entities that will be subject to the 
requirements and the type of professional skills necessary for 
preparation of the report or record;
     An identification, to the extent practicable, of all 
relevant Federal rules that may duplicate, overlap, or conflict with 
the proposed rule; and
     A description of any significant alternative to the 
proposed rule that accomplishes the stated objectives of applicable 
statutes and that minimizes any significant economic impact of the 
proposed rule on small entities.
    The report of the Panel has been placed in the rulemaking record 
for this proposal.
    In addition to EPA's Director of the Office of Regulatory 
Management and Information who acted as chairperson, the Panel 
consisted of the Director of the EPA's Assessment and Standards 
Division of the Office of Transportation and Air Quality, the 
Administrator of the Office of Management and Budget's Office of 
Information and Regulatory Affairs, and the Chief Counsel for Advocacy 
of the Small Business Administration.
    Using definitions provided by the Small Business Administration 
(SBA), companies that manufacture internal-combustion engines and that 
employ fewer than 1,000 people are considered small businesses for the 
SBAR Panel. Companies that manufacture equipment and that employ fewer 
than 500 people, or fewer than 750 people for manufacturers of 
construction equipment, or fewer than 1,000 people for manufacturers of 
generators, are considered small businesses for the SBAR Panel. Based 
on this information, we asked 25 companies that met the SBA small 
business thresholds to serve as small entity representatives for the 
duration of the Panel process. Of these 25 companies, 14 of them 
represented a cross-section of Small SI engine manufacturers, equipment 
manufacturers, and fuel system component manufacturers. (The rest of 
the companies were involved in the Marine SI market.)
    With input from small entity representatives, the Panel drafted a 
report providing findings and recommendations to us on how to reduce 
the potential burden on small businesses that may occur as a result of 
this proposed rule. The Panel report is included in the rulemaking 
record for this proposal. In light of the Panel report, and where 
appropriate, we have identified provisions anticipated for the proposed 
rule. The proposed flexibility options, based on the recommendations of 
the Panel, are described below.
(2) Proposed Burden Reduction Approaches for Small-Volume Nonhandheld 
Engine Manufacturers
    We are proposing several provisions for small business nonhandheld 
engine manufacturers. The purpose of these provisions is to reduce the 
burden on companies for which fixed costs cannot be distributed over a 
large number of engines. We request comment on the appropriateness of 
these provisions which are described in detail below.
    Under EPA's current Phase 2 regulations, EPA provided a number of 
provisions for small-volume engine manufacturers. For the Phase 2 
regulations, the criteria for determining if a company was a ``small-
volume engine manufacturer'' was based on whether the company projected 
at time of certification to have production of no more than 10,000 
nonhandheld engines per year (excluding engines sold in California that 
are subject to the California ARB standards). Based on past experience, 
EPA believes that determining the applicability of the provisions based 
on number of employees, as compared to volume of products, can be more 
problematic given the nature of the workforce in terms of full-time, 
part-time, contract, overseas versus domestic, and parent companies. 
EPA believes it can avoid these potential complications and still 
provide relief to nearly all small businesses by continuing to use the 
annual sales criteria for determining which entities qualify as a small 
volume engine manufacturer under the Phase 3 program. For these 
reasons, EPA is proposing to retain the current production-based 
criteria for determining who is a small-volume engine manufacturer and, 
as a result, eligible for the Phase 3 flexibilities described below 
(see Sec.  1054.801).
    Based on confidential sales data provided to EPA by engine 
manufacturers, the 10,000 unit cut-off for engine manufacturers would 
include all of the small business engine manufacturers currently 
identified using SBA's employee-based definition. To ensure all small 
businesses have access to the flexibilities described below, EPA is 
also proposing to allow engine manufacturers which exceed the 
production cut-off level noted above but have fewer than 1,000 
employees to request treatment as a small-volume engine manufacturer 
(see Sec.  1054.635). In such a case, the manufacturer would need to 
provide information to EPA demonstrating that the manufacturer has

[[Page 28162]]

fewer employees than the 1,000 cut-off level.
    If a small-volume engine manufacturer grows over time and exceeds 
the production volume limit of 10,000 nonhandheld engines per year, the 
engine manufacturer would no longer be eligible for the small volume 
flexibilities. However, because some of the flexibilities described 
below provide manufacturers with the ability to avoid certain testing 
such as durability testing or production line testing, it may be 
difficult for a manufacturer to fully comply with all of the testing 
requirements immediately upon losing its small-volume status. In such 
cases, EPA is proposing that the engine manufacturer would be able to 
contact EPA and request additional time, subject to EPA approval, to 
meet the testing requirements that generally apply to engine 
manufacturers.
(a) Assigned Deterioration Factors
    We are proposing that small-volume engine manufacturers may rely on 
an assigned deterioration factor to demonstrate compliance with the 
standards for the purposes of certification rather than doing service 
accumulation and additional testing to measure deteriorated emission 
levels at the end of the regulatory useful life (see Sec.  1054.240). 
EPA is not proposing actual levels for the assigned deterioration 
factors with this proposal. EPA intends to analyze emissions 
deterioration information that becomes available over the next few 
years to determine what deterioration factors would be appropriate for 
nonhandheld engines. This is likely to include deterioration data for 
engines certified to comply with California ARB's Tier 3 standards and 
engines certified early to EPA's Phase 3 standards. Prior to the 
implementation date for the Phase 3 standards, EPA will provide 
guidance to engine manufacturers specifying the levels of the assigned 
deterioration factors for small-volume engine manufacturers.
(b) Exemption From Production-Line Testing
    We are proposing that small-volume engine manufacturers would be 
exempt from the production-line testing requirements (see Sec.  
1054.301). While we are proposing to exempt small-volume engine 
manufacturers from production line testing, we believe requiring 
limited production-line testing could be beneficial to implement the 
ongoing obligation to ensure that production engines are complying with 
the standards. Therefore, we request comment on the alternative of 
applying limited production-line testing to small-volume engine 
manufacturers with a requirement to test one production engine per 
year.
(c) Additional Lead Time
    We are proposing that small-volume engine manufacturers could delay 
implementation of the Phase 3 exhaust emission standards for two years 
(see Sec.  1054.145). Small-volume engine manufacturers would be 
required to comply with the Phase 3 exhaust emission standards 
beginning in model year 2014 for Class I engines and model year 2013 
for Class II engines. Under this approach, manufacturers would be able 
to apply this delay to all of their nonhandheld engines or to just a 
portion of their production. For those engine families that are 
certified to meet the Phase 3 standards prior to these delayed dates by 
selecting an FEL at or below the Phase 3 standards, small volume engine 
manufacturers could generate early Phase 3 credits (as discussed in 
Section V.C.3) through the 2013 model year for Class I engines and 
through the 2012 model years for Class II engines. This option provides 
more lead time for small-volume engine manufacturers to redesign their 
products. They would also be able to learn from some of the hurdles 
overcome by larger manufacturers.
(d) Broad Engine Families
    We are also proposing that small-volume engine manufacturers may 
use a broader definition of engine family for certification purposes. 
Under the existing engine family criteria specified in the regulations, 
manufacturers group their various engine lines into engine families 
that have similar design characteristics including the combustion 
cycle, cooling system, cylinder configuration, number of cylinders, 
engine class, valve location, fuel type, aftertreatment design, and 
useful life category. We are proposing to allow small-volume engine 
manufacturers to group all of their Small SI engines into a single 
engine family for certification by engine class and useful life 
category, subject to good engineering judgment (see Sec.  1054.230).
(e) Hardship Provisions
    We are also proposing two types of hardship provisions for 
nonhandheld engine manufacturers consistent with the Panel 
recommendations. The first type of hardship is an unusual circumstances 
hardship which would be available to all businesses, regardless of 
size. The second type of hardship is an economic hardship provision 
which would be available to small businesses only. Sections VIII.C.8 
and VIII.C.9 provide a description of the proposed hardship provisions 
that would apply to nonhandheld engine manufacturers.
(3) Proposed Burden Reduction Approaches for Small-Volume Nonhandheld 
Equipment Manufacturers
    We are proposing three provisions for small-volume nonhandheld 
equipment manufacturers. The purpose of these provisions is to reduce 
the burden on companies for which fixed costs cannot be distributed 
over large sales volumes. We are offering these provisions because 
equipment manufacturers may need more lead time to redesign their 
equipment to accommodate the new Phase 3 engine designs. We request 
comment on the appropriateness of the flexibilities described below.
    Under EPA's current Phase 2 regulations, EPA provided a number of 
lead time provisions for small-volume equipment manufacturers. For the 
Phase 2 regulations, the criteria for determining if a company was a 
``small-volume equipment manufacturer'' was based on whether the 
company produced fewer than 5,000 nonhandheld pieces of equipment per 
year (excluding equipment sold in California that are subject to the 
California ARB standards). For the same reasons noted above for engine 
manufacturers, EPA is proposing to retain the current production-based 
criteria for determining who is a small-volume equipment manufacturer 
and, as a result, eligible for the Phase 3 flexibilities described 
below (see Sec.  1054.801). The determination of which companies 
qualify as small-volume equipment manufacturers for the purposes of the 
flexibilities described below would be based on the annual U.S.-
directed production of nonhandheld equipment in each of the three years 
from 2007 through 2009.
    Based on estimated sales data for equipment manufacturers, EPA 
believes the 5,000 unit cut-off for equipment manufacturers would 
include almost all of the small business equipment manufacturers using 
SBA's employee-based definition. However to ensure all small businesses 
have access to the flexibilities described below, EPA is also proposing 
to allow equipment manufacturers which exceed the production cut-off 
level noted above but have fewer than 500 employees for equipment 
manufacturers, or 750 employees for construction equipment 
manufacturers, or 1,000 employees for generator manufacturers, to 
request treatment as a small-volume equipment manufacturer (see Sec.  
1054.635). In such a case, the manufacturer would need to provide 
information to EPA

[[Page 28163]]

demonstrating that the manufacturer has fewer employees than the 
applicable employee cut-off level.
(a) Additional Lead Time
    As described in Section V.E.3., EPA is proposing a transition 
program for all equipment manufacturers that produce Class II 
equipment. Under that program, equipment manufacturers can install 
Phase 2 engines in limited numbers of Class II equipment over the first 
four years the Phase 3 standards apply (i.e., 2011 through 2014). The 
number of equipment that can use Phase 2 engines is based on 30 percent 
of an average annual production level of Class II equipment. To 
implement this two-year extension for small-volume equipment 
manufacturers within the context of the transition program for 
equipment manufacturers, EPA is proposing that small-volume 
manufacturers may use Phase 2 engines at a level of 200 percent of an 
average annual production level of Class II equipment. Small-volume 
equipment manufacturers could use these allowances over the four year 
period of the transition program (see Sec.  1054.625). Therefore, a 
small-volume equipment manufacturer could potentially use Phase 2 
engines on all their Class II equipment for two years, consistent with 
the SBAR Panel's recommendation, or they might, for example, sell half 
their Class II equipment with Phase 2 engines for four years assuming 
sales stay constant over time.
(b) Simplified Certification Procedure
    We are proposing a simplified engine certification procedure for 
all equipment manufacturers, including small-volume equipment 
manufacturers. See Section V.E.4 for further discussion of this 
provision.
(c) Hardship Provisions
    Because nonhandheld equipment manufacturers in many cases depend on 
engine manufacturers to supply certified engines in time to produce 
complying equipment, we are also proposing a hardship provision for all 
nonhandheld equipment manufacturers, regardless of size. The proposed 
hardship would allow the manufacturer to request more time if they are 
unable to obtain a certified engine and they are not at fault and would 
face serious economic hardship without an extension (see Sec.  
1068.255). Section VIII.C.10 provides a description of the proposed 
hardship provision that would apply to nonhandheld equipment 
manufacturers.

G. Technological Feasibility

(1) Level of Standards
    We are proposing new, more stringent exhaust HC+NOX 
standards for Class I and II Small SI engines. We are also proposing a 
new CO standard for Small SI engines used in marine generator 
applications.
    In the 2005 model year manufacturers certified over 500 Class I and 
II engine families to the Phase 2 standards using a variety of engine 
designs and emission control technology. All Class I engines were 
produced using carbureted air-fuel induction systems. A small number of 
engines used catalyst-based emission control technology. Similarly, 
Class II engines were predominately carbureted. A limited number of 
these engines used catalyst technology, electronic engine controls and 
fuel injection, or were water cooled. In both classes, several engine 
families were certified at levels that would comply with the proposed 
Phase 3 standards. Also, a number of families were very close to the 
proposed emission standards. This suggests that, even accounting for 
the relative increase in stringency associated with our proposed Phase 
3 requirements, a number of families either will not need to do 
anything or will require only modest reductions in their emission 
performance to meet the proposed standards. However, many engine 
families clearly will have to do more to improve their emissions 
performance.
    Based on our own testing of advanced technology for these engines, 
our engineering assessments, and statements from the affected industry, 
we believe the proposed requirements will require many engine 
manufacturers to adopt exhaust aftertreatment technology using 
catalyst-based systems. Other likely changes include improved engine 
designs and fuel delivery systems. Finally, adding electronic controls 
or fuel injection systems may obviate the need for catalytic 
aftertreatment for some engine families, with the most likely 
candidates being multi-cylinder engine designs.
(2) Implementation Dates
    We are proposing HC+NOX exhaust emission standards of 
10.0 g/kW-hr for Class I engines starting in the 2012 model year and 
8.0 g/kW-hr for Class II engines starting in the 2011 model year. For 
both classes of nonhandheld engines, we are proposing to maintain the 
existing CO standard of 610 g/kW-hr. We expect manufacturers to meet 
these standards by improving engine combustion and adding catalysts.
    For spark-ignition engines used in marine generators, we are 
proposing a more stringent Phase 3 CO emission standard of 5.0 g/kW-hr. 
This would apply equally to all sizes of engines subject to the Class I 
and II Small SI standards, with implementation dates as described above 
relative to Class I and Class II engines.
(3) Technological Approaches
    Our feasibility assessment began by evaluating the emissions 
performance of current technology for Small SI engines and equipment. 
These initial efforts focused on developing a baseline for emissions 
and general engine performance so that we could assess the potential 
for new emission standards for engines and equipment in this category. 
This process involved laboratory and field evaluations of the current 
engines and equipment. We reviewed engineering information and data on 
existing engine designs and their emissions performance. Patents of 
existing catalyst/muffler designs for Class I engines were also 
reviewed. We engaged engine manufacturers and suppliers of emission 
control-related engine components in discussions regarding recent and 
expected advances in emissions performance beyond that required to 
comply with the current Phase 2 standards. Finally, we purchased 
catalyst/muffler units that were already in mass production by an 
original equipment manufacturer for use on European walk-behind lawn 
mowers and conducted engineering and chemical analyses on the design 
and materials of those units.
    We used the information and experience gathered in the above effort 
along with the previous catalyst design experience of our engineering 
staff, to design and build prototype catalyst-based emission control 
systems that were capable of effectively and safely achieving the 
proposed Phase 3 requirement based on dynamometer and field testing. We 
also used the information and the results of our engine testing to 
assess the potential need for improvements to engine and fuel system 
designs, and the selective use of electronic engine controls and fuel 
injection on some engine types. A great deal of this effort was 
conducted in association with our more exhaustive study regarding the 
efficacy and safety of implementing advanced exhaust emission controls 
on Small SI engines, as well as new evaporative requirements for these 
engines. In other testing, we evaluated advanced emission controls on a 
multi-cylinder Class II engine with electronic fuel injection. The 
results of that study are also discussed in Section XII.

[[Page 28164]]

    In our test program to assess the feasibility of achieving the 
proposed Phase 3 HC+NOX standard, we evaluated 15 Class I 
engines of varying displacements and valve-train designs. Each of these 
engines was equipped with a catalyst-based control system and all 
achieved the applicable standard at the end of their regulatory useful 
lives. Our work also suggests that manufacturers of Class I engines may 
also need to improve the durability of their basic engine designs, 
ignition systems, or fuel metering systems for some engines in order to 
comply with the emission regulations.
    We tested five single-cylinder, overhead-valve Class II engines 
with prototype catalyst/muffler control systems. Three of the engines 
were carbureted and two were equipped with electronic engine and fuel 
controls. This latter technology improves the management of air-fuel 
mixtures and ignition spark timing. This itself can reduce engine-out 
emissions relative to a carbureted system and also allows the use of 
larger catalyst volumes and higher precious metal loading. Each of the 
engines achieved the requisite emission limit for HC+NOX 
(e.g., 8.0 g/kW-hr). Based on this work and information from one 
manufacturer of emission controls, we believe that either a catalyst-
based system or electronic engine controls appear sufficient to meet 
the standard. Nonetheless, some applications may require the use of 
both technologies. Finally, similarly to Class I engines, we found that 
manufacturers of Class II engines may also need to improve the 
durability of their ignition systems or fuel metering systems for some 
engines in order to comply with the emission regulations.
    Multi-cylinder Class II engines are very similar to their single-
cylinder counterparts regarding engine design and combustion 
characteristics. There are no multi-cylinder Class I engines. Base on 
these attributes and our testing of two twin-cylinder engines, we 
conclude that the proposed Phase 3 HC+NOX standard is 
technically feasible.
    Nonetheless, we also found that multi-cylinder engines may present 
unique concern with the application of catalytic control technology 
under atypical operation conditions. More specifically, the concern 
relates to the potential consequences of combustion misfire or a 
complete lack of combustion in one of the two or more cylinders when a 
single catalyst/muffler design is used. A single muffler is typically 
used in Class II applications. In a single-catalyst system, the 
unburned fuel and air mixture from the malfunctioning cylinder would 
combine with hot exhaust gases from the other, properly operating 
cylinder. This condition would create high temperatures within the 
muffler system as the unburned fuel and air charge from the misfiring 
cylinder combusts within the exhaust system. This could potentially 
destroy the catalyst.
    One solution is simply to have a separate catalyst/muffler for each 
cylinder. Another solution is to employ electronic engine controls to 
monitor ignition and put the engine into ``limp-mode'' until necessary 
repairs are made. For engines using carburetors, this would effectively 
require the addition of electronic controls. For engines employing 
electronic fuel injection that may need to add a small catalyst, it 
would require that the electronic controls incorporate ignition misfire 
detection if they do not already utilize the inherent capabilities 
within the engine management system.
    As described earlier, we also expect some engine families may use 
electronic fuel injection to meet the proposed Phase 3 standard without 
employing catalytic aftertreatment. Engine families that already use 
these fuel metering systems and are reasonably close to complying with 
the proposed requirement are likely to need only additional calibration 
changes to the engine management system for compliance. In addition, we 
expect that some engine families which currently use carbureted fuel 
systems will convert directly to electronic fuel injection. 
Manufacturers may adopt this strategy to couple achieving the standard 
without a catalyst and realizing other advantages of using fuel 
injection such as easier starting, more stable and reliable engine 
operation, and reduced fuel consumption.
    Our evaluation of electronic fuel injection systems that could be 
used to attain the proposed standard found that a rather simple, low-
cost system should be sufficient. We demonstrated this proof of concept 
as part of the engine test program we conducted for our safety study. 
In that program, we fitted two single-cylinder Class II engines with an 
electronic control unit and fuel system components developed for Asian 
motor-scooters and small-displacement motorcycles. The sensors for the 
system were minimized to include a throttle position sensor, air charge 
temperature sensor, oil temperature sensor, manifold absolute pressure 
sensor, and a crankshaft position sensor. This is in contrast to the 
original equipment manufacturer fuel injection systems currently used 
in some equipment with two-cylinder Class II engine applications that 
employ more sophisticated and expensive automotive-based components.
    Finally, there are a number of Class II engines that use gaseous 
fuels (i.e., liquid propane gas or compressed natural gas). Based on 
our engineering evaluation of current and likely emission control 
technology for these engines, we conclude that there are no special 
concerns relative to achieving the proposed Phase 3 HC+NOX 
standard.
    Turning to the proposed Phase 3 CO standard for Class I and II 
Small SI engines used in marine generator applications, these engines 
have several rather unique design considerations that are relevant to 
achieving the proposed CO standard. Marine generator engines are 
designed to operate for very long periods. Manufacturers generally 
design the engines to operate at lower loads to accommodate continuous 
operation. Manufacturers also design them to take advantage of the 
cooling available from the water in the lake or river where the boat is 
operating (seawater). By routing seawater through the engine block, or 
using a heat exchanger that transfers heat from the engine coolant to 
the seawater, manufacturers are able to maintain engine temperatures as 
well or better than automotive engines. Stable temperatures in the 
engine block make a very significant difference in engine operation, 
enabling much less distortion of the cylinders and a much more 
consistent combustion event. These operating characteristics make it 
possible to introduce advanced technology for controlling emissions. 
Manufacturers also use this cooling water in a jacketing system around 
the exhaust in order to minimize surface temperatures and reduce the 
risk of fires on boats.
    The vast majority of gasoline marine generators are produced by two 
engine manufacturers. Recently, these two manufacturers have announced 
that they are converting their marine generator product lines to new 
designs which can achieve more than a 99 percent reduction in CO 
emissions. These manufacturers stated that this action is to reduce the 
risk of CO poisoning and is a result of boat builder demand. These low 
CO emission designs used closed-loop electronic fuel injection and 
catalytic control. Both of these manufacturers have certified some low 
CO engines and have expressed their intent to convert their full 
product lines in the near future. These manufacturers also make use of 
electronic controls to monitor catalyst function.

[[Page 28165]]

(4) Consideration of Regulatory Alternatives
    In developing the proposed emission standards, we considered what 
was achievable with catalyst technology. Our technology assessment work 
indicated that the proposed emission standards are feasible in the 
context of provisions for establishing emission standards prescribed in 
section 213 of the Clean Air Act. We also considered what could be 
achieved with larger, more efficient catalysts and improved fuel 
induction systems. In particular, Chapter 4 of the Draft RIA presents 
data on Class I engines with more active catalysts and on Class II 
engines with closed-loop control fuel injection systems in addition to 
a catalyst. In both cases larger emission reductions were achieved.
    Based on this work we considered HC+NOX standards which 
would have involved a 50 percent reduction for Class I engines and a 
65-70 percent reduction for Class II engines. Chapter 11 of the Draft 
RIA evaluates these alternatives, including an assessment of the 
overall technology and costs of meeting more stringent standards. For 
Class I engines a 50 percent reduction standard would require base 
engine changes not necessarily involved with the standards we are 
proposing and the use of a more active catalyst. For Class II engines 
this would require the widespread use of closed loop control fuel 
injection systems rather than carburetors, some additional engine 
upgrades, and the use three-way catalysts. We believe it is not 
appropriate at this time to propose more stringent exhaust emission 
standards for Small SI engines. Our key concern is lead time. More 
stringent standards would require three to five years of lead time 
beyond the 2011 model year start date we are proposing for the program. 
We believe it would be more effective to implement the proposed Phase 3 
standards to achieve near-term emission reductions needed to reduce 
ozone precursor emissions and to minimize growth in the Small SI 
exhaust emissions inventory in the post 2010 time frame. More efficient 
catalysts, engine improvements, and closed loop electronic fuel 
injection could be the basis for more stringent Phase 4 emission 
standards at some point in the future.
(5) Our Conclusions
    We believe the proposed Phase 3 exhaust emission standards for 
nonhandheld Small SI engines will achieve significant emission 
reductions. Manufacturers will likely meet the proposed standards with 
a mix of three-way catalysts packaged in the mufflers and fuel-
injection systems. Test data using readily available technologies have 
demonstrated the feasibility of achieving the proposed emission levels.
    As discussed in Section X, we do not believe the proposed standards 
would have negative effects on energy, noise, or safety and may lead to 
some positive effects.

VI. Evaporative Emissions

A. Overview

    Evaporative emissions refer to hydrocarbons released into the 
atmosphere when gasoline or other volatile fuels escape from a fuel 
system. The primary source of evaporative emissions from nonroad 
gasoline engines and equipment is known as permeation, which occurs 
when fuel penetrates the material used in the fuel system and reaches 
the ambient air. This is especially common through rubber and plastic 
fuel-system components such as fuel lines and fuel tanks. Diurnal 
emissions are another important source of evaporative emissions. 
Diurnal emissions occur as the fuel heats up due to increases in 
ambient temperature. As the fuel heats, liquid fuel evaporates into the 
vapor space inside the tank. In a sealed tank, these vapors would 
increase the pressure inside the tank; however, most tanks are vented 
to prevent this pressure buildup. The evaporating fuel therefore drives 
vapors out of the tank into the atmosphere. Diffusion emissions occur 
when vapor escapes the fuel tank through an opening as a result of 
random molecular motion, independent of changing temperature. Running 
loss emissions are similar to diurnal emissions except that vapors 
escape the fuel tank as a result of heating from the engine or some 
other source of heat during operation rather than from normal daily 
temperature changes. Refueling losses are vapors that are displaced 
from the fuel tank to the atmosphere when someone fills a fuel tank. 
Refueling spitback is the spattering of liquid fuel droplets coming out 
of the filler neck during a refueling event. Spillage is fuel that is 
spilled while refueling. Regulatory provisions to set standards for 
several of these types of evaporative emissions effectively define the 
terms for establishing the specific test procedures for measuring 
emissions. See the proposed regulatory text for more information.
    This proposal is part of a larger effort to control evaporative 
emissions from all mobile sources. Motor vehicles have stringent 
evaporative emission controls based on SHED testing of complete 
vehicles.\82\ As a result, motor vehicle manufacturers must control 
diurnal emissions, permeation through all fuel-system components, 
running loss emissions, refueling vapor displacement, refueling 
spitback, and to some extent, spillage. We recently established 
evaporative emission standards for recreational vehicles and Large SI 
engines (67 FR 68242, November 8, 2002). These standards include 
permeation requirements for fuel tanks and fuel lines. In addition, 
equipment using Large SI engines must control diurnal emissions and 
running losses. Fuel systems used with Small SI engines and Marine SI 
engines are not yet subject to evaporative emission standards.
---------------------------------------------------------------------------

    \82\ An entire vehicle is placed in a SHED (Sealed Housing for 
Evaporative Determination) and total evaporative emissions are 
measured over prescribed test cycles.
---------------------------------------------------------------------------

    In August 2002, we proposed permeation and diurnal emission 
standards for fuel systems related to Marine SI engines (67 FR 53050, 
August 14, 2002). We finalized other portions of that proposal but 
chose to delay promulgation of Marine SI evaporative standards. At the 
time of the earlier proposal there were still open issues regarding 
emission control technologies for rotational-molded fuel tanks and for 
pressurizing fuel tanks as a diurnal emission control strategy. Since 
then, EPA has continued gathering information and performing tests on 
new technologies that could be used to address these issues. In this 
notice we are updating the proposed evaporative emission standards for 
Marine SI fuel systems. The standards in this proposal incorporate this 
new information.
    We are also proposing standards for controlling evaporative 
emissions from fuel systems used with Small SI engines. These proposed 
standards include requirements for controlling permeation, diffusion, 
and running loss emissions.

B. Fuel Systems Covered by This Rule

    The proposed evaporative emission standards would apply to fuel 
systems for both Small SI engines and Marine SI engines. The marine 
standards apply to fuel systems related to both propulsion and 
auxiliary engines. In some cases, specific standards are proposed only 
for certain types of equipment, as described below. These standards 
would apply only to new products, as described in Section VII.A.
    We are proposing to write the regulations related to evaporative 
emission standards in 40 CFR part 1060,

[[Page 28166]]

which is devoted to evaporative emission controls from nonroad engines 
and equipment. The exhaust standard-setting part (part 1045 for Marine 
SI and part 1054 for Small SI) defines the emission standards, but 
references part 1060 for certification and testing procedures, in 
addition to definitions, compliance-related issues, and other special 
provisions. Section VII describes further how the different parts work 
together in the certification process. Also, as described in Section 
XI, we are proposing to allow component manufacturers and some 
equipment manufacturers to certify products under the provisions of 
part 1060 with respect to recreational vehicles. We also plan to 
clarify in a separate action that marine and land-based compression-
ignition engines that operate on volatile liquid fuels (such as 
methanol or ethanol) are subject to evaporative requirements related to 
part 1060. The draft regulations in part 1060 describe how those 
provisions would apply for compression-ignition engines, but these 
regulations impose no obligations until we adopt those as requirements 
in a separate rulemaking.
    The following definitions are important in establishing which 
components would be covered by the proposed standards: ``evaporative,'' 
``fuel system,'' ``fuel line,'' ``portable nonroad fuel tank,'' and 
``installed marine fuel tank.'' See the full text of these definitions 
in the proposed regulations at Sec.  1060.801.
    Note in particular that the proposed standards would apply to fuel 
lines, including hose or tubing that contains liquid fuel. This would 
include fuel supply lines but not vapor lines or vent lines not 
normally exposed to liquid fuel. We consider fuel return lines for 
handheld engines to be vapor lines, not fuel lines. Data in Chapter 5 
of the Draft RIA suggest that permeation rates through vapor lines and 
vent lines are already lower than the proposed standard; this is due to 
the low vapor concentration in the vapor line. In contrast, permeation 
rates for materials that are consistently exposed to saturated fuel 
vapor are generally considered to be about the same as that for liquid 
fuel. The standards also do not apply to primer bulbs exposed to liquid 
fuel only for priming. This standard would apply to marine filler necks 
that are filled or partially filled with liquid fuel after a refueling 
event where the operator fills the tank as full as possible. In the 
case where the fuel system is designed to prevent liquid fuel from 
standing in the fill neck, the fill neck would be considered a vapor 
line and not subject to the proposed fuel line permeation standard. We 
request comment on the appropriateness of applying permeation standards 
to filler necks, vapor lines and vent lines for Small SI engines and 
Marine SI engines.
    One special note applies to fuel systems for auxiliary marine 
engines. These engines must meet exhaust emission standards that apply 
to land-based engines. This is appropriate because these engines, 
typically used to power generators, operate more like land-based 
engines than like marine propulsion engines. For evaporative emissions, 
however, it is important that the fuel systems for propulsion and 
auxiliary engines be subject to the same standards because these 
engines typically draw fuel from a common fuel tank and share other 
fuel-system components. We are therefore proposing to apply the Marine 
SI evaporative emission standards and certification requirements to the 
fuel systems for both auxiliary and propulsion marine engines on marine 
vessels.
    Our evaporative emission standards for automotive applications are 
based on a comprehensive measurement from the whole vehicle. However, 
the evaporative standards in this proposal are generally based on 
individual fuel-system components. For instance, we are proposing 
permeation standards for fuel lines and fuel tanks rather than for the 
equipment as a whole.\83\ We are taking this approach for several 
reasons. First, most production of Small SI equipment and Marine SI 
vessels is not vertically integrated. In other words, the fuel line 
manufacturer, the engine manufacturer, the fuel tank manufacturer, and 
the equipment manufacturer are often separate companies. In addition, 
there are several hundred equipment manufacturers and boat builders, 
many of which are small businesses. Testing the systems as a whole 
would place the entire certification burden on the equipment 
manufacturers and boat builders. Specifying emission standards and 
testing for individual components allows for measurements that are 
narrowly focused on the source of emissions and on the technology 
changes for controlling emissions. This correspondingly allows for 
component manufacturers to certify that their products meet applicable 
standards. We believe it would be most appropriate for component 
manufacturers to certify their products since they are best positioned 
to apply emission control technologies and demonstrate compliance. 
Equipment manufacturers and boat builders would then be able to 
purchase certified fuel-system components rather than doing all their 
own testing on individual components or whole systems to demonstrate 
compliance with every requirement. In contrast, controlling running 
loss emissions cannot be done on a component basis so we are proposing 
to require engine or equipment manufacturers to certify that they meet 
the running loss standard. We would otherwise expect most equipment 
manufacturers to simply identify a range of certified components and 
install the components as directed by the component manufacturer to 
demonstrate compliance with the proposed emission standards.
---------------------------------------------------------------------------

    \83\ An exception to component certification is the design 
standard for contolling running loss emissions.
---------------------------------------------------------------------------

    Second, a great deal of diversity exists in fuel-system designs 
(hose lengths, tank sizes/shapes, number of connections, etc.). In most 
cases, the specific equipment types are low-volume production runs so 
sales would not be large enough to cover the expense of SHED-type 
testing. Third, there are similarities in fuel lines and tanks that 
allow for component data to be used broadly across products in spite of 
extensive variety in the geometry and design of fuel systems. Fourth, 
many equipment types, primarily boats, would not fit in standard-size 
SHEDs and would require the development of very large, very expensive 
test facilities if the entire vessel were tested.
    Finally, by proposing separate standards for fuel line permeation, 
fuel tank permeation, diurnal emissions, and diffusion emissions, we 
are able to include simplified certification requirements without 
affecting the level of the standards. Specifying a comprehensive test 
with a single standard for all types of evaporative emissions would 
make it difficult or impossible to rely on design-based certification. 
Requiring emission tests to cover the wide range of equipment models 
would greatly increase the cost of compliance with little or no 
increase in the effectiveness of the certification program. We believe 
the proposed approach allows substantial opportunity for market forces 
to appropriately divide compliance responsibilities among affected 
manufacturers and accordingly results in an effective compliance 
program at the lowest possible cost to society.
    The proposed emission standards generally apply to the particular 
engines and their associated fuel systems. However, for ease of 
reference, we may refer to evaporative standards as being related to 
Small SI equipment or Marine SI vessels, meaning the relevant

[[Page 28167]]

evaporative standards for engines and fuel systems used in such 
equipment or vessels.\84\ See Section VI.F for a more detailed 
description of certification responsibilities for all the proposed 
evaporative standards.
---------------------------------------------------------------------------

    \84\ ``Small SI equipment'' includes all nonroad equipment 
powered by Small SI engines. ``Marine SI vessels'' includes all 
vessels powered by engines that run on volatile liquid fuels. In 
almost all cases these engines are powered by gasoline. Note also 
that volatile liquid fuels include methanol or ethanol, which could 
be used in a compression-ignition engine. While we are aware of no 
such equipment or vessels today, they would be covered by the 
proposed regulations. In this preamble, we nevertheless refer to all 
the vessels that fall within the scope of the proposed regulations 
as marine SI vessels. Throughout this section, we generally refer to 
Small SI equipment and Marine SI vessels as ``equipment,'' 
consistent with the proposed regulatory text.
---------------------------------------------------------------------------

C. Proposed Evaporative Emission Standards

    We are proposing permeation standards for Small SI equipment and 
Marine SI vessels, covering permeation from fuel tanks and fuel lines. 
We are also proposing diurnal emission standards for Marine SI vessels. 
We are proposing diffusion emission standards but not diurnal emission 
standards for nonhandheld Small SI equipment. In addition, we are 
proposing a running loss standard for nonhandheld Small SI equipment 
(except wintertime engines), with a variety of specified options for 
manufacturers to demonstrate compliance. Based on the current state of 
technology, we believe the proposed standards are a logical extension 
of the standards proposed for marine vessels in August 2002 and the 
standards finalized for recreational vehicles in November 2002.
    All the proposed evaporative emission standards would apply to new 
equipment for a useful life period in years that matches the useful 
life of the corresponding engine. We propose to specify a five-year 
useful life for evaporative requirements for Small SI equipment (we are 
not proposing a year-based useful life requirement related to exhaust 
emissions for Small SI engines). Manufacturers have expressed concern 
that they will not have time to gain five years of in-use experience on 
low-permeation fuel tanks by the proposed dates of the tank permeation 
standards. Unlike barrier fuel line, which is well established 
technology, some fuel tanks may use barrier technologies that have not 
been used extensively in other applications. An example of this 
technology would be barrier surface treatments that must be properly 
matched to the fuel tank material. Therefore, we are proposing a 
shorter useful life of two years for Marine SI and Small SI fuel tanks 
through the 2013 model year to allow manufacturers to gain experience 
in use (see Sec. Sec.  1045.145 and 1054.145). We do not expect this 
interim provision to affect manufacturer designs or in-use compliance 
efforts. We do not believe this interim provision to specify a shorter 
useful life period is necessary for other fuel-system components, 
either because there is adequate durability experience in other sectors 
or because the control inherently does not involve a concern over in-
use deterioration.
    The rest of this section summarizes the proposed standards, 
additional requirements, and implementation dates. Unless otherwise 
stated, implementation dates specified below refer to the model year. 
Section VI.D describes how manufacturers may use emission credits to 
meet fuel tank permeation standards. Section VI.E describes the test 
procedures corresponding to each standard. Section VI.F describes how 
component and equipment manufacturers certify their products and how 
their responsibilities overlap in some cases. Section VI.F also 
describes the simplified process of design-based certification for 
meeting many of the proposed standards.
(1) Fuel Line Permeation Standards and Dates
    The proposed fuel line permeation standard applies to fuel lines 
intended for use in new Small SI equipment and Marine SI vessels is 15 
g/m\2\/day at 23 [deg]C on a test fuel containing 10 percent ethanol 
(see Sec.  1060.102 and Sec.  1060.515). The form of the standard 
refers to grams of permeation over a 24-hour period divided by the 
inside surface area of the fuel line. This proposed standard is 
consistent with that adopted for fuel lines in recreational vehicles. 
The move toward low-permeation fuel lines in recreational vehicles--and 
further development work in this area since the first proposed rule for 
marine evaporative emissions--demonstrates that low-permeation fuel 
lines are available on the market today for Small SI equipment and 
Marine SI vessels. In addition, many manufacturers are already using 
low-permeation technologies in response to permeation standards in 
California. We are therefore proposing that this standard apply 
beginning with 2008 for nonhandheld Small SI equipment and 2009 for 
Marine SI vessels. For handheld equipment, we are proposing a fuel line 
permeation implementation date of 2012, except that small-volume 
families as defined in Sec.  1054.801 would have until 2013. Although 
low-permeation fuel line technology is available, handheld equipment is 
not currently subject to fuel line permeation requirements in 
California and does not typically use low-permeation fuel lines today. 
In addition, much of the fuel line used on handheld equipment is not 
straight-run fuel line for which low-permeation replacements are 
readily available; thus, more lead time is required. We request comment 
on the proposed standard and implementation dates.
    Component manufacturers would be required to certify to the 
proposed emission standard for fuel lines (this may involve 
certification to a family emission limit above the emission standard 
for handheld engines, as described in Section VI.D), except in certain 
circumstances. Equipment manufacturers may need to certify that their 
fuel lines meet the proposed emission standards if they use any 
sections or pieces of fuel line that are not already certified by the 
fuel line manufacturer, or if they comply using emission credits, as 
described in Section VI.F.
    To address the short lead time associated with the 2008 
requirements for Small SI equipment, we are proposing an interim 
arrangement in which engine manufacturers would include compliant fuel 
lines under their existing certification (see Sec.  90.127). This would 
prevent the need for other companies to submit new applications for 
certification that would need to be processed immediately. This 
arrangement would allow for engine manufacturers to start complying 
well ahead of the time that the fuel line standards become mandatory. 
The certification requirements described above for component 
manufacturers would start once Small SI engines and equipment would be 
subject to Phase 3 standards.
    By specifying standards for fuel-system components rather than the 
entire fuel system, we must separately address appropriate requirements 
for connecting pieces, such as valves, O-rings, seals, plugs, and 
grommets that are exposed to liquid fuel but are not part of the fuel 
line. We are proposing to require that these ancillary pieces meet the 
broad specifications described in Sec.  1060.101(f), which generally 
requires that fittings and connections be designed to prevent leaks. As 
described in Section VI.E.1, we are also proposing to allow testing of 
fuel line assemblies that include connecting pieces, primer bulbs, and 
other fuel line components as a single item (see Sec.  1060.102). For 
example, manufacturers may certify fuel lines for portable marine fuel 
tanks as

[[Page 28168]]

assemblies of fuel line, primer bulbs, and self-sealing end 
connections. Finally, we are proposing to require that detachable fuel 
lines be self-sealing when they are removed from the fuel tank or the 
engine because this would otherwise result in high evaporative 
emissions (see Sec.  1060.101). To the extent that equipment 
manufacturers and boat builders certify their products, they would need 
to describe how they meet the equipment-based requirements proposed in 
Sec.  1060.101(e) and (f) in their application for certification. If 
boat builders rely on certified components instead of certifying, they 
would need to keep records describing how they meet the equipment-based 
requirements proposed in Sec.  1060.101(e) and (f).
    Handheld equipment manufacturers have raised concerns that fuel 
lines constructed of available low-permeation materials may not perform 
well in some handheld applications under extreme cold weather 
conditions such as below -30 [deg]C. These products often use injected 
molded fuel lines with complex shapes and designs needed to address the 
unique equipment packaging issues and the high vibration and random 
movement of the fuel lines within the overall equipment when in use. 
Industry has expressed concern and the data in Chapter 5 of the Draft 
RIA suggest that durability issues may occur from using certain low-
permeation materials in these applications when the weather is 
extremely cold and that these could lead to unexpected fuel line leaks. 
Handheld equipment types that could be considered as cold-weather 
products include cut-off saws, clearing saws, brush cutters over 40cc, 
commercial earth and wood drills, ice augers, and chainsaws.
    The extreme cold temperatures needed to induce the potential fuel 
line failures are very rare but do occur each year in Alaska and the 
continental United States. EPA considered a number of different options 
aimed at developing special provisions for equipment most likely to be 
used in these extreme cold weather situations without providing relief 
to all of the equipment sold in the broad categories identified by 
industry as cold weather products. These included focusing the 
provisions on products used by professionals (longer useful life 
equipment or Class V equipment only), geographic-based retrofit kits, 
product segregation, and special labeling. While each of the options 
has some merit, none could provide the full assurance that handheld 
equipment using low-permeation fuel lines not compatible with extreme 
cold weather would not be used in such weather conditions. While very 
low temperature materials are available that can achieve the fuel line 
permeation standards discussed above, these materials come at a 
substantially higher cost than that for fuel lines used in non cold 
weather products and none have been evaluated in fuel lines on the 
handheld equipment at issue.
    If we consider a less stringent standard, we believe there are 
lower cost materials available that could be used to achieve permeation 
reductions in equipment designed for cold weather applications without 
creating potential safety concerns related to fuel leaks. As discussed 
in the Draft RIA, rubbers with high acrylonitrile (ACN) content are 
used in some handheld applications. These materials have about half the 
permeation of lower ACN-content rubbers also used in handheld 
applications. To capture the capability of these materials to reduce 
permeation emissions without creating other issues for cold weather 
products, we are proposing a fuel line permeation standard of 175 g/
m\2\/day in 2013 for cold-weather products. We request comment on 
appropriateness of this standard and whether there are materials that 
could be used to achieve larger fuel line permeation reductions from 
cold-weather products.
    We request comment on what products should be considered to be 
cold-weather products and if it would be possible to distinguish 
between products used in warm versus cold climates. We also request 
comment regarding whether the proposed ABT program discussed below for 
handheld equipment would provide enough flexibility to manufacturers to 
address cold weather issues through credit trading rather than through 
a differentiated standard.
    Outboard engine manufacturers have expressed concern that it would 
be difficult for them to meet proposed 2009 date for the sections of 
fuel lines that are mounted on their engines under the engine cowl. 
While some sections of straight-run fuel line are used on the 
outboards, many of the smaller sections between engine mounted fuel-
system components and connectors are preformed or even injection-molded 
parts. Outboard engine manufacturers stated that they would need 
additional time to redesign and perform testing on low-permeation fuel 
lines under the cowl. PWC and SD/I manufacturers have indicated that 
this is not an issue on their engines because they are dominantly 
straight-run pieces. Outboard engine manufacturers have also stated 
that, in contrast to under cowl fuel line, they would be able to 
facilitate the introduction of low-permeation fuel line, from the fuel 
tank to the engine, in 2008.
    We request comment on implementing an optional program where the 
implementation dates for fuel line under the cowl can be delayed beyond 
2009, provided low-permeation fuel line from the fuel tank to the 
engine is used beginning on January 1, 2008. Under this approach, 
permeation standards for primer bulbs on fuel lines from the tank to 
the engine would still begin in 2009. One specific approach would be to 
phase in the use of low-permeation fuel lines on outboards based on the 
total inside surface area of the under cowl fuel lines. For instance 
the following phase-in could be implemented: 30 percent in 2010, 60 
percent in 2011, and 90 percent in 2012. This would allow manufacturers 
to transition to the use of low-permeation fuel lines in an orderly 
fashion. Also, it would give them some flexibility to continue to use 
short sections of uncontrolled fuel lines, in the longer term, that are 
more difficult or costly to replace with low-permeation fuel lines. At 
some point in the future, such as 2015, we could require the use of 100 
percent low-permeation fuel lines. Manufacturers would be expected to 
target 100 percent use of low-permeation fuel lines in new engine 
designs. If the surface area percentages were weighted across a 
manufacturers entire product line of outboard engines (rather than on a 
per-engine basis), it would allow manufacturers to use 100 percent low-
permeation fuel lines on new engine designs, while making less changes 
to engines that are planned to be phased out of production.
    We also request comment on how the above program could be 
implemented given that the fuel line from the tank to the engine is 
typically installed by the boat builder while the under-cowl fuel line 
is installed by the engine manufacturer. One approach that has been 
considered is requiring the engine manufacturer to specify low-
permeation fuel line in its installation instructions beginning in 
2008. The engines would not be made available to boat builders who do 
not begin using low-permeation fuel lines in 2008.
(2) Fuel Tank Permeation Standards and Dates
    Except as noted below, we are proposing a fuel tank permeation 
standard of 1.5 g/m\2\/day for tanks intended for use in new Small SI 
equipment and Marine SI vessels based on the permeation rate of 
gasoline containing 10 percent ethanol at a test temperature of 28 
[deg]C (see Sec.  1060.103 and Sec.  1060.520). The emission standard 
is

[[Page 28169]]

based on the inside surface area of the fuel tank rather than the 
volumetric capacity because permeation is a function of surface area 
exposed to fuel. This proposed standard is consistent with that adopted 
for fuel tanks in recreational vehicles.
    We are proposing a fuel tank permeation standard of 2.5 g/m\2\/day 
for handheld equipment with structurally integrated nylon fuel tanks 
(see Sec.  1060.801 for the proposed definition of structurally 
integrated nylon fuel tanks). These fuel tanks are molded as part of 
the general structure of the equipment. In most cases, these fuel tanks 
are made of glass-reinforced nylon for strength and temperature 
resistance. These nylon constructions typically have significantly 
lower permeation rates than other plastics used for fuel tanks, such as 
high-density polyethylene; however, based on data in Chapter 5 of the 
Draft RIA the nylon constructions may not be able meet a standard of 
1.5 g/m\2\/day. Therefore, we believe a higher standard is necessary 
for these fuel tank constructions. We request comment on this separate 
permeation standards for structurally integrated fuel tanks.
    Many Small SI equipment manufacturers are currently using low-
permeation fuel tanks for products certified in California. The 
California tank permeation test procedures use a nominal test 
temperature of 40 [deg]C with California certification gasoline while 
we are proposing to require testing at 28 [deg]C with gasoline 
containing 10 percent ethanol. We are proposing to allow manufacturers 
the alternative of testing their fuel tanks at 40 [deg]C with our test 
fuel. Because permeation increases as a function of temperature, we are 
proposing an alternative standard of 2.5 g/m2/day for fuel tanks tested 
at 40 [deg]C. For structurally integrated nylon fuel tanks, the 
alternative standard at 40 [deg]C would be 4.0 g/m\2\/day.
    We consider three distinct classes of marine fuel tanks: (1) 
Portable marine fuel tanks (generally used with small outboards); (2) 
personal watercraft (PWC) fuel tanks; and (3) other installed marine 
fuel tanks (generally used with SD/I and larger outboards). The fuel 
tank permeation standards are proposed to start in 2011 for all Small 
SI equipment using Class II engines and for personal watercraft and 
portable marine fuel tanks. For Small SI equipment using Class I 
engines and for other installed marine fuel tanks, we propose to apply 
the same standard starting in 2012. Most of the marine fuel tanks with 
the later standards are produced in low volumes using rotational-molded 
cross-link polyethylene or fiberglass construction, both of which 
generally present a greater design challenge. We believe the additional 
lead time will be necessary for these fuel tanks to allow for a smooth 
transition to low-permeation designs. For Small SI equipment, these 
dates also align with the schedule for introducing the proposed Phase 3 
exhaust emission standards.
    Component manufacturers would be required to certify to the 
proposed permeation emission standard for fuel tanks (this may involve 
certification to a family emission limit above the emission standard, 
as described in Section VI.D), except in certain circumstances. 
Equipment manufacturers would need to certify that their fuel tanks 
meet the proposed emission standards if they are not already certified 
by the fuel tank manufacturer, or if they comply using emission 
credits, as described in Section VI.F. However, we are proposing that 
manufacturers of portable marine fuel tanks be required to certify that 
their products meet the new permeation standard. This is necessary 
because portable fuel tanks are not sold to boat builders for 
installation in a vessel. There is therefore no other manufacturer who 
could be treated as the manufacturer and responsible for meeting 
emission standards that apply to portable marine fuel tanks.
    For handheld equipment, we are proposing a phased-in implementation 
of the fuel tank permeation standards. Manufacturers would be required 
to meet the proposed fuel tank permeation standards in 2009 for 
products that they already certify in California (see Sec.  90.129). 
The remaining equipment, except for structurally integrated nylon fuel 
tanks and small-volume families, would be subject to the proposed tank 
permeation standards in 2010 (see Sec.  1054.110). Structurally 
integrated nylon fuel tanks would be subject to the proposed standards 
in 2011 and small-volume families would have to meet the proposed tank 
permeation standards beginning in 2013. Manufacturers would need to 
start using EPA-specified procedures starting in 2010, except that 
equipment certified using carryover data would be allowed to use data 
collected using procedures specified for compliance in California for 
model years 2010 and 2011 (see Sec.  1054.145).
    For the purpose of the proposed fuel tank permeation standards, a 
fuel cap mounted on the fuel tank is considered to be part of the fuel 
tank. We consider a fuel cap to be mounted on the fuel tank unless the 
fuel tank is designed to have a filler neck at least 12 inches long 
with the opening at least six inches above the top of the fuel tank. 
The fuel cap would therefore be included in the tank permeation 
standard and test. The cap may optionally be tested separately from the 
tank and the results combined to determine the total tank permeation 
rate (see Sec.  1060.521). Cap manufacturers could also test their caps 
and certify them separately to a separate 1.5 g/m\2\/day cap permeation 
standard. The permeation requirements apply independently of the 
diffusion standards described below, which address venting of fuel 
vapors. We are concerned that allowing certification of fuel caps could 
add complexity to the certification process. It would also add a 
measure of uncertainty in our efforts to ensure compliance with 
emission standards--for fuel tanks certified to permeation standards 
alone, it would be hard ensure that the fuel tanks in the final 
installation would be in a certified configuration with respect to 
diffusion emissions. We therefore request comment on the value to 
manufacturers of allowing fuel caps to be certified independently from 
the fuel tank. Note that a single certification fee would apply to fuel 
tanks that are certified to permeation and diffusion emission 
standards, but only if there is no optional fuel cap certification. 
With the option of fuel cap certification, a separate certification fee 
would apply to diffusion and permeation families, even if a single fuel 
tank manufacturer certifies to both standards.
(3) Diurnal Emission Standards and Dates
    We are proposing diurnal emission standards for fuel tanks intended 
for use in new Marine SI vessels (see Sec.  1045.107). We consider 
three distinct classes of marine fuel tanks: (1) Portable marine fuel 
tanks (used with small outboards); (2) personal watercraft (PWC) fuel 
tanks; and (3) other installed fuel tanks (used with SD/I and larger 
outboards). For diurnal emissions from portable fuel tanks, we are 
proposing a design requirement that the tank remain sealed up to a 
pressure of 5.0 psi, starting in the 2009 model year (see Sec.  
1060.105). We are also proposing that portable fuel tanks must continue 
to be self-sealing when disconnected from an engine.
    We are proposing a general emission standard of 0.40 g/gal/day 
based on a 25.6-32.2 [deg]C temperature profile for installed tanks. 
The applicable test procedures are described in Section VI.E.3. 
Manufacturers have expressed concerns that some very large boats stay 
in the water throughout the boating season and therefore will see a 
much smaller daily swing in fuel

[[Page 28170]]

temperatures, which corresponds with a smaller degree of diurnal 
emissions. We are proposing to address this concern with an alternative 
standard and test procedure that would apply only for nontrailerable 
boats. Using available measurements related to fuel temperatures and 
emission models to relate temperatures to projected diurnal emission 
levels, we are proposing an alternative standard of 0.16 g/gal/day 
based on a 27.6-30.2 [deg]C temperature cycle for fuel tanks installed 
in nontrailerable boats. For the purposes of this rule, we are 
proposing to define a nontrailerable boat as 26 feet or more in length, 
which is consistent with the U.S. Fish and Wildlife Service definition 
for ``nontrailerable recreational vessels'' in 50 CFR 86.12. The 
diurnal emission standards would apply starting in 2009 for PWC fuel 
tanks and in 2010 for other installed fuel tanks.
    Component manufacturers would be required to certify to the 
proposed diurnal emission standard for fuel tanks, except in certain 
circumstances. Equipment manufacturers would need to certify that their 
fuel tanks meet the proposed emission standards if they are not already 
certified by the fuel tank manufacturer, as described in Section VI.F. 
As described above for permeation standards, we are proposing to 
require manufacturers of portable marine fuel tanks to certify that 
they meet the proposed diurnal emission standards since there is no 
``equipment manufacturer'' to assume certification responsibility for 
those tanks.
    We believe the proposed requirements would achieve at least a 50 
percent reduction in diurnal emissions from PWC and other installed 
marine fuel tanks and nearly a 100 percent reduction from portable 
marine tanks. We request comment on the proposed diurnal emission 
standards for Marine SI vessels.
    It is common today for portable marine fuel tanks to maintain an 
airtight seal when the engine is not operating. These tanks typically 
have caps that are fitted with a valve that can be manually opened 
during engine operation and closed when the fuel tank is stored. 
Although this technology could be used to control diurnal emissions 
effectively, it depends on user intervention. We are proposing that 
portable fuel tanks be required to be fitted with a self-sealing vent 
rather than a manually-controlled vent. For instance, a one-way 
diaphragm valve could be used to allow air in when fuel is drawn from 
the tank (to prevent vacuum conditions), but otherwise seal the fuel 
tank. Current portable marine fuel tanks are small and designed to hold 
pressure when the manual valve is closed. We are proposing to require 
that portable marine fuel tanks be designed to maintain a seal to allow 
for pressure buildup resulting from normal temperature swings. These 
tanks should include valves that prevent a vacuum in the tank during 
engine operation which could restrict fuel flow to the engine and 
potentially stall the engine. We believe portable marine fuel tanks 
with valves that seal automatically will control diurnal emissions 
without relying on user operation. We are proposing to implement this 
design standard beginning with the 2009 model year. We request comment 
on this approach.
    Manufacturers will likely control emissions from installed marine 
fuel tanks either by sealing the fuel system up to 1.0 psi or by using 
a carbon canister in the vent line. As discussed below, we believe PWC 
manufacturers will likely seal the fuel tank with a pressure-relief 
valve while manufacturers of other boats with installed fuel tanks are 
more likely to use carbon canisters. However, either technology would 
be acceptable for either kind of installed marine fuel tank as long as 
every system meets the numerical standard applicable to the specific 
tank.
    Personal watercraft currently use sealed fuel systems for 
preventing fuel from exiting, or water from entering, the fuel tank 
during typical operation. These vessels use pressure-relief valves for 
preventing excessive positive pressure in the fuel system; the pressure 
to trigger the valve may range from 0.5 to 4.0 psi. Such fuel systems 
would also need a low-pressure vacuum relief valve to allow the engine 
to draw fuel from the tank during operation. In the 2002 proposal, we 
discussed a diurnal emission standard largely based on the use of a 
sealed system with a 1.0 psi pressure-relief valve. The Personal 
Watercraft Industry Association (PWIA) expressed support in their 
comments for this proposal. We estimate that diurnal emissions from a 
sealed system with a 1.0 psi pressure-relief valve would be about half 
that of the same system on a PWC with an open vent. For personal 
watercraft, we are proposing an implementation date of 2009 because the 
anticipated technology is widely used today.
    The National Marine Manufacturers Association (NMMA) expressed 
concern in their comments on the 2002 proposal that pressurized fuel 
tanks could lead to safety issues for larger installed fuel tanks. NMMA 
commented that these tanks would deform under pressure and that 
pressure could lead to fuel leaks. Manufacturers also commented that 
bladder fuel systems, which would not be pressurized, would be too 
expensive. At the time of the 2002 proposal, we considered the use of 
carbon canisters to control diurnal emissions, but were concerned that 
active purging would occur infrequently due to the low hours of 
operation per year seen by many boats. However, we have since collected 
data on carbon canisters showing that canisters can reduce emissions by 
more than 50 percent with passive purge that occurs during the normal 
breathing process without creating any significant pressure in the fuel 
tank. For installed marine fuel tanks, other than PWC, we are therefore 
proposing an implementation date of 2010 to allow additional lead time 
for designing and producing canisters for marine vessels.
    During the SBREFA process described in Section VI.I, NMMA expressed 
general support of the feasibility of using carbon canisters on boats. 
However, they commented that there are many small boat builders that 
may need additional time to become familiar with and install carbon 
canisters in their boats. We request comment on either a three-year 
phase-in (say 33/66/100 percent over the 2010 through 2012 model years) 
or an extra year of lead time for small businesses to comply with the 
proposed diurnal emission standards. We also request comment on which 
small business companies would be eligible for this flexibility. One 
option would be to use the SBA definition of a small boat builder which 
is based on having fewer than 500 employees. Another option would be to 
base the flexibility on the annual boat sales of the company. One issue 
with the latter approach would be the wide range of boat sizes and 
sales prices in the marine industry. With a given number of employees, 
many more small than large boats can be manufactured in a year.
    If a manufacturer uses a canister-based system to comply with the 
standard applicable to the specific tank, we are also proposing to 
require that manufacturers design their systems not to allow liquid 
gasoline to reach the canister during refueling or from fuel sloshing 
(see Sec.  1060.105). Liquid gasoline would significantly degrade the 
carbon's ability to capture hydrocarbon vapors. One example of an 
approach to protect the canister from exposure to liquid gasoline is a 
design in which the canister is mounted higher than the fuel level and 
a small orifice or a float valve is installed in the vent line to stop 
the flow of liquid gasoline to the canister.
    Several manufacturers have stated that it is common for users to 
fill their fuel tank until they see fuel coming out

[[Page 28171]]

of the vent line. In addition to being a source of hydrocarbon 
emissions, if liquid fuel were to reach a carbon canister, it would 
significantly reduce the effectiveness of the canister. Solutions for 
this problem are relatively straightforward and have been used in 
automotive applications for many years. We are therefore proposing to 
require that boat builders use good engineering judgment in designing 
fuel systems that address diurnal emission control in a way that does 
not increase the occurrence of fuel spitback or spillage during 
refueling beginning in the years specified in Table VI-1. While this 
provision is not detailed or prescriptive, it communicates a 
requirement that manufacturers appropriately take refueling design into 
account, and it allows EPA to make enforcement decisions as the 
industry establishes sound practices in this area. In addition, we are 
proposing that manufacturers would have to meet certain specifications 
with their fuel tank caps, including requirements to tether the cap to 
the equipment and designing the cap to provide physical or audible 
feedback when the vapor seal is established. Also, adding vents to a 
fuel tank would generally not be allowed. To the extent that boat 
builders certify their vessels to meet emission standards, they would 
need to describe how they meet these refueling-related requirements in 
their application for certification. If boat builders rely on certified 
components instead of applying for certification, they would need to 
keep records describing how they meet these refueling-related 
requirements; Section VI.F describes how such companies can meet 
certification requirements without applying for a certificate.
    Any increase in fuel temperature resulting from engine operation 
would cause a potential for emissions that is very similar to diurnal 
emissions. We are therefore proposing to disallow manufacturers from 
disabling their approaches for controlling diurnal emissions during 
engine operation (see Sec.  1060.105). This would ensure that any 
running loss emissions that would otherwise occur will be controlled to 
a comparable degree as diurnal emissions.
    We are not proposing diurnal emission standards for Small SI 
equipment. However, we request comment on such a requirement. We 
believe passively purging carbon canisters could reduce diurnal 
emissions by 50 to 60 percent from Small SI equipment. Active purging 
would result in even greater reductions. However, we believe some 
important issues would need to be resolved, such as cost, packaging, 
and vibration. The cost sensitivity is especially noteworthy given the 
relatively low emissions levels (on a per-equipment basis) from such 
small fuel tanks. We request comment on the appropriate level of such a 
standard and when it could be implemented.
    There are some small outboard marine engines that have fuel tanks 
directly mounted on the engine. In these cases, the fuel tank could be 
considered to be more similar to those on Small SI equipment than other 
marine fuel tanks. Typically, these outboard engines have fuel tanks on 
the order of 1-2 liters in size. Manufacturers have expressed concern 
about the practicality of using carbon canisters for these applications 
due to space constraints and durability impacts of engine handling. We 
request comment on excluding fuel tanks less than 2 liters in size that 
are mounted on outboard engines from the proposed diurnal emission 
requirements. Since it may be a viable alternative, comments should 
address the feasibility of using sealed fuel tanks with pressure relief 
in these applications. Similar to Small SI equipment, marine fuel tanks 
mounted on the engine are directly exposed to heat from the engine 
during operation. In the case where diurnal standards were not applied 
to these fuel tanks, we request comment on applying the proposed 
diffusion and running loss standards, described below, to these fuel 
tanks.
(4) Diffusion Standards and Dates
    As described above, diffusion emissions occur when vapor escapes 
the fuel tank through an opening as a result of random molecular 
motion, independent of changing temperature. Diffusion emissions can be 
easily controlled by venting fuel tanks in a way that forces fuel 
vapors to go through a long, narrow path to escape. We are proposing 
that manufacturers may choose between certifying to a performance 
standard or a design standard. Under a performance standard, we specify 
a test procedure and a maximum emission rate. Under a design standard, 
we specify certain designs that a manufacturer may use to comply with 
the standard. This standard would take effect at the same time as the 
exhaust emission standards--2011 for Class II engines and 2012 for 
Class I engines.
    We are proposing a performance standard of 0.80 g/day for diffusion 
emissions for fuel tanks intended for use in new nonhandheld Small SI 
equipment (Sec.  1060.105). This standard would not apply to a 
manufacturer who certifies using one of the four alternative design 
standards described below.
    1. We are proposing a design standard for diffusion in which the 
tank must be sealed except for a single vent line. This vent line would 
need to be at least 180 mm long and have a ratio of length to the 
square of the diameter of at least 5.0 mm-1 (127 
inches-1). For example, a vent line with 6 mm inside 
diameter would have to be at least 180 mm long to meet this design 
standard.
    2. We are proposing a second alternative design standard for 
diffusion in which vapors from a fuel tank are vented solely through a 
tortuous path through the fuel cap. Many fuel cap manufacturers use 
this cap design today to prevent fuel from splashing out through the 
vent during operation. As described in Chapter 5 of the Draft RIA, we 
tested three low-diffusion fuel caps used on Class I equipment with 
high annual sales. Based on these designs, we proposing to define a 
tortuous path fuel cap as one that is vented through a small path in 
the gasket and then around the threads where the cap screws onto the 
fuel tank. Specifically, we are proposing an average path length to 
total cross sectional area in the gasket pathways of greater than 1 
mm-1 and a vent path through at least 360[deg] of the 
threads.
    3. We are proposing a third alternative design standard for 
diffusion in which the fuel tank is sealed except for a vent through a 
carbon canister. Carbon canisters are one technology that manufacturers 
may use to meet diurnal emission standards in California.
    4. We are proposing a fourth alternative design standard for 
diffusion in which a fuel tank is sealed so that vapors may not exit 
the fuel tank. Under this design standard, it would be acceptable to 
have a pressure relief valve with an opening pressure of at least 0.5 
psi.
    We request comment on the appropriateness of setting a design 
standard for diffusion and on the designs described above. We also 
request comment on any additional diffusion data from fuel caps that 
are capable of meeting the proposed performance-based diffusion 
standard and on the design of these fuel caps. Even without the 
alternative of a design standard, we anticipate that fuel cap 
manufacturers, with a small number of designs covering a large number 
of equipment models, would be able to perform the necessary testing for 
a performance-standard without being unreasonably burdened.
    Fuel tank manufacturers would be required to certify that their 
products limit venting sufficiently to meet the proposed diffusion 
emission standard, except in certain circumstances. Fuel

[[Page 28172]]

cap manufacturers may optionally certify their fuel caps to the 
diffusion emission standard, in which case they would become subject to 
all the compliance requirements related to the standards, including 
certification. Equipment manufacturers would need to certify that their 
fuel tanks meet the proposed emission standards if they are not already 
certified by the fuel tank manufacturer, as described in Section VI.F.
    We are also proposing that equipment manufacturers subject to 
diffusion emission standards must ensure that the fuel cap is tethered 
to the fuel tank or the equipment to prevent it from being accidentally 
misplaced (see Sec.  1060.101). A missing fuel tank cap would bypass 
any design intended to control these losses and could lead to very high 
emission rates. Fuel cap or fuel tank manufacturers could address this 
as part of their component certification. If this is not part of the 
component certification, an equipment manufacturer would need to 
describe how it meets the tethering requirement in its application for 
certification.
    We are not proposing diffusion standards for handheld equipment. 
Handheld equipment use fuel caps that are either sealed or have 
tortuous venting pathways to prevent fuel from spilling during 
operation. We believe these fuel cap designs limit diffusion emissions 
sufficiently that handheld equipment already meet the proposed 
standard. In addition, we are not proposing diffusion standards for 
Marine SI vessels. The diurnal emission standard for Marine SI vessels 
will lead manufacturers to adopt technologies that automatically limit 
diffusion losses, so there is no need to propose a separate diffusion 
standard for those systems. Similarly, we would not finalize the 
proposed diffusion standard if we adopt a diurnal emission standard for 
Small SI equipment. We request comment on the proposed diffusion 
standard for nonhandheld equipment and whether it should apply to 
handheld equipment and marine vessels as well.
(5) Running Loss Emission Standards and Dates
    We are proposing standards to control running loss emissions from 
nonhandheld Small SI equipment beginning in the same year as the 
proposed Phase 3 exhaust emission standards--2012 for Class I engines 
and 2011 for Class II engines (see Sec.  1060.104). Equipment 
manufacturers would need to certify that their equipment models meet 
the proposed running loss requirements since component certification is 
not practical.
    We have measured fuel temperatures and found that some types of 
equipment experience significant fuel heating during engine operation. 
This was especially true for fuel tanks mounted on or near the engine. 
This occurs in many types of Small SI equipment.
    It would be very difficult to define a measurement procedure to 
consistently and accurately quantify running losses. Also, a 
performance standard with such a procedure would introduce a 
challenging testing requirement for hundreds of small-volume equipment 
manufacturers. Moreover, we believe there are several different design 
approaches that will reliably and effectively control running losses. 
We are therefore not proposing to control running losses using the 
conventional approach of establishing a procedure to measure running 
losses and adopting a corresponding emission standard. Manufacturers 
could choose from one of the following approaches to meet this 
requirement:
     Vent running loss fuel vapors from the fuel tank to the 
engine's intake manifold in a way that burns the fuel vapors in the 
engine instead of venting them to the atmosphere. The use of an 
actively purged carbon canister would qualify under this approach.
     Use a bladder to minimize fuel vapor volume in a sealed 
fuel tank.
     Design the equipment so that fuel temperature does not 
rise more than 8 [deg]C during normal operation. Such a design may use 
insulation or forced cooling to minimize temperature increases. This 
would require measuring fuel temperatures to show that each covered 
equipment configuration does not exceed the temperature threshold (see 
Sec.  1060.535).
     Show that the equipment qualifies as wintertime equipment.
    We believe any of these approaches will ensure that manufacturers 
will be substantially controlling running losses, either by preventing 
or managing running loss vapors. While none of these approaches are 
expected to require extensive design changes or lead time, any 
manufacturer choosing the option to vent running loss fuel vapors into 
the engine's intake manifold would need to make this change in 
coordination with the engine design. As a result, we believe it is 
appropriate to align the timing of the running loss standards with the 
introduction of the proposed Phase 3 standards.
    We request comment on the proposed running loss requirement for 
nonhandheld Small SI equipment. We also request comment on any other 
design approaches that will reliably and effectively control running 
losses. Examples of other approaches may be to seal the fuel tank for 
pressures up to 3.5 psi or, for equipment that does not include fuel 
recirculation, locate the fuel tank at least 12 inches away from the 
engine and other heat sources (such as exhaust pipes, hydraulic lines, 
etc.).
    We are not proposing to apply the running loss requirements to 
handheld Small SI engines. We believe running loss emission standards 
should not apply to handheld engines at this time because the likely 
approach to controlling running losses could require that manufacturers 
revisit their design for controlling exhaust emissions. As described 
above, we are not proposing to change the exhaust emission standards 
for handheld engines in this rulemaking. In addition, there are some 
technical challenges that would require further investigation. For 
example, the compact nature of the equipment makes it harder to isolate 
the fuel tank from the engine and the multi-positional nature of the 
operation may prevent a reliable means of venting fuel vapors into the 
intake manifold while the engine is running. We request comment on the 
appropriateness of requiring manufacturers to address running loss 
emissions from handheld engines.
    Furthermore, we are not proposing to apply running loss 
requirements to Marine SI engines. Installed marine fuel tanks are 
generally not mounted near the engine or other heat sources so running 
losses should be very low. A possible exception to this is personal 
watercraft since they are designed with the fuel tank closer to the 
engine. However, under the proposed standard for controlling diurnal 
emissions, we expect that manufacturers will design their fuel tanks to 
stay pressurized up to 1 psi. This would also help control running loss 
emissions. We request comment on applying running loss controls to 
Marine SI engines. In particular, we request comment on the possibility 
that other design configurations would have higher running loss 
emissions. One example may be outboard applications in which a fuel 
tank is mounted directly on the engine.
(6) Requirements Related to Refueling
    Refueling spitback and spillage emissions represent a substantial 
additional amount of fuel evaporation that contributes to overall 
emissions from equipment with gasoline-fueled engines. We are not 
proposing measurement procedures with corresponding emission standards 
to address these emission sources. However, we believe equipment 
manufacturers can take significant steps

[[Page 28173]]

to address these refueling issues by incorporating sound practices into 
their equipment designs. For example, designing a marine filler neck 
with a horizontal segment near the fuel inlet will almost inevitably 
lead to high levels of spillage since fuel flow will invariably reach 
the nozzle, leading to substantial fuel flow out of the fuel system. In 
contrast, designing for automatic shutoff would prevent this. Also, 
maintaining a vertical orientation of the filler neck would allow the 
fuel to flow back into the filler neck and into the tank after the 
nozzle shuts off.
    For Small SI equipment, designing fuel inlets that are readily 
accessible and large enough to see the rising fuel level (either 
through the tank wall or the fuel inlet) will substantially reduce 
accidental spillage during refueling. We are therefore proposing to 
require that equipment manufacturers design and build their equipment 
such that operators could reasonably be expected to fill the fuel tank 
without spitback or spillage during the refueling event (see Sec.  
1060.101). This proposed requirement mirrors the following requirement 
recently adopted with respect to portable fuel containers (72 FR 8428, 
February 26, 2007):

    You are required to design your portable fuel containers to 
minimize spillage during refueling to the extent practical. This 
requires that you use good engineering judgment to avoid designs 
that will make it difficult to refuel typical vehicle and equipment 
designs without spillage. (40 CFR 59.611(c)(3))

    While the proposed requirement is not as objective and quantifiable 
as the other standards and requirements we are proposing, we believe 
this is important, both to set a requirement for manufacturers in 
designing their products and to give EPA the ability to require 
manufacturers to select designs that are consistent with good 
engineering practice regarding effective refueling strategies. To the 
extent that equipment manufacturers and boat builders certify their 
products to emission standards, they would need to describe how they 
meet this refueling-related requirement in their application for 
certification. If boat builders rely on certified components instead of 
applying for certification, they would need to keep records describing 
how they meet this refueling-related requirement; Section VI.F 
describes how such companies can meet certification requirements 
without applying for a certificate. We request comment on this approach 
to addressing refueling emissions from nonroad spark-ignition engines. 
We also request comment on the possibility of relying on current or 
future published industry standards to establish designs for equipment 
and fueling containers that minimize refueling emissions under normal 
in-use conditions.
    Spitback and spillage are a particular concern for gasoline-fueled 
boats. Marine operators have reported that relatively large quantities 
of gasoline are released into the marina environment during refueling 
events. The American Boat and Yacht Council (ABYC) has a procedure in 
place to define a standard practice to address refueling. However, this 
procedure calls for testing by refueling up to a 75 percent fill level 
at a nominal flow rate of 5 gallons per minute. This procedure is 
clearly not consistent with prevailing practices and is not effective 
in preventing spills. We believe the most effective means of addressing 
this problem is for ABYC to revise their test procedure to reflect 
current practices. Specifically, we would recommend a procedure in 
which the marine fuel tank is filled at flow rates between 5 and 20 
gallons per minute until automatic shutoff occurs.
    A variety of technological solutions are available to address 
spitback and spillage from marine vessels. The simplest would be a 
system much like is used on cars. A small-diameter tube could run along 
the filler neck from the top of the tank to a point near the top of the 
filler neck. Once liquid fuel would reach the opening of the filler 
neck and the extra tube, the fuel would go faster up the small-diameter 
tube and trigger automatic shutoff before the fuel climbs up the filler 
neck. This design would depend on the user to use the equipment 
properly and may not be fully effective, for example, with long filler 
necks and low refueling rates. An alternative design would involve a 
snug fit between the nozzle's spout and the filler neck, which would 
allow for a tube to run from a point inside the tank (at any 
predetermined level) directly to the shutoff venturi on the spout. The 
pressure change from the liquid fuel in the tank reaching the tube's 
opening would trigger automatic shutoff of the nozzle. This system 
would prevent overflowing fuel without depending on the user. These are 
just two of several possible configurations that would address fuel 
spillage from marine vessels.
    We request comment on the degree of fuel spillage with current 
technologies and practices with marine vessels. We request comment on 
the potential for ABYC standards to address fuel spillage or on the 
need for EPA to adopt such procedures and standards. We request comment 
on the specific procedures that would be appropriate for measuring 
spitback and spillage. Finally, we request comment on adopting 
provisions such as those in 40 CFR 80.22 to regulate the dimensions of 
refueling nozzles for marine applications, including a specification of 
a nominal nozzle diameter of 1.1870.010 inches and nominal 
venturi placement \5/8\ inch from the terminal end of the nozzle.
(7) Summary Table of Proposed Evaporative Emission Standards
    Table VI-1 summarizes the proposed standards and implementation 
dates discussed above for evaporative emissions from Small SI equipment 
and Marine SI vessels. Where a standard does not apply to a given class 
of equipment, ``NA'' is used in the table to indicate ``not 
applicable.''

                                       Table VI.-1.--Proposed Evaporative Emission Standards and Model Year Dates
--------------------------------------------------------------------------------------------------------------------------------------------------------
         Standard/ category             Hose  permeation        Tank  permeation            Diurnal               Diffusion             Running loss
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                                                   Proposed Standards
--------------------------------------------------------------------------------------------------------------------------------------------------------
Standard level.....................  15 g/m2 /day..........  1.5 g/m2 /day.........  0.40 g/gal/day.......  0.80 g/day...........  Design standard.
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                                        Implementation Dates: Small SI Equipment
--------------------------------------------------------------------------------------------------------------------------------------------------------
Handheld...........................  2012 a b..............  2009-2013 c d.........  NA...................  NA...................  NA.
--------------------------------------------------------------------------------------------------------------------------------------------------------
Class I............................  2008..................  2012..................  NA...................  2012 g...............  2012.
Class II...........................  2008..................  2011..................  NA...................  2011 g...............  2011.

[[Page 28174]]

 
                                                          Implementation Dates: Marine Vessels
--------------------------------------------------------------------------------------------------------------------------------------------------------
Portable tanks.....................  2009..................  2011..................  2009 e...............  NA...................  NA.
PWC................................  2009..................  2011..................  2009.................  NA...................  NA.
Other installed tanks..............  2009..................  2012..................  2010 f...............  NA...................  NA.
--------------------------------------------------------------------------------------------------------------------------------------------------------
\a\ 2013 for small-volume families and cold weather equipment.
\b\ Fuel line permeation standard of 175 g/m2 /day for cold-weather equipment.
\c\ 2.5 g/m2 /day for structurally integrated nylon fuel tanks.
\d\ 2009 for families certified in California, 2013 for small-volume families, 2011 for structurally integrated nylon fuel tanks, and 2010 for remaining
  families.
\e\ Design standard.
\f\ Fuel tanks installed in nontrailerable boats (>=26 ft. in length) may meet a standard of 0.16 g/gal/day over an alternative test cycle.
\g\ Alternatively, may meet a design standard.

D. Emission Credit Programs

    A common feature of mobile source emission requirements is an 
emission credit program that allows manufacturers to generate emission 
credits based on certified emission levels for engine families that are 
more stringent than the standard. See Section VII for background 
information and general provisions related to emission credit programs.
    We believe it is appropriate to consider compliance based on 
emission credits relative to permeation standards for fuel lines used 
with handheld engines and for fuel tanks used in all applications. As 
described above, the emission standards apply to the fuel tanks and 
fuel lines directly, such that we would generally expect component 
manufacturers to certify their products. However, we believe it is best 
to avoid placing the responsibility for demonstrating a proper emission 
credit balance on component manufacturers for three main reasons. 
First, it is in many cases not clear whether these components will be 
produced for one type of application or another. Component 
manufacturers might therefore be selling similar products into 
different applications that are subject to different standards--or no 
standards at all. Component manufacturers may or may not know in which 
application their products will be used. Second, there will be 
situations in which equipment manufacturers and boat builders take on 
the responsibility for certifying components. This may be the result of 
an arrangement with the component manufacturer, or equipment 
manufacturers and boat builders might build their own fuel tanks. We 
believe it would be much more difficult to manage an emission credit 
program in which manufacturers at different places in the manufacturing 
chain would be keeping credit balances. There would also be a 
significant risk of double-counting of emission credits. Third, most 
component manufacturers would be in a position to use credits or 
generate credits, but not both. Equipment manufacturers and boat 
builders are more likely to be in a position where they would keep an 
internal balance of generating and using credits to meet applicable 
requirements. Our experience with other programs leads us to believe 
that an emission credit program that depends on trading is not likely 
to be successful.
    We are therefore proposing emission credit provisions in which 
equipment manufacturers and boat builders keep a balance of credits for 
their product line. Equipment manufacturers and boat builders choosing 
to comply based on emission credits would need to certify all their 
products that either generate or use emission credits. Component 
manufacturers would be able to produce their products with emission 
levels above or below applicable emission standards but would not be 
able to generate emission credits and would not need to maintain an 
accounting to demonstrate a balance of emission credits.
    We are aware that some component manufacturers would be making 
products that generate emission credits that would belong to equipment 
manufacturers or boat builders. Equipment manufacturers or boat 
builders could in turn use those emission credits to enable them to buy 
components from different competing component manufacturers. This would 
potentially put fuel tank manufacturers producing low-FEL products at a 
competitive disadvantage with other manufacturers producing high-FEL 
fuel tanks. We request comment on the best approach to setting up an 
ABT program. We specifically request comment on special provisions that 
may be appropriate to address these competitiveness issues for 
component manufacturers.
(1) Averaging, Banking, and Trading for Nonhandheld Equipment and 
Marine Vessels
    We are proposing averaging, banking, and trading (ABT) provisions 
for fuel tank permeation from nonhandheld Small SI equipment and Marine 
SI vessels (see subpart H in parts 1045 and 1054). See the following 
section for similar provisions for handheld Small SI equipment.
    We are aware of certain control technologies that would allow 
manufacturers to produce fuel tanks that reduce emissions more 
effectively than we would require. These technologies may not be 
feasible or practical in all applications, but we are proposing to 
allow equipment manufacturers using such low-emission technologies to 
generate emission credits. In other cases, an equipment manufacturer 
may want to or need to use emission credits that would allow for fuel 
tanks with permeation rates above the applicable standards. Equipment 
manufacturers would quantify positive or negative emission credits by 
establishing a Family Emission Limit (FEL) to define the applicable 
emission level, then factoring in sales volumes and useful life to 
calculate a credit total. This FEL could be based on testing done 
either by the component manufacturer or the equipment manufacturer. 
Through averaging, these emission credits could be used by the same 
equipment manufacturer to offset other fuel tanks in the same model 
year that do not have control technologies that control emissions to 
the level of the standard. Through banking, such an equipment 
manufacturer could use the emission credits in later model years to 
offset high-emitting fuel tanks. The emission credits could also be 
traded to another equipment manufacturer to offset that company's high-
emitting fuel tanks.

[[Page 28175]]

    We believe an ABT program is potentially very advantageous for fuel 
tanks because of the wide variety of tank designs. The geometry, 
materials, production volumes, and market dynamics for some fuel tanks 
are well suited to applying emission controls but other fuel tanks pose 
a bigger challenge. The proposed emission credit program allows us to 
set a single standard that applies broadly without dictating that all 
fuel tanks be converted to use low-permeation technology at the same 
time.
    We are requesting comment on one particular issue. We are not 
proposing to limit the life of evaporative emission credits under the 
proposed banking program. However, we are concerned that this could 
result in a situation where credits generated by a fuel tank sold in a 
model year are not used until many years later when the fuel tanks 
generating the credits have been scrapped and are no longer part of the 
fleet. EPA believes there may be value to limiting the use of credits 
to the period that the credit-generating fuel tanks exist in the fleet. 
For this reason, EPA requests comment on limiting the lifetime of the 
credits generated under the proposed evaporative emission ABT program 
to five years. The five-year period is consistent with the proposed 
useful life for fuel tank evaporative emissions.
    We are proposing not to allow manufacturers to generate emission 
credits by using metal fuel tanks. These tanks would have permeation 
rates well below the standard, but there is extensive use of metal 
tanks today, so it would be difficult to allow these emission credits 
without undercutting the stringency of the standard and the expected 
emission reductions from the standard.
    Emission control technologies and marketing related to portable 
marine fuel tanks are quite different than for installed tanks. Since 
these fuel tanks are not installed in vessels that are subject to 
emission standards, the fuel tank manufacturer would need to take on 
the responsibility for certification. As a result, we would treat these 
companies as both component manufacturer and equipment manufacturer 
with respect to their portable fuel tanks. As described above, we are 
proposing that component manufacturers not be responsible for 
compliance as part of an emission credit program. We would expect all 
portable fuel tank manufacturers to also make nonportable fuel tanks, 
which would again lead to a confusing combination of manufacturers 
maintaining credit balances to demonstrate compliance. In addition, 
most if not all portable fuel tanks are made using high-density 
polyethylene in a blow-molding process. The control technologies for 
these tanks are relatively straightforward and readily available so we 
do not anticipate that these companies will need emission credits to 
meet the proposed standards. We are therefore proposing to require 
portable marine fuel tanks to meet emission standards without an 
emission credit program.
    We are proposing not to allow cross-trading of emission credits 
between Small SI equipment and Marine SI vessels. The proposed 
standards are intended to be technology-forcing for each equipment 
category. We are concerned that cross-trading may allow marginal 
credits in one area to hamper technological advances in another area. 
We are also proposing not to allow credit exchanges with Small SI 
equipment certified in California because California has its own 
emission standards for these products. Similarly, if California ARB 
adopts different evaporative requirements or separate ABT provisions 
for Marine SI vessels, we would not allow credit exchanges with marine 
vessels certified in California. These restrictions are consistent with 
our existing ABT programs. We also would not allow credit exchanges 
between handheld and nonhandheld equipment or between Class I and Class 
II equipment. We are concerned that cross trading between these 
equipment types could give an unfair competitive advantage to equipment 
manufacturers with broader product lines. We request comment regarding 
whether the competitive nature of the market warrants such a 
restriction in cross-trading between Class I and Class II equipment.
    In the early years of the ABT program we are proposing not to have 
an FEL cap. This would give manufacturers additional time to use 
uncontrolled fuel tanks, primarily in small-volume applications, until 
they could convert their full product lines to having fuel tanks with 
permeation control. After an initial period of three years after the 
implementation date of the fuel tank standards, we are proposing an FEL 
cap of 5.0 g/m2 /day (8.3 g/m2 /day if tested at 
40 [deg]C). For Class II equipment, portable marine fuel tanks, and 
personal watercraft, the FEL cap would begin in 2014. For Class I 
equipment, handheld equipment, and other installed marine fuel tanks, 
the FEL cap would begin in 2015. See Sec.  1045.107 and Sec.  1054.110. 
For small volume, Small SI equipment families, we are proposing an FEL 
cap of 8.0 g/m2 /day (13.3 g/m2 /day if tested at 
40 [deg]C). The purpose of the FEL cap would be to prevent the long-
term production of fuel tanks without permeation control, while still 
providing regulatory flexibility. We request comment on the level of 
the FEL that would be necessary to achieve this goal.
    While the FEL cap is intended to require manufacturers to move 
toward widespread use of emission control technologies, we are aware of 
technologies that have measured emission levels between the proposed 
standard and the proposed FEL cap. As a result, the effect of an FEL 
cap may be that there will be little or no use of emission credits as a 
compliance strategy once the FEL cap applies. We request comment on the 
usefulness of maintaining an ABT program after we implement an FEL cap.
    We are proposing that emission credits under the tank permeation 
standards would be calculated using the following equation: Credits 
[grams] = (Standard - FEL) x useful life [years] x 365 days/year x 
inside surface area [m2]. Both the standard and the FEL are 
in units of g/m2 /day based on testing at 28 [deg]C.
    As discussed earlier, we are proposing an alternative standard for 
tank permeation testing performed at 40 [deg]C. Because permeation is 
higher at this temperature than the primary test temperature, emissions 
credits and debits calculated at this test temperature would be 
expected to be higher as well. An FEL 10 percent below the standard 
would generate 0.15 grams of credit for the primary standard and 0.25 
grams of credit for the alternative standard. Therefore, we are 
proposing that credits and debits that are calculated based on the 
alternative standard be adjusted using a multiplicative factor of 0.6 
(1.5/2.5 = 0.6).
    We request comment on the need for averaging, banking and trading 
for fuel tanks and on the specific provisions proposed above.
(2) Averaging, Banking, and Trading Program for Handheld Equipment
    We are proposing an ABT program for handheld equipment that would 
include fuel tanks and fuel lines. Under this program, a manufacturer 
would be able to use credits from fuel tanks to offset debits from fuel 
lines, or vice versa. This category of equipment generally involves 
very short sections of fuel lines, which are often made using complex, 
injection-molded designs. We believe an ABT program would help handheld 
equipment manufacturers meet fuel line permeation standards sooner than 
would otherwise be possible.

[[Page 28176]]

    As discussed earlier, we are proposing a higher standard level of 
2.5 g/m2 /day for structurally integrated handheld fuel 
tanks. This standard is intended to reflect the measured permeation 
rates and characteristics of materials used in these fuel tanks and 
manufacturer concerns regarding uncertainty about the permeation rates 
from tanks used in the wider range of products and the lack of 
definitive control strategies to reduce emissions while meeting other 
product requirements. A similar issue exists for cold-weather fuel 
lines, for which we are proposing a less stringent permeation standard 
of 175 g/m2 /day to address uncertainty associated with the 
availability of appropriate low-permeation cold-weather materials in 
the time frame of the new standards. We are concerned that windfall 
credits that may be generated for these applications if products are 
produced that are below the adjusted standards, but do not meet the 
primary standards for fuel tanks and fuel lines. To address this issue, 
we are proposing that credits would only be earned below 1.5 g/
m2 /day for fuel tanks and below 15 g/m2 /day for 
fuel lines on handheld equipment. To promote early introduction of low-
permeation products, we are proposing to allow manufacturers to be able 
to earn credits on this basis even before the permeation standards go 
into effect. Credit use would be calculated based on the applicable 
standards. Emission credits would otherwise be calculated using the 
same equation described in Section VI.D.1 above.
    Both the fuel line and fuel tank standards are in units of g/
m2 /day. However, fuel line testing is performed at 23 
[deg]C while tank testing is performed at 28 [deg]C. Because permeation 
tends to increase with increases in temperature, we request comment 
regarding whether the credits should be adjusted to account for 
temperature. This adjustment would be smaller than the adjustment 
described above for a 28 [deg]C versus 40 [deg]C test.
    For non-structurally integrated fuel tanks, we are proposing to 
apply an FEL cap of 5.0 g/m2 /day (8.3 g/m2 /day 
if tested at 40[deg]C) beginning in 2015. For structurally integrated 
fuel tanks we are proposing an FEL cap of 3.0 g/m2 /day (5.0 
g/m2 /day if tested at 40 [deg]C) in 2015. We believe this 
cap gives adequate flexibility for manufacturers to address variability 
in the permeation rates of these fuel tanks. For small volume, Small SI 
equipment families (including handheld and nonhandheld equipment), we 
are proposing a long term FEL cap of 8.0 g/m2 /day (13.3 g/
m2 /day if tested at 40[deg]C) to provide additional 
regulatory flexibility where costs cannot be spread over high 
production volumes. We request comment on the need for continuing an 
ABT program once there is an FEL cap, as described for nonhandheld 
equipment above.
(3) Other Evaporative Sources
    We are not proposing an emission credit program for other 
evaporative sources. We believe technologies are readily available to 
meet the applicable standards for fuel line permeation, diurnal 
emissions and diffusion emissions (see Section VI.H.). The exception to 
this is for fuel lines on handheld equipment as discussed above. In 
addition, the diurnal emission standards for portable marine fuel tanks 
and PWC fuel tanks are largely based on existing technology so any 
meaningful emission credit program with the proposed standards would 
result in windfall credits. The running loss standard is not based on 
emission measurements and refueling-related requirements are based on 
design specifications only, so it is not appropriate or even possible 
to calculate emission credits.
(4) Early-Allowance Programs
    Manufacturers may in some cases be able to meet the proposed 
emission standards earlier than we would require. We are proposing 
provisions for equipment manufacturers using low-emission evaporative 
systems early to generate allowances before the standards apply. These 
early allowances could be used, for a limited time, after the 
implementation date of the standards to sell equipment or fuel tanks 
that have emissions above the standards. We are proposing two types of 
allowances. The first is for Small SI equipment as a whole where for 
every year that a piece of equipment is certified early, another piece 
of equipment could delay complying with the proposed standards by an 
equal time period beyond the proposed implementation date. The second 
is similar but would be just for the fuel tank rather than the whole 
equipment (Small SI or Marine SI). Equipment or fuel tanks certified 
for the purposes of generating early allowances would be subject to all 
applicable requirements. These allowances are similar to the emission 
credit program elements described above but they are based on counting 
compliant products rather than calculating emission credits. 
Establishing appropriate credit calculations would be difficult because 
the early compliance is in some cases based on products meeting 
different standards using different procedures.
(a) Nonhandheld Small SI Equipment
    Many Small SI equipment manufacturers are currently certifying 
products to evaporative emission standards in California. The purpose 
of the proposed early-allowance program is to provide an incentive for 
manufacturers to begin selling low-emission products nationwide. We are 
proposing to give allowances to manufacturers for equipment meeting the 
California evaporative emission standards that are sold in the United 
States outside of California and are therefore not subject to 
California's emission standards. Manufacturers would need to have 
California certificates for these equipment types. See Sec.  1054.145.
    Allowances could be earned in any year before 2012 for Class I 
equipment and before 2011 for Class II equipment. We are proposing that 
the allowances may be used through the 2014 model year for Class I and 
through the 2013 model year for Class II equipment. We are proposing 
not to allow trading of allowances between Class I and Class II. To 
keep this program simpler, we are not proposing to adjust the 
allowances based on the anticipated emission rates from the equipment. 
Therefore, we believe it is necessary to at least distinguish between 
Class I and Class II equipment. We request comment on the early 
allowance program described above for nonhandheld Small SI equipment.
(b) Fuel Tanks
    We are also proposing an early-allowance program for nonhandheld 
Small SI equipment for fuel tanks (see Sec.  1054.145). This program 
would be similar to the program described above for equipment 
allowances, except that it would be for fuel tanks only. We would 
accept California-certified configurations. Allowances could be earned 
prior to 2011 for Class II equipment and prior to 2012 for Class II 
equipment; allowances could be used through 2013 for Class II equipment 
and through 2014 for Class II equipment. Allowances would not be 
exchangeable between Class I and Class II equipment. See Section V.E.3 
for a description of how this provision would interact with the 
proposed transition program for equipment manufacturers.
    The proposed early-allowance program for marine fuel tanks would be 
similar except that there are no California standards for these tanks 
(see Sec.  1045.145). Manufacturers certifying early to the proposed 
fuel tank permeation standards would be able to earn allowances that 
they could use to

[[Page 28177]]

offset high-emitting fuel tanks after the proposed standards go into 
place. We are proposing not to allow cross-trading of allowances 
between portable fuel tanks, personal watercraft, and other installed 
fuel tanks. Each of these categories includes significantly different 
tank sizes and installed tanks have different implementation dates and 
are expected to use different permeation control technology. For 
portable fuel tanks and personal watercraft, allowances could be earned 
prior to 2011 and used through the 2013 model year. For other installed 
tanks, allowances could be earned prior to 2012 and used through the 
2014 model year.

E. Testing Requirements

    Compliance with the emission standards is determined by following 
specific testing procedures. This section describes the proposed test 
procedures for measuring fuel line permeation, fuel tank permeation, 
diurnal emissions, and diffusion emissions. We also describe 
measurement procedures related to running loss emissions. As discussed 
in Section VI.H, we are proposing design-based certification as an 
alternative to testing for certain standards.
(1) Fuel Line Permeation Testing Procedures
    We are proposing that fuel line permeation be measured at a 
temperature of 23  2 [deg]C using a weight-loss method 
similar to that specified in SAE J30 \85\ and J1527 \86\ recommended 
practices (see Sec.  1060.515). We are proposing two modifications to 
the SAE recommended practice. The first modification is for the test 
fuel to contain ethanol; the second modification is to require 
preconditioning of the fuel line through a fuel soak. These 
modifications are described below and are consistent with our current 
requirements for recreational vehicles.
---------------------------------------------------------------------------

    \85\ Society of Automotive Engineers Surface Vehicle Standard, 
``Fuel and Oil Hoses,'' SAE J30, June 1998 (Docket EPA-HQ-OAR-2004-
0008-0176).
    \86\ SAE Recommended Practice J1527, ``Marine Fuel Hoses,'' 
1993, (Docket EPA-HQ-OAR-2004-0008-0195-0177).
---------------------------------------------------------------------------

(a) Test Fuel
    The recommended practice in SAE J30 and J1527 is to use ASTM Fuel C 
(defined in ASTM D471-98) as a test fuel. We are proposing to use a 
test fuel containing 10 percent ethanol. We believe the test fuel must 
contain ethanol because it is commonly blended into in-use gasoline and 
because ethanol substantially increases the permeation rates for many 
materials.
    Specifically, we are proposing to use a test fuel of ASTM Fuel C 
blended with 10 percent ethanol by volume (CE10).\87\ Manufacturers 
have expressed support of this test fuel because it is a consistent 
test fluid compared to gasoline and because it is widely used today by 
industry for permeation testing. In addition, most of the data used to 
develop the proposed fuel line permeation standards were collected on 
this test fuel. This fuel is allowed today as one of two test fuels for 
measuring permeation from fuel lines under the recreational vehicle 
standards.
---------------------------------------------------------------------------

    \87\ ASTM Fuel C is a mix of equal parts toluene and isooctane. 
We refer to gasoline blended with ethanol as E10.
---------------------------------------------------------------------------

    We request comment on allowing permeation testing using EPA 
certification gasoline (known as indolene and specified in 40 CFR 
1065.710) blended with 10 percent ethanol as the test fuel (IE10). This 
test fuel is also specified in the recreational vehicle standards and 
has the advantage of being more similar to in-use fuel than CE10. Based 
on data contained in Chapter 5 of the Draft RIA, most materials used in 
fuel line constructions have lower permeation rates on IE10 than CE10. 
Because the proposed standards are based primarily on data collected 
using CE10 as a test fuel, we also request comment on how the level of 
the standard would need to be adjusted for testing performed on IE10.
(b) Preconditioning Soak
    The second difference from weight-loss procedures in SAE practices 
is in fuel line preconditioning. We believe the fuel line should be 
preconditioned with an initial fuel fill followed by a long enough soak 
to ensure that the permeation rate has stabilized. We are proposing a 
soak period of four to eight weeks at 23  5 [deg]C. 
Manufacturers should use the longer soak period as necessary to achieve 
a stabilized permeation rate for a given fuel line design, consistent 
with good engineering judgment. For instance, thick-walled marine fuel 
line may take longer to reach a stable permeation rate than the fuel 
line used in Small SI equipment. After this fuel soak, the fuel 
reservoir and fuel line would be drained and immediately refilled with 
fresh test fuel prior to the weight-loss test. We request comment on 
the need to require a longer fuel soak, especially for marine lines.
(c) Alternative Approaches
    We also propose to allow permeation measurements using alternative 
equipment and procedures that provide equivalent results (see Sec.  
1060.505). To use these alternative methods, manufacturers would first 
need to get our approval. Examples of alternative approaches that we 
anticipate manufacturers may use are the recirculation technique 
described in SAE J1737 or enclosure-type testing such as in 40 CFR part 
86.\88\ Note that the proposed test fuel, test temperatures, and 
preconditioning soak described above would still apply. Because 
permeation increases with temperature we would accept data collected at 
higher temperatures (greater than 23 [deg]C) for a demonstration of 
compliance.
---------------------------------------------------------------------------

    \88\ SAE Recommended Practice J1737, ``Test Procedure to 
Determine the Hydrocarbon Losses from Fuel Tubes, Hoses, Fittings, 
and Fuel Line Assemblies by Recirculation,'' 1997, (Docket EPA-HQ-
OAR-2004-0008-0178).
---------------------------------------------------------------------------

    For portable marine fuel tanks, the fuel line assembly from the 
engine to the fuel tank typically includes two sections of fuel line 
with a primer bulb in-between and quick-connect assemblies on either 
end. We are proposing a provision to allow manufacturers to test the 
full assembly as a single fuel line to simplify testing for these fuel 
line assemblies (see Sec.  1060.102). This gives the manufacturer the 
flexibility to use a variety of materials as needed for performance 
reasons while meeting the fuel line permeation standard for the fully 
assembled product. Measured values would be based on the total measured 
permeation divided by the total internal surface area of the fuel line 
assembly. However, where it is impractical to calculate the internal 
surface area of individual parts of the assembly, such as a primer 
bulb, we would allow a simplified calculation that treats the full 
assembly as a straight fuel line. This small inaccuracy would cause 
reported emission levels (in g/m\2\/day) to be slightly higher so it 
would not jeopardize a manufacturer's effort to demonstrate compliance 
with the applicable standard.
    We request comment on the above approaches for fuel line permeation 
testing and on the proposed test fuel.
(2) Fuel Tank Permeation Testing Procedures
    The proposed test procedure for fuel tank permeation includes 
preconditioning, durability simulation, and a weight-loss permeation 
test (see Sec.  1060.520). The preconditioning and the durability 
testing may be conducted

[[Page 28178]]

simultaneously; manufacturers would put the tank through durability 
testing while the tank is undergoing its preconditioning fuel soak to 
reach a stabilized permeation level. We request comment on the proposed 
tank permeation test procedures and options.
(a) Test Fuel
    Similar to the proposed fuel line testing procedures, we are 
proposing to use a test fuel containing 10 percent ethanol to help 
ensure in-use emission reductions with the full range of in-use fuels. 
We are proposing to specify IE10 as the test fuel; this is made up of 
90 percent certification gasoline and 10 percent ethanol (see 40 CFR 
1065.710). This is the same test fuel specified for testing fuel tanks 
for recreational vehicles. In addition, IE10 is representative of in-
use test fuels. We are proposing that Fuel CE10 may be used as an 
alternative test fuel. Data in Chapter 5 of the Draft RIA suggest that 
permeation tends to be somewhat higher on CE10 than IE10, so testing on 
CE10 should be an acceptable demonstration of compliance. We request 
comment on the proposed test fuels.
    We included a provision allowing recreational vehicle manufacturers 
to perform emission measurements after preconditioning using IE10. This 
allowance has created substantial confusion and necessitated including 
additional provisions to prevent manufacturers from exercising the test 
option in a way that undermines the objective of maintaining a 
procedure that accounts for the effect of ethanol. As a result, we 
believe it is appropriate to propose a test procedure for Small SI 
equipment and Marine SI vessels that maintains a consistent approach by 
including ethanol in the test fuel for both preconditioning and 
emission measurements. We request comment on this approach.
(b) Preconditioning Fuel Soak
    Before testing fuel tanks for permeation, the fuel tank must be 
preconditioned by allowing it to sit with fuel inside until the 
hydrocarbon permeation rate has stabilized. Under this step, we are 
proposing that the fuel tank be filled with test fuel and soaked--
either for 20 weeks at 28  5 [deg]C or for 10 weeks at 43 
 5 [deg]C. The manufacturer may need to use a longer soak 
period if necessary to achieve a stabilized permeation rate for a given 
fuel tank, consistent with good engineering judgment.
    The tank would have to be sealed during this fuel soak and we are 
proposing that any components that are directly mounted to the fuel 
tank, such as a fuel cap, must be attached. Other openings, such as 
fittings for fuel lines or petcocks, would be sealed with impermeable 
plugs. In addition, if there is a vent path through the fuel cap, that 
vent path may be sealed. Alternatively, we are proposing that the 
opening could be sealed for testing and the fuel cap tested separately 
for permeation (discussed below). If the fuel tank is designed to have 
a separate fill neck between the fuel cap and the tank that is at least 
12 inches long and at least 6 inches above the top of the fuel tank, 
the tank may be sealed with something other than a production fuel cap.
    Manufacturers may do the durability testing described below during 
the time period specified for preconditioning. The time spent in 
durability testing may count as preconditioning time as long as the 
fuel tank has fuel inside the entire time. During the slosh testing, a 
fuel fill level of 40 percent would be considered acceptable for the 
fuel soak. Otherwise, we are proposing to require that the fuel tank be 
filled to nominal capacity during the fuel soak.
(c) Durability Tests
    We are proposing three tests to evaluate the durability of fuel 
tank permeation controls: (1) Fuel sloshing; (2) pressure-vacuum 
cycling; and (3) ultraviolet exposure. The purpose of these 
deterioration tests would be to help ensure that the technology is 
durable under the wide range of in-use operating conditions. For 
sloshing, the fuel tank would be filled to 40 percent capacity with E10 
fuel and rocked for one million cycles. The pressure-vacuum testing 
would consist of 10,000 cycles from -0.5 to 2.0 psi. These two proposed 
durability tests are based on draft recommended SAE practice.\89\ The 
third durability test would be intended to assess potential impacts of 
ultraviolet sunlight (i.e., light with wavelength ranging from 300 to 
400 nanometers) on the durability of surface treatment. In this test, 
the tank would be exposed to ultraviolet light with an intensity of at 
least 0.40 W-hr/m2/min on the tank surface for 450 hours. 
Alternatively, we are proposing the tank could be exposed to direct 
natural sunlight for an equivalent period of time.
---------------------------------------------------------------------------

    \89\ Draft SAE Information Report J1769, ``Test Protocol for 
Evaluation of Long Term Permeation Barrier Durability on Non-
Metallic Fuel Tanks,'' (Docket EPA-HQ-OAR-2004-0008-0195).
---------------------------------------------------------------------------

    We are proposing to include a provision that would allow 
manufacturers to omit one or more of the durability tests if it is not 
appropriate for a certain tank design. For example, coextruded plastic 
tanks rely on a thin layer of material within the wall of the tank. 
This material is never exposed to sunlight or liquid fuel so the 
sloshing, pressure, and ultraviolet-exposure tests would not be 
necessary. At the same time, we request comment on whether other 
durability tests would be necessary to ensure that the fuel tank would 
not be compromised for safety due to changes to address permeation. 
Examples may be temperature cycling or impact testing.
(d) Weight-Loss Test
    Following the fuel soak, we are proposing that the fuel tank must 
be drained and refilled with fresh fuel immediately after to prevent 
the fuel tank from drying out. The tank would have to be sealed within 
eight hours after refreshing the fuel at the end of the soak period. 
The permeation rate from fuel tanks would be measured by comparing mass 
measurements of the tank before and after a soaking period of at least 
two weeks at a temperature of 28  2 [deg]C. In the case of 
fuel tanks with very low permeation, the weight loss of the fuel tank 
over two week period could be too small to obtain an accurate 
measurement. We are proposing that manufacturers may extend the test 
period by two weeks to obtain an accurate measurement for fuel tanks 
with low permeation rates, consistent with good engineering judgment.
    A change in atmospheric pressure over the weeks of testing can 
affect the accuracy of measured weights for testing due to the buoyancy 
of the fuel tank. The buoyancy effect on emission measurements is 
proportional to the volume of the fuel tank, so this procedure is 
appropriate even for testing very small fuel tanks. To address this we 
are proposing a procedure in which a reference fuel tank filled with 
sand or some other inert material to the approximate total weight of 
the test tank be used to zero the scale used for measuring the test 
tank. This would result in measured and reported values representing 
the change in mass from permeation losses rather than a comparison of 
absolute masses. This is similar to an approach in which weighing would 
determine absolute masses with a mathematical correction to account for 
the effects of buoyancy. We believe the proposed approach is better 
because it minimizes the possibility of introducing or propagating 
error.
    We propose to allow permeation measurements for certification using 
alternative equipment and procedures that provide equivalent results. 
To use these alternative methods, manufacturers would first need to get

[[Page 28179]]

our approval. An example of an alternative weight-loss measurement 
procedure would be to test the fuel tank in a SHED and determine the 
permeation by measuring the concentration of hydrocarbons in the 
enclosure.
(e) Fuel Cap Permeation Testing
    As discussed above, we are proposing that manufacturers would have 
the option to test the fuel cap separately from the tank and combine 
the results to determine the total tank permeation rate. In this case, 
the permeation test would be performed as described above except that 
the fuel cap would be mounted on an impermeable reservoir such as a 
metal or glass tank. The volume of the test reservoir would have to be 
at least one liter to ensure sufficient fuel vapor exposure. We are 
proposing that the ``tank'' surface area for calculating the results 
would be the smallest inside cross sectional area of the opening on 
which the cap is mounted. The fuel cap would need to be tested in 
conjunction with a representative gasket. In the case where the vent 
path is through grooves in the gasket, another gasket of the same 
material and dimensions, without the vent grooves, may be used. In the 
case where the vent is through the cap, that vent would be sealed for 
testing.
(3) Diurnal Emission Testing Procedures
    The proposed test procedure for diurnal emissions from installed 
marine fuel tanks involves placing the fuel tank in a SHED, varying the 
temperature over a prescribed profile, and measuring the hydrocarbons 
escaping from the fuel tank (see Sec.  1060.525). The final result 
would be reported in grams per gallon where the grams are the mass of 
hydrocarbons escaping from the fuel tank over 24 hours and the gallons 
are the nominal fuel tank capacity. The proposed test procedure is 
derived from the automotive evaporative emission test with 
modifications specific to marine applications.\90\ We request comment 
on the proposed diurnal test procedures described below.
---------------------------------------------------------------------------

    \90\ See 40 CFR part 86, subpart B, for the automotive 
evaporative emission test procedures.
---------------------------------------------------------------------------

(a) Temperature Profile
    We believe it is appropriate to base diurnal measurements on a 
summer day with ambient temperatures ranging from 72 to 96 [deg]F (22.2 
to 35.6 [deg]C). This temperature profile, which is also used for 
automotive testing, represents a hot summer day when ground-level ozone 
formation is most likely. Due to the thermal mass of the fuel and, in 
some cases, the inherent insulation provided by the boat hull, the fuel 
temperatures would cover a narrower range. Data presented in Chapter 5 
of the Draft RIA suggest that the fuel temperature in an installed 
marine fuel tank would see a total change of about half the ambient 
temperature swing. We are therefore proposing a test temperature range 
of 78 to 90 [deg]F (25.6 to 32.2 [deg]C) for installed marine fuel 
tanks. This testing would be based on fuel temperature instead of 
ambient temperature.
    We are proposing an alternative, narrower temperature range for 
fuel tanks installed in nontrailerable boats (>=26 ft.). Data presented 
in Chapter 5 of the Draft RIA suggest that the fuel temperature swing 
in a boat stored in the water would be about 20 percent of the ambient 
temperature swing. Based on this relationship, we are proposing an 
alternative temperature cycle for tanks installed in nontrailerable 
boats of 81.6 to 86.4 [deg]F (27.6 to 30.2 [deg]C). This alternative 
temperature cycle would be associated with an alternative standard as 
discussed earlier. See the proposed regulations at Sec.  1060.525 for 
further detail. We request comment on the proposed test temperatures, 
especially on the appropriateness of the alternative test procedure and 
standard for tanks installed in nontrailerable boats.
    The automotive diurnal test procedure includes a three-day 
temperature cycle to ensure that the carbon canister can hold at least 
three days of diurnal emissions without vapors breaking through to the 
atmosphere. For marine vessels using carbon canisters as a strategy for 
controlling evaporative emissions, we are proposing a three-day cycle 
here for the same reason. In the automotive test, the canister is 
loaded and then purged by the engine during a warm-up drive before the 
first day of testing. Here, we are proposing a different approach 
because we anticipate that canisters on marine applications will be 
passively purged. Before the first day of testing, the canister would 
be loaded to full working capacity and then run over the diurnal test 
temperature cycle, starting and ending at the lowest temperature, to 
allow one day of passive purging. The test result would then be based 
on the highest recorded value during the following three days.
    For fuel systems using a sealed system (including those that rely 
on pressure-relief valves with no canister), we believe a three-day 
test would not be necessary. Before the first day of testing, the fuel 
would be stabilized at the initial test temperature. Following this 
stabilization, the SHED would be purged, followed by a single run 
through the diurnal temperature cycle. Because this technology does not 
depend on purging or storage capacity of a canister, multiple days of 
testing should not be necessary. We are therefore proposing a one-day 
test for the following technologies: Sealed systems, sealed systems 
with a pressure-relief valve, bladder fuel tanks, and sealed fuel tanks 
with a volume-compensating air bag. We request comment on this 
simplified approach.
(b) Test Fuel
    Consistent with the automotive test procedures, we are proposing to 
specify a gasoline test fuel with a volatility of 9 psi.\91\ We are not 
proposing that the fuel used in diurnal emission testing include 
ethanol for two reasons. First, we do not believe that ethanol in the 
fuel affects the diurnal emissions or control effectiveness other than 
the effect that ethanol in the fuel may have on fuel volatility. 
Second, in-use fuels containing ethanol are generally blended in such a 
way as to control for ethanol effects in order to meet fuel volatility 
requirements. We request comment on the proposed test fuel and whether 
it would be appropriate to specify a test fuel blended with ethanol 
either as the primary test fuel or as an optional test fuel. If so, we 
request comment regarding whether the volatility of the test fuel 
should be controlled to 9 psi or if ethanol should be blended into 
certification gasoline. We also request comment on the effect of 
ethanol in the fuel on controlled diurnal emissions and if the standard 
would need to be adjusted to account for ethanol in the test fuel.
---------------------------------------------------------------------------

    \91\ Volatility is specified based on a procedure known as Reid 
Vapor Pressure (see ASTM D 323-99a).
---------------------------------------------------------------------------

    Diurnal emissions are not only a function of temperature and fuel 
volatility, but of the size of the vapor space in the fuel tank. 
Consistent with the automotive procedures, we are proposing that the 
fill level at the start of the test be 40 percent of the nominal 
capacity of the fuel tank. Nominal capacity of the fuel tank would be 
defined as the a fuel tank's volume as specified by the fuel tank 
manufacturer, using at least two significant figures, based on the 
maximum volume of fuel the tank can hold with standard refueling 
techniques. The ``permanent'' vapor space above a fuel tank that has 
been filled to capacity would not be considered in the nominal capacity 
of the fuel tank.

[[Page 28180]]

(c) Fuel Tank Configuration
    The majority of marine fuel tanks are made of plastic. Even plastic 
fuel tanks designed to meet our proposed standards would be expected to 
have some amount of permeation. However, over the length of the diurnal 
test, if it were performed on a new tank that had not been previously 
exposed to fuel, the effect of permeation on the test results should be 
insignificant. For fuel tanks that have reached their stabilized 
permeation rate (such as testing on in-use tanks), we believe it would 
be appropriate to correct for permeation. In such a case, we propose 
that the permeation rate be measured from the fuel tank and subtracted 
from the final diurnal test result. The fuel tank permeation rate would 
be measured with the established procedure for measuring permeation 
emissions, except that the test fuel would be the same as that used for 
diurnal emission testing. This test measurement would have to be made 
just before the diurnal emission test to ensure that the permeation 
rate does not change when measuring diurnal emissions. In no case would 
we allow a permeation correction higher than that corresponding to the 
applicable permeation standard for a tank with a given inside surface 
area. Because not correcting for permeation represents the worst-case 
test result, we would accept data from manufacturers in which no 
permeation correction was applied. We request comment on this approach.
(4) Diffusion Testing Procedures
    The proposed procedure for measuring diffusion emissions is very 
similar to that for diurnal emissions, with three primary differences 
(see Sec.  1060.530). First, the fuel tank should be filled to 90 
percent of its nominal capacity. Second, the fuel tank is held in a 
controlled environment to stabilize at test temperatures. Third, the 
test run is proposed to be six hours in length. Testing has shown that 
diffusion occurs at a steady rate, so we would want manufacturers to be 
able to run a full test in a single day's shift rather than running a 
test for a full 24 hours. Measured emissions are then adjusted 
mathematically for comparison to the gram-per-day standard.
    There is some concern that fluctuating temperatures during this 
test could cause small diurnal effects that would result in higher 
measured emissions. Filling the fuel tank to 90 percent would help 
minimize the potential for diurnal effects by increasing the thermal 
mass of the fuel and by reducing the volume of the vapor space. In 
addition, the proposed diffusion standard is based on data collected 
from testing in this manner.
    As described above, we are proposing to allow fuel cap 
manufacturers to voluntarily certify their fuel caps to diffusion 
standard. This would require a separate test with a fuel cap mounted on 
a test tank with a representative sealing configuration of production 
tanks.
    As described for diurnal measurements, we are proposing that 
manufacturers would be able to separately quantify permeation emissions 
occurring during the diffusion test and subtract the permeation 
contribution so the reported result isolates the test to quantifying 
diffusion emissions.
(5) Measurement Procedures Related to Running Loss Emissions
    We do not specify a procedure for measuring running loss emissions, 
but we are proposing to allow manufacturers to demonstrate control of 
running losses by showing that fuel temperatures will not increase by 
more than 8 [deg]C during normal operation (see Sec.  1060.104 and 
Sec.  1060.535). This requires testing to measure fuel temperatures on 
each equipment configuration. We are proposing a fuel temperature test 
that includes filling the fuel tank with commercially available 
gasoline and operating the equipment for one hour over a normal in-use 
duty cycle with a load factor approximately the same as the specified 
test cycle. If the equipment consumes 80 percent of the fuel capacity 
in one hour of operation, a shorter period may be used based on time 
until the fuel tank is drained to 20 percent capacity. We are proposing 
that manufacturers would be required to document a description of the 
operation and include grass height or equivalent variables affecting 
load.
    We are proposing that the testing must occur outdoors with a 
beginning ambient temperature ranging from 20 to 30 [deg]C with no 
precipitation and with average wind speeds below fifteen miles per 
hour. The ambient temperature would have to be steady or increasing 
during the test and it must be during a mostly sunny time period with a 
maximum cloud cover of 25 percent as reported by the nearest local 
airport making hourly meteorological observations.
    We are proposing that the temperature of the fuel in the tank must 
be within 2 [deg]C of (but not exceeding) the ambient temperature at 
the beginning of the test. Fuel temperature would be measured with a 
thermocouple positioned in the fuel but not touching the inside walls 
or bottom of the tank. Ambient temperature would be measured on-site in 
the shade. The equipment configuration meets the requirement to control 
running losses if measured minimum and maximum fuel temperatures 
throughout the period of operation do not differ by more than 8 [deg]C. 
In the case were the equipment has multiple fuel tanks, the temperature 
would have to be measured on each fuel tank. We request comment on this 
procedure for measuring fuel temperatures.
    We are also proposing to allow manufacturers to use an alternative 
procedure in a laboratory with prior EPA approval. The alternative test 
procedure would need to simulate outdoor conditions and consider engine 
operation, solar load, temperature, and wind speed. The manufacturer 
would be required to make a demonstration of equivalency.

F. Certification and Compliance Provisions

    Sections VII and VIII describe several general provisions related 
to certifying emission families and meeting other regulatory 
requirements. This section notes several particulars related to 
applying these general provisions to evaporative emissions.
    Marine vessels do not always include installed fuel systems. 
Manufacturers of vessels without installed fuel systems do not have the 
ability to control engine or fuel system design parameters. We are 
therefore proposing that vessels without an installed fuel system would 
not be subject to the proposed standards (see Sec.  1045.5). As a 
result, it is necessary for us to treat manufacturers of uninstalled 
fuel-system components as the equipment manufacturer with respect to 
evaporative emission standards. This includes manufacturers of outboard 
engines (including any fuel lines or fuel tanks produced with the 
engine), portable fuel tanks, and the fuel line system (including fuel 
line, primer bulb, and connectors).
    For ease of reference, Small SI equipment manufacturers, Marine SI 
boat builders, and manufacturers of portable marine fuel tanks (and 
associated fuel-system components) are all referred to as equipment 
manufacturers in this section.
(1) Liability for Certification and Compliance
    The proposed standards for fuel lines and fuel tanks apply to any 
such components that are used with or intended to be used with Small SI 
engines or Marine SI engines (see Sec.  1060.1 and Sec.  1060.601). 
Section VI.C

[[Page 28181]]

describes for each standard which manufacturer is expected to certify. 
Engine manufacturers would describe these fuel-system components in the 
same certification application in which they document their compliance 
with exhaust emission standards (see Sec.  1045.201 and Sec.  
1054.201).
    In most cases, nonroad standards apply to the manufacturer of the 
engine or the manufacturer of the nonroad equipment. Here, the products 
subject to the standards (fuel lines and fuel tanks) are typically 
manufactured by a different manufacturer. In most cases the engine 
manufacturers do not produce complete fuel systems and would therefore 
not be in a position to do all the testing and certification work 
necessary to cover the whole range of products that will be used. We 
are therefore proposing an arrangement in which manufacturers of fuel-
system components are in most cases subject to the standards and are 
subject to certification and other compliance requirements associated 
with the applicable standards. We are proposing to prohibit the 
introduction into commerce of noncompliant fuel-system components that 
are intended for installation in Small SI equipment or Marine SI 
vessels unless the component manufacturer either certifies the 
component or has a contractual arrangement for each equipment 
manufacturers using their products to certify those components. As a 
matter of good practice, any components not intended for installation 
in Small SI equipment or Marine SI vessels should be labeled 
accordingly to prevent the possibility of improper installation to 
prevent confusion in this regard.
    As described in Section VI.D, component manufacturers may certify 
with measured emission levels showing that the components meet the 
emission standard, or they may certify to an FEL above or below the 
standard. If any component manufacturer certifies using an FEL, the FEL 
becomes the emission standard for that emission family for all 
practical purposes. The component manufacturer however would not be 
required to meet any overall average for their products, but would have 
the option to certify to an FEL above or below the standard. This is to 
facilitate the use of ABT by equipment manufacturers, as discussed 
below.
    Equipment manufacturers would be subject to all the proposed 
evaporative standards. This applies for the general standards described 
above with respect to fuel caps, miscellaneous fuel-system components, 
and refueling. These standards generally depend on design 
specifications rather than emission measurements, so we believe it is 
appropriate to simply deem these products to be certified if they are 
designed and produced to meet the standards we specify. The vessel 
manufacturer would also need to keep records of the components used 
(see Sec.  1060.210). This would allow us, by operation of the 
regulation, to have certified products without requiring the paperwork 
burden associated with demonstrating compliance with these relatively 
straightforward specifications. Manufacturers could optionally apply 
for and receive a certificate of conformity with respect to these 
general standards, but this would not be necessary and we would expect 
this to be a rare occurrence.
    Equipment manufacturers would also be subject to all the proposed 
emission standards. Equipment manufacturers may comply with 
requirements related to evaporative emission standards in three 
different situations. First, equipment manufacturers might install only 
components certified by the component manufacturer, without using 
emission credits. In this case all the components must meet the 
proposed emission standard or have an FEL below the standard. Such an 
equipment manufacturer would be subject to the fuel line and fuel tank 
standards, but would be able to satisfy their requirements by using 
certified components. They would need to apply for certification only 
with respect to the remaining emission standards they are subject to, 
such as running loss emissions (if applicable). Equipment manufacturers 
must also design and produce their equipment to meet the requirements 
specified in Sec.  1060.101(f), though this would not necessarily 
involve an application for certification. Such an equipment 
manufacturer would generally need only to use certified components, add 
an emission label, and follow any applicable emission-related 
installation instructions to ensure that certified components are 
properly installed. This is similar to an equipment manufacturer that 
is required to properly install certified engines in its equipment, 
except that the equipment manufacturer must meet general design 
standards and shares the liability for meeting emission standards.
    Second, equipment manufacturers may be required to certify certain 
components based on contractual arrangements with the manufacturer of 
those components. In this case, the equipment manufacturer's 
certification causes the component manufacturer to no longer be subject 
to the standard. This approach might involve the equipment manufacturer 
relying on test data from the component manufacturer. The equipment 
manufacturer might also be producing its own fuel tanks for 
installation in its equipment, in which case it would be subject to the 
standards and all requirements related to certification and compliance. 
In either case, the equipment manufacturer would take on all the 
responsibilities associated with certification and compliance with 
respect to those components.
    Third, equipment manufacturers may comply with evaporative emission 
requirements by using certified components, some of which are certified 
to an FEL above the standard. The equipment manufacturer would then 
comply based on emission credits. In this case, the equipment 
manufacturer would take on all the certification and compliance 
responsibilities with respect to any components that are part of the 
equipment manufacturer's emission credit calculations. Equipment 
manufacturers would generally use only certified components for meeting 
evaporative emission requirements, but they might also hold the 
certificate for such components. For purposes of certification, 
equipment manufacturers would not need to submit new test data if they 
use certified components. Equipment manufacturers would make an annual 
accounting to demonstrate a net balance of credits for the model year. 
Under this approach, the component manufacturer would continue to be 
subject to the standards for its products and be required to meet the 
certification and compliance responsibilities related to the standard. 
However, as in the first option, the component manufacturer would not 
be required to meet any averaging requirements or be required to use 
emissions credits. Where equipment manufacturers use ABT with 
components that have already been certified by the component 
manufacturer, there will be overlapping certifications between the two 
parties. We propose to address this by specifying that all parties are 
responsible for meeting applicable requirements associated with the 
standards to which they have certified, but if any specific requirement 
is met by one company, we will consider the requirement to be met for 
all companies (see Sec.  1060.5). For example, either the component 
manufacturer or the equipment manufacturer could honor warranty claims, 
but we may hold both companies responsible for the violation if there 
is a failure to meet warranty obligations.
    Similarly, if we find that new equipment is sold without a valid

[[Page 28182]]

certificate of conformity for the fuel lines or fuel tanks, then the 
equipment manufacturer and all the affected fuel-system manufacturers 
subject to the standards would be liable for the noncompliance (see 
Sec.  1060.601).
    Liability for recall of noncompliant products would similarly fall 
to any manufacturer whose product is subject to the standard, as 
described above. If more than one manufacturer is subject to the 
standards for a noncompliant product, we would have the discretion to 
assign recall liability to any one of those manufacturers. In assigning 
this liability, we would generally consider factors such as which 
manufacturer has substantial manufacturing responsibility and which 
manufacturer holds the certificate (see Sec.  1060.5). However, we may 
hold equipment manufacturers liable for recall even if they don't 
manufacture or certify the defective product. This would generally be 
limited to cases where the component manufacturer is unavailable to 
execute any remedial action. For example, if a foreign component 
manufacturer discontinues their participation in the U.S. market or a 
component manufacturer goes out of business, we would turn to the 
equipment manufacturer.
    The proposed running loss standards for nonhandheld Small SI 
engines are not geared toward component certification, which 
necessitates some special provisions. If engine manufacturers sell 
their engines with a complete fuel system, which is typical for Class I 
engines, they would also be subject to and need to comply with running 
loss standards as part of their overall certification. Of the available 
alternatives for demonstrating compliance with the running loss 
standard, we would expect the only practical approach for these 
companies would be to route vapors from the fuel tank into the engine's 
air intake system for combustion. Any engine manufacturer certifying 
its engines this way would need to test for exhaust emissions with an 
installed running loss vent (see Sec.  1054.501). If equipment 
manufacturers use only fuel-system components that have been certified 
by component manufacturers (without using emission credits) and engines 
that are certified by the engine manufacturer to meet both exhaust and 
running loss standards, they would have no responsibility to certify. 
However, if the engine manufacturer does not sell its engine with a 
complete fuel system that has been certified for running loss control, 
the equipment manufacturer would need to certify with respect to the 
running loss standard.
    The running loss standard is not a typical standard based on 
emission measurements using established procedures. Some of the 
available compliance demonstrations involve straightforward design 
specifications that involve no measurement at all. The approach of 
keeping fuel temperatures from increasing above a specified threshold 
involves a test procedure with a performance standard, but does not 
involve emission measurements. As described above, it may be possible 
to identify design specifications that would replace the need for the 
proposed temperature measurements. In this case running loss control 
would be a straightforward design standard that we could treat like the 
general standards above, in which equipment manufacturers are deemed to 
be certified by operation of the regulations, rather than submitting an 
application for certification. The regulations would prohibit the sale 
of equipment without the specified running loss controls.
(2) Regulatory Requirements Related to Certification
    The established provisions for implementing exhaust emission 
standards apply similarly for evaporative emission standards; however, 
because the control technologies are very different, these requirements 
require further clarification. For example, scheduled maintenance is an 
important part of certifying engines to exhaust emission standards. 
There is little or no maintenance involved for the expected 
technologies for controlling evaporative emissions. The regulations 
still require manufacturers to identify specified maintenance 
procedures, if there are any, but there are no specific limitations on 
the maintenance intervals and no distinction for emission-related 
maintenance. Manufacturers may not do any maintenance during testing 
for certification. (See Sec.  1060.125 and Sec.  1060.235.) We also do 
not expect that emission-related warranty claims would be common, but 
we are proposing a two-year period for emission-related warranties with 
respect to evaporative emission controls.
    Similarly, we do not expect manufacturers to use evaporative 
emission control technologies that involve adjustable parameters or 
auxiliary emission control devices. Technologies that control 
evaporative emissions are generally passive designs that prevent vapors 
from escaping, in contrast to the active systems engines use to control 
exhaust emissions. The regulations state the basic expectation that 
systems must comply with standards throughout any adjustable range 
without auxiliary emission control devices, but it is clear that these 
provisions will not apply to most evaporative systems. We also do not 
allow emission control strategies that cause or contribute to an 
unreasonable risk to public health or welfare or that involve defeat 
devices. While these are additional statutory provisions that are 
meaningful primarily in the context of controlling exhaust emissions, 
we are proposing to include them for addressing evaporative emissions 
(see Sec.  1045.101). This also addresses the possibility that future 
technologies may be different in a way that makes these provisions more 
meaningful. We request comment on this approach. In particular we 
request comment on best way of adapting these provisions to evaporative 
emission controls.
    The testing specified for certifying fuel systems to the 
evaporative emission standards includes measurements for evaluating the 
durability of emission control technologies where appropriate. While we 
adopted evaporative requirements for recreational vehicles relying on a 
testing approach that used deterioration factors, we believe it is more 
appropriate to incorporate the durability testing for each family 
directly. Therefore, no requirement exists for generating deterioration 
factors for any evaporative emission standard. We request comment on 
the best approach to incorporate durability testing for evaporative 
emission standards
    We are proposing to require that Small SI engine or equipment 
manufacturers add an emission control information label if they certify 
with respect to running losses or if they certify based on the use of 
emission credits. We are proposing to require that Marine SI engine or 
vessel manufacturers add an emission control information label for 
evaporative emission only if they certify based on the use of emission 
credits. (See Sec.  1060.135.) If engine, equipment, or vessel 
manufacturers also certify fuel-system components separately, they may 
include that additional information in a combined label. If the 
equipment is produced by the same company that certifies the engine for 
exhaust standards, the emission control information label for the 
engine may include all the appropriate information related to 
evaporative emissions.
    In addition, we are proposing a simplified labeling requirement for 
fuel lines (see Sec.  1060.136). This would involve only the fuel line 
manufacturer's name, EPA's standardized designation for an

[[Page 28183]]

emission family, and the family emission limit (FEL), if applicable. 
This labeling information would need to be repeated continuously, with 
not more than 12 inches before repeating. There is some concern that if 
short sections of fuel lines are used, that sections of the fuel line 
may be found on equipment without sufficient markings on them. We 
request comment regarding whether the length of the repeated labeling 
information should be shorter than 12 inches. We are proposing 
simplified labeling requirements for fuel filters, primer bulbs, or 
short preformed fuel lines (less than 12 inches long) (see Sec.  
1060.138).
    Fuel tanks that are certified separately would need to include an 
emission control information label (see Sec.  1060.137). This would 
involve fuel tank manufacturer's name, EPA's standardized designation 
for an emission family, the FEL (if applicable), a simple compliance 
statement, and a description of the method of controlling emissions. 
For example, a label on a certified marine fuel tank would need to 
describe how it meets permeation emission standards and identify the 
part numbers of any associated components for meeting diurnal emission 
standards.
    Including the fuel tank's family emission limit is important, not 
only for EPA oversight, but also to communicate this information to 
equipment manufacturers and end users. Unlike the situation for exhaust 
emissions, the certifying manufacturer establishes the FEL, but does 
not maintain a balance of emission credits. Equipment manufacturers may 
buy fuel tanks and fuel lines that have an FEL, which would be the 
basis for calculating emission credits for the equipment manufacturer. 
Any other approach would require equipment manufacturers to be vigilant 
about verifying FEL values with EPA or the component manufacturer, or 
both. Also, as described in Section VI.F.6, we are proposing to require 
that owners find replacement fuel tanks and fuel lines with FELs that 
match or exceed the emission control performance represented by the 
original parts. This is an unrealistic expectation unless the FEL is 
readily available on the original equipment.
    Other fuel-system components would need to be labeled with the 
manufacturer's name and part number, if space allows, and EPA's 
standardized designation for an emission family (see Sec.  1060.138). 
This would apply for carbon canisters, fuel tanks that are not 
certified separately, and any other fuel-system components (such as 
fuel caps) that are certified separately. Equipment manufacturers could 
meet the requirement to label fuel tanks by placing the overall 
equipment label on the fuel tank, as long as the fuel tank and label 
are positioned such that the label can be read easily.
    Manufacturers have expressed concern that it would be very 
difficult to properly label very small fuel tanks and fuel lines. To 
the extent that engine manufacturers are certifying their products with 
respect to evaporative emissions, this problem can be addressed in part 
by putting the information related to evaporative emissions on the 
engine label already required for exhaust emissions. This is most 
likely to be the case for the smallest products. We request comment on 
any additional provisions we would need to specify to address space 
limitations on very small fuel-system components.
    While we are proposing no requirement for manufacturers to test 
production-line or in-use products, we may pursue testing of certified 
products to evaluate compliance with evaporative emission standards 
(see Sec.  1060.301).
(3) Emission Families
    To certify equipment or components, manufacturers would first 
define their emission families. This is generally based on selecting 
groups of products that have similar emission characteristics 
throughout the useful life (see Sec.  1060.230). For example, fuel 
tanks could be grouped together if they were made of the same material 
(including consideration of additives such as pigments, plasticizers, 
and UV inhibitors that may affect emissions) and the same control 
technology. For running loss control for nonhandheld Small SI engines 
and equipment, emission families are based on the selected compliance 
demonstration. For example, certifying manufacturers would have one 
emission family for all their products that vent fuel vapors to the 
engine's air intake system, and another emission family for all their 
products that comply based on keeping fuel temperatures below the 
specified threshold.
    The manufacturer would then select a single product from the 
emission family for certification testing. This product would be the 
one that is most likely to exceed the applicable emission standard. For 
instance, the ``worst-case'' fuel tank in a family of monolayer tanks 
would likely be the tank with the thinnest average wall thickness. For 
fuel lines or co-extruded fuel tanks with a permeation barrier layer, 
the worst-case configuration may be the thinnest barrier thickness.
    Testing with those products, as specified above, would need to show 
compliance with emission standards. The manufacturers would then send 
us an application for certification. After reviewing the information in 
the application, we would issue a certificate of conformity allowing 
equipment manufacturers to introduce into commerce certified equipment 
from the covered emission family, or alternatively, equipment with the 
components from certified emission families.
(4) Compliance Provisions From 40 CFR Part 1068
    As described in Section VIII, we are proposing to apply the 
provisions of 40 CFR part 1068 to Small SI and Marine SI engines, 
equipment, and vessels. This section describes how some of the 
provisions of part 1068 apply specifically with respect to evaporative 
emissions.
    The provisions of Sec.  1068.101 prohibit introducing into commerce 
new nonroad engines and equipment unless they are covered by a 
certificate of conformity and labeled appropriately. Section VI.F.1 
describes the responsibilities for engine manufacturers, equipment 
manufacturers, and manufacturers of fuel-system components with respect 
to the prohibition against introducing uncertified products into 
commerce. In the case of portable marine fuel tanks and outboard 
engines, there is no equipment manufacturer so we are proposing to 
treat manufacturers of these items as equipment manufacturers relative 
to this prohibition.
    While engine rebuilding or extensive engine maintenance is 
commonplace in the context of exhaust emission controls, there is very 
little analogous servicing related to evaporative emission controls. 
Nevertheless, it can be expected that individual components, such as 
fuel lines, fuel tanks, or other fuel-system components, may be 
replaced periodically. While the detailed rebuilding provisions of 
Sec.  1068.120 have no meaning for evaporative emission controls, the 
underlying requirement applies generally. Specifically, if someone is 
servicing a certified system, there must be a reasonable basis to 
believe that the modified emission control system will perform at least 
as well as the original system. We are not proposing any recordkeeping 
requirements related to maintenance of evaporative emission control 
systems.
    There are many instances where we specify in 40 CFR part 1068, 
subparts C and D, that engines (and the associated

[[Page 28184]]

equipment) are exempt from emission standards under certain 
circumstances, such as for testing, national security, or export. Our 
principle objective in applying these provisions to evaporative 
emission standards is to avoid confusion. We are therefore proposing 
that an exemption from exhaust emission standards, automatically 
triggers a corresponding exemption from evaporative emission standards 
for the same products. We believe it is unlikely that an equipment 
manufacturer will need a separate exemption from evaporative emission 
standards, but the exemptions related to national security, testing, 
and economic hardship would apply if such a situation were to occur. We 
believe these are the only three reasons that would ever call for 
evaporative systems to be exempt when the engines have not already been 
exempted for some reason. We request comment on this approach to 
addressing exemptions and importation provisions for evaporative 
requirements.
    Given the extended times required to precondition fuel-system 
components, we have no plans to require evaporative testing of units 
from the production line. This means that evaporative measurements are 
not part of the production-line testing program or selective 
enforcement audits. On the other hand, we may require certifying 
manufacturers to supply us with production equipment or components as 
needed for our own testing or we may find our own source of products 
for testing.
    The defect-reporting requirements of Sec.  1068.501 apply to 
certified evaporative systems. This requires the certifying 
manufacturer to maintain information, such as warranty claims, that may 
indicate an emission-related defect. The regulations describe when 
manufacturers must pursue an investigation of apparent defects and when 
to report defects to EPA. These provisions apply to every certifying 
manufacturer and their certified products, including component 
manufacturers.
(5) Interim Compliance Flexibility for Small SI Equipment
    Most Small SI equipment manufacturers are currently certifying 
products to evaporative emission requirements in California. However, 
these standards and their associated test procedures differ somewhat 
from those proposed in this document. Although the standards are 
different, we believe evaporative emission control technologies are 
available to meet the California ARB's standards and our proposed 
emission standards. To help manufacturers transition to selling low-
emission equipment nationwide, we are proposing to accept California 
ARB certification of equipment and components in the early years of the 
proposed federal program.
    As discussed above, we are proposing to accept California ARB 
certification for nonhandheld equipment and fuel tanks for the purposes 
of the proposed early-allowance program (see Sec. Sec.  1045.145 and 
1054.145). We are also proposing to accept California ARB certification 
of handheld fuel tanks through the 2011 model year (see Sec.  90.129).
    We are proposing to accept Class I/Class II fuel lines meeting 
California ARB certification or certain SAE specifications through the 
2011/2010 model years (see Sec.  90.127). These SAE specifications 
include SAE J30 R11A, SAE J30 R12, and SAE J2260 Category 1. Such fuel 
lines would need to be labeled accordingly. As described in Section 
VI.C.1, we are proposing to require that engine manufacturers certify 
fuel lines used with their engines until the proposed Phase 3 standards 
are in place. The purpose of this provision is to give Small SI 
equipment manufacturers additional lead time before they have to 
certify to the proposed standards. For any fuel lines installed on the 
equipment, but not supplied with the engine, we are proposing that the 
engine manufacturer would be required to supply low-permeation fuel 
line specifications in its installation instructions (see Sec.  
90.128). Equipment manufacturers would be required, under the 
prohibited acts specified in the regulations, to use the fuel line 
specified by the engine manufacturer.
    We are proposing to allow certification of walk-behind mowers under 
Sec.  90.127 as an alternative to the proposed fuel line permeation 
standards if manufacturers rely on SHED-based certification to meet the 
California standards that apply to the overall equipment (diurnal, tank 
permeation, and fuel line permeation). While this might allow for use 
of fuel lines that exceed the proposed standards, we believe the 
overall emission control will be at least as great from systems that 
have been tested and certified using SHED-based procedures. The Phase 3 
standards described above do not rely on diurnal emission control, so 
we do not intend to continue the provision for SHED-based testing and 
certification. However, we request comment on the possible 
administrative advantages or emission control advantages of continuing 
this alternative approach in the Phase 3 time frame.
(6) Replacement Parts
    We are proposing to apply the tampering prohibition in Sec.  
1068.101(b)(1) for evaporative systems. This means that it would be a 
violation to replace compliant fuel tanks or fuel lines with 
noncompliant products. This would effectively disable the applicable 
emission controls. To address the concern that low-cost replacement 
products will be easy to make available and difficult to prevent, we 
are proposing several new noncompliance-related provisions. In Sec.  
1060.610 we clarify the meaning of tampering for evaporative systems 
and propose two requirements. First, for the period from January 1, 
2012 to December 31, 2019, we propose to require that manufacturers, 
distributors, retailers, and importers of these replacement parts 
clearly label their products with respect to the applicable 
requirements. For example, a package might be labeled as compliant with 
the requirements in 40 CFR part 1060 or it might be labeled as 
noncompliant and appropriate only for use in applications not covered 
by EPA standards. Unless the packaging clearly states otherwise, the 
product is presumed to be intended for applications that are subject to 
EPA standards. Second, starting in 2020 we are proposing a provision 
stating that it is presumed that all replacement parts intended for 
applications covered by EPA standards will be installed in such 
equipment. This presumption significantly enhances our ability to 
enforce the tampering prohibition because the replacement part is then 
noncompliant before it is installed in a vessel or a piece of 
equipment. We believe shifting to a blanket presumption in 2020 is 
appropriate since in-use vessels and equipment will be almost 
universally subject to EPA's evaporative emission standards by that 
time.
    We are aware that producing low-permeation fuel tanks in very low 
production volumes can be costly. In particular, some equipment owners 
may need to replace a fuel tank that has been certified to a Family 
Emission Limit (FEL) that is lower than the emission standard. The 
owner would need to find and install a replacement fuel tank that is 
certified with an FEL that is the same as or lower than that of the 
replaced fuel tank. However, we are concerned that such replacement 
fuel tanks may in some cases not be available. We are proposing to 
allow equipment owners to ask for an exemption from the tampering 
prohibition if there is no low-FEL tank available. The replacement tank 
would still need to meet applicable

[[Page 28185]]

standards, but would not need to meet the more stringent emission 
levels reflected by the old tank's FEL. We request comment on the need 
for this provision. In particular, we request comment on the likelihood 
that owners would be unable to find replacement tanks that match the 
emission level of the fuel tanks being replaced.
(7) Certification Fees
    Under our current certification program, manufacturers pay a fee to 
cover the costs associated with various certification and other 
compliance activities associated with an EPA issued certificate of 
conformity. These fees are based on the projected costs to EPA per 
emission family. For the fees rule published May 11, 2004, we conducted 
a cost study to assess EPA's costs associated with conducting programs 
for the industries that we certify (69 FR 26222). A copy of the cost 
study worksheets that were used to assess the fees per category may be 
found on EPA's fees Web site at http://www.epa.gov/otaq/proprule.htm. 
We are proposing to establish a new fees category for certification 
related to the proposed evaporative emission standards. The costs for 
this category will be determined using the same method used in 
conducting the previous cost study.
    As under the current program, this depends on an assessment of the 
anticipated number of emission families and the corresponding EPA 
staffing necessary to perform this work. At this time, EPA plans to 
perform a basic level of certification review of information and data 
submitted to issue certificates of conformity for the evaporative 
emission standards, as well as conducting some testing to measure 
evaporative emissions. This is especially the case for equipment 
manufacturers that use only certified components for meeting applicable 
emission standards. We are proposing a fee of $241 based on Agency 
costs for half of a federal employee's time and three employees hired 
through the National Senior Citizens Education and Research Center 
dedicated to the administration of the evaporative certification 
program, including the administrative, testing, and overhead costs 
associated with these people. The total cost to administer the program 
is estimated to be $362,225. We divided this cost by the estimated 
number of certificates, 1503, to calculate the proposed fee.
    We will update the fees related to evaporative emission 
certificates each year when we update the fees for all categories. The 
actual fee in 2015 and later model years will depend on these annual 
calculations. The fees update will be based upon EPA's costs of 
implementing the evaporative category multiplied by the consumer price 
index (CPI), then divided by the average of the number of certificates 
received in the two years prior to the update. The CPI will be applied 
to all of EPA's costs except overhead. This is a departure from EPA's 
current fees program wherein the CPI is applied only to EPA's labor 
costs. In the most recent fees rulemaking, commenters objected to 
applying the CPI to EPA's fixed costs. In the proposed fee program for 
the evaporative category, however, there are no fixed costs. EPA 
expects all its costs to increase with inflation and we therefore think 
it is appropriate to apply the inflation adjustment to all of the 
program costs.
    Where a manufacturer holds the certificates for compliance with 
exhaust emission standards and includes certification for evaporative 
emissions in that same certificate, we would assess an additional 
charge related to compliance with evaporative emission standards to 
that for the exhaust emission certification.
    EPA believes it appropriate to charge less for a certificate 
related to evaporative emissions relative to the existing charge for 
certificates of conformity for exhaust emissions from the engines in 
these same vessels and equipment. The amount of time and level of 
effort associated with reviewing the latter certificates is higher than 
that projected for the certificates for evaporative emissions.
(8) Engineering Design-Based Certification
    Certification of equipment or components that are subject to 
performance-based emission standards depends on test data showing that 
products meet the applicable standards. We are proposing a variety of 
approaches that reduce the level of testing needed to show compliance. 
As described above, we allow manufacturers to group their products into 
emission families so that a test on a single worst-case configuration 
can be used to show that all products in the emission family are 
compliant. Also, test data from a given year could be ``carried over'' 
for later years for a given emission control design (see Sec.  
1060.235). These steps help reduce the overall cost of testing.
    Design-based certification is an additional step that may be 
available to reduce testing requirements (see Sec.  1060.240). To 
certify their products using design-based certification, certifying 
manufacturers would describe, from an engineering perspective, how 
their fuel systems meet the applicable design specifications. These 
manufacturers could then forego the testing described in Section VI.E. 
We believe there are several emission control designs that use 
established technologies that are well understood to have certain 
emission characteristics. At the same time, while engineering design-
based certification is a useful tool for reducing the test burden 
associated with certification, this does not remove a manufacturer's 
liability for meeting the emission standard throughout the useful life.
    The following sections describe how we propose to implement 
engineering design-based certification for each of the different 
performance standards. We are proposing that we may establish 
additional engineering design-based certification options where we find 
that new test data demonstrate that the use of other technology designs 
will ensure compliance with the applicable emission standards. These 
designs would need to produce emission levels comfortably below the 
proposed emission standards when variability in the emission control 
performance is considered.
(a) Fuel Line Permeation
    In our program for recreational vehicles, we specified that fuel 
lines meeting certain SAE specifications could be certified by design. 
However, we are not proposing to allow this for Small SI equipment or 
marine vessels. That decision was appropriate for recreational 
vehicles, because that program did not include provisions for component 
certification. Fuel line manufacturers will need to conduct testing 
anyway to qualify their fuel lines as meeting the various industry 
ratings so any testing burden to demonstrate compliance with EPA 
standards should be minimal. We would allow test data used to meet 
industry standards to be used to certify to the proposed standards 
provided that the data were collected in a manner consistent with this 
proposal and that the data were made available to EPA if required.
(b) Fuel Tank Permeation
    We are proposing to consider that a metal fuel tank meets the 
design criteria for a design-based certification as a low-permeation 
fuel tank. There is also a body of existing test data showing that co-
extruded fuel tanks from automotive applications have permeation rates 
that are well below the proposed standard. We are proposing to allow 
design-based certification for co-extruded high-

[[Page 28186]]

density polyethylene fuel tanks with a continuous ethylene vinyl 
alcohol barrier layer. The EVOH barrier layer would be required to be 
at least 2 percent of the wall thickness of the fuel tank.
    To address the permeability of the fuel cap, seals, and gaskets 
used on metal and co-extruded tanks, we are proposing that the design 
criteria include a specification that seals and gaskets that are not 
made of low-permeation materials must have a total exposed surface area 
smaller than 1000 mm\2\. A metal or co-extruded fuel tank with seals 
that meet this design criterion would reliably pass the standard. 
However, we believe it is not appropriate to assign an emission level 
to fuel tanks using a design-based certification option that would 
allow them to generate emission credits. Given the uncertainty of 
emission rates from the seals and gaskets, we would not consider these 
tanks to be any more effective than other fuel tanks meeting emission 
standards.
(c) Diurnal Emissions
    For portable marine fuel tanks, we are proposing a design standard 
based on automatically sealing the tank to prevent fuel venting while 
fuel temperatures are rising. The options described below for design-
based certification therefore deal only with installed marine fuel 
tanks (including personal watercraft).
    We are proposing that fuel systems sealed to 1.0 psi would meet the 
criteria for engineering design-based certification to the proposed 
diurnal emission standards. Systems that remain sealed up to positive 
pressures of 1.0 psi have a predictable relationship to changing fuel 
temperatures that ensure that total diurnal emissions over the 
specified test procedure will be below the proposed standard. This type 
of system would allow venting of fuel vapors only when pressures exceed 
1.0 psi or when the fuel cap is removed for refueling. Note that 
systems with anti-siphon valves would have to be designed to prevent 
fuel releases when the system is under pressure to meet Coast Guard 
requirements.
    Bladder fuel tanks and tanks with a volume-compensating air bag are 
specialized versions of tanks that may meet the specifications for 
systems that remain sealed up to positive pressures of 1.0 psi. In each 
of these designs, volume changes within a sealed system prevent 
pressure buildup. As long as these designs meet basic specifications 
for system integrity they would also qualify for design-based 
certification.
    We are proposing that fuel tanks equipped with a passively purged 
carbon canister to control diurnal emissions may be certified by 
design, subject to several technical specifications. To ensure that 
there is enough carbon to collect a sufficient mass of hydrocarbon 
vapors, we propose to specify a minimum butane working capacity of 9 g/
dL based on the test procedures specified in ASTM D5228-92. The carbon 
canister would need a minimum carbon volume of 0.040 liters per gallon 
of fuel tank capacity. For fuel tanks certified to the optional 
standards for tanks in nontrailerable boats ( 26 ft. in length), we are 
proposing a minimum carbon volume of 0.016 liters per gallon of fuel 
tank capacity.
    We are proposing two additional specifications for the quality of 
the carbon. We believe these specifications are necessary to ensure 
that the canister will continue to function effectively over the full 
useful life of a marine vessel. First, the carbon would need to meet a 
moisture adsorption capacity maximum of 0.5 grams of water per gram of 
carbon at 90 percent relative humidity and a temperature of 25  5 [deg]C. Second, the carbon would need to pass a dust attrition 
test similar to that in ASTM D3802-79. The moisture adsorption and dust 
attrition tests are described in more detail in Chapter 5 of the Draft 
RIA. We are also proposing that the carbon canister must be properly 
designed to ensure the in-use effectiveness of the carbon.
    The canisters would need to be designed using good engineering 
judgment to ensure structural integrity. They must include a volume 
compensator or other device to hold the carbon pellets in place under 
vibration and changing temperatures and the vapor flow would need to be 
directed so that it reaches the whole carbon bed rather than just 
passing through part of the carbon. We are proposing that the geometry 
of the carbon canister must have a length to diameter ratio of at least 
3.5.
    The emission data we used to develop these proposed engineering 
design-based certification options are presented in Chapter 5 of the 
Draft RIA. Manufacturers wanting to use designs other than those we 
discuss here would have to perform the applicable testing. However, 
once an additional technology is proven, we may consider adding it to 
the list as one that qualifies for engineering design-based 
certification. For example, if several manufacturers were to pool 
resources to test a diurnal emission control strategy and submit this 
data to EPA, we could consider this particular technology, with any 
appropriate design specifications, as one that qualifies to be 
considered compliant under engineering design-based certification. We 
would intend to revise the regulations to include any additional 
technologies we decide are suitable for design-based certification, but 
we would be able to approve the use of additional engineering design-
based certification with these technologies before changing the 
regulations. We request comment on this approach to design-based 
certification for diurnal emission control technologies and on the 
specific technologies discussed above. Section IV.H presents a more 
detailed description of these technologies and how they can be used to 
reduce evaporative emissions.

G. Small-Business Provisions

(1) Small Business Advocacy Review Panel
    On May 3, 2001, we convened a Small Business Advocacy Review Panel 
under section 609(b) of the Regulatory Flexibility Act as amended by 
the Small Business Regulatory Enforcement Fairness Act of 1996. The 
purpose of the Panel was to collect the advice and recommendations of 
representatives of small entities that could be affected by this 
proposed rule and to report on those comments and the Panel's findings 
and recommendations as to issues related to the key elements of the 
Initial Regulatory Flexibility Analysis under section 603 of the 
Regulatory Flexibility Act. We convened a Panel again on August 17, 
2006 to update our findings for this new proposal. The Panel reports 
have been placed in the rulemaking record for this proposal. Section 
609(b) of the Regulatory Flexibility Act directs the review Panel to 
report on the comments of small entity representatives and make 
findings as to issues related to identified elements of an initial 
regulatory flexibility analysis (IRFA) under RFA section 603. Those 
elements of an IRFA are:
     A description of, and where feasible, an estimate of the 
number of small entities to which the proposed rule will apply;
     A description of projected reporting, recordkeeping, and 
other compliance requirements of the proposed rule, including an 
estimate of the classes of small entities that will be subject to the 
requirements and the type of professional skills necessary for 
preparation of the report or record;
     An identification, to the extent practicable, of all 
relevant Federal rules

[[Page 28187]]

that may duplicate, overlap, or conflict with the proposed rule; and
     A description of any significant alternative to the 
proposed rule that accomplishes the stated objectives of applicable 
statutes and that minimizes any significant economic impact of the 
proposed rule on small entities.
    In addition to the EPA's Small Business Advocacy Chairperson, the 
Panel consisted of the Director of the Assessment and Standards 
Division of the Office of Transportation and Air Quality, the 
Administrator of the Office of Information and Regulatory Affairs 
within the Office of Management and Budget, and the Chief Counsel for 
Advocacy of the Small Business Administration.
    Using definitions provided by the Small Business Administration 
(SBA), companies that manufacture internal-combustion engines and that 
employ fewer than 1000 people are considered small businesses for a 
Small Business Advocacy Review (SBAR) Panel. Equipment manufacturers, 
boat builders, and fuel-system component manufacturers that employ 
fewer than 500 people are considered small businesses for the SBAR 
Panel. Based on this information, we asked 25 companies that met the 
SBA small business thresholds to serve as small entity representatives 
for the duration of the Panel process. These companies represented a 
cross-section of engine manufacturers, equipment manufacturers, and 
fuel-system component manufacturers.
    With input from small-entity representatives, the Panel drafted a 
report providing findings and recommendations to us on how to reduce 
potential burden on small businesses that may occur as a result of this 
proposed rule. The Panel Report is included in the rulemaking record 
for this proposal. We are proposing all of the recommendations as 
presented in the Panel Report. The proposed flexibility options 
recommended to us by the Panel, and any updated assessments, are 
described below.
(2) Proposed Burden Reduction Approaches for Small Businesses Subject 
to the Proposed Evaporative Emission Standards
    The SBAR Panel Report includes six general recommendations for 
regulatory flexibility for small businesses affected by the proposed 
evaporative emission standards. This section discusses the provisions 
being proposed based on each of these recommendations. In this industry 
sector, we believe the burden reduction approaches presented in the 
Panel Report should be applied to all businesses with the exception of 
one general economic hardship provision described below which is 
designed specifically for small businesses. The majority of fuel tanks 
produced for the Small SI equipment and Marine SI vessel market are 
made by small businesses or by companies producing small volumes of 
these products. The purpose of these options is to reduce the potential 
burden on companies for which fixed costs cannot be distributed over a 
large product line. For this reason, we often also consider the 
production volume when making decisions regarding burden reduction 
options.
(a) Consideration of Appropriate Lead Time
    Small businesses commented that they would need to make significant 
changes to their plastic fuel tank designs and molding practices to 
meet the proposed fuel tank permeation standards. For blow-molded tank 
designs with a molded-in permeation barrier, new blow-molding machines 
would be needed that could produce multi-layer fuel tanks. One small 
business commented that, due to the lead time needed to install a new 
machine and to perform quality checks on the tanks, they would not be 
ready to sell multi-layer blow-molded fuel tanks until 2011 for the 
Small SI and Marine SI markets.
    Small businesses that rotational-mold fuel tanks were divided in 
their opinion of when they would be ready to produce low-permeation 
fuel tanks. One manufacturer stated that it is already producing fuel 
tanks with a low-permeation inner layer that are used in Small SI 
applications. This company also sells marine fuel tanks, but not with 
the low-permeation characteristics. However, they have performed Coast 
Guard durability testing on a prototype 40 gallon marine tank using 
their technology which passed the tests. Two other small businesses, 
that rotationally mold fuel tanks, stated that they have not been able 
to identify and demonstrate a low-permeation technology that would meet 
their cost and performance needs. They commented that developing and 
demonstrating low-permeation technology is especially an issue for the 
marine industry because of the many different tank designs and Coast 
Guard durability requirements.
    Consistent with the Panel recommendations in response to the above 
comments, we are proposing to provide sufficient lead time for blow-
molded and marine rotational molded fuel tanks. We are proposing tank 
permeation implementation dates of 2011 for Class II equipment and 2012 
for Class I equipment. For marine fuel tanks, we are proposing to 
implement the tank permeation standards in 2011 with an additional year 
(2012) for installed fuel tanks which are typically rotational-molded 
marine fuel tanks (see Sec.  1054.110 and Sec.  1045.107).
    There was no disagreement on the technological feasibility of the 
Marine SI diurnal emission standard EPA is considering. Small 
businesses commented that they would like additional time to install 
carbon canisters in their vessels. They stated that some boat designs 
would require deck and hull changes to assist in packaging the 
canisters and they would like to make these changes in the normal 
turnover cycle of their boat molds. Small businesses commented that 
they would consider asking EPA to allow the use of low-permeation fuel 
line prior to 2009 as a method of creating an emission neutral option 
for providing extra time for canisters. We are requesting comment on 
phase-in schemes or other burden reduction approaches which would 
provide small businesses additional lead time to meet these 
requirements without losing overall emission reductions.
    The majority of large equipment manufacturers have indicated that 
they will be using low-permeation fuel lines in the near term as part 
of their current product plans. As a result, we are proposing an 
implementation date of 2008 for Small SI fuel line permeation standards 
for nonhandheld equipment (see Sec.  90.127). The Panel expressed 
concern that small equipment manufacturers who do not sell products in 
California may not necessarily be planning on using low-permeation fuel 
line in 2008. Therefore, we are proposing a 2009 implementation date 
for low-permeation fuel line for small businesses producing Small SI 
nonhandheld equipment.
(b) Fuel Tank ABT and Early-Incentive Program
    The Panel recommended that we propose an ABT program for fuel tank 
permeation and an early-allowance program for fuel tank permeation. Our 
proposed ABT and early-allowance programs are described above. We are 
requesting comment on including service tanks in the ABT program. These 
are tanks that are sold as replacement parts for in-use equipment.
(c) Broad Definition of Emission Family
    The Panel recommended that we propose broad emission families for 
fuel tank emission families similar to the

[[Page 28188]]

existing provisions for recreational vehicles. As described above, we 
are proposing permeation emission families be based on type of material 
(including additives such as pigments, plasticizers, and UV 
inhibitors), emission control strategy, and production methods. Fuel 
tanks of different sizes, shapes, and wall thicknesses would be grouped 
into the same emission family (see Sec.  1045.230 and Sec.  1054.230). 
Manufacturers therefore would be able to broadly group similar fuel 
tanks into the same emission family and then only test the 
configuration most likely to exceed the emission standard. Although 
Small SI and Marine SI fuel tanks would not be allowed in the same 
emission family, it could be possible to carry-across certification 
test data from one category to another.
(d) Compliance Progress Review for Marine Fuel Tanks
    One manufacturer of rotational-molded fuel tanks has stated that 
they are already selling low-permeation tanks into the Small SI market 
and they have plans to sell them into marine applications. However, 
other manufacturers of rotational-molded marine fuel tanks have 
expressed concern that they do not have significant in-use experience 
to demonstrate the durability of low-permeation rotational-molded fuel 
tanks in boats. To address this uncertainty, EPA intends to continue to 
engage on a technical level with rotational-molded marine fuel tank 
manufacturers and material suppliers to assess the progress of low-
permeation fuel tank development and compliance. If systematic problems 
are identified across the industry, this would give EPA the opportunity 
to address the problem. If problems were identified only for individual 
businesses, this would give EPA early notice of the issues that may 
need to be addressed through the proposed hardship relief provisions.
(e) Engineering Design-Based Certification
    In the existing evaporative emission program for recreational 
vehicles, manufacturers using metal fuel tanks may certify by design to 
the tank permeation standards. Tanks using design-based certification 
provisions are not included in the ABT program because they are 
assigned a certification emission level equal to the standard. The 
Panel recommended that we propose to allow design-based certification 
for metal tanks and plastic fuel tanks with a continuous EVOH barrier. 
The Panel also recommended that we propose design-based certification 
for carbon canisters. A detailed description of the proposed design-
based certification options that are consistent with the Panel 
recommendations is presented earlier in this document.
    The National Marine Manufacturers Association (NMMA) the American 
Boat and Yacht Council (ABYC) and the Society of Automotive Engineers 
(SAE) have industry recommended practices for boat designs that must be 
met as a condition of NMMA membership. NMMA stated that they are 
working to update these recommended practices to include carbon 
canister installation instructions and low-permeation fuel line design. 
The Panel recommended that EPA accept data used for meeting the 
voluntary requirements as part of the EPA certification. We are 
proposing that this data could be used as part of EPA certification as 
long as it is collected consistent with the test procedures and other 
requirements described in this proposal.
(f) Hardship Provisions
    We are proposing two types of hardship provisions consistent with 
the Panel recommendations. The first type of hardship is an unusual 
circumstances hardship which would be available to all businesses, 
regardless of size. The second type of hardship is an economic hardship 
provision which would be available to small businesses only. Sections 
VIII.C.8 and VIII.C.9 provide a description of the proposed hardship 
provisions that would apply to the range of manufacturers subject to 
the proposed Marine SI and Small SI evaporative emission requirements. 
This would include Marine SI engine manufacturers, nonhandheld engine 
manufacturers, nonhandheld equipment manufacturers, handheld equipment 
manufacturers, boat builders, and fuel-system component manufacturers.
    The proposed criteria for small businesses are presented earlier in 
Sections III.F.2 and IV.G for Marine SI engine manufacturers, Section 
V.F.2 for nonhandheld engine manufacturers, and Section V.F.3 for 
nonhandheld equipment manufacturers. For handheld equipment 
manufacturers, EPA is proposing to use the existing small-volume 
manufacturer criteria which relies on a production cut-off of 25,000 
pieces of handheld equipment per year. For boat builders and fuel-
system component manufacturers, EPA is proposing to base the 
determination of whether a company is a small business based on the SBA 
definition. The SBA small business definition for companies 
manufacturing boats subject to the proposed standards is fewer than 500 
employees. Likewise, the SBA small business definition for companies 
manufacturing fuel-system components such as fuel tanks and fuel lines 
is fewer than 500 employees.
    Because many boat builders, nonhandheld equipment manufacturers, 
and handheld equipment manufacturers will depend on fuel tank 
manufacturers and fuel line manufacturers to supply certified products 
in time to produce complying vessels and equipment, we are also 
proposing a hardship provision for all boat builders and Small SI 
equipment manufacturers, regardless of size. The proposed hardship 
would allow the boat builder or equipment manufacturer to request more 
time if they are unable to obtain a certified fuel system component and 
they are not at fault and would face serious economic hardship without 
an extension (see Sec.  1068.255). Section VIII.C.10 provides a 
description of the proposed hardship provisions that would apply to 
boat builders and Small SI equipment manufacturers.

H. Technological Feasibility

    We believe there are several strategies that manufacturers can use 
to meet the proposed evaporative emission standards. We have collected 
and will continue to collect emission test data on a wide range of 
technologies for controlling evaporative emissions. The design-based 
certification levels discussed above are based on this test data and we 
may amend the list of approved designs and emission levels as more data 
become available.
    In the following sections we briefly describe how we decided to 
propose specific emission standards and implementation dates, followed 
by a more extensive discussion of the expected emission control 
technologies. A more detailed discussion of the feasibility of the 
proposed evaporative requirements, including all the underlying test 
data, is included in Chapter 5 of the Draft RIA. See Table VI-1 for a 
summary of the proposed evaporative emission standards.
(1) Level of Standards
    The proposed fuel line and fuel tank permeation standards for Small 
SI equipment and Marine SI vessels are based on the standards already 
adopted for recreational vehicles. These applications use similar 
technology in their fuel systems. In cases where the fuel systems 
differ we have identified technological approaches that could be used 
to meet these same emission levels. The control strategies are 
discussed below. For structurally integrated nylon fuel tanks and for 
fuel

[[Page 28189]]

lines used with cold-weather equipment, we are proposing slightly 
relaxed standards based on available permeation data. In addition, we 
have proposed higher numerical standards for fuel tank permeation for 
tests performed at higher temperature (40 [deg]C vs. 28 [deg]C). These 
higher numerical standards are based on data described in Chapter 5 of 
the Draft RIA.
    For fuel tanks installed in personal watercraft and for portable 
marine fuel tanks, we are proposing diurnal emission standards based on 
the current capabilities of these systems. We are basing the proposed 
standard for other installed marine fuel tanks on the capabilities of 
passive systems that store emitted vapors in a carbon canister. The 
Draft RIA describes the test results on passively purged canisters, and 
other technologies, that led us to the proposed level of the diurnal 
emission standard.
    Control of diffusion emissions from Small SI equipment requires 
application of a simple technological approach that is widely used 
today. The Draft RIA describes the testing we conducted on fuel caps 
with tortuous vent paths and short vent lines on which we based the 
diffusion emission standard.
    We have measured running loss emissions and found that some Small 
SI products have very high emission levels. The large variety of 
manufacturers and equipment types makes it impractical to design a 
measurement procedure, which means that we are unable to specify a 
performance standard. We are proposing a design standard for running 
losses from Small SI equipment by specifying that manufacturers may use 
any of a variety of specified design solutions, as described in Section 
VI.C.6. Several of these design options are already in common use 
today.
    We are proposing to require that equipment and vessel manufacturers 
use good engineering judgment in their designs to minimize refueling 
spitback and spillage. In general, it would simply require 
manufacturers to use system designs that are commonly used today. 
Several refueling spitback and spillage control strategies are 
discussed in Chapter 5 of the Draft RIA.
(2) Implementation Dates
    Low-permeation fuel line is available today. Many Small SI 
equipment manufacturers certifying to permeation standards in 
California are selling products with low-permeation fuel line 
nationwide. In addition, many boat builders have begun using low-
permeation marine fuel lines to feed fuel from the fuel tank to the 
engine. For this reason, we are proposing to implement the fuel line 
permeation standards in 2008 for nonhandheld Small SI equipment and in 
2009 for Marine SI vessels. This date is the same as for recreational 
vehicles and is two years later than the California requirements for 
Small SI equipment. For handheld equipment, there are no fuel line 
permeation requirements in California. In addition, injection molded 
fuel lines are common in many applications rather than straight-run 
extruded fuel line. For this reason we are proposing to delay 
implementation of fuel line permeation standards for handheld equipment 
until 2012 (or 2013 for small volume emission families). We request 
comment on the proposed implementation dates for fuel line permeation 
standards.
    Similar to fuel line technology, low-permeation fuel tank 
constructions are used today in automotive and portable fuel tank 
applications. This technology is also being developed for use in 
recreational vehicles and for Small SI equipment sold in California. 
The available technology options include surface treatment and multi-
layer constructions, though rotational molding presents some unique 
design challenges. Based on discussions with fuel tank manufacturers, 
and on our own assessment of the lead time necessary to change current 
industry practices, we believe low-permeation fuel tank technology can 
be applied in the 2011-2012 model years for Small SI and Marine SI fuel 
tanks. We are proposing to implement the fuel tank permeation standards 
in 2011 for Class II equipment and portable and PWC marine fuel tanks. 
For Class I equipment and installed marine fuel tanks, we are proposing 
an implementation date of 2012. We are proposing to phase-in the 
handheld fuel tank standards on the following schedule: 2009 for 
equipment models certifying in California, 2013 for small-volume 
families, and 2010 for the remaining fuel tanks on handheld equipment. 
We believe this will facilitate an orderly transition from current fuel 
tank designs to low-permeation fuel tanks.
    We are proposing the additional year of lead time for the large 
fuel tanks installed in marine vessels largely due to concerns raised 
over the application of low-permeation rotational-molded fuel tank 
technology to marine applications. The majority of these fuel tanks are 
typically rotational-molded by small businesses. Although low-
permeation technology has emerged for these applications, we believe 
additional lead time will be necessary for all manufacturers to be 
ready to implement this technology. This will give these manufacturers 
additional time to make changes to their production processes to comply 
with the standards and to make any tooling changes that may be 
necessary. We are similarly proposing the implementation of fuel tank 
permeation standards for Class I fuel tanks installed in Small SI 
equipment in 2012, mostly to align with the implementation date for the 
Phase 3 exhaust emission standards. This is especially important for 
Class I engines where most of the engine manufacturers will also be 
responsible for meeting all evaporative emission standards. We request 
comment on the proposed implementation dates for the proposed fuel tank 
permeation standards.
    We are proposing to implement the running loss standards for 
nonhandheld Small SI equipment in the same year as the exhaust emission 
standards. We believe this is appropriate because the running loss 
vapor will in some cases be routed to the intake manifold for 
combustion in the engine. Manufacturers would need to account for the 
effect of the additional running loss vapor in their engine 
calibrations. We request comment on this approach.
    We are proposing to implement the proposed diurnal standards for 
portable marine fuel tanks and personal watercraft in 2009. We believe 
these requirements will not result in a significant change from current 
practice so this date will provide sufficient lead time for 
manufacturers to comply with standards. For other installed fuel tanks, 
however, we are proposing a later implementation date of 2010. The 
development of canisters as an approach to control diurnal emissions 
without pressurizing the tanks has substantially reduced the expected 
level of effort to redesign and retool for making fuel tanks. However, 
canister technology has not yet been applied commercially to marine 
applications and additional lead time may be necessary to work out 
various technical parameters, such as design standards and installation 
procedures to ensure component durability and system integrity. We 
request comment on the proposed diurnal implementation dates.
(3) Technological Approaches
    We believe several emission control technologies can be used to 
reduce evaporative emissions from Small SI equipment and Marine SI 
vessels. These emission control strategies are discussed below. Chapter 
5 of the Draft RIA presents more detail on these technologies and 
Chapter 6 provides information on the estimated costs. We request 
comment on these or other technological approaches for reducing

[[Page 28190]]

evaporative emissions from these engines and equipment.
(a) Fuel Line Permeation
    Fuel lines produced for use in Small SI equipment and Marine SI 
applications are generally extruded nitrile rubber with a cover for 
abrasion resistance. Fuel lines used in Small SI applications often 
meet SAE J30 R7 recommendations, including a permeation limit of 550 g/
m2/day at 23 [deg]C on ASTM Fuel C. Fuel lines for personal 
watercraft are typically designed to meet SAE J2046, which includes a 
permeation limit of 300 g/m2/day at 23 [deg]C on ASTM Fuel 
C.\92\ Marine fuel lines subject to Coast Guard requirements under 33 
CFR part 183 are designated as either Type A or Type B and either Class 
1 or Class 2. SAE J1527 provides detail on these fuel line designs. 
Type A fuel lines pass the U.S. Coast Guard fire test while Type B 
designates fuel lines that have not passed this test. Class 1 fuel 
lines are intended for fuel-feed lines where the fuel line is normally 
in contact with liquid fuel and has a permeation limit of 100 g/
m2/day at 23 [deg]C. Class 2 fuel lines are intended for 
vent lines and fuel fill necks where liquid fuel is not continuously in 
contact with the fuel line; it has a permeation limit of 300 g/
m2/day at 23 [deg]C. In general practice, most boat builders 
use Class 1 fuel lines for both vent lines and fuel-feed lines to avoid 
carrying two types of fuel lines. Most fuel fill necks, which have a 
much larger diameter and are constructed differently, use materials 
meeting specifications for Class 2 fuel lines. The marine industry is 
currently in the process of revising SAE J1527 to include a permeation 
rating of 15 g/m2/day at 23 [deg]C on fuel CE10 for marine 
fuel lines.
---------------------------------------------------------------------------

    \92\ Society of Automotive Engineers Surface Vehicle Standard, 
``Personal Watercraft Fuel Systems,'' SAE J2046, Issues 1993-01-19 
(Docket EPA-HQ-OAR-2004-0008-0179).
---------------------------------------------------------------------------

    Low-permeability fuel lines are in production today. One fuel line 
design, already used in some marine applications, uses a thermoplastic 
layer between two rubber layers to control permeation. This 
thermoplastic barrier may either be nylon or ethyl vinyl acetate. 
Barrier approaches in automotive applications include fuel lines with 
fluoroelastomers such as FKM and fluoroplastics such as Teflon and THV. 
In addition to presenting data on low-permeation fuel lines, Chapter 5 
of the Draft RIA lists several fuel-system materials and their 
permeation rates. Molded rubber fuel line components, such as primer 
bulbs and some handheld fuel lines, could meet the standard by using a 
fluoroelastomer such as FKM. The Draft RIA also discusses low-
permeation materials that retain their flexibility at very low 
temperatures.
    Automotive fuel lines made of low-permeation plastic tubing are 
generally made from fluoroplastics. An added benefit of these low-
permeability fuel lines is that some fluoropolymers can be made to 
conduct electricity and therefore prevent the buildup of static 
charges. This type of fuel line can reduce permeation by more than an 
order of magnitude below the level associated with barrier-type fuel 
lines, but it is relatively inflexible and would need to be molded in 
specific shapes for each equipment or vessel design. Manufacturers have 
commented that they need flexible fuel lines to fit their many designs, 
resist vibration, prevent kinking, and simplify connections and 
fittings. An alternative to custom molding is to manufacture fuel lines 
with a corrugated profile (like a vacuum hose). Producing flexible 
fluoropolymer fuel lines is somewhat more expensive but the result is a 
product that meets emission standards without compromising in-use 
performance or ease of installation.
(b) Fuel Tank Permeation
    Blow-molding is widely used for the manufacture of Small SI, 
portable marine, and PWC fuel tanks. Typically, blow-molding is 
performed by creating a hollow tube, known as a parison, by pushing 
high-density polyethylene (HDPE) through an extruder with a screw. The 
parison is then pinched in a mold and inflated with an inert gas. In 
highway applications, nonpermeable plastic fuel tanks are produced by 
blow molding a layer of ethylene vinyl alcohol (EVOH) or nylon between 
two layers of polyethylene. This process is called coextrusion and 
requires at least five layers: the barrier layer, adhesive layers on 
either side of the barrier layer, and two outside layers of HDPE that 
make up most of the thickness of the fuel tank walls. However, multi-
layer construction requires additional extruder screws, which 
significantly increases the cost of the blow-molding process. One 
manufacturer has developed a two-layer barrier approach using a 
polyarylamide inner liner. This technology is not in production yet but 
appears to be capable of permeation levels similar to the traditional 
EVOH barrier designs. This approach would enable blow-molding of low-
permeation fuel tanks with only one additional extruder screw.
    Multi-layer fuel tanks can also be formed using injection molding. 
In this method a low-viscosity polymer is forced into a thin mold to 
create the two sides of the fuel tank (e.g., top and bottom), which are 
then fused together. To add a barrier layer, a thin sheet of the 
barrier material is placed inside the mold before injecting the 
poleythylene. The polyethylene, which generally has a much lower 
melting point than the barrier material, bonds with the barrier 
material to create a shell with an inner liner.
    A less expensive alternative to coextrusion is to blend a low-
permeable resin with the HDPE and extrude it with a single screw to 
create barrier platelets. The trade name typically used for this 
permeation control strategy is Selar. The low-permeability resin, 
typically EVOH or nylon, creates noncontinuous platelets in the HDPE 
fuel tank to reduce permeation by creating long, tortuous pathways that 
the hydrocarbon molecules must navigate to escape through the fuel tank 
walls. Although the barrier is not continuous, this strategy can still 
achieve greater than a 90 percent reduction in permeation of gasoline. 
EVOH has much higher permeation resistance to alcohol than nylon so it 
would likely be the preferred material for meeting the proposed 
standard based on testing with a 10 percent ethanol fuel.
    Many fuel tanks for Small SI equipment are injection-molded out of 
either HDPE or nylon. Injection-molding can be used with lower 
production volumes than blow-molding due to lower tooling costs. In 
this method, a low-viscosity polymer is forced into a thin mold to 
create the two sides of the fuel tank; these are then fused together 
using vibration, hot plate or sonic welding. A strategy such as Selar 
has not been demonstrated to work with injection-molding due to high 
shear forces.
    An alternative to injection-molding is thermoforming which is also 
cost-effective for lower production volumes. In this process, sheet 
material is heated and then drawn into two vacuum dies. The two halves 
are then fused while the plastic is still molten to form the fuel tank. 
Low-permeation fuel tanks can be constructed using this process by 
using multi-layer sheet material. This multi-layer sheet material can 
be extruded using similar materials to multi-layer blow-molded fuel 
tank designs. A typical barrier construction would include a thin EVOH 
barrier, adhesion layers on both sides, a layer of HDPE regrind, and 
outside layers of pure virgin HDPE.
    Regardless of the molding process, another type of low-permeation 
technology for HDPE fuel tanks would

[[Page 28191]]

be to treat the surfaces with a barrier layer. Two ways of achieving 
this are known as fluorination and sulfonation. The fluorination 
process causes a chemical reaction where exposed hydrogen atoms are 
replaced by larger fluorine atoms, which creates a barrier on the 
surface of the fuel tank. In this process, batches of fuel tanks are 
generally processed post-production by stacking them in a steel 
container. The container is then voided of air and flooded with 
fluorine gas. By pulling a vacuum in the container, the fluorine gas is 
forced into every crevice in the fuel tanks. Fluorinating with this 
process would treat both the inside and outside surfaces of the fuel 
tank, thereby improving the reliability and durability of the 
permeation-resistance. As an alternative, fuel tanks can be fluorinated 
during production by exposing the inside surface of the fuel tank to 
fluorine during the blow-molding process. However, this method may not 
prove as effective as post-production fluorination.
    Sulfonation is another surface treatment technology where sulfur 
trioxide is used to create the barrier by reacting with the exposed 
polyethylene to form sulfonic acid groups on the surface. Current 
practices for sulfonation are to place fuel tanks on a small assembly 
line and expose the inner surfaces to sulfur trioxide, then rinse with 
a neutralizing agent. However, sulfonation can also be performed using 
a batch method. Either of these sulfonation processes can be used to 
reduce gasoline permeation by more than 95 percent.
    Over the first month or so of use, polyethylene fuel tanks can 
experience a material expansion of as much as three percent due to 
saturation of the plastic with fuel. Manufacturers have raised the 
concern that this hydrocarbon expansion could degrade the effectiveness 
of surface treatments like fluorination or sulfonation. However, we 
believe this will not significantly affect these surface treatments. 
California ARB has performed extensive permeation testing on portable 
fuel containers with and without these surface treatments. Prior to the 
permeation testing, the tanks were prepared by performing a durability 
procedure where the fuel container cycled a minimum of 1,000 times 
between--1 psi and 5 psi. In addition, the fuel containers were soaked 
with fuel for a minimum of four weeks before testing. Their test data, 
presented in Chapter 5 of the Draft RIA, show that fluorination and 
sulfonation are still effective after this durability testing. We have 
conducted our own permeation testing on fluorinated fuel tanks that 
have been exposed to fuel for more than a year with excellent results. 
These results are presented in the Draft RIA.
    Manufacturers have also commented that fuel sloshing in the tank 
under normal in-use operation could wear off the surface treatments. 
However, we believe this is unlikely to occur. These surface treatments 
actually result in an atomic change in the structure of the surface of 
the fuel tank. To wear off the treatment, the plastic itself would need 
to be worn away. In addition, testing by California ARB shows that the 
fuel tank permeation standard can be met by fuel tanks that have 
undergone 1.2 million slosh cycles. Test data on a sulfonated 
automotive HDPE fuel tank after five years of use showed no 
deterioration in the permeation barrier. These data are presented in 
Chapter 5 of the Draft RIA.
    A fourth method for molding plastic fuel tanks is called 
rotational-molding. Rotational-molding is a lower-cost alternative for 
smaller production volumes. In this method, a mold is filled with a 
powder form of polyethylene with a catalyst material. While the mold is 
rotated in an oven, the heat melts the plastic. When cross-link 
polyethylene (XLPE) is used, this heat activates a catalyst in the 
plastic, which causes a strong cross-link material structure to form. 
This method is often used for relatively large fuel tanks in Small SI 
equipment and for installed marine fuel tanks. The advantages of this 
method are low tooling costs, which allow for smaller production 
volumes, and increased strength and flame resistance. Flame resistance 
is especially important for installed marine fuel tanks subject to 33 
CFR part 183. At this time, the barrier treatment approaches discussed 
above for HDPE have not been demonstrated to be effective for XLPE.
    We have evaluated two permeation control approaches for rotational-
molded fuel tanks. The first is to form an inner layer during the 
molding process. Historically, the primary approach for this is to use 
a drop-box that opens after the XLPE tank begins to form. However, 
processes have been developed that eliminate the need for a drop box. 
With this construction a low-permeation inner liner can be molded into 
the fuel tank. Manufacturers are currently developing acetyl copolymer, 
nylon, and polybutylene terephthalate inner liners for this 
application. In fact, one fuel tank manufacturer is already selling 
tanks with a nylon inner liner into Class II Small SI equipment 
applications. Initial testing suggests that these barrier layers could 
be used to achieve the proposed standards.
    The second approach to creating a barrier layer on XLPE rotational-
molded fuel tanks is to use an epoxy barrier coating. One manufacturer 
has demonstrated that a low-permeation barrier coating can be adhered 
to an XLPE fuel tank that results in a permeation rate below the 
proposed standard. In this case, the manufacturer used a low level of 
fluorination to increase the surface energy of the XLPE so the epoxy 
would adhere properly.
    Marine fuel tanks are also fabricated out of either metal or 
fiberglass. Metal does not permeate so tanks that are constructed and 
installed properly to prevent corrosion should meet the proposed 
standards throughout their full service life. For fiberglass fuel 
tanks, one manufacturer has developed a composite that has been 
demonstrated to meet the proposed fuel tank permeation standard. 
Permeation control is achieved by incorporating fillers into a resin 
system and coating the assembled tank interior and exterior. This 
filler is made up of nanocomposites (very small particles of treated 
volcanic ash) which are dispersed into a carrier matrix. These 
particles act like the barrier platelets discussed above by creating a 
tortuous pathway for hydrocarbon migration through the walls of the 
fuel tank.
(c) Diurnal
    Portable marine fuel tanks are currently equipped with a valve that 
can be closed by the user when the tank is stored to hold vapor in the 
fuel tank. These fuel tanks are designed to hold the pressure that 
builds up when a sealed fuel tank undergoes normal daily warming. This 
valve must be opened when the engine is operating to prevent a vacuum 
from forming in the fuel tank as the fuel level in the tank decreases. 
A vacuum in the fuel tank could prevent fuel from being drawn into the 
engine. Because the valve is user-controlled, any emission control is 
dependent on user behavior. This can be corrected by replacing the 
user-controlled valve with a simple one-way valve in the fuel cap. For 
instance, a diaphragm valve that is common in many automotive 
applications seals when under pressure but opens at low-vacuum 
conditions.
    Personal watercraft currently use sealed systems with pressure-
relief valves that start venting vapors when pressures reach a 
threshold that ranges from 0.5 to 4.0 psi. We believe the proposed 
standard can be met through the use of a sealed fuel system with a 1.0 
psi pressure-relief valve. Personal watercraft should therefore be able 
to meet the proposed standard with little or no change to current 
designs.

[[Page 28192]]

    For other vessels with installed fuel tanks, manufacturers have 
commented that even 1.0 psi of pressure would be too high for their 
applications. They expressed concern that their fuel tanks had large, 
flat surfaces that would deform or leak at pressures of 0.5 psi or 
higher. This concern led us to consider several technologies for 
controlling diurnal emissions without pressurizing the tank, including 
carbon canisters, volume-compensating air bags, and bladder fuel tanks.
    The primary evaporative emission control device used in automotive 
applications is a carbon canister. With this technology, vapor 
generated in the tank is vented to a canister containing activated 
carbon. The fuel tank must be sealed such that the only venting that 
occurs is through the carbon canister. This prevents more than a 
minimal amount of positive or negative pressure in the tank. The 
activated carbon collects and stores the hydrocarbons. The activated 
carbon bed in the canister is refreshed by purging.
    In a marine application, an engine purge is not practical; 
therefore, canisters were not originally considered to be a practical 
technology for controlling diurnal vapor from boats. Since that time, 
however, we have collected information showing that the canister is 
purged sufficiently during cooling periods to reduce diurnal emissions 
effectively. When the fuel in the tank cools, fresh air is drawn back 
through the canister into the fuel tank. This fresh air partially 
purges the canister and returns hydrocarbons to the fuel tank. This 
creates open sites in the carbon so the canister can again collect 
vapor during the next heating event. Test data presented in Chapter 5 
of the Draft RIA show that a canister starting from empty is more than 
90 percent effective until it reaches the point of saturation. Once it 
reaches saturation, a canister is still capable of reducing diurnal 
emissions by more than 60 percent due to the normal airflow across the 
canister bed during cooling periods. Adding active purging during 
engine operation would improve the level of control somewhat depending 
on how often the engine is operated.
    Manufacturers have raised the concern that it is common for fuel to 
pass out the vent line during refueling. If there were a canister in 
the vent line it would become saturated with fuel. While this would not 
likely cause permanent damage to the canister, we believe marine fuel 
systems should prevent liquid fuel from exiting the vent line for both 
environmental and safety reasons. A float valve or small orifice in the 
entrance to the vent line from the fuel tank would prevent liquid fuel 
from reaching the canister or escaping from the tank. Any pressure 
build-up from such a valve would cause fuel to back up the fill neck 
and shut off the fuel dispensing nozzle. Manufacturers have also 
expressed concerns for canister durability in marine applications due 
to vibration, shock, and humidity. However, there are now marine grades 
of activated carbon that are harder and more moisture-resistant than 
typical automotive carbon. Industry installed canisters equipped with 
the marine grade carbon on 14 boats in a pilot program and no problems 
were encountered. This is discussed in more detail in Chapter 5 of the 
Draft RIA.
    Another concept for minimizing pressure in a sealed fuel tank is 
through the use of a volume-compensating air bag. The purpose of the 
bag is to fill up the vapor space above the liquid fuel. By minimizing 
the vapor space, the equilibrium concentration of fuel vapors occupies 
a smaller volume, resulting in a smaller mass of vapors. As the 
equilibrium vapor concentration increases with increasing temperature, 
the vapor space expands, which forces air out of the bag through the 
vent to atmosphere. Because the bag volume decreases to compensate for 
the expanding vapor space, total pressure inside the fuel tank stays 
very close to atmospheric pressure. Once the fuel tank cools in 
response to cooling ambient temperatures the resulting vacuum in the 
fuel tank will make the bag expand again by drawing air from the 
surrounding environment. Our test results show that pressure could be 
kept below 0.8 psi using a bag with a capacity equal to 25 percent of 
the fuel tank capacity. The use of a volume-compensating air bag, in 
conjunction with a pressure-relief valve, would be very effective in 
controlling diurnal emissions.
    Probably the most effective technology for reducing diurnal 
emissions from marine fuel tanks is through the use of a collapsible 
fuel bladder. In this concept, a low-permeation bladder is installed in 
the fuel tank to hold the fuel. As fuel is drawn from the bladder the 
vacuum created collapses the bladder. There is, therefore, no vapor 
space and no pressure build-up from fuel heating. No vapors would be 
vented to the atmosphere since the bladder is sealed. This option could 
also significantly reduce emissions during refueling that would 
normally result from dispensed fuel displacing vapor in the fuel tank. 
We have received comments that this would be cost-prohibitive because 
it could increase costs from 30 to 100 percent, depending on tank size. 
However, bladder fuel tanks have safety advantages and they are already 
sold by at least one manufacturer to meet market demand in niche 
applications.
(d) Running Loss
    Running loss emissions can be controlled by sealing the fuel cap 
and routing vapors from the fuel tank to the engine intake. In doing 
so, vapors generated by heat from the engine will be burned in the 
engine's combustion chamber. It may be necessary to use a valve or 
limited-flow orifice in the purge line to prevent too much fuel vapor 
from reaching the engine and to prevent liquid fuel from entering the 
line if the equipment flips over. Depending on the configuration of the 
fuel system and purge line, a one-way valve in the fuel cap may be 
desired to prevent a vacuum in the fuel tank during engine operation. 
We anticipate that a system like this would eliminate running loss 
emissions. However, higher temperatures during operation and the 
additional length of vapor line would slightly increase permeation. 
Considering these effects, we still believe that the system described 
here would reduce running losses from Small SI equipment by more than 
90 percent. Other approaches would be to move the fuel tank away from 
heat sources or to use heat protection such as a shield or directed air 
flow.
    We are not considering running loss controls for marine vessels. 
For portable fuel tanks and installed fuel tanks on larger vessels we 
would expect the significant distance from the engine and the cooling 
effect of operating the vessel in water to prevent significant heating 
of the fuel tanks during engine operation. For personal watercraft, 
fuel tanks have a sealed system with pressure relief that should help 
contain running loss emissions. For other installed fuel tanks, we 
would expect the system for controlling diurnal emissions would capture 
about half of any running losses that would occur.
(e) Diffusion
    Many manufacturers today use fuel caps that effectively limit the 
diffusion of gasoline from fuel tanks. In fact, the proposed diffusion 
emission standard for Small SI equipment is based to a large degree on 
the diffusion control capabilities of these fuel caps. As discussed in 
Chapter 5 of the Draft RIA, venting a fuel tank through a tube (rather 
than through an open orifice) also greatly reduces diffusion. We have 
conducted additional testing with short, narrow-diameter vent lines 
that provide

[[Page 28193]]

enough resistance to diffusion to meet the proposed emission standards.
    A secondary benefit of the running loss control described above for 
Small SI equipment relates to diffusion emissions. In a system that 
vents running loss vapors to the engine, venting losses would occur 
through the vapor line to the engine intake, rather than through open 
vents in the fuel cap. This approach should therefore eliminate 
diffusion emissions.
(4) Regulatory Alternatives
    We considered both less and more stringent evaporative emission 
control alternatives for fuel systems used in Small SI equipment and 
Marine SI vessels. Chapter 11 of the Draft RIA presents details on this 
analysis of regulatory alternatives. The results of this analysis are 
summarized below. We believe the proposed permeation standards are 
reflective of available technology and represent a step change in 
emissions performance. Therefore, we consider the same permeation 
control scenario in the less stringent and more stringent regulatory 
alternatives.
    For Small SI equipment, we considered a less stringent alternative 
without running loss emission standards Small SI engines. However, we 
believe controlling running loss and diffusion emissions from 
nonhandheld equipment is feasible at a relatively low cost. Running 
loss emissions can be controlled by sealing the fuel cap and routing 
vapors from the fuel tank to the engine intake. Other approaches would 
be to move the fuel tank away from heat sources or to use heat 
protection such as a shield or directed air flow. Diffusion can be 
controlled by simply using a tortuous tank vent path, which is commonly 
used today on Small SI equipment to prevent fuel splashing or spilling. 
These emission control technologies are relatively straight-forward, 
inexpensive, and achievable in the near term. Not requiring these 
controls would be inconsistent with section 213 of the Clean Air Act. 
For a more stringent alternative, we considered applying a diurnal 
emission standard for all Small SI equipment. We believe passively 
purging carbon canisters could reduce diurnal emissions by 50 to 60 
percent from Small SI equipment. However, we believe some important 
issues would need to be resolved for diurnal emission control, such as 
cost, packaging, and vibration. The cost sensitivity is especially 
noteworthy given the relatively low emissions levels (on a per-
equipment basis) from such small fuel tanks.
    For marine vessels, we considered a less stringent alternative, 
where there would be no diurnal emission standard for vessels with 
installed fuel tanks. However, installed fuel tanks on marine vessels 
are much larger in capacity than those used in Small SI applications. 
Our analysis indicates that traditional carbon canisters are feasible 
for boats at relatively low cost. While packaging and vibration are 
also issues with marine applications, we believe these issues have been 
addressed. Carbon canisters were installed on fourteen boats by 
industry in a pilot program. The results demonstrated the feasibility 
of this technology. The proposed standards would be achievable through 
engineering design-based certification with canisters that are very 
much smaller than the fuel tanks. In addition, sealed systems, with 
pressure control strategies would be accepted under the proposed 
engineering design-based certification. For a more stringent scenario, 
we consider a standard that would require boat builders to use an 
actively purged carbon canister. This means that, when the engine is 
operating, it would draw air through the canister to purge the canister 
of stored hydrocarbons. However, we rejected this option because active 
purge occurs infrequently due to the low hours of operation per year 
seen by many boats. The gain in overall efficiency would be quite small 
relative to the complexity active purge adds into the system in that 
the engine must be integrated into a vessel-based control strategy. The 
additional benefit of an actively purged diurnal control system is 
small in comparison to the cost and complexity of such a system.
(5) Our Conclusions
    We believe the proposed evaporative emission standards reflect what 
manufacturers can achieve through the application of available 
technology. We believe the proposed lead time is necessary and adequate 
for fuel tank manufacturers, equipment manufacturers, and boat builders 
to select, design, and produce evaporative emission control strategies 
that will work best for their product lines. We expect that meeting 
these requirements will pose a challenge, but one that is feasible when 
taking into consideration the availability and cost of technology, lead 
time, noise, energy, and safety. The role of these factors is presented 
in detail in Chapters 5 and 6 of the Draft RIA. As discussed in Section 
X, we do not believe the proposed standards would have negative effects 
on energy, noise, or safety and may lead to some positive effects.

VII. General Concepts Related to Certification and Other Requirements

    This section describes general concepts concerning the proposed 
emission standards and various requirements related to these standards. 
There is a variety of proposed requirements that serve to ensure 
effective implementation of the emission standards, such as applying 
for certification, labeling engines, and meeting warranty requirements. 
The following discussion reviews these requirements for Small SI 
engines and outboard and personal-watercraft engines that have already 
been subject to exhaust emission standards, explains a variety of 
changes, and describes how these provisions apply to evaporative 
emissions. Sterndrive and inboard marine engines will be subject to 
emission standards for the first time so all these requirements are new 
for those engines.
    Rather than making changes to existing regulations, we have drafted 
new regulatory text describing the new emission standards and related 
requirements and included that text in this proposal. The proposed 
regulations are written in plain-language format. In addition to the 
improved clarity of the regulatory text, this allows us to harmonize 
the regulations with our other programs requiring control of engine 
emissions.\93\
---------------------------------------------------------------------------

    \93\ For additional background related to plans for migrating 
regulations, see ``Plain Language Format of Emission Regulations for 
Nonroad Engines,'' EPA420-F-02-046, September 2002 (http://www.epa.gov/otaq/regs/nonroad/2002/f02046.pdf).
---------------------------------------------------------------------------

    The proposed regulatory text migrates the existing requirements for 
Small SI engines, including all the emission standards and other 
requirements related to getting and keeping a valid certificate of 
conformity, from 40 CFR part 90 to 40 CFR part 1054. For nonhandheld 
engines, manufacturers must comply with all the provisions in part 1054 
once the Phase 3 standards begin to apply in 2011 or 2012. For handheld 
engines, manufacturers must comply with the provisions in part 1054 
starting in 2010. Similarly, we are proposing to migrate the existing 
requirements for Marine SI engines from 40 CFR part 91 to 40 CFR part 
1045. Manufacturers must comply with the provisions in part 1045 for an 
engine once the proposed exhaust emission standards begin to apply in 
2009.
    The proposed requirements for evaporative emissions are described 
in 40 CFR part 1060, with some category-specific provisions in 40 CFR 
parts 1045 and 1054, which are referred to as the exhaust standard-
setting parts for each

[[Page 28194]]

type of engine. Adopting the provisions related to evaporative 
emissions in a broadly applicable part has two main advantages. First, 
we anticipate that in many cases boat builders, equipment 
manufacturers, and manufacturers of fuel-system components will need to 
certify their products only to the standards for evaporative emissions, 
with no corresponding responsibility for exhaust emissions. These 
companies will not need to focus on the exhaust standard-setting part 
except to read the short section defining the evaporative emission 
standards and requirements. Second, manufacturers of fuel-system 
components make products that are not necessarily unique to a specific 
category of engines. The regulations in 40 CFR parts 1045 and 1054 will 
highlight the standards that apply and provide any specific directions 
in applying the general provisions in part 1060. The standards, test 
procedures, and certification provisions are almost completely uniform 
across our programs so this combined set of evaporative-related 
provisions will make it much easier for companies to certify their 
products if they are not subject to the exhaust emission standards. In 
Section XI we describe how we might apply the provisions of part 1060 
to recreational vehicles regulated under 40 CFR part 1051.
    Other provisions describing general testing procedures, including 
detailed laboratory and equipment specifications and procedures for 
equipment calibration and emission measurements, are written in 40 CFR 
part 1065. The exhaust standard-setting parts also include testing 
specifications that are specific to each type of engine, including duty 
cycles, test-fuel specifications, and procedures to establish 
deterioration factors. See Section IX for further discussion of these 
test procedures. Engines, equipment, and vessels subject to the new 
standard-setting parts (parts 1045, 1054, and 1060) will also be 
subject to the general compliance provisions in 40 CFR part 1068. These 
include prohibited acts and penalties, exemptions and importation 
provisions, selective enforcement audits, defect reporting and recall, 
and hearing procedures. See Section VIII for further discussion of 
these general compliance provisions. Both part 1065 and part 1068 
already apply to various other engine categories. We are therefore 
publishing in this proposal only the changes needed to apply the 
existing regulations to the engines, equipment, and vessels covered by 
this rulemaking.

A. Scope of Application

    This proposal covers spark-ignition propulsion marine engines and 
vessels powered by those engines introduced into commerce in the United 
States. The proposal also covers other nonroad spark-ignition engines 
rated at or below 19 kW and the corresponding equipment. The following 
sections describe generally when emission standards apply to these 
products. Refer to the specific program discussion in Sections III 
through VI for more information about the scope of application and 
timing of the proposed standards.
(1) Do the standards apply to all engines, equipment, and vessels or 
only to new products?
    The scope of this proposal is broadly set by Clean Air Act section 
213(a)(3), which instructs us to set emission standards for new nonroad 
engines and new nonroad vehicles. Generally speaking, the proposed rule 
is intended to cover all new engines and vehicles in the identified 
categories (including any associated vehicles, vessels, or other 
equipment). Once the emission standards apply to an engine, piece of 
equipment, or fuel-system component manufacturers must get a 
certificate of conformity from us before selling them or otherwise 
introducing them into commerce in the United States. Note that the term 
``manufacturer'' includes any individual or company introducing into 
commerce in the United States engines, equipment, vessels, or 
components that are subject to emission standards. These Clean Air Act 
requirements relate to importation and any other means of introducing 
covered products into commerce. In addition to any applicable 
evaporative requirements, we also require equipment manufacturers that 
install engines from other companies to install only certified engines 
once emission standards apply. The certificate of conformity (and 
corresponding emission control information label) provides assurance 
that manufacturers have met their obligation to make engines, 
equipment, and vessels that meet emission standards over the useful 
life we specify in the regulations.
(2) How do I know if my engine or equipment is new?
    We are proposing to define ``new'' consistent with previous 
rulemakings. Under the proposed definition, a nonroad engine (or 
nonroad equipment) is considered new until its title has been 
transferred to the ultimate purchaser or the engine has been placed 
into service. This proposed definition would apply to engines, 
equipment, and vessels so the nonroad equipment using these engines 
would be considered new until their title has been transferred to an 
ultimate buyer. In Section VII.B.1 we describe how to determine the 
model year of individual engines, equipment, and vessels.
    To further clarify the proposed definition of new nonroad engine, 
we are proposing to specify that a nonroad engine, equipment, or vessel 
is placed into service when it is used for its intended purpose. We are 
therefore proposing that an engine subject to the proposed standards is 
used for its intended purpose when it is installed in a vessel or other 
piece of nonroad equipment. We need to make this clarification because 
some engines are made by modifying a highway or land-based nonroad 
engine that has already been installed on a vessel or other piece of 
equipment, so without this clarification, these engines may escape 
regulation. For example, an engine installed in a marine vessel after 
it has been used for its intended purpose as a land-based highway or 
nonroad engine is considered ``new'' under this definition. We believe 
this is a reasonable approach because the practice of adapting used 
highway or land-based nonroad engines may become more common if these 
engines are not subject to the standards in this proposal.
    In summary, an engine would be subject to the proposed standards if 
it is:
     Freshly manufactured, whether domestic or imported; this 
may include engines produced from engine block cores;
     Installed for the first time in nonroad equipment after 
having powered a car, a truck, or a category of nonroad equipment 
subject to different emission standards;
     Installed in new nonroad equipment, regardless of the age 
of the engine; or
     Imported--whether new or used, as long as the engine was 
not built before the initial emission standards started to apply.
(3) When do imported engines, equipment, and vessels need to meet 
emission standards?
    The proposed emission standards would apply to all new engines, 
equipment, and vessels that are used in the United States. According to 
Clean Air Act section 216 ``new'' includes engines or equipment that 
are imported by any person, whether freshly manufactured or used. Thus, 
the proposed program would include

[[Page 28195]]

engines that are imported for use in the United States whether they are 
imported as loose engines or are already installed on a vessel or other 
piece of nonroad equipment built elsewhere. All imported engines would 
need an EPA-issued certificate of conformity to clear customs, with 
limited exemptions (as described in Section VIII).
    If an engine or piece of nonroad equipment that was built after 
emission standards take effect is imported without a currently valid 
certificate of conformity, we would still consider it to be a new 
engine, equipment, or vessel. This means it would need to comply with 
the emission standards that apply based on its model year. Thus, for 
example, a marine vessel manufactured in a foreign country in 2009, 
then imported into the United States in 2010, would be considered 
``new.'' The engines on that piece of equipment would have to comply 
with the requirements for the 2009 model year, assuming that the engine 
has not been modified and no other exemptions apply. This provision is 
important to prevent manufacturers from avoiding emission standards by 
building products abroad, transferring their title, and then importing 
them as used products. Note that if an imported engine has been 
modified it must meet emission standards based on the year of 
modification rather than the year of manufacture. See Section V.E.6 and 
Section XI.C for proposed and contemplated restrictions related model 
years for importation of new engines and equipment.
(4) Do the standards apply to exported engines, equipment, or vessels?
    Engines, equipment, or vessels intended for export would generally 
not be subject to the requirements of the proposed emission control 
program, except that we would not exempt engines exported to countries 
having standards identical to the United States. However, engines, 
equipment, or vessels that are exported and subsequently re-imported 
into the United States must be certified. For example, this would be 
the case when a foreign company purchases engines manufactured in the 
United States for installation in nonroad equipment for export back to 
the United States. Those engines would be subject to the emission 
standards that apply on the date the engine was originally 
manufactured. If the engine is later modified and certified (or 
recertified), the engine is subject to emission standards that apply on 
the date of the modification. So, for example, foreign equipment 
manufacturers buying U.S.-made engines without recertifying the engines 
will need to make sure they purchase complying engines for the products 
they sell in the United States.
(5) Are there any new products that would be exempt from the emission 
standards?
    We are proposing to extend our basic nonroad exemptions to the 
engines, equipment, and vessels covered by this proposal. These include 
the testing exemption, the manufacturer-owned exemption, the display 
exemption, and the national security exemption. These exemptions are 
described in more detail in Section VIII.C.
    In addition, the Clean Air Act does not consider engines used 
solely for competition to be nonroad engines so the proposed emission 
standards do not apply to them. The Clean Air Act similarly does not 
consider engines used in stationary applications to be nonroad engines; 
however, EPA has proposed to apply emission standards for stationary 
spark-ignition engines that are comparable to the standards that apply 
to nonroad engines (71 FR 33804, June 12, 2006). As described in 
Section V, we are proposing in this notice to apply the Phase 3 
standards for Small SI engines equally to stationary spark-ignition 
engines at or below 19 kW. Refer to the program discussions in Sections 
III through VI for a discussion of how the various exclusions apply for 
different categories of engines.

B. Emission Standards and Testing

(1) How is the model year determined?
    The proposed emission standards are effective on a model-year 
basis. We are proposing to define model year much like we do for 
passenger cars. It would generally mean either the calendar year or 
some other annual production period based on the manufacturer's 
production practices. For example, manufacturers could start selling 
2006 model year engines as early as January 2, 2005 as long as the 
production period extends until at least January 1, 2006. All of a 
manufacturer's engines from a given model year would have to meet 
emission standards for that model year. For example, manufacturers 
producing new engines in the 2006 model year would need to comply with 
the 2006 standards.
(2) How do adjustable engine parameters affect emission testing?
    Many engines are designed with components that can be adjusted for 
optimum performance under changing conditions, such as varying fuel 
quality, high altitude, or engine wear. Examples of adjustable 
parameters include spark timing, idle speed setting, and fuel injection 
timing. While we recognize the need for this practice, we are also 
concerned that engines maintain a consistent level of emission control 
for the whole range of adjustability. We are therefore proposing to 
require that engines meet emission standards over the full adjustment 
range.
    Manufacturers would have to provide a physical stop to prevent 
adjustment outside the established range. Operators would then be 
prohibited from adjusting engines outside this range. Refer to the 
proposed regulatory text for more information about adjustable engine 
parameters. See especially the proposed sections 40 CFR 1045.115 for 
Marine SI engines and 40 CFR 1054.115 for Small SI engines.
(3) Alternate Fuels
    The emission standards apply to all spark-ignition engines 
regardless of the fuel they use. Almost all Marine SI engines and Small 
SI engines operate on gasoline, but these engines may also operate on 
other fuels, such as natural gas, liquefied petroleum gas, ethanol, or 
methanol. The test procedures in 40 CFR part 1065 describe adjustments 
needed for operating test engines with oxygenated fuels.
    In some special cases, a single engine is designed to alternately 
run on different fuels. For example, some engines can switch back and 
forth between natural gas and LPG. We request comment on the best way 
of certifying such engines so they can be in a single engine family, 
even though we would normally require engines operating on different 
fuels to be in separate engine families. We could require such 
manufacturers to conduct emission testing with emission-data engines 
operating on both fuels to establish the worst-case configuration. In 
particular, we request comment on the appropriate data for 
demonstrating compliance at the end of the service-accumulation period 
for durability testing.
    Once an engine is placed into service, someone might want to 
convert it to operate on a different fuel. This would take the engine 
out of its certified configuration, so we are proposing to require that 
someone performing such a fuel conversion go through a certification 
process. We would expect to allow certification of the complete engine 
using normal certification procedures, or the aftermarket conversion 
kit could be certified using the provisions of 40 CFR part 85, subpart 
V. This contrasts with the existing provisions that allow for fuel 
conversions that can be demonstrated

[[Page 28196]]

not to increase emission levels above the applicable standard. We 
propose to apply this requirement starting January 1, 2010. (See Sec.  
90.1003 and Sec.  1054.635.)

C. Demonstrating Compliance

    We are proposing a compliance program to accompany emission 
standards. This consists first of a process for certifying engine 
models and fuel systems (either as a part of or independently from the 
vessel or equipment). In addition to certification, we are proposing 
several provisions to ensure that emission control systems continue to 
function over long-term operation in the field. Most of these 
certification and durability provisions are consistent with previous 
rulemakings for these and other nonroad engines, equipment, and 
vessels. Refer to the discussion of the specific programs in Sections 
III through VI for additional information about these requirements for 
each engine category.
(1) How would I certify my engines, equipment, or vessels?
    Sections III through VI describe the proposed emission standards 
for new engines, equipment, and vessels. Section VI in particular 
describes which companies are responsible for certifying to the new 
standards. This section describes the general certification process.
    We are proposing a certification process similar to that already 
adopted for these and other engines and equipment. Certifying 
manufacturers generally test representative prototype engines or fuel 
system components and submit the emission data along with other 
information to EPA in an application for a Certificate of Conformity. 
If we approve the application, then the manufacturer's Certificate of 
Conformity allows the manufacturer to sell the engines, equipment, or 
vessels described in the application in the United States. We are 
proposing to include clarifying language to specify that the 
certificate is valid starting with the indicated effective date, but 
that it is not valid for any production after December 31 of the model 
year for which it is issued. We are also proposing a provision to 
preclude issuance of certificates after December 31 of a given model 
year. This would avoid a situation in which a manufacturer receives 
certification after it is no longer valid for further production.
    We are proposing that manufacturers certify their engine models by 
grouping them into emission families. Under this approach, engines 
expected to have similar emission characteristics would be classified 
in the same emission family. The emission family definition is 
fundamental to the certification process and to a large degree 
determines the amount of testing required for certification. The 
proposed regulations include specific engine characteristics for 
grouping emission families for each category of products. To address a 
manufacturer's unique product mix, we may approve using broader or 
narrower emission families as long as the manufacturer can show that 
all the engines in an engine family will have similar emission control 
characteristics over the engines' useful life.
    The useful life period specified in the regulations defines the 
period over which manufacturers are responsible for meeting emission 
standards. The useful life values included in our regulations are 
intended to reflect the period during which engines are designed to 
properly function without being remanufactured. Useful life values are 
unique for each category of engines. As proposed, for purposes of 
certification, manufacturers would be required to use test data to 
estimate the rate of deterioration for each emission family over its 
useful life. Manufacturers would show that each emission family meets 
the emission standards after incorporating the estimated deterioration 
in emission control.
    The emission-data engine is the engine from an emission family that 
will be used for certification testing. To ensure that all engines in 
the family meet the standards, we are proposing that manufacturers 
select for certification testing the engine from the family that is 
most likely to exceed emission standards. In selecting this ``worst-
case'' engine, the manufacturer uses good engineering judgment. 
Manufacturers would consider, for example, all engine configurations 
and power ratings within the emission family and the range of allowed 
options. Requiring the worst-case engine to be tested ensures that all 
engines within the emission family are complying with emission 
standards. A similar approach would be used for evaporative emission 
control systems in emission families.
    We are proposing to require manufacturers to include in their 
application for certification the results of all emission tests from 
their emission-data units (engines, fuel tanks, etc.), including any 
diagnostic-type measurements (such as ppm testing) and invalidated 
tests. This complete set of test data ensures that the valid tests 
forming the basis of the manufacturer's application are a robust 
indicator of emission control performance rather than a spurious or 
incidental test result.
    Clean Air Act section 206(h) specifies that test procedures for 
certification (including the test fuel) should adequately represent in-
use operation. We are proposing test fuel specifications intended to 
represent in-use fuels. Engines would have to meet the standards on 
fuels with properties anywhere in the range of proposed test fuel 
specifications. The test fuel is generally to be used for all testing 
associated with the regulations proposed in this document, including 
certification, production-line testing, and in-use testing.
    We are proposing to require that engine manufacturers give engine 
operators instructions for properly maintaining their engines. We are 
including limitations on the frequency of scheduled maintenance that a 
manufacturer may specify for emission-related components to help ensure 
that emission control systems do not depend on an unreasonable 
expectation of maintenance in the field. These maintenance limits would 
also apply during any service accumulation that a manufacturer may do 
to establish deterioration factors. This approach is common to all our 
engine programs. We are proposing new regulatory language to clarify 
that engine manufacturers may perform emission-related maintenance 
during service accumulation only to the extent that they can 
demonstrate that such maintenance will be done with in-use engines. It 
is important to note, however, that these provisions would not limit 
the maintenance an operator could perform. It would merely limit the 
maintenance that operators would be expected to perform on a regularly 
scheduled basis. Some of these requirements are new for engines that 
are already subject to standards. We believe it is important to define 
limits to these maintenance parameters, especially with the expectation 
that engines will begin to incorporate aftertreatment technologies. See 
Sec.  1045.125 and Sec.  1054.125 of the proposed regulations for more 
information.
(2) What emission labels are required?
    Once an emission family is certified every product a manufacturer 
produces from that emission family would need an emission label with 
basic identifying information. We request comment on the proposed 
requirements for the design and content of engine labels, which are 
detailed in Sec.  1045.135 and Sec.  1054.135 of the proposed 
regulation text.
    The current regulations require equipment manufacturers to put a 
duplicate label on the equipment if the

[[Page 28197]]

engine is installed in a way that obscures the label on the engine. We 
are proposing to clarify this requirement for duplicate labels to 
ensure that labels are accessible without creating a supply of 
duplicate labels that are not authentic or are not used appropriately. 
Specifically, we are proposing to require engine manufacturers to 
supply duplicate labels to equipment manufacturers that request them 
and keep records to show how many labels they supply. Similarly, we are 
proposing that equipment manufacturers must request from engine 
manufacturers a specific number of duplicate labels, with a description 
of which engine and equipment models are involved and why the duplicate 
labels are necessary. Equipment manufacturers would need to destroy any 
excess labels and keep records to show the disposition of all the 
labels they receive. This would make it easier for us to verify that 
engines are meeting requirements and it would be easier for U.S. 
Customs to clear imported equipment with certified engines.
(3) What requirements apply to auxiliary emission control devices?
    Clean Air Act section 203(a) and existing regulations prohibit the 
use of a defeat device (see 40 CFR 90.111 and 91.111). The defeat 
device prohibition is intended to ensure that engine manufacturers do 
not use auxiliary emission control devices (AECD) in a regulatory test 
procedure that reduce the effectiveness of the emission control system 
during operation that is not substantially included in the regulatory 
test procedure.\94\ We are proposing to require manufacturers to 
describe their AECDs and explain why these are not defeat devices.
---------------------------------------------------------------------------

    \94\ Auxiliary emission control device is defined at 40 CFR 90.2 
and 91.2 as `` any element of design that senses temperature, 
vehicle speed, engine RPM, transmission gear, or any other parameter 
for the purpose of activating, modulating, delaying or deactivating 
the operation of any part of the emission control system.''
---------------------------------------------------------------------------

    Under the current regulations, there has been limited use of AECDs. 
However, with the proposed new emission standards and the corresponding 
engine technologies, we expect manufacturers to increase their use of 
engine designs that rely on AECDs. Disclosure of the presence and 
purpose of an AECD is essential in allowing us to evaluate the AECD and 
determine whether it represents a defeat device.
(4) What warranty requirements apply to engines or other products that 
are subject to emission standards?
    Consistent with our current emission control programs, we are 
proposing that manufacturers provide a design and defect warranty 
covering emission-related components. If the manufacturer offers a 
longer mechanical warranty for the engine or any of its components 
without an additional charge, the proposed regulations would require 
that the emission-related warranty period must be at least as long as 
the commercial warranty for the engine or the applicable components. 
Extended warranties that are available for an extra price would not 
trigger a need for a longer emission-related warranty. See the proposed 
regulation language for a description of which components are emission-
related.
    If an operator makes a valid warranty claim for an emission-related 
component during the warranty period, the engine manufacturer is 
generally obligated to replace the component at no charge to the 
operator. The engine manufacturer may deny warranty claims if the 
operator failed to do prescribed maintenance that contributed to the 
warranty claim.
    We are also proposing a defect reporting requirement that applies 
separately from the emission-related warranty (see Section VIII.F). In 
general, defect reporting applies when a manufacturer discovers a 
pattern of component failures whether that information comes from 
warranty claims, voluntary investigation of product quality, or other 
sources.
(5) Can I meet standards with emission credits?
    We are proposing a new emission-credit program for sterndrive and 
inboard marine engines and for evaporative emissions. We are also 
proposing to revise the existing emission-credit provisions for 
outboard and personal-watercraft engines and for Small SI engines. An 
emission-credit program is an important factor we take into 
consideration in setting emission standards that are appropriate under 
Clean Air Act section 213. An emission-credit program can reduce the 
cost and improve the technological feasibility of achieving standards, 
helping to ensure the standards achieve the greatest achievable 
reductions, considering cost and other relevant factors, in a time 
frame that is earlier than might otherwise be possible. Manufacturers 
gain flexibility in product planning and the opportunity for a more 
cost-effective introduction of product lines meeting a new standard. 
Emission-credit programs also create an incentive for the early 
introduction of new technology, which allows certain emission families 
to act as trailblazers for new technology. This can help provide 
valuable information to manufacturers on the technology before they 
apply the technology throughout their product line. This early 
introduction of clean technology improves the feasibility of achieving 
the standards and can provide valuable information for use in other 
regulatory programs that may benefit from similar technologies.
    Emission-credit programs generally involve averaging, banking, or 
trading. Averaging would allow a manufacturer to certify one or more 
emission families at emission levels above the applicable emission 
standards as long as the increased emissions are offset by one or more 
emission families certified below the applicable standards. The over-
complying families generate credits that are used by the under-
complying families. Compliance is determined on a total mass emissions 
basis to account for differences in production volume, power, and 
useful life among emission families. The average of all emissions for a 
particular manufacturer's production must be at or below the level of 
the applicable emission standards. This calculation generally factors 
in sales-weighted average power, production volume, useful life, and 
load factor. Banking and trading would allow a manufacturer to generate 
emission credits and bank them for future use in its own averaging 
program in later years or sell them to another company.
    A manufacturer choosing to participate in an emission-credit 
program would certify each participating emission family to a Family 
Emission Limit (FEL). In its certification application, a manufacturer 
would determine a separate FEL for each pollutant included in the 
emission-credit program. The FEL selected by the manufacturer becomes 
the emission standard for that emission family. Emission credits are 
based on the difference between the emission standard that applies and 
the FEL. The engines have to meet the FEL for all emission testing. At 
the end of the model year, manufacturers would generally need to show 
that the net effect of all their emission families participating in the 
emission-credit program is a zero balance or a net positive balance of 
credits. A manufacturer could generally choose to include only a single 
pollutant from an emission family in the emission-credit program or, 
alternatively, to establish an FEL for each of the regulated 
pollutants.

[[Page 28198]]

    Refer to the program discussions in Sections III through VI for 
more information about emission-credit provisions for individual engine 
or equipment categories. We request comment on all aspects of the 
emission-credit programs discussed in this proposal. In particular, we 
request comment on the structure of the proposed emission-credit 
programs and how the various provisions may affect manufacturers' 
ability to utilize averaging, banking, or trading to achieve the 
desired emission-reductions in the most efficient and economical way.
(6) How does EPA define maximum engine power?
    Maximum engine power is used to calculate the value of emission 
credits. For Small SI engines, it is also used to determine whether the 
standards apply; for example engines above 1000 cc are subject to Small 
SI standards only if maximum engine power is at or below 19 kW. For 
Marine SI engines, maximum engine power is also used to determine the 
emission standard that applies to a particular engine and to calculate 
emission credits. The regulations give no specific direction for 
defining maximum power for determining whether part 90 applies. Marine 
SI engine manufactures declare a rated power based on a procedure 
specified in a voluntary consensus standard, while credit calculations 
are based on sales-weighted average power for an engine family. We are 
concerned that these terms and specifications are not objective enough 
to ensure consistent application of regulatory requirements to all 
manufacturers. To the extent that manufacturers can determine different 
values of rated power or maximum engine power, they could be subject to 
different emission standards and calculate emission credits differently 
for otherwise identical engines. We believe it is important that a 
single power value be determined objectively according to a specific 
regulatory definition. Note that maximum engine power is not used 
during engine testing.
    We are proposing to standardize the determination of maximum engine 
power by relying primarily on the manufacturer's design specifications 
and the maximum torque curve that the manufacturer expects will 
represent the actual production engines. Under this approach the 
manufacturer would take the torque curve that is projected for an 
engine configuration, based on the manufacturer's design and production 
specifications, and convert it into a ``nominal power curve'' that 
would relate the maximum expected power to engine speed when a 
production engine is mapped according to our specified mapping 
procedures. The maximum engine power is the maximum power point on that 
nominal power curve. This has become the standard approach for all our 
emission control programs.
    Manufacturers would report the maximum engine power of each 
configuration in the application for certification. As with other 
engine parameters, manufacturers would ensure that the engines they 
produce under the certificate have maximum engine power consistent with 
those described in their applications. However, since we recognize that 
variability is a normal part of engine production, we allow a tolerance 
around the nominal value. We would instead require only that the power 
specified in the application be within the normal power range for 
production engines (see Sec.  1045.140 and Sec.  1054.140). We would 
typically expect the specified power to be within one standard 
deviation of the mean power of the production engines. If a 
manufacturer determines that the specified power is outside of the 
normal range for production engines, we may require the manufacturer to 
amend the application for certification. Manufacturer could 
alternatively change their engines to conform to the parameters 
detailed in the application for certification. In deciding whether to 
require a change to the application for certification, we would 
consider the degree to which the specified power differed from that of 
the production engines, the normal power variability for those engines, 
whether the engine used or generated emission credits, and whether the 
error affects which standards apply to the engine.
(7) What are the proposed production-line testing requirements?
    We are proposing to modify production-line testing requirements for 
engines already subject to exhaust emission standards and to extend 
these requirements to sterndrive and inboard marine engines. According 
to these requirements, manufacturers would routinely test production-
line engines to help ensure that newly assembled engines control 
emissions at least as well as the emission-data engines tested for 
certification. Production-line testing serves as a quality-control 
step, providing information to allow early detection of any problems 
with the design or assembly of freshly manufactured engines. This is 
different than selective enforcement auditing where we would give a 
test order for more rigorous testing for production-line engines in a 
particular emission family (see Section VIII.E).
    If an engine fails to meet an emission standard, the manufacturer 
must modify it to bring that specific engine into compliance. If too 
many engines exceed emission standards, the manufacturer will need to 
correct the problem for the engine family. This correction may involve 
changes to assembly procedures or engine design, but the manufacturer 
must, in any case, do sufficient testing to show that the emission 
family complies with emission standards.
    The proposed production-line testing programs would depend on the 
Cumulative Sum (CumSum) statistical process for determining the number 
of engines a manufacturer needs to test. We have used CumSum procedures 
for production-line testing with several other engine categories. Each 
manufacturer selects engines randomly at the beginning of a new 
sampling period. If engines must be tested at a facility where final 
assembly is not yet completed, manufacturers must randomly select 
engine components and assemble the test engine according to their 
established assembly instructions. The sampling period is a calendar 
quarter for engine families over 1,600 units. The minimum testing rate 
for these families is five engines per year. For engine families with 
projected sales at or below 1,600 units, the sampling period is a 
calendar year and the minimum testing rate is two engines. We may waive 
testing requirements for Marine SI engine families with projected sales 
below 150 units per year and for Small SI engine families with 
projected sales below 5,000 units per year. The CumSum program uses the 
emission results to calculate the number of tests required for the 
remainder of the sampling period to reach a pass or fail determination. 
If tested engines have relatively high emissions, the statistical 
sampling method calls for an increased number of tests to show that the 
emission family meets emission standards. The remaining number of tests 
is recalculated after the manufacturer tests each engine. Engines 
selected should cover the broadest range of production configurations 
possible. Tests should also be distributed evenly throughout the 
sampling period to the extent possible.
    Under the CumSum approach, a limited number of individual engines 
can exceed the emission standards before the Action Limit is met and 
the engine family itself fails under the production-line testing 
program. If an engine family fails, we may suspend the certificate. The 
manufacturer would then need to take steps to address the

[[Page 28199]]

nonconformity, which may involve amending the application for 
certification. This could involve corrected production procedures, a 
modified engine design. This may also involve changing the Family 
Emission Limit if there is no defect and the original Family Emission 
Limit was established using good engineering judgment. Note, however, 
that we propose to require manufacturers to adjust or repair every 
failing engine and retest it to show that it meets the emission 
standards. Note also that all production-line emission measurements 
must be included in the periodic reports to us. This includes any type 
of screening or surveillance tests (including ppm measurements), all 
data points for evaluating whether an engine controls emissions ``off-
cycle,'' and any engine tests that exceed the minimum required level of 
testing.
    While the proposed requirements may involve somewhat more testing 
than is currently required under 40 CFR part 90 or 91, there are 
several factors that limit the additional burden. First, the testing 
regulations in 40 CFR part 1065 specify that manufacturers may use 
field-testing equipment and procedures to measure emissions from 
production-line engines. This may substantially reduce the cost of 
testing individual engines by allowing much lower-cost equipment for 
measuring engines following assembly.
    Second, we are proposing to reduce the testing requirements for 
emission families that consistently meet emission standards. The 
manufacturer may request a reduced testing rate for emission families 
with no production-line tests exceeding emission standards for two 
consecutive years. The minimum testing rate is one test per emission 
family for one year. Our approval for a reduced testing rate would 
apply for a single model year.
    Third, as we have concluded in other engine programs, some 
manufacturers may have unique circumstances that call for different 
methods to show that production engines comply with emission standards. 
We therefore propose to allow a manufacturer to suggest an alternate 
plan for testing production-line engines as long as the alternate 
program is as effective at ensuring that the engines will comply. A 
manufacturer's petition to use an alternate plan should address the 
need for the alternative and should justify any changes from the 
regular testing program. The petition must also describe in detail the 
equivalent thresholds and failure rates for the alternate plan. If we 
approve the plan, we would use these criteria to determine when an 
emission family would become noncompliant. It is important to note that 
this allowance is intended only to provide flexibility and is not 
intended to affect the stringency of the standards or the production-
line testing program.
    Refer to the specific program discussions in Sections III, IV, and 
V for additional information about production-line testing for 
different types of engines.

D. Other Concepts

(1) What are the proposed emission-related installation instructions?
    For manufacturers selling loose engines to equipment manufacturers, 
we are proposing to require that the engine manufacturer develop a set 
of emission-related installation instructions. This would include 
anything that the installer would need to know to ensure that the 
engine operates within its certified design configuration. For example, 
the installation instructions could specify a total capacity needed 
from the engine cooling system, placement of catalysts after final 
assembly, or specification of parts needed to control evaporative 
emissions. If equipment manufacturers fail to follow the established 
emission-related installation instructions, we would consider this 
tampering, which could subject them to significant civil penalties. 
Refer to the proposed regulations for more information about specific 
provisions related to installation instructions (see Sec.  1045.130 and 
Sec.  1054.130).
(2) What is an agent for service?
    We are proposing to require that manufacturers identify an agent 
for service in the United States in their application for 
certification. The named person should generally be available within a 
reasonable time to respond to our attempts to make contact, either by 
telephone, e-mail, or in person. The person should also be capable of 
communicating about matters related to emission program requirements in 
English. (See Sec.  1045.205 and Sec.  1054.205).
(3) Are there special provisions for small manufacturers of these 
engines, equipment, and vessels?
    The scope of this proposal includes many engine, equipment, and 
vessel manufacturers that have not been subject to our regulations or 
certification process. Many of these manufacturers are small 
businesses. The sections describing the proposed emission control 
program include discussion of proposed special compliance provisions 
designed to address small business issues for the different types of 
engines and other products covered by the rule. Section XIV.B gives an 
overview of the inter-agency process in which we developed these small-
volume provisions.

VIII. General Nonroad Compliance Provisions

    This section describes a wide range of compliance provisions that 
apply generally to all the engines and equipment that would be subject 
to the proposed standards. Several of these provisions apply not only 
to engine manufacturers but also to equipment manufacturers installing 
certified engines, remanufacturing facilities, operators, and others.
    For standards that apply to equipment or fuel-system components, 
the provisions generally applicable to engine manufacturers would also 
apply to the equipment or component manufacturers. While this preamble 
section is written as if it would apply to engine exhaust standards, 
the same provisions would apply for equipment or component evaporative 
standards. We are proposing extensive revisions to the regulations to 
more carefully make these distinctions.
    As described in Section VII, we are proposing to migrate these 
general compliance provisions from 40 CFR parts 90 and 91 to the 
established regulatory text in 40 CFR part 1068. The provisions in part 
1068 already apply to other engine categories and we believe they can 
be applied to Small SI engines and Marine SI engines with minimal 
modification. Note that Section XI.C describes a variety of proposed 
changes and updates to the regulatory provisions in part 1068. We 
request comment on all aspects of part 1068 for these engines. The 
following discussion follows the sequence of the existing regulatory 
text in part 1068.\95\
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    \95\ The regulatory text in the proposal does not republish the 
provisions of part 1068 that we are not proposing to change. For the 
latest full-text version of part 1068, see http://www.gpoaccess.gov/ecfr/index.html. Note that part 1068 is in Title 40, Protection of 
Environment.
---------------------------------------------------------------------------

A. Miscellaneous Provisions (Part 1068, Subpart A)

    This regulation contains some general provisions, including general 
applicability and the definitions that apply to part 1068. Other 
provisions concern good engineering judgment, how we would handle 
confidential information, how the EPA Administrator delegates decision-

[[Page 28200]]

making authority, and when we may inspect facilities, engines, or 
records.
    The process of testing engines and preparing an application for 
certification requires the manufacturer to make a variety of judgments. 
This includes, for example, selecting test engines, operating engines 
between tests, and developing deterioration factors. EPA has the 
authority to evaluate whether a manufacturer's use of engineering 
judgment is reasonable. The regulations describe the methodology we use 
to address any concerns related to a manufacturer's use of good 
engineering judgment in cases where the manufacturer has such 
discretion (see 40 CFR 1068.5). We will take into account the degree to 
which any error in judgment was deliberate or in bad faith. This 
subpart is consistent with provisions already adopted for light-duty 
highway vehicles and various other nonroad engines.

B. Prohibited Acts and Related Requirements (Part 1068, Subpart B)

    The proposed provisions in this subpart lay out a set of 
prohibitions for engine manufacturers, equipment manufacturers, 
operators, and engine rebuilders to ensure that engines comply with the 
emission standards. These provisions are summarized below but readers 
are encouraged to review the regulatory text. These provisions are 
intended to help ensure that each new engine sold or otherwise entered 
into commerce in the United States is certified to the relevant 
standards, that it remains in its certified configuration throughout 
its lifetime, and that only certified engines are used in the 
appropriate nonroad equipment.
(1) General Prohibitions (Sec.  1068.101)
    This proposed regulation contains several prohibitions consistent 
with the Clean Air Act. We generally prohibit selling a new engine in 
the United States without a valid certificate of conformity issued by 
EPA, deny us access to relevant records, or keep us from entering a 
facility to test or inspect engines. In addition, no one may 
manufacture any device that will make emission controls ineffective or 
remove or disable a device or design element that may affect an 
engine's emission levels, which we would consider tampering. We have 
generally applied the existing policies developed for tampering with 
highway engines and vehicles to nonroad engines.\96\ Other prohibitions 
reinforce manufacturers' obligations to meet various certification 
requirements. We also prohibit selling engine parts that prevent 
emission control systems from working properly. Finally, for engines 
that are excluded from regulation based on their use in certain 
applications, we generally prohibit using these engines in applications 
for which emission standards apply.
    Each prohibited act has a corresponding maximum penalty as 
specified in Clean Air Act section 205. As provided for in the Federal 
Civil Penalties Inflation Adjustment Act of 1990, Pub. L. 10-410, these 
maximum penalties are in 1970 dollars and should be periodically 
adjusted by regulation to account for inflation. The current penalty 
amount for most violations is $32,500.\97\
---------------------------------------------------------------------------

    \96\ ``Interim Tampering Enforcement Policy,'' EPA memorandum 
from Norman D. Shutler, Office of General Counsel, June 25, 1974 
(Docket A-2000-01; document II-B-20).
    \97\ EPA acted to adjust the maximum penalty amount in 1996 (61 
FR 69364, December 31, 1996). See also 40 CFR part 19.
---------------------------------------------------------------------------

(2) Equipment Manufacturer Provisions (Sec.  1068.105)
    The provisions of Sec.  1068.105 require equipment manufacturers to 
use certified engines in their new equipment once the emission 
standards begin to apply. We would allow a grace period for equipment 
manufacturers to deplete their supply of uncertified engines if they 
follow their normal inventory practices for buying engines, rather than 
stockpiling noncompliant (or previous-tier) engines to circumvent the 
new standards.
    We require equipment manufacturers to observe the engine 
manufacturers' emission-related installation instructions to ensure 
that the engines remain consistent with the application for 
certification. This may include such things as radiator specifications, 
diagnostic signals and interfaces, and placement of catalytic 
converters.
    If equipment manufacturers install a certified engine in a way that 
obscures the engine label, we propose to require that they add a 
duplicate label on the equipment. The equipment manufacturer would need 
to request from the engine manufacturer a specific number of duplicate 
labels, describe which engine and equipment models are involved, and 
explain why the duplicate labels are necessary. Equipment manufacturers 
would need to destroy any excess labels and keep records to show the 
disposition of all the labels they receive. This would make it easier 
for us to verify that engines are meeting requirements and it would be 
easier for U.S. Customs to clear imported equipment with certified 
engines.
    Equipment manufacturers not fulfilling the responsibilities we 
describe in this section would be in violation of one or more of the 
prohibited acts described above.
(3) In-Service Engines (Sec.  1068.110)
    The regulations generally prevent manufacturers from requiring 
owners to use any certain brand of aftermarket parts as well as give 
the manufacturers responsibility for engine servicing for emission-
related warranty issues, leaving the responsibility for all other 
maintenance with the owner. This proposed regulation would also reserve 
our right to do testing (or require testing), for example, to 
investigate potential defeat devices or in-use noncompliance, as 
authorized by the Clean Air Act.
(4) Engine Rebuilding (Sec.  1068.120)
    We are proposing to apply rebuild provisions for all the nonroad 
engines subject to the proposed emission standards. This approach is 
similar to what applies to heavy-duty highway engines and most other 
nonroad engines. This is necessary to prevent an engine rebuilder from 
rebuilding engines in a way that disables the engine's emission 
controls or compromises the effectiveness of the emission control 
system. We are proposing minimal recordkeeping requirements for 
businesses involved in commercial engine rebuilding to show that they 
comply with the regulations.
    In general, anyone who rebuilds a certified engine must restore it 
to its original (or a lower-emitting) configuration. Rebuilders must 
also replace some critical emission control components such as fuel 
injectors and oxygen sensors in all rebuilds for engines that use those 
technologies. Rebuilders must replace an existing catalyst if there is 
evidence that it is not functional; for example, if rattling pieces 
inside a catalyst show that it has lost its physical integrity, it 
would need to be replaced. See Sec.  1068.120 for more detailed 
information.
    These rebuilding provisions define good maintenance and rebuilding 
practices to help someone avoid violating the prohibition on ``removing 
or disabling'' emission control systems. These provisions therefore 
apply also to individuals who rebuild their own engines. However, we do 
not require such individuals to keep records to document compliance.
    We request comment on applying these proposed requirements for 
engine rebuilding and maintenance to the engines and vehicles subject 
to this rulemaking. In addition, we request

[[Page 28201]]

comment on the associated recordkeeping requirements.

C. Exemptions (Part 1068, Subpart C)

    We are proposing to apply several exemptions for certain specific 
situations, consistent with previous rulemakings. In general, exempted 
engines would need to comply with the requirements only in the sections 
related to the exemption. Note that additional restrictions could apply 
to importing exempted engines (see Section VIII.D). We may also require 
manufacturers (or importers) to add a permanent label describing that 
the engine is exempt from emission standards for a specific purpose. In 
addition to helping us enforce emission standards, this would help 
ensure that imported engines clear Customs without difficulty.
(1) Testing
    Anyone would be allowed to request an exemption for engines used 
only for research or other investigative purposes.
(2) Manufacturer-Owned Engines
    Engines that are used by engine manufacturers for development or 
marketing purposes could be exempted from regulation if they are 
maintained in the manufacturers' possession and are not used for any 
revenue-generating service. In contrast with the testing exemption, 
only certificate holders would be able to use this exemption.
(3) Display Engines
    Anyone may request an exemption for an engine if it is for display 
only.
(4) National Security
    Engine manufacturers could receive an exemption for engines they 
can show are needed by an agency of the federal government responsible 
for national defense. For cases where the engines will not be used on 
combat applications, the manufacturer would have to request the 
exemption with the endorsement of the procuring government agency.
(5) Exported Engines
    Engines that will be exported to countries that do not have the 
same emission standards as those that apply in the United States would 
be exempted without need for a request. This exemption would not be 
available if the destination country has the same emission standards as 
those in the United States.
(6) Competition Engines
    New engines that are used solely for competition are excluded from 
regulations applicable to nonroad engines. For purposes of our 
certification requirements, a manufacturer would receive an exemption 
if it can show that it produces the engine specifically for use solely 
in competition (see Sections III through V for specific provisions). In 
addition, engines that have been modified for use in competition would 
be exempt from the prohibition against tampering described above 
(without need for request). The literal meaning of the term ``used 
solely for competition'' would apply for these modifications. We would 
therefore not allow the engine to be used for anything other than 
competition once it has been modified. This also applies to someone who 
would later buy the engine, so we would require the person modifying 
the engine to remove or deface the original engine label and inform a 
subsequent buyer in writing of the conditions of the exemption.
(7) Replacement Engines
    An exemption would be available to engine manufacturers without 
request if that is the only way to replace an engine from the field 
that was produced before the current emission standards took effect. If 
less stringent standards applied to the old engine when it was new, the 
replacement engine would also have to meet those standards.
(8) Unusual Circumstance Hardship Provision
    Under the unusual circumstances hardship provision, any 
manufacturer subject to the proposed standards would be able to apply 
for hardship relief if circumstances outside their control cause the 
failure to comply and if failure to sell the subject engines or 
equipment or fuel system component would have a major impact on the 
company's solvency (see Sec.  1068.245). An example of an unusual 
circumstance outside a manufacturer's control may be an ``Act of God,'' 
a fire at the manufacturing plant, or the unforeseen shutdown of a 
supplier with no alternative available. The terms and time frame of the 
relief would depend on the specific circumstances of the company and 
the situation involved. As part of its application for hardship, a 
company would be required to provide a compliance plan detailing when 
and how it would achieve compliance with the standards. This hardship 
provision would be available to all manufacturers of engines, 
equipment, boats, and fuel system components subject to the proposed 
standards, regardless of business size.
(9) Economic Hardship Provision for Small Businesses
    An economic hardship provision would allow small businesses subject 
to the proposed standards to petition EPA for limited additional lead 
time to comply with the standards (see Sec.  1068.250). A small 
business would have to make the case that it has taken all possible 
business, technical, and economic steps to comply, but the burden of 
compliance costs would have a significant impact on the company's 
solvency. Hardship relief could include requirements for interim 
emission reductions and/or the purchase and use of emission credits. 
The length of the hardship relief decided during review of the hardship 
application would be up to one year, with the potential to extend the 
relief as needed. We anticipate that one to two years would normally be 
sufficient. As part of its application for hardship, a company would be 
required to provide a compliance plan detailing when and how it would 
achieve compliance with the standards. This hardship provision would be 
available only to small manufacturers of engines, equipment, boats, and 
fuel system components subject to the standards. For the purpose of 
determining which manufacturers qualify as a small business, EPA is 
proposing criteria based on either a production cut-off or the number 
of employees. The proposed criteria for determining which companies 
qualify as a small business are contained in Section III.F.2 for SD/I 
engines, Section IV.G for OB/PWC engines, Sections V.F.2 for 
nonhandheld engines, V.F.3 for nonhandheld equipment, and Section 
VI.G.2.f for handheld equipment, boats, and fuel system components.
(10) Hardship for Equipment Manufacturers, Vessel Manufacturers, and 
Secondary Engine Manufacturers
    Equipment manufacturers and boat builders in many cases will depend 
on engine manufacturers and fuel system component manufacturers to 
supply certified engines and fuel system components in time to produce 
complying equipment or boats by the date emission standards begin to 
apply. We are aware of other regulatory control programs where 
certified engines have been available too late for equipment 
manufacturers to adequately accommodate changing engine size or 
performance characteristics. To address this concern, we are proposing 
to allow Small SI equipment manufacturers and Marine SI boat builders 
to request up to one extra year before using certified engines or fuel 
system components if

[[Page 28202]]

they are unable to obtain certified product and they are not at fault 
and would face serious economic hardship without an extension. See 
Sec.  1068.255 for the proposed regulatory text related to this 
hardship.
    In addition, we are aware that some manufacturers of nonroad 
engines are dependent on another engine manufacturer to supply base 
engines that are then modified for the final application. Similar to 
equipment or vessel manufacturers, these ``secondary engine 
manufacturers'' may face difficulty in producing certified engines if 
the manufacturer selling the base engine makes an engine model 
unavailable with short notice. These secondary engine manufacturers 
generally each buy a relatively small number of engines and would 
therefore not necessarily be able to influence the marketing or sales 
practices of the engine manufacturer selling the base engine. As a 
result, we are proposing that secondary engine manufacturers could 
apply for this hardship as well. However, because these secondary 
engine manufacturers control the final design of their modified engine 
and could benefit in the market if they are allowed to produce a 
product certified to less stringent standards than their competitors, 
we would generally not approve an exemption unless the secondary engine 
manufacturer committed to a plan to make for any calculated loss in 
environmental benefit. Provisions similar to this hardship were already 
adopted for Large SI engines and recreational vehicles. See the 
existing regulatory text in Sec.  1068.255(c).
(11) Delegated Final Assembly
    The regulations in 40 CFR 1068.260 allow for flexible manufacturing 
for companies that produce engines that rely on aftertreatment. These 
regulations allow for equipment manufacturers to receive separate 
shipment of aftertreatment devices with the obligation resting on the 
equipment manufacturer to correctly install the aftertreatment on the 
engine when installing the engine in the equipment. Allowing for this 
practice requires an exemption from provisions which prohibit an engine 
from being introduced into commerce in its uncertified configuration. 
The provisions in Sec.  1068.260 to prevent improper use of this 
exemption include requirements to (1) Have contractual arrangements 
with equipment manufacturers; (2) submit affidavits to EPA regarding 
the use of the exemption; (3) include the price of the aftertreatment 
in the cost of the engine (to avoid giving equipment manufacturers an 
incentive to reduce costs inappropriately); and (4) periodically audit 
the affected equipment manufacturers.
    These provisions are not likely to be necessary for most Marine SI 
engine manufacturers. We do not expect outboard or personal watercraft 
engine manufacturers to use aftertreatment technology. For sterndrive/
inboard engines, we expect catalyst designs generally to be so integral 
to the exhaust manifold that engine manufacturers will include them 
with their engines. However, their may be some less common designs, 
such as engines on large vessels or airboats, where engine 
manufacturers may want to use the provisions allowing for separate 
shipment of aftertreatment. We are therefore proposing to adopt the 
provisions of Sec.  1068.260 without change for Marine SI engines.
    Manufacturers of handheld Small SI engines typically build both the 
engine and the equipment so we are proposing not to allow for delegated 
assembly with these engines.
    In contrast, nonhandheld engines (especially Class II) are built by 
engine manufacturers and sold to equipment manufacturers, often without 
complete fuel or exhaust systems. Ensuring that consumers get only 
engines that are in a certified configuration therefore requires a 
carefully crafted program. As described in Section V.E.2, we are 
proposing special provisions to accommodate the unique circumstances 
related to nonhandheld Small SI engines.
(12) Uncertified Engines Subject to Emission Standards
    In some cases we require manufacturers to meet certain emission 
standards without requiring certification, most commonly for 
replacement engines. In 40 CFR 1068.265 we spell out manufacturers 
obligations for these compliant but uncertified engines. Manufacturers 
must have test data showing that their engines meet the applicable 
emission standards and are liable for the emission performance of their 
engines, much like for certified engines, but are not required to 
submit an application for certification and get EPA approval before 
selling the engine. We propose to apply these provisions without 
modification for Small SI engines and Marine SI engines.

D. Imports (Part 1068, Subpart D)

    In general, the same certification requirements would apply to 
engines and equipment whether they are produced in the United States or 
are imported. The regulations in part 1068 also include some additional 
provisions that would apply if someone wants to import an exempted or 
excluded engine.
    All the proposed exemptions described above for new engines would 
also apply to importation, though some of these exemptions apply only 
on a temporary basis. An approved temporary exemption would be 
available only for a defined period. We could require the importer to 
post bond while the engine is in the United States. There are several 
additional proposed exemptions that would apply only to imported 
engines.
     Identical configuration: This is a permanent exemption to 
allow individuals to import engines that were designed and produced to 
meet applicable emission standards. These engines may be different than 
certified engines only in the fact that the emission label is missing 
because they were not intended for sale in the United States.
     Ancient engines: We would generally treat used engines as 
new if they are imported without a certificate of conformity. However, 
this permanent exemption would allow for importation of uncertified 
engines if they are more than 20 years old and remain in their original 
configuration.
     Repairs or alterations: This is a temporary exemption to 
allow companies to repair or modify engines. This exemption does not 
allow for operating the engine except as needed to do the intended 
work. This exemption would also apply for the practice for retiring 
bigger engines; noncompliant engines may be imported under this 
exemption for the purpose of recovering the engine block.
     Diplomatic or military: This is a temporary exemption to 
allow diplomatic or military personnel to use uncertified engines 
during their term of service in the U.S.
    We request comment on all these exemptions for domestically 
produced and imported engines and vehicles.

E. Selective Enforcement Audit (Part 1068, Subpart E)

    Clean Air Act section 206(b) gives us the discretion in any program 
with vehicle or engine emission standards to do selective enforcement 
auditing of production engines. We would do a selective enforcement 
audit by choosing an engine family and giving the manufacturer a test 
order that details a testing program to show that production-line 
engines meet emission standards. The regulation text describes the 
audit procedures in greater detail.

[[Page 28203]]

    We intend generally to rely on manufacturers' testing of 
production-line engines to show that they are consistently building 
products that conform to the standards. However, we reserve our right 
to do selective enforcement auditing if we have reason to question the 
emission testing conducted and reported by the manufacturer or for 
other reasons.

F. Defect Reporting and Recall (Part 1068, Subpart F)

    We are proposing to apply the defect reporting requirements of 
Sec.  1068.501 to replace the provisions of 40 CFR part 85 for nonroad 
engines. The requirements obligate manufacturers to tell us when they 
learn that emission control components or systems are defective and to 
conduct investigations under certain circumstances to determine if an 
emission-related defect is present. We are also proposing a requirement 
that manufacturers initiate these investigations when warranty claims 
and other available information indicate that a defect investigation 
may be fruitful. For this purpose, we consider defective any part or 
system that does not function as originally designed for the regulatory 
useful life of the engine or the scheduled replacement interval 
specified in the manufacturer's maintenance instructions.
    We believe the investigation requirement proposed in this rule will 
allow both EPA and the engine manufacturers to fully understand the 
significance of any unusually high rates of warranty claims that may 
have an impact on emissions. We believe prudent engine manufacturers 
already conduct a thorough investigation when available data indicate 
recurring parts failures as part of their normal practice to ensure 
product quality. Such data are valuable and readily available to most 
manufacturers and, under this proposal, must be considered to determine 
whether or not there is a possible defect of an emission-related part.
    Defect reports submitted in compliance with the current regulations 
are based on a single threshold applicable to engine families of all 
production volumes. No affirmative requirement for gathering 
information about the full extent of the problem applies. Many Small SI 
engine families have very high sales volumes. The proposed approach may 
therefore result in fewer total defect reports that should be submitted 
compared with the traditional approach because the number of defects 
triggering the submission requirement generally rises in proportion to 
the engine family size. Under the existing regulations, very small 
engine families would likely never report even a prominent defect 
because a relatively high proportion of such engines would have to be 
known to be defective before reporting is required under a scheme with 
fixed thresholds. The proposed threshold for reporting for the smallest 
engine families is therefore lower than under the current regulations.
    We are aware that accumulation of warranty claims will likely 
include many claims and parts that do not represent defects, so we are 
establishing a relatively high threshold for triggering the 
manufacturer's responsibility to investigate whether there is, in fact, 
a real occurrence of an emission-related defect.
    This proposal is intended to require manufacturers to use 
information we would expect them to keep in the normal course of 
business. We believe in most cases manufacturers would not be required 
to institute new programs or activities to monitor product quality or 
performance. A manufacturer that does not keep warranty information may 
ask for our approval to use an alternate defect-reporting methodology 
that is at least as effective in identifying and tracking potential 
emission-related defects as the proposed requirements. However, until 
we approve such a request, the proposed thresholds and procedures 
continue to apply.
    The proposed investigation thresholds are ten percent of total 
production to date up to a total production of 50,000 engines, but 
never fewer than 50 for any single engine family in one model year. For 
production between 50,000 and 550,000 units, the investigation 
threshold would increase at a marginal rate of four percent. For all 
production above 550,000 an investigation threshold of 25,000 engines 
would apply. For example, for an engine family with a sales volume of 
20,000 units in a given model year, the manufacturer would have to 
investigate potential emission-related defects after identifying 2,000 
possible defects. For an engine family with a sales volume of 450,000 
units in a given model year, the manufacturer would have to investigate 
potential emission-related defects after identifying 21,000 possible 
defects. These thresholds reflect the relevant characteristics of 
nonroad engines, such as the varying sales volumes, engine 
technologies, and warranty and maintenance practices.
    To carry out an investigation to determine if there is an emission-
related defect, manufacturers would have to use available information 
such as preexisting assessments of warranted parts. Manufacturers would 
also have to gather information by assessing previously unexamined 
parts submitted with warranty claims and replacement parts which are 
available or become available for examination and analysis. If 
available parts are deemed too voluminous to conduct a timely 
investigation, manufacturers would be permitted to employ appropriate 
statistical analyses of representative data to help draw timely 
conclusions regarding the existence of a defect. These investigative 
activities should be summarized in the periodic reports of recently 
opened or closed investigations, as discussed below. It is important to 
note that EPA does not regard having reached the investigation 
thresholds as conclusive proof of the existence of a defect, only that 
initiation of an appropriate investigation is merited to determine 
whether a defect exists.
    The second threshold in this proposal specifies when a manufacturer 
must report that an emission-related defect exists. This threshold 
involves a smaller number of engines because each potential defect has 
been screened to confirm that it is an emission-related defect. In 
counting engines to compare with the defect-reporting threshold, the 
manufacturer would consider a single engine family and model year. 
However, when a defect report is required, the manufacturer would 
report all occurrences of the same defect in all engine families and 
all model years that use the same part. The threshold for reporting a 
defect is two percent of total production for any single engine family 
for production up to 50,000 units, but never fewer than 20 for any 
single engine family in one model year. For production between 50,000 
and 550,000 units, the investigation threshold would increase at a 
marginal rate of one percent. For all production above 550,000 an 
investigation threshold of 6,000 engines would apply.
    It is important to note that while EPA regards occurrence of the 
defect threshold as proof of the existence of a reportable defect, it 
does not regard that occurrence as conclusive proof that recall or 
other action is merited.
    If the number of engines with a specific defect is found to be less 
than the threshold for submitting a defect report, but warranty claims 
or other information later indicate additional potentially defective 
engines, under this proposal the information must be aggregated for the 
purpose of determining whether the threshold for submitting a defect 
report has been met. If a manufacturer has knowledge from any source 
that the threshold for submitting a defect report has been met,

[[Page 28204]]

a defect report would have to be submitted even if the trigger for 
investigating has not yet been met. For example, if manufacturers 
receive information from their dealers, technical staff, or other field 
personnel showing conclusively that a recurring emission-related defect 
exists, they would have to submit a defect report if the submission 
threshold is reached.
    At specified times, the manufacturer would have to report open 
investigations as well as recently closed investigations that did not 
require a defect report. We are not proposing a fixed time limit for 
manufacturers to complete their investigations. However, the periodic 
reports required by the regulations will allow us to monitor these 
investigations and determine if it is necessary or appropriate for us 
to take further action.
    We request comment on all aspects of this approach to defect 
reporting. We also request comment on whether these reporting 
requirements should also apply to the current Phase 2 compliance 
program and if so, when these provisions should be applied.
    Under Clean Air Act section 207, if we determine that a substantial 
number of engines within an engine family, although properly used and 
maintained, do not conform to the appropriate emission standards, the 
manufacturer must remedy the problem and conduct a recall of the 
noncomplying engine family. However, we recognize that in some cases 
recalling noncomplying nonroad engines may not achieve sufficient 
environmental protection, so instead of making a determination of a 
substantial number of nonconforming engines (and thereby triggering a 
recall responsibility), we may allow manufacturers in some cases to 
nominate alternative remedial measures to address most potential 
noncompliance situations.

G. Hearings (Part 1068, Subpart G)

    According to this regulation, manufacturers would have the 
opportunity to challenge our decision to deny an application for 
certification or to suspend, revoke, or void an engine family's 
certificate. This also applies to our decision to reject the 
manufacturer's use of good engineering judgment (see Sec.  1068.5), and 
to our decisions related to emission-credit programs. Part 1068, 
subpart G, references the proposed procedures for a hearing to resolve 
such disputes.

IX. General Test Procedures

    The regulatory text in part 1065 is written with the intent to 
apply broadly to EPA engine programs. Part 1065 was originally adopted 
on November 8, 2002 (67 FR 68242) and currently applies for nonroad 
diesel engines, large nonroad spark-ignition engines and recreational 
vehicles under 40 CFR parts 1039, 1048 and 1051, respectively. The 
regulatory text was substantially revised in a recent rulemaking to 
make a variety of corrections and improvements (70 FR 40420, July 13, 
2005).
    This proposal applies to anyone who tests engines to show that they 
meet the emission standards for Small SI engines or Marine SI engines. 
This includes certification testing as well as all production-line and 
in-use testing. See the program descriptions above for testing 
provisions that are unique to each category of engines.
    We are proposing to apply the existing test provisions in part 1065 
for all Small SI engines and Marine SI engines. See Sections III 
through V for testing issues that are specific to the particular engine 
categories. In addition, we are proposing to allow manufacturers to use 
the provisions of part 1065 even before the proposed new standards take 
effect. This would allow manufacturers to migrate to the new test 
procedures sooner. This may involve upgrading to different types of 
analyzers that are specified in part 1065 but not in part 90 or part 
91. It may also involve recoding computers to do modal calculations 
specified in part 1065 instead of the weight-based calculations in part 
90 or part 91. At the same time, this would allow EPA to do 
confirmatory testing using the upgraded procedures without waiting for 
the proposed new standards to apply. This is important because EPA 
testing facilities are used for many different programs and the 
conversion to testing according to part 1065 specifications is well 
underway. We are aware that the new test specifications regarding 
engine mapping, generating duty cycles, and applying cycle-validation 
criteria would affect the emission measurements so we would follow the 
manufacturers' methods for these parameters in any case. For any other 
parameters, we would understand any differences between test procedures 
specified in parts 90, 91, and 1065 either to have no effect on 
emission measurements or to improve the accuracy of the measurement.
    We have identified various provisions in part 90 and part 91 that 
may need correction or adjustment. We request comment on the following 
possible changes:
     Changing the standard temperature condition for volume-
related calculations in Sec.  90.311(a)(2) and Sec.  91.311(a)(2) from 
25 [deg]C to 20 [deg]C. This would be consistent with EPA's test 
regulations, including the specifications in Sec.  1065.640.
     Removing the requirement to derive calibration and span 
gas concentrations from NIST Standard Reference Materials in Sec.  
90.312(c) and Sec.  91.312(c). This goes beyond the traceability 
requirements of other EPA test regulations and standard lab practices. 
We could instead refer to Sec.  1065.750 for calibration and span gas 
concentrations.
     Changing the direction for specifying gas concentrations 
in Sec.  90.312(c)(3) and Sec.  91.312(c)(3) from a volumetric basis to 
a molar basis.
     Correcting inconsistent requirements related to gas 
dividers. The regulations at Sec.  90.312(c)(4) and Sec.  91.312(c)(4) 
specify an accuracy of 2 percent, while Sec.  90.314(c) and 
Sec.  91.314(c) specify an accuracy of 1.5 percent. We 
could select one of these values, or we could refer to the gas divider 
specifications in Sec.  1065.248 and Sec.  1065.307.
     Correcting inconsistent specifications related to the 
timing of CO interference checks. The regulations at Sec.  90.317(b) 
and Sec.  91.317(b) specify that interference checks occur as part of 
annual maintenance, Sec.  90.325(a) and Sec.  91.325(a) specify that 
interference checks occur after any major repairs that could affect 
analyzer performance. We believe it would be most appropriate to make 
these consistent based on the specification in Sec.  1065.303, which 
calls for interference checks to occur after major maintenance.
    As we have done in previous programs, we are proposing specific 
test procedures to define how measurements are to be made but would 
allow the use of alternate procedures if they are shown to be 
equivalent to our specified procedures.\98\ The test procedures 
proposed in part 1065 are derived from our test procedures in 40 CFR 
part 86 for highway heavy-duty gasoline engines and light-duty 
vehicles. The procedures have been simplified (and to some extent 
generalized) to better fit nonroad engines. The procedures in part 1065 
currently apply to recreational vehicles and to nonroad spark-ignition 
engines above 19 kW. We request comment on all aspects of these 
proposed test procedures. We also request comment regarding whether any 
additional parts of the test procedures contained in 40 CFR part 86 
(for highway vehicles and engines), in other parts that apply to 
nonroad engines, or

[[Page 28205]]

in ISO 8178 should be incorporated into the final test procedures.
---------------------------------------------------------------------------

    \98\ Note that the published procedures still apply if we 
approve a manufacturer's use of an alternative procedure. EPA 
testing may be done using the published procedures or the alternate 
procedures approved for a given engine family.
---------------------------------------------------------------------------

A. Overview

    Part 1065 is organized by subparts as shown below:
     Subpart A: General provisions; global information on 
applicability, alternate procedures, units of measure, etc.
     Subpart B: Equipment specifications; required hardware for 
testing
     Subpart C: Measurement instruments
     Subpart D: Calibration and verifications; for measurement 
systems
     Subpart E: Engine selection, preparation, and maintenance
     Subpart F: Test protocols; step-by-step sequences for 
laboratory testing and test validation
     Subpart G: Calculations and required information
     Subpart H: Fuels, fluids, and analytical gases
     Subpart I: Oxygenated fuels; special test procedures
     Subpart J: Field testing and portable emissions 
measurement systems
     Subpart K: Definitions, references, and symbols
    The regulations prescribe scaled specifications for test equipment 
and measurement instruments by parameters such as engine power, engine 
speed and the emission standards to which an engine must comply. That 
way this single set of specifications will cover the full range of 
engine sizes and our full range of emission standards. Manufacturers 
will be able to use these specifications to determine what range of 
engines and emission standards may be tested using a given laboratory 
or field testing system.
    The content already adopted in part 1065 is mostly a combination of 
material from our most recent updates to other test procedures and from 
test procedures specified by the International Organization for 
Standardization (ISO). There are also some provisions we created 
specifically for part 1065, generally to address very recent advances 
such as measuring very low concentrations of emissions, using new 
measurement technology, using portable emissions measurement systems, 
and performing field testing.
    The content in part 1065 also reflects a shift in our approach for 
specifying measurement performance. In the past we specified numerous 
calibration accuracies for individual measurement instruments, and we 
specified some verifications for individual components such as 
NO2-to-NO converters. We have shifted our focus away from 
individual instruments and toward the overall performance of complete 
measurement systems. We did this for several reasons. First, some of 
what we specified in the past precluded the implementation of new 
measurement technologies. These new technologies, sometimes called 
``smart analyzers,'' combine signals from multiple instruments to 
compensate for interferences that were previously tolerable at higher 
emissions levels. These analyzers are useful for detecting low 
concentrations of emissions. They are also useful for detecting 
emissions from raw exhaust, which can contain high concentrations of 
interferences, such as water vapor. This is particularly important for 
field testing, which will most likely rely upon raw exhaust 
measurements. Second, this new ``systems approach'' requires periodic 
verifications for complete measurement systems, which we feel will 
provide a more robust assurance that a measurement system as a whole is 
operating properly. Third, the systems approach provides a direct 
pathway to demonstrate that a field test system performs similarly to a 
laboratory system. Finally, we feel that our systems approach will lead 
to a more efficient way of ensuring measurement performance in the 
laboratory and in the field. We believe this efficiency will stem from 
less frequent calibrations of individual instruments and higher 
confidence that a complete measurement system is operating properly.
    Below is a brief description of the content of each subpart. The 
discussion highlights some recent changes to part 1065. We are not 
proposing any changes to part 1065 as part of this proposal, but we 
intend to make various changes to part 1065 as part of a concurrent 
rulemaking to set new emission standards for marine diesel and 
locomotive engines. Manufacturers of engines that are the subject of 
this proposal are encouraged to stay abreast of testing changes that we 
propose in this other rulemaking.
(1) Subpart A General Provisions
    In Subpart A we identify the applicability of part 1065 and 
describe how procedures other than those in part 1065 may be used to 
comply with a standard-setting part. In Sec.  1065.10(c)(1) we specify 
that testing must be conducted in a way that represents in-use engine 
operation, such that in the rare case where provisions in part 1065 
result in unrepresentative testing, we may cooperate with manufacturers 
to work out alternative testing approaches for demonstrating compliance 
with emission standards. Another aspect of representative testing 
relates to the desire to maintain consistency between certification 
testing and in-use testing. If we or manufacturers test in-use engines, 
we would expect the engine to be removed from the equipment and 
installed on an engine dynamometer for testing with no changes to the 
engine (including the governor, fuel system, exhaust system and other 
components).
    In Sec.  1065.10(c)(7) and Sec.  1065.12 we describe a process by 
which we may approve alternative test procedures that we determine to 
be equivalent to (or more accurate than) the specified procedures. 
Given the new testing specifications in part 1065 and the standard-
setting parts, and this more detailed approach to approving alternative 
test procedures, we will not allow manufacturers to continue testing 
based on any earlier approvals for alternative testing under part 90 or 
part 91. Any manufacturer wishing to continue testing with any method, 
device, or specification that departs from that included in this 
proposal would need to request approval for such testing under Sec.  
1065.10(c)(7).
    Other information in this subpart includes a description of the 
conventions we use regarding units and certain measurements and we 
discuss recordkeeping. We also provide an overview of how emissions and 
other information are used for determining final emission results. The 
regulations in Sec.  1065.15 include a figure illustrating the 
different ways we allow brake-specific emissions to be calculated.
    In this same subpart, we describe how continuous and batch sampling 
may be used to determine total emissions. We also describe the two ways 
of determining total work that we approve. Note that the figure 
indicates our default procedures and those procedures that require 
additional approval before we will allow them.
(2) Subpart B Equipment Specifications
    Subpart B first describes engine and dynamometer related systems. 
Many of these specifications are scaled to an engine's size, speed, 
torque, exhaust flow rate, etc. We specify the use of in-use engine 
subsystems such as air intake systems wherever possible to best 
represent in-use operation when an engine is tested in a laboratory.
    Subpart B also describes sampling dilution systems. These include 
specifications for the allowable components, materials, pressures, and 
temperatures. We describe how to sample crankcase emissions.
    The regulations in Sec.  1065.101 include a diagram illustrating 
all the available equipment for measuring emissions.

[[Page 28206]]

(3) Subpart C Measurement Instruments
    Subpart C specifies the requirements for the measurement 
instruments used for testing. These specifications apply to both 
laboratory and field testing. In subpart C we recommend accuracy, 
repeatability, noise, and response time specifications for individual 
measurement instruments, but note that we require that overall 
measurement systems meet the calibrations and verifications in Subpart 
D.
    In some cases we allow new instrument types to be used where we 
previously did not allow them. For example, we now allow the use of a 
nonmethane cutter for NMHC measurement, a nondispersive ultraviolet 
analyzers for NOX measurement, zirconia sensors for 
O2 measurement, various raw-exhaust flow meters for 
laboratory and field testing measurement, and an ultrasonic flow meter 
for CVS systems.
(4) Subpart D Calibrations and Verifications
Subpart D describes what we mean when we specify accuracy, 
repeatability and other parameters in Subpart C. These specifications 
apply to both laboratory and field testing. We are adopting 
calibrations and verifications that scale with engine size and with the 
emission standards to which an engine is certified. We are replacing 
some of what we have called ``calibrations'' in the past with a series 
of verifications, such as a linearity verification, which essentially 
verifies the calibration of an instrument without specifying how the 
instrument must be initially calibrated. Because new instruments have 
built-in routines that linearize signals and compensate for various 
interferences, our existing calibration specifications sometimes 
conflicted with an instrument manufacturer's instructions. In addition, 
there are new verifications in subpart D to ensure that the new 
instruments we specify in Subpart C are used correctly.
(5) Subpart E Engine Selection, Preparation, and Maintenance
    Subpart E describes how to select, prepare, and maintain a test 
engine. We updated these provisions to include both gasoline and diesel 
engines.
(6) Subpart F Test Protocols
    Subpart F describes the step-by-step protocols for engine mapping, 
test cycle generation, test cycle validation, pre-test preconditioning, 
engine starting, emission sampling, and post-test validations. We 
adopted an improved way to map and generate cycles for constant-speed 
engines that would better represent in-use engine operation. We adopted 
a more streamlined set of test cycle and validation criteria. We allow 
modest corrections for drift of emission analyzer signals within a 
certain range.
(7) Subpart G Calculations and Required Information
    Subpart G includes all the calculations required in part 1065. We 
adopted definitions of statistical quantities such as mean, standard 
deviation, slope, intercept, t-test, F-test, etc. By defining these 
quantities mathematically we intend to resolve any potential ambiguity 
when we discuss these quantities in other subparts. We have written all 
calculations for calibrations and emission calculations in 
international units to comply with 15 CFR part 1170, which removes the 
voluntary aspect of the conversion to international units for federal 
agencies. Furthermore, Executive Order 12770 (56 FR 35801, July 29, 
1991) reinforces this policy by providing Presidential authority and 
direction for the use of the metric system of measurement by Federal 
agencies and departments. For our standards that are not completely in 
international units (i.e., grams/horsepower-hour, grams/mile), we 
specify in part 1065 the correct use of internationally recognized 
conversion factors.
    We also specify emission calculations based on molar quantities for 
flow rates instead of volume or mass. This change eliminates the 
frequent confusion caused by using different reference points for 
standard pressure and standard temperature. Instead of declaring 
standard densities at standard pressure and standard temperature to 
convert volumetric concentration measurements to mass-based units, we 
declare molar masses for individual elements and compounds. Since these 
values are independent of all other parameters, they are known to be 
universally constant.
(8) Subpart H Fuels, Fluids, and Analytical Gases
    Subpart H specifies test fuels, lubricating oils and coolants, and 
analytical gases for testing. We are not identifying any detailed 
specification for service accumulation fuel. Instead, we specify that 
service accumulation fuel must be either a test fuel or a commercially 
available in-use fuel. This helps ensure that testing is representative 
of in-use engine operation. We are adding a list of ASTM specifications 
for in-use fuels as examples of appropriate service accumulation fuels. 
Compared to the proposed regulatory language, we have clarified that 
Sec.  1065.10(c)(1) does not require test fuels to be more 
representative than the specified test fuels. We have added an 
allowance to use similar test fuels that do not meet all of the 
specifications provided they do not compromise the manufacturer's 
ability to demonstrate compliance. We also now allow the use of ASTM 
test methods specified in 40 CFR part 80 in lieu of those specified in 
part 1065. We did this because we may more frequently review and update 
the ASTM methods in part 80 versus those in part 1065.
    Proper testing requires the use of good engineering judgment to 
maintain the stability of analytical gases.
(9) Subpart I Oxygenated Fuels
    Subpart I describes special procedures for measuring certain 
hydrocarbons whenever oxygenated fuels are used. We updated the 
calculations for these procedures in Subpart G. We have made some 
revisions to the proposed text to make it consistent with the original 
content of the comparable provisions in part 86. We have also added an 
allowance to use the California NMOG test procedures to measure 
alcohols and carbonyls.
(10) Subpart J Field Testing and Portable Emissions Measurement Systems
    Portable Emissions Measurement Systems (PEMS) for field testing for 
marine spark-ignition engines must generally meet the same 
specifications and verifications that laboratory instruments must meet 
according to subparts B, C, and D. However, we allow some deviations 
from laboratory specifications. In addition to meeting many of the 
laboratory system requirements, a PEMS must meet an overall 
verification relative to laboratory measurements. This verification 
involves repeating a duty cycle several times. The duty cycle itself 
must have several individual field-test intervals (e.g., NTE events) 
against which a PEMS is compared to the laboratory system. This is a 
comprehensive verification of a PEMS. We also adopted a procedure for 
preparing and conducting a field test and adopted drift corrections for 
emission analyzers. Given the evolving state of PEMS technology, the 
field-testing procedures provide for a number of known measurement 
techniques. We have added provisions and conditions for using PEMS in 
an engine dynamometer laboratory to conduct laboratory testing.

[[Page 28207]]

(11) Subpart K Definitions, References, and Symbols
    Subpart K includes all the defined terms, identification of 
reference materials, and lists of acronyms and abbreviations used 
throughout part 1065.

B. Special Provisions for Nonroad Spark-Ignition Engines

    While part 1065 defines a wide range of specifications to define 
appropriate test procedures, several parameters are unique to each 
program. For example, each category of engines has one or more duty 
cycles that describe exactly how to operate each engine during the 
test. These category-specific provisions are described in part 1045, 
subpart F, for Marine SI engines and in part 1054, subpart F, for Small 
SI engines.
    Manufacturers may run the specified steady-state duty cycle either 
as a series of discrete modes or as a ramped-modal cycle. The ramped-
modal cycle specifies the same engine speeds and loads as in 
conventional discrete-mode testing, but the modes are connected by 
gradual ramps in engine speed and torque for a single, continuous 
emission-sampling period. The different modes are connected with 
twenty-second linear speed and torque transitions during which 
emissions are measured. Emission sampling therefore starts at the 
beginning of a ramped-modal cycle and does not stop until its last mode 
is completed.
    Ramped-modal cycles involve a different sequence of modes than is 
specified for discrete-mode testing. For example, the first mode, which 
is engine idle, is split so that half the idle mode occurs at the 
beginning of the test and half occurs at the end of the test. This 
helps facilitate certain technical aspects of emission sampling. 
Instead of using weighting factors for each steady-state mode, a 
ramped-modal cycle specifies different time durations for each mode. 
Time durations of the modes and transitions are proportioned to the 
established modal weighting factors for the specified cycle.
    There are several advantages to ramped-modal testing. Using 
discrete-mode testing, manufacturers sample emissions for an 
unspecified time duration near the end of each individual mode. The 
result is several separate measurements that must be combined 
mathematically to yield an overall emission result in g/kW-hr. The 
ramped-modal cycle has a single emission-sampling period. This 
decreases testing variability and reduces the overall cost of running 
tests. Ramped-modal testing also enables the use of batch sampling 
systems such as bag samplers.

X. Energy, Noise, and Safety

    Section 213 of the Clean Air Act directs us to consider the 
potential impacts on safety, noise, and energy when establishing the 
feasibility of emission standards for nonroad engines. Furthermore, 
section 205 of EPA's 2006 Appropriations Act requires us to assess 
potential safety issues, including the risk of fire and burn to 
consumers in use, associated with the proposed emission standards for 
nonroad spark-ignition engines below 50 horsepower.\99\ As further 
detailed in the following sections, we expect that the proposed exhaust 
and evaporative emission standards will either have no adverse affect 
on safety, noise, and energy or will improve certain aspects of these 
important characteristics. A more in depth discussion of these topics 
relative to the proposed exhaust and evaporative emission standards is 
contained in Chapters 4 and 5 of the Draft RIA, respectively. Also, our 
conclusions relative to safety are fully documented in our 
comprehensive safety study which is discussed in the next section.
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    \99\ Department of the Interior, Environment, and Related 
Agencies Appropriations Act, 2006, Pub. L. 109-54, Title II, sec. 
205, 119 Stat. 499, 532 (August 2, 2005).
---------------------------------------------------------------------------

A. Safety

    We conducted a comprehensive, multi-year safety study of spark-
ignition engines that focused on the four areas where we are proposing 
new emission standards.\100\ These areas are:
---------------------------------------------------------------------------

    \100\ ``EPA Technical Study on the Safety of Emission Controls 
for Nonroad Spark-Ignition Engines < 50 Horsepower,'' Office of 
Transportation and Air Quality, U.S. Environmental Protection 
Agency, Washington, DC, EPA420-R-06-006, March 2006. This document 
is available in Docket EPA-HQ-OAR-2004-0008. This report was also 
subject to peer review, as described in a peer review report that is 
also available in the docket.
---------------------------------------------------------------------------

     New catalyst-based HC+NOX exhaust emission 
standards for Class I and Class II nonhandheld spark-ignition engines;
     New fuel evaporative emission standards for nonhandheld 
and handheld equipment;
     New HC+NOX exhaust emission standards for 
outboard and personal watercraft engines and vessels, and a new CO 
exhaust emission standard for nonhandheld engines used in marine 
auxiliary applications; and
     New fuel evaporative emission standards for outboard and 
personal watercraft engines and vessels.
    Each of these four areas is discussed in greater detail in the next 
sections.
(1) Exhaust Emission Standards for Small Spark-Ignition Engines
    The technology approaches that we assessed for achieving the 
proposed Small SI engine standards included exhaust catalyst 
aftertreatment and improvements to engine and fuel system designs. In 
addition to our own testing and development effort, we also met with 
engine and equipment manufacturers to better understand their designs 
and technology and to determine the state of technological progress 
beyond EPA's Phase 2 emission standards.
    The scope of our safety study included Class I and Class II engine 
systems that are used in residential walk-behind and ride-on lawn mower 
applications, respectively. Residential lawn mower equipment was chosen 
for the following reasons.
     Lawn mowers and the closely-related category of lawn 
tractors overwhelmingly represent the largest categories of equipment 
using Class I and Class II engines.
     Consumer Product Safety Commission (CPSC) data indicate 
that more thermal burn injuries are associated with lawn mowers than 
occur with other nonhandheld equipment; lawn mowers therefore represent 
the largest thermal burn risk for these classes of engines.
     General findings regarding advanced emission control 
technologies for residential lawn and garden equipment carry over to 
commercial lawn and turf care equipment as well as to other nonhandheld 
equipment using Class I and Class II engines.
    We conducted the technical study of the incremental risk on several 
fronts. First, working with CPSC, we evaluated their reports and 
databases and other outside sources to identify those in-use situations 
which create fire and burn risk for consumers. The outside sources 
included meetings, workshops, and discussions with engine and equipment 
manufacturers. From this information, we identified ten scenarios for 
evaluation that covered a comprehensive variety of in-use conditions or 
circumstances which potentially could lead to an increased risk in 
burns or fires.
    Second, we conducted extensive laboratory and field testing of both 
current technology (Phase 2) and prototype catalyst-equipped advanced-
technology engines and equipment (Phase 3) to assess the emission 
control performance and thermal characteristics of the engines and 
equipment. This testing included a comparison of exhaust system, 
engine, and equipment

[[Page 28208]]

surface temperatures using still and full motion video thermal imaging 
equipment.
    Third, we conducted a design and process Failure Mode and Effects 
Analyses (FMEA) comparing current Phase 2 and Phase 3 compliant engines 
and equipment to evaluate incremental changes in risk probability as a 
way of evaluating the incremental risk of upgrading Phase 2 engines to 
meet Phase 3 emission standards.\101\ This is an engineering analysis 
tool to help engineers and other professional staff to identify and 
manage risk. In an FMEA, potential failure modes, causes of failure, 
and failure effects are identified and a resulting risk probability is 
calculated from these results. This risk probability is used by the 
FMEA team to rank problems for potential action to reduce or eliminate 
the causal factors. Identifying these causal factors is important 
because they are the elements that a manufacturer can consider to 
reduce the adverse effects that might result from a particular failure 
mode.
---------------------------------------------------------------------------

    \101\ ``EPA Technical Study on the Safety of Emission Controls 
for Nonroad Spark-Ignition Engines < 50 Horsepower,'' Office of 
Transportation and Air Quality, U.S. Environmental Protection 
Agency, Washington, DC, EPA420-R-06-006, March 2006. This document 
is available in Docket EPA-HQ-OAR-2004-0008.
---------------------------------------------------------------------------

    Our technical work and subsequent analysis of all of the data and 
information strongly indicate that effective catalyst-based standards 
can be implemented without an incremental increase in the risk of fire 
or burn to the consumer either during or after using the equipment. 
Similarly, we did not find any increase in the risk of fire during 
refueling or in storage near typical combustible materials. For 
example, our testing program demonstrated that properly designed 
catalyst-mufflers could, in some cases, actually result in systems that 
were significantly cooler than many current original equipment 
mufflers. A number of design elements appear useful to properly 
managing heat loads including: (1) The use of catalyst designs that 
minimize CO oxidation through careful selection of catalyst size, 
washcoat composition, and precious metal loading; (2) positioning the 
catalyst within the cooling air flow of the engine fan or redirecting 
some cooling air over the catalyst area with a steel shroud; (3) 
redirecting exhaust flow through multiple chambers or baffles within 
the catalyst-muffler; and (4) larger catalyst-muffler volumes than the 
original equipment muffler.
(2) Fuel Evaporative Emission Standards for Nonhandheld and Handheld 
Engines and Equipment
    We reviewed the fuel line and fuel tank characteristics for 
nonhandheld and handheld equipment and evaluated control technology 
which could be used to reduce evaporative emissions from these two 
subcategories. The available technology is capable of achieving 
reductions in fuel tank and fuel line permeation without an adverse 
incremental impact on safety. For fuel lines and fuel tanks, the 
applicable consensus safety standards, manufacturer specific test 
procedures and EPA requirements are sufficient to ensure that there 
will be no increase in the types of fuel leaks that lead to fire and 
burn risk during in-use operation. Instead, these standards will reduce 
vapor emissions both during operation and in storage. That reduction, 
coupled with some expected equipment redesign, is expected to lead to 
reductions in the risk of fire or burn without affecting component 
durability.
    The Failure Mode and Effects Analyses, which was described in the 
previous section, also evaluated permeation and running loss controls 
on nonhandheld engines. We found that these controls would not increase 
the probability of fire and burn risk from those expected with current 
fuel systems, but could in fact lead to directionally improved systems 
from a safety perspective. Finally, the running loss control program 
being proposed for nonhandheld equipment will lead to changes that are 
expected to reduce risk of fire during in-use operation. Moving fuel 
tanks away from heat sources, improving cap designs to limit leakage on 
tip over, and requiring a tethered cap will all help to eliminate 
conditions which lead to in-use problems related to fuel leaks and 
spillage. Therefore, we believe the application of emission control 
technology to reduce evaporative emissions from these fuel lines and 
fuel tanks will not lead to an increase in incremental risk of fires or 
burns and in some cases is likely to at least directionally reduce such 
risks.
(3) Exhaust Emission Standards for Outboard and Personal Watercraft 
Marine Engines and Vessels and Marine Auxiliary Engines
    Our analysis of exhaust emission standards for OB/PWC engines and 
marine auxiliary engines found that the U. S. Coast Guard (USCG) has 
comprehensive safety standards that apply to engines and fuel systems 
used in these vessels. Additionally, organizations such as the Society 
of Automotive Engineers, Underwriters Laboratories, and the American 
Boat and Yacht Council (ABYC) also have safety standards that apply in 
this area. We also found that the four-stroke and two-stroke direct 
injection engine technologies which are likely to be used to meet the 
exhaust emission standards contemplated for OB/PWC engines are in 
widespread use in the vessel fleet today. These more sophisticated 
engine technologies are replacing the traditional two-stroke carbureted 
engines. The four-stroke and two-stroke direct injection engines meet 
applicable USCG and ABYC safety standards and future products will do 
so as well. The proposed emission standards must be complementary to 
existing safety standards and our analysis indicates that this will be 
the case. There are no known safety issues with the advanced 
technologies compared with two-stroke carbureted engines. The newer-
technology engines arguably provide safety benefits due to improved 
engine reliability and range in-use. Based on the applicability of USCG 
and ABYC safety standards and the good in-use experience with advanced-
technology engines in the current vessel fleet, we believe new emission 
standards would not create an incremental increase in the risk of fire 
or burn to the consumer.
(4) Fuel Evaporative Emission Standards for Outboard and Personal 
Watercraft Engines and Vessels
    We reviewed the fuel line and fuel tank characteristics for marine 
vessels and evaluated control technology which could be used to reduce 
evaporative emissions from boats. With regard to fuel lines, fuel 
tanks, and diurnal controls, there are rigorous USCG, ABYC, United 
Laboratories, and Society of Automotive Engineers standards which 
manufacturers will continue to meet for fuel system components. All of 
these standards are designed to address the in-use performance of fuel 
systems, with the goal of eliminating fuel leaks. The low-permeation 
fuel lines and tanks needed to meet the Phase 3 requirements would need 
to pass these standards and every indication is that they would 
pass.\102\
---------------------------------------------------------------------------

    \102\ ``EPA Technical Study on the Safety of Emission Controls 
for Nonroad Spark-Ignition Engines < 50 Horsepower,'' Office of 
Transportation and Air Quality, U.S. Environmental Protection 
Agency, Washington, DC, EPA420-R-06-006, March 2006. This document 
is available in Docket EPA-HQ-OAR-2004-0008.
---------------------------------------------------------------------------

    Furthermore, the EPA permeation certification requirements related 
to emissions durability will add an additional layer of assurance. Low-
permeation fuel lines are used safely

[[Page 28209]]

today in many marine vessels. Low-permeation fuel tanks and diurnal 
emission controls have been demonstrated in various applications for 
many years without an increase in safety risk. Furthermore, a properly 
designed fuel system with fuel tank and fuel line permeation controls 
and diurnal emission controls would reduce the fuel vapor in the boat, 
thereby reducing the opportunities for fuel related fires. In addition, 
using improved low-permeation materials coupled with designs meeting 
USCG and ABYC requirements should reduce the risk of fuel leaks into 
the vessel. We believe the application of emission control technologies 
on marine engines and vessels for meeting the proposed fuel evaporative 
emission standards would not lead to an increase in incremental risk of 
fires or burns, and in many cases may incrementally decrease safety 
risk in certain situations.

B. Noise

    As automotive technology demonstrates, achieving low emissions from 
spark-ignition engines can correspond with greatly reduced noise 
levels. Direct-injection two-stroke and four-stroke OB/PWC have been 
reported to be much quieter than traditional carbureted two-stroke 
engines. Catalysts in the exhaust act as mufflers which can reduce 
noise. Additionally, adding a properly designed catalyst to the 
existing muffler found on all Small SI engines can offer the 
opportunity to incrementally reduce noise.

C. Energy

(1) Exhaust Emission Standards
    Adopting new technologies for controlling fuel metering and air-
fuel mixing, particularly the conversion of some carbureted engines to 
advanced fuel injection technologies, will lead to improvements in fuel 
consumption. This is especially true for OB/PWC engines where we expect 
the proposed standards to result in the replacement of old technology 
carbureted two-stroke engines with more fuel-efficient technologies 
such as two-stroke direct injection or four-stroke engines. Carbureted 
crankcase-scavenged two-stroke engines are inefficient in that 25 
percent or more of the fuel entering the engine may leave the engine 
unburned. EPA estimates that conversion to more fuel efficient 
recreational marine engines would save 61 million gallons of gasoline 
per year in 2030. The conversion of some carbureted Small SI engines to 
fuel injection technologies is also expected to improve fuel economy. 
We estimate approximately 18 percent of the Class II engines will be 
converted to fuel injection and that this will result in a fuel savings 
of about 10 percent for each converted engine. This translates to a 
fuel savings of about 56 million gallons of gasoline in 2030 when all 
of the Class II engines used in the U.S. will comply with the proposed 
Phase 3 standards. By contrast, the use of catalyst-based control 
systems on Small SI engines is not expected to change their fuel 
consumption characteristics.
(2) Fuel Evaporative Emission Standards
    We anticipate that the proposed fuel evaporative emission standards 
will have a positive impact on energy. By capturing or preventing the 
loss of fuel due to evaporation, we estimate that the lifetime average 
fuel savings would be about 1.6 gallons for an average piece of Small 
SI equipment and 32 gallons for an average boat. This translates to a 
fuel savings of about 41 million gallons for Small SI equipment and 30 
million gallons for Marine SI vessels in 2030 when most of the affected 
equipment used in the U.S. would be expected to have evaporative 
emission controls.

XI. Proposals Affecting Other Engine and Vehicle Categories

    We are proposing to make several regulatory changes that would 
affect engines, equipment, and vessels other than Small SI and Marine 
SI. These changes are described in the following sections. We request 
comment on all aspects of these proposed changes.

A. State Preemption

    Section 209(e) of the Clean Air Act prohibits states and their 
political subdivisions from adopting or enforcing standards and other 
requirements relating to the control of emissions from nonroad engines 
or vehicles. Section 209(e) authorizes EPA to waive this preemption for 
California for standards and other requirements for nonroad engines and 
vehicles, excluding new engines that are smaller than 175 horsepower 
used in farm or construction equipment or vehicles and new locomotives 
or new engines used in locomotives. States other than California may 
adopt and enforce standards identical to California standards 
authorized by EPA.
    EPA promulgated regulations implementing section 209(e) on July 20, 
1994 (59 FR 36987). EPA subsequently promulgated revised regulations 
implementing section 209(e) on December 30, 1997 (62 FR 67733). See 40 
CFR part 85, subpart Q. We are proposing to create a new part 1074 that 
would describe the federal preemption of state and local emission 
requirements. This is being done as part of EPA's ongoing effort to 
write its regulations in plain language format in subchapter U of title 
40 of the CFR. The proposed regulations are based directly on the 
existing regulations in 40 CFR part 85, subpart Q. With the exception 
of the simplification of the language and specific changes described in 
this section, we are not changing the meaning of these regulations.
    Pursuant to section 428 of the 2004 Consolidated Appropriations 
Act, we are proposing to add regulatory language to implement the 
legislative restriction on states other than California adopting, after 
September 1, 2003, standards or other requirements applicable to spark-
ignition engines smaller than 50 horsepower. We are also proposing to 
add, pursuant to that legislation, criteria for EPA's consideration in 
authorizing California to adopt and enforce standards applicable to 
such engines.\103\
---------------------------------------------------------------------------

    \103\ See section 428 of the Appropriations Act for 2004.
---------------------------------------------------------------------------

    On July 12, 2002, the American Road and Transportation Builders 
Association (ARTBA) petitioned EPA to amend EPA's rules implementing 
section 209(e) of the Act.\104\ In particular, ARTBA petitioned EPA to 
amend its regulations and interpretive rule regarding preemption of 
state and local requirements ``that impose in-use and operational 
controls or fleet-wide purchase, sale or use standards on nonroad 
engines.''\105\
---------------------------------------------------------------------------

    \104\ ``Petition to Amend Rules Implementing Clean Air Act 
section 209(e),'' American Road and Transportation Builders 
Association (ARTBA), July 12, 2002. Also, EPA received an additional 
communication from ARTBA urging EPA to grant the petition after the 
decision of the U.S. Supreme Court in EMA v. SCAQMD, 541 U.S. 246 
(2004). See ``ARTBA Petition,'' L. Joseph, ARTBA, to D. Dickinson & 
R. Doyle, EPA, April 30, 2004. These documents are available in 
Docket EPA-HQ-OAR-2004-0008.
    \105\ In 1994, EPA promulgated an interpretive rule at Appendix 
A to subpart A of 40 CFR part 89. The appendix provides that state 
restrictions on the use and operation of nonroad engines are not 
preempted under section 209.
---------------------------------------------------------------------------

    ARTBA believes such controls should be preempted. As we are already 
revising the preemption provisions to a certain extent in this rule, we 
believe it is appropriate to respond to ARTBA's petition in the context 
of this rule, while giving the public the ability to respond to provide 
comments regarding ARTBA's petition. EPA is not proposing to adopt the 
explicit changes requested by ARTBA in its petition; however, EPA will 
continue to review the arguments raised by ARTBA's petition, as well as 
all further arguments provided by ARTBA and other commenters during the 
period for notice and comment on

[[Page 28210]]

this issue. We will respond to the petition, and if appropriate, make 
any changes to the regulations to conform our response to ARTBA and 
other commenters in the final rule. We request comment from the public 
regarding issues related to ARTBA's petition and how we should respond.

B. Certification Fees

    Under our current certification program, manufacturers pay a fee to 
cover the costs associated with various certification and other 
compliance activities associated with an EPA issued certificate of 
conformity. These fees are based on the actual and/or projected cost to 
EPA per emission family. We are proposing to establish a new fees 
category for certification related to the proposed evaporative emission 
standards. Sections III and VI describe how these fees would apply to 
sterndrive/inboard marine engines and equipment and vessels subject to 
evaporative emission standards since these products are not currently 
required to pay certification fees.
    In addition, we are proposing to create a new part 1027 in title 40 
that would incorporate the new and existing fee requirements under a 
single part in the regulations. This is being done as part of EPA's 
ongoing effort to write its regulations in plain language format in 
subchapter U of title 40 of the CFR. The proposed regulations are based 
directly on the existing regulations in 40 CFR part 85, subpart Y. 
Aside from a variety of specific changes, moving this language to part 
1027 is not intended to affect the substance of the existing fee 
provisions. We are proposing the following adjustments and 
clarifications to the existing regulations:
     Establishing a new fees category for new evaporative 
emission standards.
     Eliminating one of the paths for applying for a reduced 
fee. The existing regulations specify that applications covering fewer 
than six vehicles or engines, each with an estimated retail sales price 
below $75,000, shall receive a certificate for five vehicles or 
engines. Holders of these certificates are required to submit an annual 
model year reduced fee payment report adjusting the fees paid. We are 
proposing to eliminate this pathway and the associated report, as they 
are complex and have been rarely used.
     Clarifying the obligation to make additional payment on a 
reduced fee certificate if the actual final sales price is more than 
the projected retail sales price for a reduced fee vehicle or engine. 
As before, the final fee payment must also reflect the actual number of 
vehicles.
     Applying the calculated fee changes for later years, which 
are based on the Consumer Price Index and the total number of 
certificates, only after the change in the fee's value since the last 
reported change has reached $50. The fee change for the ``Other'' 
category for calendar year 2005 to 2006 changed from $826 to $839 and 
for non-road compression-ignition engines from $1822 to $1831. Under 
the proposal, the fee would not change until such time as the fee 
increase would be $50.00 or greater. This might not occur after one 
year, but after two or more years the calculated increase in a fee 
based on the change in the Consumer Price Index might be more than 
$50.00. The same applies if the price goes both up and down. For 
example, if the fee published in EPA guidance for a category of engine 
was $1,000 in 2011 and the calculated fee for 2012 is $990 and in 2013 
is $1040, the fee in 2013 would remain at $1,000 since the change from 
the 2011 fee is only $40. This would minimize confusion related to 
changing fees where the calculated fee is very close to that already 
established for the previous year. It will also lessen paperwork and 
administrative burdens for manufacturers and EPA in making adjustments 
for small fees changes for applications that are completed around the 
change in a calendar year. The number of certificates may go up or down 
in any given year, while the Consumer Price Index would generally 
increase annually. As a result, this change would be revenue-neutral or 
would perhaps slightly decrease overall revenues.
     Clarifying that all fee-related records need to be kept, 
not just those related to the ``final reduced fee calculation and 
adjustment.''
     Adding www.Pay.gov or other methods specified in guidance 
as acceptable alternative methods for payment and filing of fee forms. 
We anticipate several changes in administration of the fees program in 
coming months. It is likely that future payment of fees by electronic 
funds transfers (other than wire payments through the Federal Reserve) 
will be available only through online payments via www.Pay.gov. We are 
also receiving an increasing number of fee forms through e-mail 
submissions, which has proved to be a reliable and convenient method. 
We will be establishing a specific e-mail address for these 
submissions.
     Establishing a single deadline for all types of refunds: 
total, partial for reduced fees, and partial for corrections. In all 
cases, refund requests must be received within six months of the end of 
the model year. A common type of request is due to an error in the fee 
amount paid as a result of changed fees for a new calendar year. We 
frequently apply these overpayments to other pending certification 
applications. This is less burdensome than applying for a simple 
refund, both for EPA and for most manufacturers. Applications to apply 
such refunds to other certification applications must also be received 
within six months of the end of the model year of the original engine 
family or test group.
     Emphasizing with additional cross references that the same 
reduced fee provisions that apply to Independent Commercial Importers 
also apply to modification and test vehicle certificates under 40 CFR 
85.1509 and 89.609: the number of vehicles covered is listed on the 
certificate, a revision of the certificate must be applied for and 
additional reduced fee payments made if additional vehicles are to be 
covered, and the certificate must be revised to show the new total 
number of vehicles to be covered.

C. Amendments to General Compliance Provisions in 40 CFR Part 1068

    The provisions of part 1068 currently apply for nonroad diesel 
engines regulated under 40 CFR part 1039, Large SI engines regulated 
under 40 CFR part 1048, and recreational vehicles regulated under 40 
CFR part 1051. We are proposing to apply these provisions also for 
Small SI and Marine SI engines, equipment, and vessels. Any changes we 
make to part 1068 will apply equally for these other types of engines 
and vehicles. We therefore encourage comment from any affected 
companies for any of these proposed changes.
    The most significant change we are proposing for part 1068 is to 
clarify the language throughout to make necessary distinctions between 
engines, equipment, and fuel-system components--and particularly 
between equipment using certified engines and equipment that has been 
certified to meet equipment-based standards. This becomes necessary 
because the evaporative emission standards proposed in this document 
apply in some cases to equipment manufacturers and boat builders, while 
the exhaust emission standards apply only to engine manufacturers. Some 
provisions in part 1068 apply to equipment manufacturers differently if 
they hold a certificate of conformity rather than merely installing 
certified engines (or certified fuel-system components). The proposed 
changes in regulatory language are intended to help make those 
distinctions. See Sec.  1068.2 for a

[[Page 28211]]

description of the proposed terminology that we intend to use 
throughout part 1068.
    We are aware that in some cases manufacturers produce nonroad 
engines by starting with a complete or partially complete engine from 
another manufacturer and modifying it as needed for the particular 
application. This is especially common for Marine SI and Large SI 
engines and equipment, but it may also occur for other types of nonroad 
engines and equipment. We are concerned that an interpretation of the 
prohibited acts in Sec.  1068.101 would disallow this practice because 
the original engine manufacturer is arguably selling an engine that is 
not covered by a certificate of conformity even though emission 
standards apply. We are addressing this first by proposing to define 
``engine'' for the purposes of the regulations (see Sec.  1068.30). To 
do this, we differentiate between complete engines and partially 
complete engines, both of which need to be covered by a certificate. 
Partially complete engines would include any engine, consisting of the 
engine block plus at least one attached component such that the engine 
is not yet in its final, certified configuration. We are also proposing 
to allow for a path by which the original engine manufacturer would not 
need to certify partially complete engines or request approval for an 
exemption (see Sec.  1068.262). To do this though, the original engine 
manufacturer would need a written request from a secondary engine 
manufacturer who already holds a valid certificate of conformity for 
the engine based on its final configuration and application. These 
proposed provisions are intended generally to be clarifications of the 
existing regulatory provisions, particularly those in Sec.  1068.330 
for imported engines.
    One situation involving partially complete engines involves the 
engine block as a replacement part where the original engine had major 
structural damage. In this case the engine manufacturer will typically 
sell an engine block with piston, crankshaft, and other internal 
components to allow the user to repower with many of the components 
from the original engine. Under the proposed definitions, these short 
blocks or three-quarter blocks would be new engines subject to emission 
standards. We believe it would be appropriate to address this situation 
in the regulations with the replacement engine provisions in Sec.  
1068.240, which provides a path for making new engines that are exempt 
from current emission standards. We request comment on applying these 
replacement-engine provisions to engine blocks as replacement parts.
    We are proposing to further clarify the requirement for engine 
manufacturers to sell engines in their certified configuration. The 
existing provisions in Sec.  1068.260 describe how manufacturers may 
use delegated assembly to arrange for equipment manufacturers to 
separately source aftertreatment components for engines that depend on 
aftertreatment to meet emission standards. We are proposing to include 
language to clarify that we will consider an engine to be in its 
certified configuration in certain circumstances even if emission-
related components are not assembled to the engine. This is intended to 
reflect common practice that has developed over the years. We are also 
proposing to clarify that engines may be shipped without radiators or 
other components that are unrelated to emission controls, and that we 
may approve requests to ship engines without emission-related 
components in some circumstances. This would generally be limited to 
equipment-related components such as vehicle-speed sensors. We could 
specify conditions that we determine are needed to ensure that shipping 
the engine without such components will not result in the engine being 
operated outside of its certified configuration.
    We adopted a definition of ``nonroad engine'' that continues to 
apply today (see Sec.  1068.30). This definition distinguishes between 
portable or transportable engines that may be considered either nonroad 
or stationary, depending on the way they will be used. The distinction 
between nonroad and stationary engines is most often relevant for new 
engines in determining which emission standards apply. However, we have 
received numerous questions related to equipment whose usage has 
changed so that the original designation no longer applies. The 
definition does not address these situations. We are therefore 
proposing to adopt provisions that would apply when an engine 
previously used in a nonroad application is subsequently used in an 
application other than a nonroad application, or when an engine 
previous used in a stationary application is moved (see Sec.  1068.31).
    In addition, we are proposing several amendments to part 1068 to 
clarify various items. These include:
     Sec.  1068.101(a)(1): Revising the prohibited act to 
specify that engines must be ``covered by'' a certificate rather than 
``having'' a certificate. The revised language is more descriptive and 
consistent with the Clean Air Act.
     Sec.  1068.101(a)(1)(i): Clarifying that engines or 
equipment are considered to be uncertified if they are not in a 
configuration that is included in the applicable certificate of 
conformity. This would apply even if the product had an emission label 
stating that it complies with emission standards.
     Sec.  1068.101(a)(2): Clarifying the prohibition on 
recordkeeping to apply also to submission of records to the Agency.
     Sec.  1068.101(b)(2): Adding a prohibition against using 
engines in a way that renders emission controls inoperative, such as 
misfueling or failing to use additives that the manufacturer specifies 
as part of the engine's certified configuration. This is more likely to 
apply for compression-ignition engines than spark-ignition engines.
     Sec.  1068.101(b)(7): Clarifying the prohibitions related 
to warranty to require the submission of specified information in the 
application for certification; adding language to identify obligations 
related to recall; and preventing the manufacturer from communicating 
to users that warranty coverage is conditioned on using authorized 
parts or service facilities. These provisions are consistent with 
requirements that apply in other EPA programs.
     Sec.  1068.105(a): Revising the regulation to allow 
equipment manufacturers to use up normal inventories of previous model 
year engines only if it is a continuation of ongoing production with 
existing inventories. These provisions would not apply for an equipment 
manufacturer starting to produce a new equipment model.
     Sec.  1068.105: Eliminating paragraph (b) related to using 
highway certification for nonroad engines or equipment, since these 
provisions are spelled out specifically for each nonroad program where 
appropriate.
     Sec.  1068.105(b): Clarifying the requirement to follow 
emission-related installation instructions to include installation 
instructions from manufacturers that certify components to evaporative 
emission standards.
     Sec.  1068.120: Clarifying the rebuilding provisions to 
apply to maintenance related to evaporative emissions.
     Sec.  1068.240: Clarifying that the scope of the exemption 
for new replacement engines is limited to certain engines; also 
clarifying that the replacement engine provisions apply for replacing 
engines that meet alternate emission standards (such as those produced

[[Page 28212]]

under the Transition Program for Equipment Manufacturers).
     Sec.  1068.250: Revising the applicability of the hardship 
provisions to small businesses more broadly by referring to a term that 
is defined in Sec.  1068.30; this would include small businesses as 
identified in the standard-setting part, or any companies that meet the 
criteria established by the Small Business Administration.
     Sec.  1068.250: Clarifying the timing related to hardship 
approvals, and the ability to get extensions under appropriate 
circumstances.
     Sec.  1068.260: Revising the provisions related to 
delegated assembly as described in Section XI.F and clarifying that 
reduced auditing rates as specified in paragraph (a)(6) should be based 
on the number of equipment manufacturers involved rather than the 
number of engines; also specifying that manufacturers may itemize 
invoices to ensure that the Customs valuation for assessment of import 
duties is based on the price of the imported engine without the 
aftertreatment components that are being shipped separately. We request 
comment on adding a provision allowing for a separate invoice for 
aftertreatment components that are shipped separately.
     Sec.  1068.305: Clarifying that the requirement to submit 
importation forms applies to all engines, not just nonconforming 
engines; also adding a requirement to keep these records for five 
years. Both of these changes are consistent with the Customs 
regulations at 19 CFR 12.74.
     Part 1068, Appendix I: Clarifying that the fuel system 
includes evaporative-related components and that the parts comprising 
the engine's combustion chamber are emission-related components.
    Manufacturers have also expressed a concern that the engine 
rebuilding provisions in Sec.  1068.120 do not clearly address the 
situation in which rebuilt engines are used to repower equipment where 
the engine being replaced meets alternate emission standards (such as 
those produced under the Transition Program for Equipment 
Manufacturers). These engines are not certified to the emission 
standards that would otherwise apply for the given model year, so there 
may be some confusion regarding the appropriate way of applying these 
regulatory requirements.
    In Section V.E.6 we describe several proposed special compliance 
provisions that are intended to improve our ability to oversee our 
emission control program for Small SI engines. For example, we are 
proposing that manufacturers take steps to ensure that they will be 
able to honor emission-related warranty claims, meet any compliance- or 
enforcement-related obligations that may arise, and import new engines 
and equipment in a timely manner after we adopt new standards. We 
request comment on the appropriateness of adopting any or all of those 
provisions under part 1068 such that they would apply to all engines 
and equipment subject to part 1068. We also request comment on any 
adjustments to those provisions that would be appropriate for other 
categories of engines and equipment, whether we choose to adopt these 
provisions in this proposal or in a separate rulemaking.
    In addition, we request comment on early application of the 
provisions of part 1068 before the standards proposed in this notice 
take effect. For example, for any provisions not directly related to 
the emission standards, we could revise the regulations in part 90 and 
part 91 to reference the corresponding provisions in part 1068. We 
similarly request comment on making these changes for diesel engines 
regulated under part 89 (land-based) and part 94 (marine). This would 
allow us to accelerate the transition to plain-language regulations and 
prevent confusion from maintaining multiple versions of similar 
provisions for several years. We would also be able to substantially 
decrease printing costs. The provisions most appropriately considered 
for early transition to part 1068 include: (1) Selective enforcement 
audits, (2) exemptions, (3) importation provisions, (4) defect 
reporting and recall, (5) hearing procedures, and (6) treatment of 
confidential information.
    We are also seeking comment on revisions to 40 CFR 1068.101. 
Section 203 of the Act (42 U.S.C. 7522) states that performing certain 
acts, ``and causing thereof,'' constitutes a prohibited act. We are 
interested in revising the regulations to specifically include this 
prohibition on the ``causing'' of any of the prohibited acts listed in 
the statute and the regulations. Adding this clarification would help 
people who are subject to the regulations to more fully understand what 
actions are prohibited and may potentially subject them to enforcement 
proceedings under the Act. The revisions themselves would not be 
intended to add new enforcement authorities beyond what is already 
specified in the statute.
    If we consider it a violation to cause someone to commit a 
prohibited act, then persons causing any prohibited act would also be 
subject to the full administrative and judicial enforcement actions 
allowable under the Act and the regulations. The prohibition on 
``causing'' a prohibited act would apply to all persons and would not 
be limited to manufacturers or importers of regulated engines or 
equipment.
    If this provision is adopted, EPA would interpret the ``causation'' 
aspect of section 203 broadly. In assessing whether a person has caused 
a prohibited act, EPA would evaluate the totality of circumstances. For 
example, in certain circumstances EPA believes a retailer may be 
responsible for causing the importation of engines or equipment not 
covered by a valid certificate of conformity or otherwise in violation 
of our regulations, such as the labeling requirements. In addition to 
the prohibitions that apply to manufacturers and importers generally 
under section 203, EPA will also consider many factors in assessing 
whether a manufacturer, importer, retailer, distributor or other person 
has caused a prohibited act, including, but not limited to, the 
following: (1) The contractual or otherwise established business 
relationship of those persons involved in producing and/or selling new 
engines and equipment; (2) the particular efforts or influence of the 
alleged violator contributing to, leading to or resulting in the 
prohibited act; and (3) the efforts, or lack thereof, of the person to 
prevent such a violation. EPA will evaluate the entire circumstances in 
determining whether a person caused another person to commit a 
prohibited act such as importing engines or equipment in violation of 
our regulations.

D. Amendments Related to Large SI Engines (40 CFR Part 1048)

    Manufacturers of Large SI engines are encouraged to review the 
proposed changes described in Section XI.C related to 40 CFR part 1068.
    Some of the issues related to Marine SI engines described in 
Section III relate to Large SI engines. In particular, the uncertain 
availability of certain base engine models from General Motors for use 
in nonroad applications poses a challenge for efforts to certify the 
engines to the Large SI standards. In particular, the uncertain lead 
time associated with getting the new engines and the level of effort 
expected for certifying the existing engine models that are planned for 
obsolescence make it difficult for companies, especially small 
businesses, to go through the certification process and recover costs 
for repeated testing. Of greatest concern are requirements related to 
developing deterioration factors for these engines. The existing 
regulations allow for assigned deterioration factors for small 
businesses, but these apply only to companies with fewer than 200

[[Page 28213]]

employees. We are therefore proposing to expand the definition of 
small-volume engine manufacturer to also include companies with annual 
U.S. sales of no more than 2000 Large SI engines. This would align with 
the provisions already adopted by California ARB. Similarly, we are 
proposing a provision allowing for assigned deterioration factors for 
small-volume engine families for Small SI engines (see Section V). A 
similar dynamic applies for Large SI engines. Any such allowance would 
apply to engine families with projected sales up to 300 or 500 units to 
reflect to different production volumes. We request comment on allowing 
assigned deterioration factors for small-volume engine families for 
Large SI engines, and on the appropriate threshold for this provision.
    We are also proposing to revise the provisions related to 
competition engines to align with the proposal for Small SI engines. 
Any Small SI engine that is produced under the competition exemption 
will very likely exceed 19 kW. As a result, we believe it is 
appropriate to make these provisions identical to avoid confusion.
    Manufacturers have notified us that the transient test for 
constant-speed engines does not represent in-use operation in a way 
that significantly affects measured emission levels. This notification 
is required by Sec.  1065.10(c)(1). In particular, manufacturers have 
pointed out that the specified operation involves light engine loads 
such that combustion and exhaust temperatures do not rise enough to 
reach catalyst light-off temperatures. As a result, meeting the 
standard using the constant-speed transient test would require the use 
of significantly oversized catalysts, which would add significant costs 
without a commensurate improvement for in-use emission control. We 
faced a similar dilemma in the effort to adopt transient standards for 
nonroad diesel engines, concluding that the transient standards should 
not apply until we develop a more suitable duty cycle that more 
appropriately reflects in-use operation. We are proposing to take this 
same approach for Large SI engines, waiving the requirement constant 
speed engines to meet the transient standards until we are able to 
develop a more appropriate duty cycle. Manufacturers must continue to 
meet the standards for steady-state testing and the field-testing 
standards continue to apply. We are also proposing to clarify that 
manufacturers certifying constant-speed engines should describe their 
approach to controlling emissions during transient operation in their 
application for certification.
    Manufacturers have also pointed out that a multiplicative 
deterioration factor is problematic for engines with very low emission 
levels. While the HC+NOX emissions may be as high as 2.7 g/
kW-hr, manufacturers are certifying some engine families with 
deteriorated emission levels below 0.1 g/kW-hr. These very low emission 
levels are well below the standard, but the measurement systems are 
challenged to produce a precisely repeatable emission level at that 
point. As a result, measurement variability and minor engine-to-engine 
variability can lead to small absolute differences in emission levels 
that become magnified by a deterioration factor that reflects the 
extremely small low-hour measurement. We are therefore proposing to 
specify that manufacturers use an additive deterioration factor if 
their low-hour emission levels are below 0.3 g/kW-hr. This change would 
accommodate the mathematical and analyzer effects of very low emission 
levels without changing the current practice for the majority of 
engines that are certified with emission levels closer to the standard. 
This change would remove the incentive for manufacturers to increase 
their engine's emission levels to avoid an artificially large 
deterioration factor. The only exception would be for cases in which 
good engineering judgment dictates that a multiplicative deterioration 
factor would nevertheless be appropriate for engines with very low 
emissions. This may be the case if an engine's deterioration can be 
attributed, even at very low emission levels, to proportionally 
decreased catalyst conversion of emissions from an aged engine. It is 
important to note that Large SI engine manufacturers are subject to in-
use testing to demonstrate that they meet emission standards throughout 
the useful life. Should such testing indicate that an additive 
deterioration factor does not appropriately reflect actual performance, 
we would require manufacturers to revise their deterioration factors 
appropriately, as required under the current regulations. If such 
discrepancies appear for multiple manufacturers, we would revise the 
regulation to again require multiplicative deterioration factors for 
all aftertreatment-based systems. We also request comment on a further 
refinement of the form of the deterioration factor to more closely 
reflect the degradation in catalyst conversion efficiency. For example, 
measuring engine-out emissions would allow for calculating catalyst 
conversion efficiency, such that changes in this parameter over an 
engine's useful life could be factored into a calculation to 
characterize an engine's actual rate of deterioration.
    Most Large SI engines are installed in equipment that has metal 
fuel tanks. This formed the basis of the regulatory approach to set 
evaporative emission standards and certification requirements. 
Manufacturers have raised questions about the appropriate steps to take 
for systems that rely on plastic fuel tanks. These tanks are able to 
meet standards, but questions have been raised about the engine 
manufacturer's role in certifying a range of fuel tanks with their 
engines. We request comment on the extent to which the current 
regulatory requirements might limit the range of fuel tank designs.
    The current permeation standards for Large SI equipment references 
Category 1 fuel lines as defined in the version of SAE J2260 that was 
issued in November, 1996. In 2004, the Society of Automotive Engineers 
(SAE) updated SAE J2260. Manufacturers have asked whether we will 
approve fuel lines based on the updated procedures. The new procedures 
have two primary differences related to fuel line permeation. First, 
the test fuel was changed from CM15 to CE10.\106\ Second, the 
associated limits for the different categories of fuel line permeation 
were revised. Data presented in Chapter 5 of the Draft RIA suggest that 
permeation from low-permeation fuel line materials can be less than 
half on CE10 than on CM15. The permeation specification for Category 1 
fuel line was revised by SAE from 0-25 g/m\2\/day to 3-10 g/m\2\/day. 
(A new Category 0 was added at 0-3 g/m\2\/day.) Directionally, the new 
Category 1 permeation limits seem to account for the change in the test 
fuel. In addition, ethanol fuel blends are commonly used in-use while 
methanol fuel blends are less common. We request comment on updating 
the regulations for Large SI equipment to reference the Category 1 fuel 
line specifications in the updated version of SAE J2260 (revised 
November 2004). We also request comment on whether this new 
specification would affect the stringency of the standard or the choice 
of fuel line constructions for this equipment.
---------------------------------------------------------------------------

    \106\ ``C'' refers to fuel C as specified in ASTM D 412, E10 
refers to 10 percent ethanol, and M15 refers to 15 percent methanol.
---------------------------------------------------------------------------

    We are also proposing several technical amendments to part 1048. 
Many of these simply correct

[[Page 28214]]

typographical errors or add references to the proposed regulatory cites 
in part 1054. Several changes are intended merely to align regulatory 
language with that of other programs, including those that would be 
subject to the standards proposed in this notice. In addition, we are 
proposing the following changes:
     Sec.  1048.5: Clarifying that locomotive propulsion 
engines are not subject to Large SI emission standards, even if they 
use spark-ignition engines. This is based on the separate provisions 
that apply to locomotives in Clean Air Act section 213.
     Sec.  1048.101: Clarifying manufacturer's responsibility 
to meet emission standards for different types of testing, especially 
to differentiate between field-testing standards and duty-cycle 
standards.
     Sec.  1048.105: Clarifying that only the permeation 
standards of SAE J2260 apply to fuel lines used with Large SI engines.
     Sec.  1048.105: Clarifying that the requirement to prevent 
fuel boiling is affected by the pressure in the fuel tank. The 
regulation currently characterizes the boiling point of fuel only at 
atmospheric pressure. Pressurizing the fuel tank increases the boiling 
point of the fuel.
     Sec.  1048.105: Reorganizing the regulatory provisions to 
align with the new language in 40 CFR part 1060. This is not intended 
to change any of the applicable requirements.
     Sec.  1048.110: Clarifying that ``malfunctions'' relate to 
engines failing to maintain emission control and not to diagnostic 
systems that fail to report signals; and clarifying that the 
malfunction indicator light needs to stay illuminated for malfunctions 
or for system errors.
     Sec.  1048.120: Clarifying that the emission-related 
warranty covers only those components from 40 CFR part 1068, Appendix 
I, whose failure will increase emissions.
     Sec.  1048.125: Clarifying the provisions related to 
noncritical emission-related maintenance.
     Sec.  1048.135: Revising the engine labeling requirements 
to allow omission of the manufacturing date only if the date is stamped 
or engraved on the engine, rather than allowing manufacturers to keep 
records of engine build dates. This is important for verifying that 
engines comply with standards based on their build date.
     Sec.  1048.205: Removing detailed specifications for 
describing auxiliary emission control devices in the application for 
certification. This responds to the concern expressed by manufacturers 
that the existing, very prescriptive approach requires much more 
information than is needed to adequately describe emission control 
systems. We are proposing to leave in place a broad requirement to 
describe emission control systems and parameters in sufficient detail 
to allow EPA to confirm that no defeat devices are employed. 
Manufacturers should be motivated to include substantial information to 
make such determinations in the certification process, rather than 
being subject to this type of investigation for emission control 
approaches that are found to be outside of the scope of the application 
for certification.
     Sec.  1048.205: Adding requirement to align projected 
sales volumes with actual sales from previous years. This does not 
imply additional reporting or recordkeeping requirements. It is 
intended simply to avoid situations where manufacturers intentionally 
mis-state their projected sales volume to gain some advantage under the 
regulations.
     Sec.  1048.205: Specifying that manufacturers must submit 
modal emission results rather than just submitting a weighted average. 
Since this information is already part of the demonstration related to 
the field-testing standards, this should already be common practice.
     Sec.  1048.220: Clarifying that if manufacturers change 
their maintenance instructions after starting production for an engine 
family, they may not disqualify engines for in-use testing or warranty 
claims based on the fact that operators did not follow the revised 
maintenance instructions.
     Sec.  1048.225: Clarifying the terminology to refer to 
``new or modified engine configurations'' rather than ``new or modified 
nonroad engines.'' This is necessary to avoid using the term ``new 
nonroad engine'' in a way that differs from the definitions in Sec.  
1048.801.
     Sec.  1048.230: Clarifying that engine families relate 
fundamentally to emission certification and that we would expect 
manufacturers to suggest a tailored approach to specifying engine 
families under Sec.  1048.230(d) to occur only in unusual 
circumstances.
     1048.240: Adding a requirement for design-based 
certification for the diurnal standards that fuel tanks need to use 
low-permeation materials.
     1048.245: Adding the provision to allow for component 
certification for plastic fuel tanks. The revised language clarifies 
the requirement related to allowing pressure relief for vacuum 
pressures and for controlling permeation rates from plastic fuel tanks.
     Sec.  1048.250: Adding a requirement for manufacturers to 
report their sales volumes for an engine family if they are using a 
provision that depends on production volumes.
     Sec.  1048.301: Clarifying that engine families with 
projected sales volumes below 150 units may have reduced testing rates 
for production-line testing. This level of production does not allow 
for adequate testing to use the statistical techniques before exceeding 
specified maximum testing rates.
     Sec.  1048.305: Clarifying that (1) Tested engines should 
be built in a way that represents production engines; (2) the field-
testing standards apply for any testing conducted (this may involve 
simply comparing modal results to the field-testing standards); and (3) 
we may review a decision to use emission results from a retested engine 
instead of the original results.
     Sec.  1048.310: Clarifying the relationship between 
quarterly testing and compliance with the annual testing requirements.
     Sec.  1048.315: Correcting the equation for the CumSum 
statistic to prevent negative values.
     Sec.  1048.410: Clarifying that repeat tests with an in-
use test engine are acceptable, as long as the same number of repeat 
tests are performed for all engines.
     Sec.  1048.415: Clarifying that the provisions related to 
defect reporting in 40 CFR 1068.501 apply for in-use testing.
     Sec.  1048.501: Removing specified mapping procedures, 
since these are addressed in 40 CFR part 1065.
     Sec.  1048.505: Removing redundant text and removing 
sampling times specified in Table 1, since these are addressed in Sec.  
1048.505(a)(1).
     Sec.  1048.505: Correcting the mode sequence listed in the 
table for the ramped-modal testing.
     Sec.  1048.505: Clarifying that cycle statistics for 
discrete-mode testing must be calculated separately for each mode.
     Sec. Sec.  1048.605 and 1048.610: Requiring some 
demonstration that the sales restrictions that apply for these sections 
are met, and clarifying the provisions related to emission credits for 
vehicles that generate or use emission credits under 40 CFR part 86.
     Sec.  1048.801: Revising several definitions to align with 
updated definitions adopted (or proposed) for other programs.
    We request comment on changing Sec.  1048.220 to prevent 
manufacturers from distributing revised emission-related maintenance 
instructions until we have approved them. We are taking this approach 
for Small SI and Marine

[[Page 28215]]

SI engines in this proposal (see Sec. Sec.  1045.220 and 1054.220) 
because we believe it would be inappropriate for manufacturers to 
specify increased or decreased emission-related maintenance without EPA 
approval of those changes. The same concern applies equally to all 
nonroad spark-ignition engines and vehicles, so we would expect to 
apply the same policy to all these engines.
    For Small SI and Marine SI engines we are proposing to require 
manufacturers of imported engines to include basic information in the 
application for certification, including identification of associated 
importers, specific ports intended for importation, and testing 
facilities where testing could be done in the United States. We request 
comment on extending these provisions to Large SI engines. See Sec.  
1054.205.

E. Amendments Related To Recreational Vehicles (40 CFR Part 1051)

    Manufacturers of recreational vehicles are encouraged to review the 
proposed changes described in Section XI.C related to 40 CFR part 1068.
    We are proposing in this notice to establish a process by which 
manufacturers of fuel system components certify that their products 
meet emission standards. For recreational vehicles we adopted a program 
in which the exhaust and evaporative emission standards apply to the 
vehicle so we did not set up a process for certifying fuel-system 
components. We continue to believe that evaporative emission standards 
should apply to the vehicle. However, we are proposing to allow 
manufacturers of fuel-system components to opt in to this program by 
certifying their fuel tanks or fuel lines to the applicable standards. 
While this would be a voluntary step, any manufacturer opting into the 
program in this way would be subject to all the requirements that apply 
to certificate holders. While manufacturers of recreational vehicles 
would continue to be responsible for meeting standards and certifying 
their vehicles, it may be appropriate to simplify their compliance 
effort by allowing them to rely on the certification of the fuel-line 
manufacturer or fuel-tank manufacturer.
    We also request comment on specifying that vehicle manufacturers 
use the certification and testing procedures proposed in 40 CFR part 
1060 to meet the evaporative emission standards included in part 1051. 
This would not be intended to affect the stringency of current 
requirements. This would simply allow us to maintain consistent 
requirements across programs and avoid publishing redundant 
specifications.
    We are also proposing several technical amendments to part 1051. 
Many of these simply correct typographical errors or add references to 
the proposed regulatory cites in part 1054. Several changes are 
intended merely to align regulatory language with that of other 
programs, including those that would be subject to the standards 
proposed in this notice.
    In addition, we are proposing the following changes:
     Sec.  1051.1: Revising the speed threshold for offroad 
utility vehicles to be subject to part 1051. Changing from ``25 miles 
per hour or higher'' to ``higher than 25 miles per hour'' aligns this 
provision with the similar threshold for qualifying as a motor vehicle 
in 40 CFR 85.1703.
     Sec.  1051.5: Clarifying the status of very small 
recreational vehicles to reflect the provisions in the current 
regulations in 40 CFR part 90 to treat such vehicles with a dry weight 
under 20 kilograms as Small SI engines.
     Sec.  1051.25: Clarifying that manufacturers of 
recreational vehicles that use engines certified to meet exhaust 
emission standards must still certify the vehicle with respect to the 
evaporative emission standards.
     Sec.  1051.120: Clarifying that the emission-related 
warranty covers only those components from 40 CFR part 1068, Appendix 
I, whose failure will increase emissions.
     Sec.  1051.125: Clarifying the provisions related to 
noncritical emission-related maintenance.
     Sec.  1051.135: Revising the labeling requirements to 
allow omission of the manufacturing date only if the date is stamped or 
engraved on the vehicle, rather than allowing manufacturers to keep 
records of vehicle build dates. This is important for verifying that 
vehicles comply with standards based on their build date.
     Sec.  1051.135: Adding a requirement to include family 
emission limits related to evaporative emissions to the emission 
control information label. Since this change may involve some time for 
manufacturers to comply, we are proposing to apply this starting with 
the 2009 model year.
     Sec.  1051.137: Clarifying how the labeling requirements 
apply with respect to the averaging program and selected family 
emission limits.
     Sec.  1051.205: Removing detailed specifications for 
describing auxiliary emission control devices in the application for 
certification. This responds to the concern expressed by manufacturers 
that the existing, very prescriptive approach requires much more 
information that is needed to adequately describe emission control 
systems. We are proposing to leave in place a broad requirement to 
describe emission control systems and parameters in sufficient detail 
to allow EPA to confirm that no defeat devices are employed. 
Manufacturers should be motivated to include substantial information to 
make such determinations in the certification process, rather than 
being subject to this type of investigation for emission control 
approaches that are found to be outside of the scope of the application 
for certification.
     Sec.  1051.205: Requirements to align projected sales 
volumes with actual sales from previous years. This does not imply 
additional reporting or recordkeeping requirements. It is intended 
simply to avoid situations where manufacturers intentionally mis-state 
their projected sales volume to gain some advantage under the 
regulations.
     Sec.  1051.220: Clarifying that if manufacturers change 
their maintenance instructions after starting production for an engine 
family, they may not disqualify vehicles for warranty claims based on 
the fact that operators did not follow the revised maintenance 
instructions.
     Sec.  1051.225: Clarifying the terminology to refer to 
``new or modified vehicle configurations'' rather than ``new or 
modified vehicles.'' This is necessary to avoid confusion with the term 
``new vehicle'' as it relates to introduction into commerce.
     Sec.  1051.225: Clarifying the provisions related to 
changing an engine family's Family Emission Limit after the start of 
production.
     Sec.  1051.255: Adopting a different SAE standard for 
specifying low-permeability materials to allow for design-based 
certification of metal fuel tanks with gaskets made of polymer 
materials. The existing language does not adequately characterize the 
necessary testing and material specifications.
     Sec.  1051.230: Clarifying that engine families relate 
fundamentally to emission certification and that we would expect 
manufacturers to suggest a tailored approach to specifying engine 
families under Sec.  1051.230(e) to occur only in unusual 
circumstances.
     Sec.  1051.250: Adding a requirement for manufacturers to 
report their sales volumes for an engine family if they are using a 
provision that depends on production volumes.
     Sec.  1051.301: Clarifying that engine families with 
projected sales volumes

[[Page 28216]]

below 150 units may be exempted from production-line testing. This 
level of production does not allow for adequate testing to use the 
statistical techniques before exceeding specified maximum testing 
rates.
     Sec.  1051.305: Clarifying that tested vehicles should be 
built in a way that represents production vehicles.
     Sec.  1051.310: Clarifying the relationship between 
quarterly testing and compliance with the annual testing requirements; 
and clarifying the testing provisions that apply for engine families 
where the production period is substantially less than a full year.
     Sec.  1051.315: Correcting the equation for the CumSum 
statistic to prevent negative values.
     Sec.  1051.325: Clarifying the basis on which we would 
approve retroactive changes to the Family Emission Limit for an engine 
family that has failed under production-line testing.
     Sec.  1051.505: Clarifying that cycle statistics for 
discrete-mode testing must be calculated separately for each mode.
     Sec. Sec.  1051.605 and 1051.610: Requiring some 
demonstration that the sales restrictions that apply for these sections 
are met.
     Sec.  1051.650: Add a requirement to certify vehicles that 
are converted to run on a different fuel. We expect this is a rare 
occurrence, but one that we should make subject to certification 
requirements (see Section VII.B.3).
     Sec.  1051.701: Clarifying that manufacturers using 
emission credits to meet emission standards must base their credit 
calculations on their full product line-up, rather than considering 
only those engine families with Family Emission Limits above or below 
the emission standard. We are also clarifying that a single family may 
not generate emission credits for one pollutant while using emission 
credits for another pollutant, which is common to all our emission 
control programs.
     Sec.  1051.735: Adding a requirement to keep records 
related to banked emission credits for as long as a manufacturer 
intends for those credits to be valid. This is necessary for us to 
verify the appropriateness of credits used for demonstrating compliance 
with emission standards in later model years.
     Sec.  1051.801: Revising several definitions to align with 
updated definitions adopted (or proposed) for other programs.
    We request comment on changing Sec.  1051.220 to prevent 
manufacturers from distributing revised emission-related maintenance 
instructions until we have approved them. We are taking this approach 
for Small SI and Marine SI engines in this proposal (see Sec. Sec.  
1045.220 and 1054.220) because we believe it would be inappropriate for 
manufacturers to specify increased or decreased emission-related 
maintenance without EPA approval of those changes. The same concern 
applies equally to all nonroad spark-ignition engines and vehicles, so 
we would expect to apply the same policy to all these engines.
    For Small SI and Marine SI engines we are proposing to require 
manufacturers of imported engines to include basic information in the 
application for certification, including identification of associated 
importers, specific ports intended for importation, and testing 
facilities where testing could be done in the United States. We request 
comment on extending these provisions to recreational vehicles. See 
Sec.  1054.205.

F. Amendments Related to Heavy-Duty Highway Engines (40 CFR Part 85)

    We are proposing to make several adjustments to the provisions 
related to delegated assembly specified in Sec.  85.1713. These 
adjustments include:
     Removing the provision related to auditing outside the 
United States since equipment manufactured in other countries would not 
be subject to these provisions
     Clarifying that the exemption expires when the equipment 
manufacturer takes possession of the engine, but not before it reaches 
the point of final assembly
     Clarifying the prohibition related to following 
installation instructions to ensure that engines will be in their 
certified configuration when installed in a piece of equipment.
    We believe all these amendments are straightforward adjustments 
that are appropriate for maintaining a program that allows for 
appropriate oversight and implementation.

G. Amendments Related to Stationary Spark-Ignition Engines (40 CFR Part 
60)

    On June 12, 2006 we proposed emission standards for stationary 
spark-ignition engines (71 FR 33804). The June 2006 proposal specified 
that stationary spark-ignition engines at or below 19 kW would be 
subject to all the same emission standards and certification 
requirements that apply to Small SI engines. If we would include the 
new Phase 3 standards for Small SI engines in 40 CFR part 90, these 
requirements would apply automatically to those stationary engines. 
However, since the Phase 3 standards will be in 40 CFR part 1054, as 
described in Section V, we are proposing to revise the regulatory 
language for stationary spark-ignition engines in 40 CFR part 60, 
subpart JJJJ, to directly reference the Phase 3 standards part 1054.

XII. Projected Impacts

A. Emissions from Small Nonroad and Marine Spark-Ignition Engines

    As discussed in previous sections, this proposal will reduce 
exhaust emissions from specific sizes of nonhandheld Small SI and 
Marine SI engines. It will also reduce evaporative emissions from the 
fuel systems used on nonhandheld and handheld Small SI equipment and 
Marine SI vessels (for simplicity we collectively include the 
evaporative emission requirements from equipment or vessels when 
referring to Small SI or Marine SI engines in the remainder of this 
section). The proposed exhaust and evaporative emission standards will 
directly affect volatile organic hydrocarbon compounds (VOC), oxides of 
nitrogen (NOX), and to a lesser extent carbon monoxide (CO). 
Also, we anticipate that the emission control technology which is 
likely to be used to meet the exhaust emission standards will affect 
directly emitted particulate matter, most importantly particles with 
diameters of 2.5 micrometers or less (PM2.5). It will also 
incrementally reduce air toxic emissions. A detailed analysis of the 
effects of this proposal on emissions and emission inventories can be 
found in Chapter 3 of the Draft RIA.
    The contribution of exhaust and evaporative emissions from Small SI 
and Marine SI engines to total 50-state emission inventories is 
significant and will remain so into the future. Table XII-1 presents 
the nationwide inventory for these engines for both 2001 and 2020. (The 
inventories cover all Small SI and Marine SI engines including the 
portion of Small SI engines regulated by the California ARB.) Table 
XII-1 shows that for the primary pollutants affected by this proposal, 
these engines contribute about 25 to 30 percent of the nationwide VOC 
emissions from all mobile sources. The nationwide contribution to the 
total mobile source NOX inventory is about 5 percent or 
less. Finally, for PM2.5, the contribution ranges from about 
25 to 30 percent.

[[Page 28217]]



 Table XII-1.--Contribution of Small Nonroad and Marine SI Engines to National (50-State) Mobile Source Emission
                                                   Inventories
----------------------------------------------------------------------------------------------------------------
                                                               2001                            2020
                                                 ---------------------------------------------------------------
                                                     Small SI/                       Small SI/
                    Pollutant                        marine SI      Percent of       marine SI      Percent of
                                                    inventory,     mobile source    inventory,     mobile source
                                                       tons          inventory         tons          inventory
----------------------------------------------------------------------------------------------------------------
VOC.............................................       2,239,056              28       1,351,739              27
NOX.............................................         159,051               1         201,789               4
PM2.5...........................................          42,294               9          39,271              16
CO..............................................      20,867,436              24      16,373,518              31
----------------------------------------------------------------------------------------------------------------

(1) VOC
    Table XII-2 shows the VOC emissions and emission reductions we 
expect both with and without the proposed standards for engines, 
equipment, and vessels affected by the proposal. In 2001, Small SI and 
Marine SI emitted approximately 1,081,000 and 961,000 tons of VOC, 
respectively. Without the proposed standards, these emissions will 
decrease because of the effect of the existing emission control 
requirements to about 1,005,000 and 490,000 tons by 2040, respectively. 
With the proposed controls, this pollutant will be further reduced by 
34 percent for Small SI engines and 74 percent for Marine SI engines by 
2040. The VOC emission inventory trends over time for both categories 
of engines that are subject to the proposal are shown in Figure XII-1.

   Table XII-2.--National (50-State) VOC Emissions and Emission Reductions for Small SI and Marine SI Engines
----------------------------------------------------------------------------------------------------------------
                                                      Without      With proposed                      Percent
          Year                   Category          proposed rule       rule          Reduction       reduction
----------------------------------------------------------------------------------------------------------------
2001....................  Small Engine..........       1,080,898       1,080,898
                          Marine................         961,240         961,240
                          Both..................       2,042,138       2,042,138
2015....................  Small Engine..........         708,331         510,617         197,714              28
                          Marine................         513,105         372,020         141,086              27
                          Both..................       1,221,436         882,637         338,799              28
2020....................  Small Engine..........         764,453         508,677         255,776              33
                          Marine................         466,624         232,697         233,927              50
                          Both..................       1,231,078         741,375         489,703              40
2030....................  Small Engine..........         884,188         581,766         302,422              34
                          Marine................         464,490         135,956         328,533              71
                          Both..................       1,348,678         717,723         630,955              47
2040....................  Small Engine..........       1,005,403         659,976         345,427              34
                          Marine................         490,052         127,158         362,893              74
                          Both..................       1,495,455         787,135         708,320              47
----------------------------------------------------------------------------------------------------------------


[[Page 28218]]

[GRAPHIC] [TIFF OMITTED] TP18MY07.001

(2) NOX
    Table XII-3 shows the NOX emissions and emission 
reductions we expect both with and without the proposed standards for 
engines affected by the proposal. In 2001, Small SI and Marine SI 
emitted approximately 102,000 and 41,500 tons of NOX, 
respectively. Without the proposed standards, these emissions will 
increase to about 135,000, and 95,400 tons by 2040, respectively. With 
the proposed controls, this pollutant will be reduced by 47 percent for 
Small SI engines and 51 percent for Marine SI engines by 2040. The 
NOX emission inventory trends over time for both categories 
of engines that are subject to the proposal are shown in Figure XII-2.

   Table XII-3.--National (50-State) NOX Emissions and Emission Reductions for Small SI and Marine SI Engines
----------------------------------------------------------------------------------------------------------------
                                                      Without      With proposed                      Percent
          Year                   Category          proposed rule       rule          Reduction       reduction
----------------------------------------------------------------------------------------------------------------
2001....................  Small Engine..........         101,928         101,928
                          Marine................          41,514          41,514
                          Both..................         143,442         143,442
2015....................  Small Engine..........          94,432          58,117          36,315              38
                          Marine................          73,583          59,024          14,558              20
                          Both..................         168,015         117,141          50,874              30
2020....................  Small Engine..........         102,310          55,241          47,069              46
                          Marine................          80,655          55,656          24,999              31
                          Both..................         182,965         110,896          72,069              39
2030....................  Small Engine..........         118,615          62,778          55,837              47
                          Marine................          89,225          46,859          42,366              47
                          Both..................         207,840         109,637          98,203              47
2040....................  Small Engine..........         135,136          71,361          63,775              47
                          Marine................          95,440          46,874          48,567              51
                          Both..................         230,577         118,235         112,342              49
----------------------------------------------------------------------------------------------------------------


[[Page 28219]]

[GRAPHIC] [TIFF OMITTED] TP18MY07.002

(3) PM2.5
    Table XII-4 shows the PM2.5 emissions and emission reductions we 
expect both with and without the proposed standards for engines 
affected by the proposal. In 2001, Small SI and Marine SI emitted 
23,200 and 15,600 tons of PM2.5, respectively. Without the proposed 
standards, the PM2.5 emissions from Small SI engines will increase to 
39,100 by 2040, while those from Marine SI will decrease to about 6,000 
tons in that year due to the effects of the existing emission control 
requirements for certain types of recreational marine engines, e.g, 
outboards. With the proposed controls, this pollutant will be reduced 
by 5 percent for Small SI engines and a further 84 percent for Marine 
SI engines by 2040. The PM2.5 emission inventory trends over time for 
both categories of engines that are subject to the proposal are shown 
in Figure XII-3.

  Table XII-4.--National (50-State) PM2.5 Emissions and Emission Reductions for Small SI and Marine SI Engines
----------------------------------------------------------------------------------------------------------------
                                                      Without      With proposed                      Percent
          Year                   Category          proposed rule       rule          Reduction       reduction
----------------------------------------------------------------------------------------------------------------
2001....................  Small Engine..........          23,163          23,163
                          Marine................          15,625          15,625
                          Both..................          38,789          38,789
2015....................  Small Engine..........          27,747          26,647           1,100               4
                          Marine................           6,823           4,666           2,157              32
                          Both..................          34,570          31,313           3,256               9
2020....................  Small Engine..........          30,009          28,574           1,435               5
                          Marine................           5,908           2,448           3,461              59
                          Both..................          35,917          31,022           4,896              14
2030....................  Small Engine..........          34,535          32,849           1,686               5
                          Marine................           5,719           1,107           4,613              81
                          Both..................          40,255          33,956           6,299              16
2040....................  Small Engine..........          39,079          37,153           1,926               5
                          Marine................           6,016             985           5,031              84
                          Both..................          45,095          38,138           6,957              15
----------------------------------------------------------------------------------------------------------------


[[Page 28220]]

[GRAPHIC] [TIFF OMITTED] TP18MY07.003

(4) CO
    Table XII.-5 shows the CO emissions and emission reductions we 
expect both with and without the proposed standards for engines 
affected by the proposal. In 2001, Small SI and Marine SI emitted 
16,108,000 and 2,585,000 tons of PM2.5, respectively. Without the 
proposed standards, these emissions will increase slightly for Small SI 
engines to 16,727,000 and decrease slightly for Marine SI engines to 
2,122,000 tons by 2040, respectively. With the proposed controls, this 
pollutant will be reduced by 16 percent for Small SI engines and a 
further 22 percent for Marine SI engines by 2040. The CO emission 
inventory trends over time for both categories of engines that are 
subject to the proposal are shown in Figure XII-4.

    Table XII-5.--National (50-State) CO Emissions and Emission Reductions for Small SI and Marine SI Engines
----------------------------------------------------------------------------------------------------------------
                                                      Without      With proposed                      Percent
          Year                   Category          proposed rule       rule          Reduction       reduction
----------------------------------------------------------------------------------------------------------------
2001....................  Small Engine..........      16,108,103      16,108,103  ..............  ..............
                          Marine................       2,584,786       2,584,786  ..............  ..............
                          Both..................      18,692,890      18,692,890  ..............  ..............
2015....................  Small Engine..........      11,797,078      10,317,051       1,480,027              13
                          Marine................       2,031,684       1,883,241         148,443               7
                          Both..................      13,828,762      12,200,291       1,628,471              12
2020....................  Small Engine..........      12,712,775      10,782,258       1,930,518              15
                          Marine................       1,968,663       1,718,956         249,707              13
                          Both..................      14,681,439      12,501,214       2,180,225              15
2030....................  Small Engine..........      14,700,521      12,411,661       2,288,860              16
                          Marine................       2,009,248       1,607,678         401,570              20
                          Both..................      16,709,768      14,019,339       2,690,429              16
2040....................  Small Engine..........      16,726,708      14,113,517       2,613,191              16
                          Marine................       2,122,336       1,665,392         456,943              22
                          Both..................      18,849,044      15,778,910       3,070,134              16
----------------------------------------------------------------------------------------------------------------


[[Page 28221]]

[GRAPHIC] [TIFF OMITTED] TP18MY07.004

B. Estimated Costs

    In assessing the economic impact of setting emission standards, we 
have made a best estimate of the costs associated with the technologies 
we anticipate manufacturers will use in meeting the standards. In 
making our estimates for the proposed rule, we have relied on our own 
technology assessment, which includes information developed by EPA's 
National Vehicle and Fuel Emissions Laboratory (NVFEL). Estimated costs 
include variable costs (e.g. hardware and assembly time) and fixed 
costs (e.g. research and development, retooling, engine certification 
and test cell upgrades to 40 CFR 1065 requirements). We projected that 
manufacturers will recover the fixed costs over five years of 
production and used an amortization rate of 7 percent in our analysis. 
The analysis also considers total operating costs, including 
maintenance and fuel consumption. Cost estimates based on the projected 
technologies represent an expected change in the cost of engines as 
they begin to comply with new emission standards. All costs are 
presented in 2005 dollars. Full details of our cost analysis can be 
found in Chapter 6 of the Draft RIA. Estimated costs related to exhaust 
emissions were also subject to peer review, as described in a set of 
peer review reports that are available in the docket for this 
rulemaking.
    Cost estimates based on the current projected costs for our 
estimated technology packages represent an expected incremental cost of 
equipment in the near term. For the longer term we have identified 
factors that would cause cost impacts to decrease over time. First, as 
noted above, we project that manufacturers will spread their fixed 
costs over the first five years of production. After the fifth year of 
production, we project that the fixed costs would be retired and the 
unit costs could be reduced as a result.
    The cost analysis considers both long-term and short-term costs. We 
expect that over time, manufacturers will undergo a learning process 
that will lead to lower variable costs. For instance, the analysis 
incorporates the expectation that Small SI engine manufacturers will 
optimize the catalyst muffler offerings available and thereby 
streamline their production and reduce costs. The cost analysis 
generally incorporates this learning effect by decreasing estimated 
variable costs by 20 percent starting in the sixth year of production. 
Long-term impacts on costs are expected to decrease as manufacturers 
fully amortize their fixed costs and learn to optimize their designs 
and production processes to meet the standards more efficiently. The 
learning curve has not been applied to Small SI EFI systems due to the 
fact that the technologies are currently well established on similar 
sized engines in other applications.
    We project average costs to comply with the proposed exhaust 
emission standards for Small SI engines and equipment to range from $9-
$15 per Class I equipment to meet the Phase 3 standards. We anticipate 
the manufacturers will meet the emission standard with several 
technologies including engine improvements and catalysts. For Class II 
equipment, we project average costs to range from $22-$47 per equipment 
to meet the proposed emission standards. We anticipate the 
manufacturers of Class II engines would meet the proposed exhaust 
emission standards by engine improvements and adding catalysts and/or 
electronic fuel injection to their engines.
    For Small SI equipment, we have also estimated a per-unit cost for 
the proposed evaporative emission standards. The average short-term 
costs without fuel savings are projected to be $0.82 for handheld 
equipment, $3.16 for Class I equipment, and $6.90 for Class II 
equipment. These costs are based on fuel tank and fuel line permeation 
control, and for non-handheld equipment, running loss and diffusion

[[Page 28222]]

control. Because evaporative emissions are composed of otherwise usable 
fuel that is lost to the atmosphere, measures that reduce evaporative 
emissions will result in fuel savings. We estimate that the average 
fuel savings, due to permeation control, be about 1.2 gallons over the 
5-year average operating lifetime. This translates to a discounted 
lifetime savings of more than $2 at an average fuel price of $1.81 per 
gallon.
    For marine engines, we estimated per-engine costs for OB, PWC, and 
SD/I engines for meeting the proposed exhaust emission standards. The 
short-term cost estimates without fuel savings are $280 for OB, $360 
for PWC, and $360 for SD/I engines. For OB/PWC engines, we anticipate 
that manufacturers would meet the standards through the expanded 
production of existing low-emission technologies such as four-stroke 
and direct-injection two-stroke engines. For SD/I engines, we 
anticipate that manufacturers would use catalytic control to meet the 
proposed standards.
    For marine vessels, we have also estimated a per-unit cost for the 
proposed evaporative emission standards. The average short-term costs 
without fuel savings are projected to be $12 for boats with portable 
fuel tanks, $17 for PWC, and $74 for boats with installed fuel tanks. 
These costs are based on fuel tank and fuel line permeation control and 
diurnal emission control. For portable fuel tanks, diurnal emission 
control is based on an automatic sealing vent, for PWC we estimate that 
changes will not be necessary from current designs, and for other boats 
with installed fuel tanks, the estimated costs are based on the use of 
a passively-purged carbon canister. Because evaporative emissions are 
composed of otherwise usable fuel that is lost to the atmosphere, 
measures that reduce evaporative emissions will result in fuel savings. 
We estimate that the average fuel savings, due to permeation control, 
be about 31 gallons over the 15-year average operating lifetime. This 
translates to a discounted lifetime savings of about $36 at an average 
fuel price of $1.81 per gallon.

C. Cost per Ton

    We have calculated the cost per ton of the Phase 3 standards 
contained in this proposal by estimating costs and emission benefits 
for these engines. We made our best estimates of the combination of 
technologies that engine manufacturers might use to meet the new 
standards, best estimates of resultant changes to equipment design, 
engine manufacturer compliance program costs, and fuel savings in order 
to assess the expected economic impact of the proposed Phase 3 emission 
standards for Small SI engines and Marine SI engines. Emission 
reduction benefits are taken from the results of the Inventory chapter 
of the RIA (Chapter 3).
    A summary of the annualized costs to Small SI and Marine SI engine 
manufacturers is presented in Table XII-6. These annualized costs are 
over a 30-year period and presented both with a 3-percent and a 7-
percent discount rate. The annualized fuel savings for Small SI engines 
are due to reduced fuel costs from the use of electronic fuel injection 
on Class II engines as well as fuel savings from evaporative measures 
on all Small SI engines. The annualized fuel savings for Marine SI 
engines are due to reduced fuel costs from the expected elimination of 
2-stroke outboard motors from the new engine fleet as well as fuel 
savings from evaporative emission controls on all vessels.

  Table XII-6.--Estimated Annualized Cost to Manufacturers and Annualized Fuel Savings over 30 Years Due to the
                                 Phase 3 Small SI and Marine SI Engine Standards
                                     [2005$, 3 and 7 percent discount rates]
----------------------------------------------------------------------------------------------------------------
                                                                 Annualized cost to      Annualized fuel savings
                                                               manufactuers (millions/        (millions/yr)
           Engine category              Emissions category               yr)           -------------------------
                                                             --------------------------
                                                                   3%           7%           3%           7%
----------------------------------------------------------------------------------------------------------------
Small SI Engines....................  Exhaust...............         $281         $267          $71          $63
                                      Evaporative...........           70           67           58           52
                                      Aggregate.............          350          334          129          114
Marine SI Engines...................  Exhaust...............          134          141           76           67
                                      Evaporative...........           26           26           29           25
                                      Aggregate.............          160          167          105           92
----------------------------------------------------------------------------------------------------------------

    We have estimated the Small SI and Marine SI engine cost per ton of 
the Phase 3 HC+NOX standards over the typical lifetime of 
the equipment that are covered by this proposal. We have examined the 
cost per ton by performing a nationwide cost per ton analysis in which 
the net present value of the cost of compliance per year is divided by 
the net present value of the HC+NOX benefits over 30 years. 
The resultant discounted cost per ton is presented in Table XII-7. The 
total (exhaust and evaporative) cost per ton, using a 7 percent 
discount rate, with fuel savings is $950 for Small SI equipment and 
$350 for marine vessels. For the proposal as a whole, the cost per ton 
of HC+NOX reduction is $660. Reduced operating costs offset 
a portion of the increased cost of producing the cleaner Small SI and 
Marine SI engines. Reduced fuel consumption also offsets the costs of 
permeation control. Chapter 7 of the RIA contains a more detailed 
discussion of the cost per ton analysis.

                      Table XII-7.--Estimated Cost Per Ton of the HC+NOX Emission Standards
                                     [2005$, 3 and 7 percent discount rates]
----------------------------------------------------------------------------------------------------------------
                                                                                      Discounted cost per ton
                                                                                 -------------------------------
                            Category                              Implementation   Without fuel      With fuel
                                                                       dates       savings  (3%/   savings  (3%/
                                                                                        7%)             7%)
----------------------------------------------------------------------------------------------------------------
Small SI Exhaust................................................       2011-2012     $1700/$1860     $1270/$1420

[[Page 28223]]

 
Small SI Evaporative............................................       2008-2013         720/770         120/170
Marine SI Exhaust...............................................       2009-2013         690/820         300/430
Marine SI Evaporative...........................................       2009-2012         530/630         (70)/35
Aggregate.......................................................       2008-2013        660/1120         226/660
----------------------------------------------------------------------------------------------------------------

    As is discussed above, we are also expecting some reduction in 
direct PM emissions and carbon monoxide. These reductions will come 
primarily as product of the technology being used to meet HC and 
NOX standards and not directly as a result of the 
implementation of specific technology to achieve these gains. Thus, we 
have elected to focus our cost per ton analysis on HC+NOX.
    One useful purpose of cost per ton analysis is to compare this 
program to other programs designed to achieve similar air quality 
objectives. Toward that end, we made a comparison between the 
HC+NOX cost per ton values presented in Table C-2 and the 
HC+NOX cost per ton of other recent mobile source programs. 
Table XII-8 summarizes the HC+NOX cost per ton of several 
recent EPA actions for controlled emissions from mobile sources. While 
the analyses for each rule were not completely identical, it is clear 
that the Small SI and Marine SI values compare favorably with the other 
recent actions.

   Table XII-8.--Cost Per Ton of Previously Implemented HC+NOX Mobile
                             Source Programs
              [2005$, 7 percent discount with fuel savings]
------------------------------------------------------------------------
                                                            Discounted
                         Program                           cost per ton
------------------------------------------------------------------------
2002 HH engines Phase 2.................................             840
2001 NHH engines Phase 2................................           * neg
1998 Marine SI engines..................................            1900
2004 Comm Marine CI.....................................             200
2007 Large SI exhaust...................................              80
2006 ATV exhaust........................................             300
2006 Off-highway motorcycle.............................             290
2006 Recreational marine CI.............................             700
2010 Snowmobile.........................................            1430
2006 <50cc highway motorcycle...........................            1860
2010 Class 3 highway motorcycle.........................            1650
------------------------------------------------------------------------
* Fuel savings outweigh engineering/hardware costs.

D. Air Quality Impact

    Information on the air quality impacts of this proposed action can 
be found in Section II of this preamble. Section II includes health 
effect information on ozone, PM, CO and air toxics. It also includes 
modeled projections of future ozone concentrations with and without the 
controls detailed in this proposal. The proposed emission reductions 
would lead to reductions in ambient concentrations of ozone, PM, CO and 
air toxics.

E. Benefits

    This section presents our analysis of the health and environmental 
benefits that can be expected to occur as a result of the proposed 
Small SI and Marine SI engine standards throughout the period from 
initial implementation through 2030. Nationwide, the engines that are 
subject to the proposed emission standards in this rule are a 
significant source of mobile source air pollution. The proposed 
standards would reduce exposure to hydrocarbon, CO and NOX 
emissions and help avoid a range of adverse health effects associated 
with ambient ozone and PM2.5 levels. In addition, the 
proposed standards would help reduce exposure to CO, air toxics, and 
PM2.5 for persons who operate or who work with or are 
otherwise active in close proximity to these engines.
    EPA typically quantifies PM- and ozone-related benefits in its 
regulatory impact analyses (RIAs) when possible. In the analysis of 
past air quality regulations, ozone-related benefits have included 
morbidity endpoints and welfare effects such as damage to commercial 
crops. EPA has not recently included a separate and additive mortality 
effect for ozone, independent of the effect associated with fine 
particulate matter. For a number of reasons, including (1) Advice from 
the Science Advisory Board (SAB) Health and Ecological Effects 
Subcommittee (HEES) that EPA consider the plausibility and viability of 
including an estimate of premature mortality associated with short-term 
ozone exposure in its benefits analyses and (2) conclusions regarding 
the scientific support for such relationships in EPA's 2006 Air Quality 
Criteria for Ozone and Related Photochemical Oxidants (the CD), EPA is 
in the process of determining how to appropriately characterize ozone-
related mortality benefits within the context of benefits analyses for 
air quality regulations. As part of this process, we are seeking advice 
from the National Academy of Sciences (NAS) regarding how the ozone-
mortality literature should be used to quantify the reduction in 
premature mortality due to diminished exposure to ozone, the amount of 
life expectancy to be added and the

[[Page 28224]]

monetary value of this increased life expectancy in the context of 
health benefits analyses associated with regulatory assessments. In 
addition, the agency has sought advice on characterizing and 
communicating the uncertainty associated with each of these aspects in 
health benefit analyses.
    Since the NAS effort is not expected to conclude until 2008, the 
agency is currently deliberating how best to characterize ozone-related 
mortality benefits in its rulemaking analyses in the interim. For the 
analysis of the proposed standards, we do not quantify an ozone 
mortality benefit. So that we do not provide an incomplete picture of 
all of the benefits associated with reductions in emissions of ozone 
precursors, we have chosen not to include an estimate of total ozone 
benefits in the proposed RIA. By omitting ozone benefits in this 
proposal, we acknowledge that this analysis underestimates the benefits 
associated with the proposed standards. Our analysis, however, 
indicates that the rule's monetized PM2.5 benefits alone 
substantially exceed our estimate of the costs.
    The PM2.5 benefits are scaled based on relative changes 
in PM2.5 precursor emissions (direct PM and NOX) 
between this rule and the proposed Clean Air Nonroad Diesel (CAND) 
rule. As explained in Section 8.2.1 of the RIA for this rule, the 
PM2.5 benefits scaling approach is limited to those studies, 
health impacts, and assumptions that were used in the proposed CAND 
analysis. As a result, PM-related premature mortality is based on the 
updated analysis of the American Cancer Society cohort (ACS; Pope et 
al., 2002).\107\ However, it is important to note that since the CAND 
rule, EPA's Office of Air and Radiation (OAR) has adopted a different 
format for its benefits analyses in which characterization of the 
uncertainty in the concentration-response function is integrated into 
the main benefits analysis. This new approach follows the 
recommendation of NRC's 2002 report ``Estimating the Public Health 
Benefits of Proposed Air Pollution Regulations'' to begin moving the 
assessment of uncertainties from its ancillary analyses into its main 
benefits presentation through the conduct of probabilistic 
analyses.\108\ Within this context, additional data sources are 
available, including a recent expert elicitation and updated analysis 
of the Six-Cities Study cohort (Laden et al., 2006).\109\ Please see 
the PM NAAQS RIA for an indication of the sensitivity of our results to 
use of alternative concentration-response functions. The 
PM2.5-related benefits associated with the proposed 
standards are presented in table XII-9.
---------------------------------------------------------------------------

    \107\ Pope, C.A., III, R.T. Burnett, M.J. Thun, E.E. Calle, D. 
Krewski, K. Ito, and G.D. Thurston. 2002. ``Lung Cancer, 
Cardiopulmonary Mortality, and Long-term Exposure to Fine 
Particulate Air Pollution.'' Journal of the American Medical 
Association 287:1132-1141.
    \108\ National Research Council (NRC). 2002. Estimating the 
Public Health Benefits of Proposed Air Pollution Regulations. 
Washington, DC: The National Academies Press.
    \109\ Laden, F., J. Schwartz, F.E. Speizer, and D.W. Dockery. 
2006. Reduction in Fine Particulate Air Pollution and Mortality. 
American Journal of Respiratory and Critical Care Medicine. 173: 
667-672.
---------------------------------------------------------------------------

    It should be noted that since the CAND rule, EPA's Office of Air 
and Radiation (OAR) has adopted a different format for its benefits 
analysis in which characterization of uncertainty is integrated into 
the main benefits analysis. The benefits scaling approach used in the 
analysis of the proposed standards limits our ability to integrate 
uncertainty into the main analysis. For the benefits analysis of the 
final standards, we will adopt this integrated uncertainty approach. 
Please see the PM NAAQS RIA for an indication of the uncertainty 
present in the base estimate of benefits and the sensitivity of our 
results to the use of alternative concentration-response functions.

   Table XII-9.--Estimated Monetized PM-Related Health Benefits of the
                           Proposed Standards
------------------------------------------------------------------------
                                              Total Benefits a, b, c
                                                 (billions 2005$)
                                         -------------------------------
                                               2020            2030
------------------------------------------------------------------------
Using a 3% discount rate................        $2.1 + B        $3.4 + B
Using a 7% discount rate................        $1.9 + B       $3.1 + B
------------------------------------------------------------------------
\a\ Benefits include avoided cases of mortality, chronic illness, and
  other morbidity health endpoints. PM-related mortality benefits
  estimated using an assumed PM threshold at background levels (3 [mu]g/
  m3). There is uncertainty about which assumed threshold to use and
  this may impact the magnitude of the total benefits estimate. For a
  more detailed discussion of this issue, please refer to Section
  8.6.2.2 of the RIA.
\b\ For notational purposes, unquantified benefits are indicated with a
  ``B'' to represent the sum of additional monetary benefits and
  disbenefits. A detailed listing of unquantified health and welfare
  effects is provided in Table XII-12.
\c\ Results reflect the use of two different discount rates: 3 and 7
  percent, which are recommended by EPA's Guidelines for Preparing
  Economic Analyses\110\ and OMB Circular A-4.\111\ Results are rounded
  to two significant digits for ease of presentation and computation.

(1) Quantified Human Health and Environmental Effects of the Proposed 
Standards
---------------------------------------------------------------------------

    \110\ U.S. Environmental Protection Agency. September 2000. 
Guidelines for Preparing Economic Analyses. EPA 240-R-00-003.
    \111\ U.S. Office of Management and Budget (OMB). 2003. Circular 
A-4 Guidance for Federal Agencies Preparing Regulatory Analyses, 
Available at: http://www/whitehouse.gov/omb/inforeg/iraguide.html. 
Accessed December 15, 2005.
---------------------------------------------------------------------------

    In this section we discuss the PM2.5 benefits of the 
proposed standards. To estimate PM2.5 benefits, we rely on a 
benefits transfer technique. The benefits transfer approach uses as its 
foundation the relationship between reductions in precursors to 
PM2.5 (NOX and direct PM2.5 emissions) 
and ambient PM2.5 concentrations modeled across the 
contiguous 48 states (and DC) for the Clean Air Nonroad Diesel (CAND) 
proposal.\112\ For a given future year, we first calculate the ratio 
between CAND direct PM2.5 emission reductions and direct 
PM2.5 emission reductions associated with the proposed 
control standards (proposed emission reductions/CAND emission 
reductions). We calculate a similar ratio for NOX. We then 
multiply these ratios by the percent that direct PM2.5 and 
NOX emissions, respectively, contribute towards population-
weighted reductions in ambient PM2.5 due to the CAND 
standards. This calculation results in a ``benefits apportionment 
factor'' for the relationship between direct PM emissions and ambient 
PM2.5 and NOX emissions and ambient 
PM2.5, which are then applied to the incidence and monetized 
benefits from the CAND proposal. In this way, we apportion the results 
of the proposed CAND analysis to its underlying PM precursor emission 
reductions and scale the apportioned

[[Page 28225]]

benefits to reflect differences in emission reductions between the two 
rules.\113\ This benefits transfer method is consistent with the 
approach used in other recent mobile and stationary source rules.\114\
---------------------------------------------------------------------------

    \112\ See 68 FR 28327, May 23, 2003.
    \113\ Note that while the proposed regulations control 
hydrocarbons (VOCs), which contribute to PM formation, the benefits 
transfer scaling approach only scales benefits based on 
NOX, SO2, and direct PM emission reductions. 
PM benefits will likely be underestimated as a result, though we are 
unable to estimate the magnitude of the underestimation. Note also 
that PM-related mortality benefits estimated for the CAND analysis 
used an assumed PM threshold at background levels (3 [mu]g/
m3). There is uncertainty about which threshold to use 
and this may impact the magnitude of the total benefits estimate. 
For a more detailed discussion of this issue, please refer to 
Chapter 8.2 of the RIA.
    \114\ See: Mobile Source Air Toxics proposed rule (71 FR 15803, 
March 29, 2006); Clean Air Nonroad Diesel final rule (69 FR 38958, 
June 29, 2004); Nonroad Large Spark-Ignition Engines and 
Recreational Engines standards (67 FR 68241, November 8, 2002); 
Final Industrial Boilers and Process Heaters NESHAP (69 FR 55217, 
September 13, 2004); Final Reciprocating Internal Combustion Engines 
NESHAP (69 FR 33473, June 15, 2004); Final Clean Air Visibility Rule 
(EPA-452/R-05-004, June 15, 2005); Ozone Implementation Rule 
(documentation forthcoming).
---------------------------------------------------------------------------

    Table XII-10 presents the primary estimates of reduced incidence of 
PM-related health effects for the years 2020 and 2030 for the proposed 
emission control strategy.\115\ In 2030, we estimate that PM-related 
annual benefits include approximately 450 fewer premature fatalities, 
290 fewer cases of chronic bronchitis, 800 fewer non-fatal heart 
attacks, 460 fewer hospitalizations (for respiratory and cardiovascular 
disease combined), 310,000 days of restricted activity due to 
respiratory illness and approximately 52,000 fewer work-loss days. We 
also estimate substantial health improvements for children from reduced 
upper and lower respiratory illness, acute bronchitis, and asthma 
attacks.
---------------------------------------------------------------------------

    \115\ The ``primary estimate'' refers to the estimate of 
benefits that reflects the suite of endpoints and assumptions that 
EPA believes yields the expected value of air quality improvements 
related to the proposed standards. The impact that alternative 
endpoints and assumptions have on the benefit estimates are explored 
in appendixes to the RIA.

    Table XII-10.--Estimated Annual Reductions in Incidence of Health
                                Effects a
------------------------------------------------------------------------
                                            2020 annual     2030 annual
              Health effect                  incidence       incidence
                                             reduction       reduction
------------------------------------------------------------------------
PM-Related Endpoints:
    Premature Mortality \b\--
    Adult, age 30 and over plus Infant,              290             450
     age < 1 year.......................
    Chronic bronchitis (adult, age 26                200             290
     and over)..........................
    Non-fatal myocardial infarction                  490             800
     (adult, age 18 and over)...........
    Hospital admissions--respiratory                 160             270
     (all ages) \c\.....................
    Hospital admissions--cardiovascular              130             200
     (adults, age > 18) \d\.............
    Emergency room visits for asthma                 210             310
     (age 18 years and younger).........
    Acute bronchitis, (children, age 8-              470             700
     12)................................
    Lower respiratory symptoms                     5,600           8,300
     (children, age 7-14)...............
    Upper respiratory symptoms                     4,300           6,300
     (asthmatic children, age 9-18).....
    Asthma exacerbation (asthmatic                 7,000          10,000
     children, age 6-18)................
    Work loss days......................          38,000          52,000
    Minor restricted activity days               220,000         310,000
     (adults age 18-65).................
------------------------------------------------------------------------
\a\ Incidence is rounded to two significant digits. The PM estimates
  represent benefits from the proposed rule nationwide. The ozone
  estimates only represent benefits from the Eastern 37 states and DC,
  though the program is national in scope.
\b\ PM-related adult mortality based upon studies by Pope, et al
  2002.\116\ PM-related infant mortality based upon studies by Woodruff,
  Grillo, and Schoendorf,1997.\117\
\c\ Respiratory hospital admissions for PM include admissions for
  chronic obstructive pulmonary disease (COPD), pneumonia and asthma.
\d\ Cardiovascular hospital admissions for PM include total
  cardiovascular and subcategories for ischemic heart disease,
  dysrhythmias, and heart failure.

(2) Monetized Benefits
    Table XII-11 presents the estimated monetary value of reductions in 
the incidence of health and welfare effects. Annual PM-related health 
benefits are approximately $3.4 billion in 2030, assuming a 3 percent 
discount rate (or $3.1 billion assuming a 7 percent discount rate). All 
monetized estimates are stated in 2005 dollars. These estimates account 
for growth in real gross domestic product (GDP) per capita between the 
present and the years 2020 and 2030. As the table indicates, total 
benefits are driven primarily by the reduction in premature fatalities 
each year, which accounts for well over 90 percent of total benefits.
---------------------------------------------------------------------------

    \116\ Pope, C.A., III, R.T. Burnett, M.J. Thun, E.E. Calle, D. 
Krewski, K. Ito, and G.D. Thurston. 2002. ``Lung Cancer, 
Cardiopulmonary Mortality, and Long-term Exposure to Fine 
Particulate Air Pollution.'' Journal of American Medical Association 
287:1132-1141.
    \117\ Woodruff, T.J., J. Grillo, and K.C. Schoendorf. 1997. 
``The Relationship Between Selected Causes of Postneonatal Infant 
Mortality and Particulate Infant Mortality and Particulate Air 
Pollution in the United States.'' Environmental Health Perspectives 
105(6):608-612.
---------------------------------------------------------------------------

    Table XII-11 indicates with a ``B'' those additional health and 
environmental benefits of the rule that we were unable to quantify or 
monetize. These effects are additive to the estimate of total benefits, 
and are related to the following sources:
     There are many human health and welfare effects associated 
with ozone, PM, and toxic air pollutant reductions that remain 
unquantified because of current limitations in the methods or available 
data. A full appreciation of the overall economic consequences of the 
proposed standards requires consideration of all benefits and costs 
expected to result from the new standards, not just those benefits and 
costs which could be expressed here in dollar terms. A listing of the 
benefit categories that could not be quantified or monetized in our 
benefit estimates are provided in Table XII-12.
     The PM air quality model only captures the benefits of air 
quality improvements in the 48 states and DC; PM benefits for Alaska 
and Hawaii are not reflected in the estimate of benefits.
---------------------------------------------------------------------------

    \118\ U.S. Environmental Protection Agency, 2000. Guidelines for 
Preparing Economic Analyses. www.yosemite1.epa.gov/ee/epa/eed/hsf/pages/Guideline.html.
    \119\ Office of Management and Budget, The Executive Office of 
the President, 2003. Circular A-4. http://www.whitehouse.gov/omb/circulars.

[[Page 28226]]



 Table XII-11.--Estimated Annual Monetary Value of Reductions in Incidence of Health and Welfare Effects (2005$)
                                                      a, b
----------------------------------------------------------------------------------------------------------------
                                                                                  2020 estimated  2030 estimated
                                                                                     value of        value of
               Health effect                              Pollutant                 reductions      reductions
                                                                                    (millions)      (millions)
----------------------------------------------------------------------------------------------------------------
PM-Related Premature mortality c, d
    Adult >30 years........................  PM2.5..............................
        3 percent discount rate............  ...................................          $2,000          $3,100
        7 percent discount rate............  ...................................           1,800           2,800
    Child <1 year..........................  ...................................               5               6
Chronic bronchitis (adults, 26 and over)...  PM2.5..............................              90             140
Non-fatal acute myocardial infarctions
    3 percent discount rate................  ...................................              50              77
    7 percent discount rate................  PM2.5..............................              48              75
Hospital admissions for respiratory causes.  PM2.5..............................             2.9             5.0
Hospital admissions for cardiovascular       PM2.5..............................             3.1             4.7
 causes.
Emergency room visits for asthma...........  PM2.5..............................            0.07            0.11
Acute bronchitis (children, age 8-12)......  PM2.5..............................            0.20            0.30
Lower respiratory symptoms (children, age 7- PM2.5..............................            0.11            0.16
 14).
Upper respiratory symptoms (asthma, age 9-   PM2.5..............................            0.13            0.19
 11).
Asthma exacerbations.......................  PM2.5..............................            0.36            0.54
Work loss days.............................  PM2.5..............................             5.8             7.0
Minor restricted activity days (MRADs).....  PM2.5..............................              14              19
Monetized Total \e\
    Base estimate:
        3 percent discount rate............  PM2.5..............................       2,100 + B       3,400 + B
        7 percent discount rate............  ...................................       1,900 + B      3,100 + B
----------------------------------------------------------------------------------------------------------------
\a\ Incidence is rounded to two significant digits. The PM estimates represent benefits from the proposed rule
  nationwide.
\b\ Monetary benefits adjusted to account for growth in real GDP per capita between 1990 and the analysis year
  (2020 or 2030).
\c\ Valuation of premature mortality based on long-term PM exposure assumes discounting over the SAB recommended
  20 year segmented lag structure described in the Regulatory Impact Analysis for the Final Clean Air Interstate
  Rule (March 2005). Results show 3 percent and 7 percent discount rates consistent with EPA and OMB guidelines
  for preparing economic analyses (US EPA, 2000 and OMB, 2003).118, 119
\d\ Adult mortality based upon the ACS cohort study (Pope et al., 2002). Infant mortality based upon studies by
  Woodruff, Grillo, and Schoendorf, 1997.
\e\ B represents the monetary value of health and welfare benefits not monetized. A detailed listing is provided
  in Table XII-12.


  Table XII-12.--Unquantified and Non-Monetized Effects of the Proposed
          Small Spark Ignition/Recreational Marine Engine Rule
------------------------------------------------------------------------
                                       Effects not included in primary
         Pollutant/effects                 estimates--changes in:
------------------------------------------------------------------------
Ozone Health a....................  Premature mortality: short-term
                                     exposures b.
                                    Hospital admissions: respiratory.
                                    Emergency room visits for asthma.
                                    Minor restricted-activity days.
                                    School loss days.
                                    Asthma attacks.
                                    Cardiovascular emergency room
                                     visits.
                                    Acute respiratory symptoms.
                                    Chronic respiratory damage.
                                    Premature aging of the lungs.
                                    Non-asthma respiratory emergency
                                     room visits.
                                    Increased exposure to UVb.
Ozone Welfare.....................  Yields for
                                       --commercial forests.
                                       --some fruits and vegetables.
                                       --non-commercial crops.
                                    Damage to urban ornamental plants.
                                    Impacts on recreational demand from
                                     damaged forest aesthetics.
                                    Ecosystem functions.
                                    Increased exposure to UVb.
PM Health c.......................  Premature mortality--short term
                                     exposures d.
                                    Low birth weight.
                                    Pulmonary function.
                                    Chronic respiratory diseases other
                                     than chronic bronchitis.
                                    Non-asthma respiratory emergency
                                     room visits.
                                    Exposure to UVb ()e.
PM Welfare........................  Visibility in Class I areas.
                                    Residential and recreational
                                     visibility in non-Class I areas.
                                    Soiling and materials damage.
                                    Damage to ecosystem functions.
                                    Exposure to UVb () e.

[[Page 28227]]

 
Nitrogen and Sulfate Deposition     Commercial forests due to acidic
 Welfare.                            sulfate and nitrate deposition.
                                    Commercial freshwater fishing due to
                                     acidic deposition.
                                    Recreation in terrestrial ecosystems
                                     due to acidic deposition.
                                    Existence values for currently
                                     healthy ecosystems.
                                    Commercial fishing, agriculture, and
                                     forests due to nitrogen deposition.
                                    Recreation in estuarine ecosystems
                                     due to nitrogen deposition.
                                    Ecosystem functions.
                                    Passive fertilization.
CO Health.........................  Behavioral effects.
HC Health f.......................  Cancer (benzene, 1,3-butadiene,
                                     formaldehyde, acetaldehyde).
                                    Anemia (benzene).
                                    Disruption of production of blood
                                     components (benzene).
                                    Reduction in the number of blood
                                     platelets (benzene).
                                    Excessive bone marrow formation
                                     (benzene).
                                    Depression of lymphocyte counts
                                     (benzene).
                                    Reproductive and developmental
                                     effects (1,3-butadiene).
                                    Irritation of eyes and mucus
                                     membranes (formaldehyde).
                                    Respiratory irritation
                                     (formaldehyde).
                                    Asthma attacks in asthmatics
                                     (formaldehyde).
                                    Asthma-like symptoms in non-
                                     asthmatics (formaldehyde).
                                    Irritation of the eyes, skin, and
                                     respiratory tract (acetaldehyde).
                                    Upper respiratory tract irritation
                                     and congestion (acrolein).
HC Welfare........................  Direct toxic effects to animals.
                                    Bioaccumulation in the food chain.
                                    Damage to ecosystem function.
                                    Odor.
------------------------------------------------------------------------
a In addition to primary economic endpoints, there are a number of
  biological responses that have been associated with ozone health
  effects including increased airway responsiveness to stimuli,
  inflammation in the lung, acute inflammation and respiratory cell
  damage, and increased susceptibility to respiratory infection. The
  public health impact of these biological responses may be partly
  represented by our quantified endpoints.
b Recent analyses provide evidence that short-term ozone exposure is
  associated with increased premature mortality. As a result, EPA is
  considering how to incorporate ozone mortality benefits into its
  benefits analyses as a separate estimate of the number of premature
  deaths that would be avoided due to reductions in ozone levels.
c In addition to primary economic endpoints, there are a number of
  biological responses that have been associated with PM health effects
  including morphological changes and altered host defense mechanisms.
  The public health impact of these biological responses may be partly
  represented by our quantified endpoints.
d While some of the effects of short-term exposures are likely to be
  captured in the estimates, there may be premature mortality due to
  short-term exposure to PM not captured in the cohort study upon which
  the primary analysis is based.
e May result in benefits or disbenefits.
f Many of the key hydrocarbons related to this rule are also hazardous
  air pollutants listed in the Clean Air Act.

(3) What Are the Significant Limitations of the Benefits Analysis?
    Every benefit-cost analysis examining the potential effects of a 
change in environmental protection requirements is limited to some 
extent by data gaps, limitations in model capabilities (such as 
geographic coverage), and uncertainties in the underlying scientific 
and economic studies used to configure the benefit and cost models. 
Deficiencies in the scientific literature often result in the inability 
to estimate quantitative changes in health and environmental effects, 
such as potential increases in premature mortality associated with 
increased exposure to carbon monoxide. Deficiencies in the economics 
literature often result in the inability to assign economic values even 
to those health and environmental outcomes which can be quantified. 
These general uncertainties in the underlying scientific and economics 
literature, which can cause the valuations to be higher or lower, are 
discussed in detail in the RIA and its supporting references. Key 
uncertainties that have a bearing on the results of the benefit-cost 
analysis of the proposed standards include the following:
     The exclusion of potentially significant and unquantified 
benefit categories (such as health, odor, and ecological benefits of 
reduction in ozone, air toxics, and PM);
     Errors in measurement and projection for variables such as 
population growth;
     Uncertainties in the estimation of future year emissions 
inventories and air quality, especially regarding the discrepancy 
between the modeled and proposed suite of standards and their impact on 
emissions inventories;
     Uncertainties associated with the scaling of the PM 
results of the modeled benefits analysis to the proposed standards, 
especially regarding the assumption of similarity in geographic 
distribution between emissions and human populations and years of 
analysis;
     Uncertainty in the estimated relationships of health and 
welfare effects to changes in pollutant concentrations including the 
shape of the concentration-response function, the size of the effect 
estimates, and the relative toxicity of the many components of the PM 
mixture;
     Uncertainties in exposure estimation; and
     Uncertainties associated with the effect of potential 
future actions to limit emissions.
    As Table XII-11 indicates, total benefits are driven primarily by 
the reduction in premature fatalities each year. Elaborating on the 
list of uncertainties above, some key assumptions underlying the 
primary estimate for the premature mortality category include the 
following:

[[Page 28228]]

     Inhalation of fine particles is causally associated with 
premature death at concentrations near those experienced by most 
Americans on a daily basis. Although biological mechanisms for this 
effect have not yet been completely established, the weight of the 
available epidemiological, toxicological, and experimental evidence 
supports an assumption of causality. The impacts of including a 
probabilistic representation of causality were explored in the expert 
elicitation-based results of the recently published PM NAAQS RIA. 
Because the analysis of the proposed standards is constrained to the 
studies included in the CAND PM benefits scaling approach, we are 
unable to conduct the same analysis of expert elicitation-based 
mortality incidence for the proposed standards.\120\ However, we 
qualitatively describe the expert elicitation-based mortality results 
associated with the final PM NAAQS to provide an indication of the 
sensitivity of our PM-related premature mortality results to use of 
alternative concentration-response functions. We present this 
discussion in the RIA.
---------------------------------------------------------------------------

    \120\ The scaling approach relies on the incidence and valuation 
estimates derived from the studies available at the time of the CAND 
analysis. Incidence estimates and monetized benefits derived from 
new information, including mortality derived from the full expert 
elicitation, are not available for scaling. Please refer to section 
2 of this preamble and Chapter 12 of the RIA for more information 
about the benefits scaling approach.
---------------------------------------------------------------------------

     Since the publication of CAIR, a follow up to the Harvard 
six-city study on premature mortality was published (Laden et al., 2006 
based on Dockery et al., 1993),121 122 which both confirmed 
the effect size from the first study and provided additional evidence 
that reductions in PM2.5 directly result in reductions in 
the risk of premature death. The impacts of including this study in the 
primary analysis were explored in the results of the recently published 
PM NAAQS RIA. Because the analysis of the proposed standards is 
constrained to the studies included in the CAND PM benefits scaling 
approach, we are unable to characterize PM-related mortality based on 
Laden et al. However, we discuss the implications of these results in 
the RIA for the proposed standards.
---------------------------------------------------------------------------

    \121\ Laden, F., J. Schwartz, F.E. Speizer, and D.W. Dockery. 
2006. Reduction in Fine Particulate Air Pollution and Mortality. 
American Journal of Respiratory and Critical Care Medicine. 173: 
667-672.
    \122\ Dockery, D.W., C.A. Pope, X.P. Xu, J.D. Spengler, J.H. 
Ware, M.E. Fay, B.G. Ferris, and F.E. Speizer. 1993. ``An 
Association between Air Pollution and Mortality in Six U.S. 
Cities.'' New England Journal of Medicine 329(24):1753-1759.
---------------------------------------------------------------------------

     All fine particles, regardless of their chemical 
composition, are equally potent in causing premature mortality. This is 
an important assumption, because PM produced via transported precursors 
emitted from Small SI and Marine SI engines may differ significantly 
from PM precursors released from electric generating units and other 
industrial sources. However, no clear scientific grounds exist for 
supporting differential effects estimates by particle type.
     The concentration-response function for fine particles is 
approximately linear within the range of ambient concentrations under 
consideration. Thus, the estimates include health benefits from 
reducing fine particles in areas with varied concentrations of PM, 
including both regions that may be in attainment with PM2.5 
standards and those that are at risk of not meeting the standards.
    Taking into account these uncertainties, we believe this benefit-
cost analysis provides a conservative estimate of the expected economic 
benefits of the proposed standards in future years because of the 
exclusion of potentially significant benefit categories. Acknowledging 
benefits omissions and uncertainties, we present a best estimate of the 
total benefits based on our interpretation of the best available 
scientific literature and methods. Furthermore, our analysis reflects 
many methodological improvements that were incorporated into the 
analysis of the final Clean Air Interstate Rule (CAIR), including a 
revised value of a statistical life, a revised baseline rate of future 
mortality, and a revised mortality lag assumption. Details of these 
improvements can be found in the RIA for this rule and in the final 
CAIR rule RIA.\123\ Once again, however, it should be noted that since 
the CAIR rule, EPA's Office of Air and Radiation (OAR) has adopted a 
different format for its benefits analysis in which characterization of 
uncertainty is integrated into the main benefits analysis. Please see 
the PM NAAQS RIA for an indication of the uncertainty present in the 
base estimate of benefits and the sensitivity of our results to the use 
of alternative concentration-response functions.
---------------------------------------------------------------------------

    \123\ See Chapter 4 of the Final Clean Air Interstate Rule RIA 
(http://www.epa.gov/cair) for a discussion of EPA's ongoing efforts 
to address the NAS recommendations in its regulatory analyses.
---------------------------------------------------------------------------

(4) How Do the Benefits Compare to the Costs of the Proposed Standards?
    The proposed rule establishes separate standards that reduce the 
evaporative and exhaust emissions from Small SI and Marine SI engines. 
A full appreciation of the overall economic consequences of these 
provisions requires consideration of the benefits and costs expected to 
result from each standard. Due to limitations in data availability and 
analytical methods, however, we are only able to present the benefits 
of the entire proposed rule in the aggregate for both PM2.5 
and ozone. There are also a number of health and environmental effects 
associated with the proposed standards that we were unable to quantify 
or monetize (see Table XII-12).
    Table XII-13 contains the estimates of monetized PM2.5-
related benefits of the proposed standards and estimated social welfare 
costs for each of the proposed control programs. The annual social 
welfare costs of all provisions of this proposed rule are described 
more fully in the next section. The results in Table XII-13 suggest 
that the 2020 and 2030 monetized benefits of the proposed standards are 
much greater than the expected social welfare costs. Specifically, the 
annual benefits of the program would be approximately $2.1 + B billion 
annually in 2020 using a three percent discount rate (or $1.9 + B 
billion using a seven percent discount rate), compared to estimated 
social welfare costs of approximately $252 million in that same year. 
The net benefits are expected to increase to $3.4 + B billion annually 
in 2030 using a three percent discount rate (or $3.1 + B billion using 
a seven percent discount rate), even as the social welfare costs of 
that program fall to $241 million.
    In Table XII-13, we present the costs and PM-related benefits 
related to each of the two broad engine classes regulated by the 
proposed standards: Small SI and Marine SI engines. Table XII-13 also 
presents the costs and PM-related benefits related to the specific 
engine classes regulated by the proposed standards: Small SI--Class I, 
Class II, and Handheld (HH); Marine SI--Sterndrive/Inboard (SD/I), and 
Outboard/Personal Water Craft (OB/PWC). Using the same PM scaling 
approach described in Chapter 8.2 of the RIA, we are able to split out 
the estimated PM benefits related to the different Small SI and Marine 
SI engine classes. One can see that in all cases, the PM benefits 
accrued by the engine classes are greater than the costs, even when 
fuel savings is not factored into the cost estimate. The benefit-to-
cost ratio would be even greater if we

[[Page 28229]]

estimated the ozone benefits related to the proposed standards.

  Table XII-13.--Summary of Annual Benefits, Costs, and Net Benefits of
            the Proposed Small SI and Marine SI Engine Rule a
------------------------------------------------------------------------
                                       2020  (Millions   2030  (Millions
             Description                  of  2005          of  2005
                                          dollars)          dollars)
------------------------------------------------------------------------
Estimated Social Welfare Costs b c
    Small SI........................             $351              $404
        Class I.....................              145               167
        Class II....................              199               229
        HH d........................                7                 8
    Marine SI.......................              154               164
        SD/I........................               41                44
        OB/PWC......................              113               120
            Total...................              505               569
            Fuel Savings............             (253)             (327)
Total Social Welfare Costs..........              252               241
Estimated Benefits e f
    PM-Only Small SI Benefits
        3 percent discount rate.....              861             1,280
        7 percent discount rate.....              782             1,160
            Class I
                3 percent discount                478               647
                 rate...............
                7 percent discount                434               587
                 rate...............
            Class II
                3 percent discount                383               627
                 rate...............
                7 percent discount                348               570
                 rate...............
    PM-Only Marine SI Benefits
        3 percent discount rate.....            1,280             2,110
        7 percent discount rate.....            1,160             1,190
            SD/I
        3 percent discount rate.....              209               487
        7 percent discount rate.....              190               442
            OB/PWC
        3 percent discount rate.....            1,070             1,620
        7 percent discount rate.....              969             1,470
Total PM-Only Benefits g
        3 percent discount rate.....          2,140+B           3,380+B
        7 percent discount rate.....          1,940+B           3,070+B
Annual Net PM-Only Benefits (Total
 Benefits-Total Costs) g
        3 percent discount rate.....          1,890+B           3,140+B
        7 percent discount rate.....          1,690+B          2,830+B
------------------------------------------------------------------------
\a\ All estimates are rounded to three significant digits and represent
  annualized benefits and costs anticipated for the years 2020 and 2030.
  Columnar totals may not sum due to rounding.
\b\ Note that costs are the annual total costs of reducing all
  pollutants associated with each provision of the proposed control
  package, while the benefits reflect the value of reductions in PM2.5
  only.
\c\ To calculate annual fixed costs, we use a 7 percent average before-
  tax rate of return on private capital (see Chapter 9). We do not
  present annual costs using an alternative rate of return. In Chapter
  9, however, we use both a 3 percent and 7 percent social discount rate
  to calculate the net present value of total social costs consistent
  with EPA and OMB guidelines for preparing economic analyses (US EPA,
  2000 and OMB, 2003).124 125
\d\ Handheld emission reductions associated with the proposed standards,
  volatile organic hydrocarbons, are not accounted for in the PM
  benefits scaling approach. The PM benefit scaling approach is based
  upon changes in NOX and direct PM2.5 (see section 8.2 of the RIA). We
  therefore do not estimate any PM-related benefits associated with
  emission reductions in the handheld engine class.
\e\ PM-related benefits in this table are nationwide.
\f\ Valuation of premature mortality based on long-term PM exposure
  assumes discounting over the SAB recommended 20-year segmented lag
  structure described in section 8.3 of the RIA. Valuation of non-fatal
  myocardial infarctions is based on the cost-of-illness over a 5-year
  period after the incident. The valuation of both endpoints therefore
  requires the use of a discount rate. We present the PM-related
  benefits results using a 3 percent and 7 percent social discount rate
  consistent with EPA and OMB guidelines for preparing economic analyses
  (US EPA, 2000 and OMB, 2003).
\g\ Not all possible benefits or disbenefits are quantified and
  monetized in this analysis. B is the sum of all unquantified benefits
  and disbenefits. Potential benefit categories that have not been
  quantified and monetized are listed in Table XII-12.

F. Economic Impact Analysis
---------------------------------------------------------------------------

    \124\ U.S. Environmental Protection Agency, 2000. Guidelines for 
Preparing Economic Analyses. http:// www.yosemite1.epa.gov/ee/epa/eed/hsf/pages/Guideline.html.
    \125\ Office of Management and Budget, The Executive Office of 
the President, 2003. Circular A-4. http://www.whitehouse.gov/omb/circulars.
---------------------------------------------------------------------------

    We prepared an Economic Impact Analysis (EIA) to estimate the 
economic impacts of the proposed emission control program on the Small 
SI and Marine SI engine and equipment markets. In this section we 
briefly describe the Economic Impact Model (EIM) we developed to 
estimate the market-level changes in price and outputs for affected 
markets, the social costs of the program, and the expected distribution 
of those costs across affected stakeholders. We also present the 
results of our analysis. We request comment on all aspects of the 
analysis,

[[Page 28230]]

including the model and the model inputs.
    We estimate the net social costs of the proposed program to be 
about $241 million in 2030.126, 127 This estimate reflects 
the estimated compliance costs associated with the Small SI and Marine 
SI engine standards and the expected fuel savings from improved 
evaporative controls. When the fuel savings are not taken into account, 
the results of the economic impact modeling suggest that the social 
costs of these programs are expected to be about $569 million in 2030. 
Consumers of Small SI and Marine products are expected to bear about 75 
percent of these costs. Small SI engine and equipment manufacturers are 
expected to bear 6 percent and 19 percent, respectively. We estimate 
fuel savings of about $327 million in 2030, which will accrue to 
consumers.
---------------------------------------------------------------------------

    \126\ All estimates presented in this section are in 2005$.
    \127\ This analysis is based on an earlier version of the 
engineering compliance developed for this rule. The net present 
value of the engineering costs used in this analysis (without taking 
the fuel savings into account, at a 3 percent discount rate over the 
period of the analysis) is $10.0 billion, which is about $100 
million less than the net present value of the final estimated 
engineering costs, $10.1 billion. We do not expect that a difference 
of this magnitude would change the overall results of this economic 
impact analysis, in terms of market impacts and how the costs are 
expected to be shared among stakeholders.
---------------------------------------------------------------------------

    With regard to market-level impacts in 2030, the average price 
increase for Small SI engines is expected to be about 9.1 percent ($17 
per unit). The average price increase for Marine SI engines is expected 
to be about 1.7 percent ($195 per unit). The largest average price 
increase for Small SI equipment is expected to be about 5.6 percent 
($15 per unit) for Class I equipment. The largest average price 
increase for Marine SI vessels is expected to be about 2.1 percent 
($178 per unit) for Personal Watercraft.
(1) What is an Economic Impact Analysis?
    An Economic Impact Analysis (EIA) is prepared to inform decision 
makers about the potential economic consequences of a regulatory 
action. The analysis consists of estimating the social costs of a 
regulatory program and the distribution of these costs across 
stakeholders. These estimated social costs can then be compared with 
estimated social benefits (as presented in Section XII.E). As defined 
in EPA's Guidelines for Preparing Economic Analyses, social costs are 
the value of the goods and services lost by society resulting from (a) 
The use of resources to comply with and implement a regulation and (b) 
reductions in output.\128\ In this analysis, social costs are explored 
in two steps. In the market analysis, we estimate how prices and 
quantities of goods affected by the proposed emission control program 
can be expected to change once the program goes into effect. In the 
economic welfare analysis, we look at the total social costs associated 
with the program and their distribution across stakeholders.
---------------------------------------------------------------------------

    \128\ EPA Guidelines for Preparing Economic Analyses, EPA 240-R-
00-003, September 2000, p 113. A copy of this document can be found 
at http://yosemite.epa.gov/ee/epa/eed.nsf/webpages/Guidelines.html.
---------------------------------------------------------------------------

(2) What Is the Economic Impact Model?
    The EIM is a behavioral model developed for this proposal to 
estimate price and quantity changes and total social costs associated 
with the emission controls under consideration. The EIM simulates how 
producers and consumers of affected products can be expected to respond 
to an increase in production costs as a result of the proposed emission 
control program. In this EIM, compliance costs are directly borne by 
producers of affected goods. Depending on the producers' and consumers' 
sensitivity to price changes, producers of affected products will try 
to pass some or all of the increased production costs on to the 
consumers of these goods through price increases. In response to the 
price increases, consumers will decrease their demand for the affected 
good. Producers will react to the decrease in quantity demanded by 
decreasing the quantity they produce; the market will react by setting 
a higher price for those fewer units. These interactions continue until 
a new market equilibrium quantity and price combination is achieved. 
The amount of the compliance costs that can be passed on to the 
consumers is ultimately limited by the price sensitivity of consumers 
and producers in the relevant market (represented by the price 
elasticity of demand or supply). The EIM explicitly models these 
behavioral responses and estimates the new equilibrium prices and 
output and the resulting distribution of social costs across these 
stakeholders (producers and consumers).
(3) What Economic Sectors Are Included in This Economic Impact 
Analysis?
    There are two broad economic sectors affected by the emission 
control program described in this proposal: (1) Small SI engines and 
equipment, and (2) Marine SI engines and equipment. For Small SI 
engines and equipment we distinguish between handheld and nonhandheld 
sectors. For handheld, we model one integrated handheld engine and 
equipment category. On the nonhandheld side, we model 6 engine 
categories, depending on engine class and useful life (Class I: UL125, 
UL250, and UL500; Class II: UL250, UL500, UL1000), and 8 equipment 
categories (agriculture/construction/general industrial; utility and 
recreational vehicles; lawn mowers; tractors; other lawn and garden; 
generator sets/welders; pumps/compressors/pressure washers; and 
snowblowers). For Marine SI engines and equipment, we distinguish 
between sterndrives and inboards (SD/I), outboards (OB), and personal 
watercraft (PWC). SD/I and OB are further categorized by whether they 
are luxury or not. All of these markets are described in more detail in 
Chapter 9 of the RIA and in the industry characterizations prepared for 
this proposal.
    This analysis assumes that all of these products are purchased and 
used by residential households. This means that to model the behavior 
change associated with the proposed standards we model all uses as 
residential lawn and garden care or power generation (Small SI) or 
personal recreation (Marine SI). We do not explicitly model commercial 
uses (how the costs of complying with the proposed programs may affect 
the production of goods and services that use Small SI or Marine SI 
engines or equipment as production inputs); we treat all commercial 
uses as if they were residential uses. We believe this approach is 
reasonable because the commercial share of the end use markets for both 
Small SI and Marine SI equipment is very small.\129\ In addition, for 
any commercial uses of these products the share of the cost of these 
products to total production costs is also small (e.g., the cost of a 
Small SI generator is only a very small part of the total production 
costs for a construction firm). Therefore, a price increase of the 
magnitude anticipated for this control program is not expected to have 
a noticeable impact on prices or quantities of goods or services 
produced using Small SI or Marine SI equipment as inputs (e.g., 
commercial turf care, construction, or fishing).
---------------------------------------------------------------------------

    \129\ The Outdoor Power Equipment Institute (OPEI) provides 
annual estimates of Small SI shipments (unit volumes) broken out 
into commercial and residential markets. For 2003 and 2004, the 
commercial share for NHH products is estimated to be 3.3 percent and 
2.8 percent, respectively; for all Small SI products is estimated to 
be 1.4 percent and 1.2 percent. Similarly, commercial uses of Marine 
SI vessels are limited. See the industry characterizations prepared 
for this proposal for more information (RTI, 2006).

---------------------------------------------------------------------------

[[Page 28231]]

    In the EIM the Small SI and Marine SI markets are not linked (there 
is no feedback mechanism between the Small SI and Marine SI market 
segments). This is appropriate because the affected equipment is not 
interchangeable and because there is very little overlap between the 
engine producers in each market. These two sectors represent different 
aspects of economic activity (lawn and garden care and power generation 
as opposed to recreational marine) and production and consumption of 
one product is not affected by the other. In other words, an increase 
in the price of lawnmowers is not expected to have an impact on the 
production and supply of personal watercraft, and vice versa. 
Production and consumption of each of these products are the results of 
other factors that have little cross-over impacts (the need for 
residential garden upkeep or power generation; the desire for personal 
recreation).
(4) What Are the Key Features of the Economic Impact Model?
    A detailed description of the features of the EIM and the data used 
in this analysis is provided in Chapter 9 of the RIA prepared for this 
rule. The model methodology is firmly rooted in applied microeconomic 
theory and was developed following the methodology set out in OAQPS's 
Economic Analysis Resource Document.\130\
---------------------------------------------------------------------------

    \130\ U.S. Environmental Protection Agency, Office of Air 
Quality Planning and Standards, Innovative Strategies and Economics 
Group, OAQPS Economic Analysis Resource Document, April 1999. A copy 
of this document can be found at http://www.epa.gov/ttn/ecas/econdata/Rmanual2.
---------------------------------------------------------------------------

    The EIM is a computer model comprised of a series of spreadsheet 
modules that simulate the supply and demand characteristics of the 
markets under consideration. The initial market equilibrium conditions 
are shocked by applying the compliance costs for the control program to 
the supply side of the markets (this is done by shifting the relevant 
supply curves by the amount of the compliance costs). The EIM uses the 
model equations, model inputs, and a solution algorithm to estimate 
equilibrium prices and quantities for the markets with the regulatory 
program. These new prices and quantities are used to estimate the 
social costs of the model and how those costs are shared among affected 
markets.
    The EIM uses a multi-market partial equilibrium approach to track 
changes in price and quantity for the modeled markets. As explained in 
EPA's Guidelines for Preparing Economic Analyses, ``partial 
equilibrium'' means that the model considers markets in isolation and 
that conditions in other markets are assumed either to be unaffected by 
a policy or unimportant for social cost estimation. Multi-market 
analysis models go beyond partial equilibrium by extending the inquiry 
to more than just single markets and attempt to capture at least some 
of the interaction between markets--in this case, between selected 
engine and equipment markets sectors.\131\
---------------------------------------------------------------------------

    \131\ EPA Guidelines for Preparing Economic Analyses, EPA 240-R-
00-003, September 2000, p. 125-6.
---------------------------------------------------------------------------

    The EIM uses an intermediate run time frame. This means that some 
factors of production are fixed and some are variable. In very short 
analyses, all factors of production would be assumed to be fixed, 
leaving the producers with no means to respond to the increased 
production costs associated with the regulation (e.g., they cannot 
adjust labor or capital inputs). Under this time horizon, the costs of 
the regulation fall entirely on the producer. In the long run, all 
factors of production are variable and producers can adjust production 
in response to cost changes imposed by the regulation (e.g., using a 
different labor/capital mix). In the intermediate run there is some 
resource immobility which may cause producers to suffer producer 
surplus losses, but they can also pass some of the compliance costs to 
consumers.
    The EIM assumes a perfectly competitive market structure. The 
perfect competition assumption is a widely accepted economic practice 
for this type of analysis, and only in rare cases are other approaches 
used.\132\ It should be noted that the perfect competition assumption 
is not about the number of firms in a market, it is about how the 
market operates. The markets included in this analysis do not exhibit 
evidence of noncompetitive behavior: there are no indications of 
barriers to entry, the firms in these markets are not price setters, 
and there is no evidence of high levels of strategic behavior in the 
price and quantity decisions of the firms. These markets are also 
mature markets as evidenced by unit sales growing at the rate of 
population increases. Pricing power in such markets is typically 
limited. In addition, the products produced within each market are 
somewhat homogeneous in that engines and equipment from one firm can be 
purchased instead of engines and equipment from another firm. Finally, 
according to contestable market theory, oligopolies and even monopolies 
will behave very much like firms in a competitive market if it is 
possible to enter particular markets without cost (i.e., there are no 
sunk costs associated with market entry or exit). This is the case with 
these markets, as there is significant excess production capacity in 
both the Small SI and Marine SI industries, in part due to improved 
productivity and efficiency in current plants. Idle production capacity 
also limits the ability of firms to raise prices, since competitors can 
easily capture market share by increasing their production at the 
expense of a producer that increases its prices. For all of these 
reasons it is appropriate to use a perfect competition model to 
estimate the economic impacts of this proposal.
---------------------------------------------------------------------------

    \132\ See, for example, EPA Guidelines for Preparing Economic 
Analyses, EPA 240-R-00-003, September 2000, p 126.
---------------------------------------------------------------------------

    The perfect competition assumption has an impact on the way the EIM 
is structured. In a competitive market the supply curve is based on the 
industry marginal cost curve; fixed costs do not influence production 
decisions at the margin. Therefore, in the market analysis the model is 
shocked by variable costs only. However, the nature of the Small SI and 
Marine SI markets suggests the market supply curve shifts in the model 
should include fixed and variable compliance costs. This is because 
Small SI and Marine SI engine and equipment manufacturers produce a 
product that changes very little over time. These manufacturers may not 
engage in research and development to improve their products on a 
continuous basis (as opposed to highway vehicles or nonroad engines and 
equipment). If this is the case, then the product changes that would be 
required to comply with the proposed standards would require these 
manufacturers to devote new funds and resources to product redesign and 
facilities changes. In this situation, Small SI and Marine SI engine 
and equipment manufacturers would be expected to increase their prices 
by the full amount of the compliance costs (both fixed and variable) to 
attempt to recover those costs. To reflect these conditions, the supply 
shift in this EIM is based on both fixed and variable costs, even 
though the model assumes perfect competition. A sensitivity analysis 
was performed to investigate the impacts under the alternative 
scenarios of shifting the supply curve by the variable costs only. The 
results of that analysis can be found in the RIA prepared for this 
proposal. We request comment on the extent to which manufacturers can 
be expected to devote additional funds to cover the fixed costs 
associated with the standards, or whether they in fact do provide for 
product development resources on a continuous basis and can

[[Page 28232]]

be expected to use those funds to cover the fixed costs. We also 
request comment on whether companies would attempt to pass fixed costs 
to consumers as an additional price increase and, if so, how much of 
the fixed costs would be based on and for how long.
    The market interactions modeled in the EIM are those between 
producers and consumers of the specified engines and the equipment that 
use those engines. The EIM does not consider sales distribution 
networks or how the regulated goods are sold to final consumers through 
wholesalers and/or retailers. This is appropriate because the proposed 
regulatory program does not impose additional costs on the distribution 
networks and those relationships are not expected to change as a result 
of the standards. In the case of Small SI equipment, however, concerns 
have been raised about the potential for dominant retailers (big box 
stores such as Wal-Mart, Sears and K-Mart) to affect the ability of 
manufacturers to pass along cost increases associated with new emission 
control requirements, forcing them to absorb the compliance costs 
associated with the proposed standards. As described in greater detail 
in Chapter 9 of the RIA, dominant retailers are not expected to affect 
market interactions in ways that would offset the assumption of perfect 
competition by preventing firms from passing on increases in costs 
associated with the control program. This is because all firms in the 
market are expected to comply with the control program, and all will 
experience an increase in marginal costs. Profit-maximizing 
manufacturers will continue to follow a marginal cost pricing rule 
regardless of the distribution arrangements. If large retail 
distributors attempted to prevent efficient manufacturers from raising 
prices in response to the standards, manufacturers would likely respond 
to a retailer's price pressure by reducing output. This would result in 
large excess demand in the equipment market which would ultimately have 
to be satisfied through a new higher equilibrium price, which in turn 
would result in greater supply, thus bidding the price down to a new 
market equilibrium after the application of the control program.
    The relationships modeled in the EIM do not include substitution 
away from Small SI and Marine SI engines and equipment to diesel or 
electric alternatives. This is appropriate because consumers are not 
likely to make these substitutions. Substitution to diesel Small SI 
equipment is not a viable option for most residential consumers, either 
because diesel equipment does not exist (e.g., diesel string trimmers) 
or because there would be a large price premium that would discourage 
the use of diesel equipment (e.g., diesel lawnmowers and diesel 
recreational marine vessels). In addition, most households are not 
equipped to handle the additional fuel type and misfueling would carry 
a high cost. Finally, the lack of a large infrastructure system already 
in place like the one supporting the use of gasoline equipment for 
residential and recreational purposes, including refueling and 
maintenance, represents a large barrier to substitution from gasoline 
to diesel equipment. On the electric side, the impact of substitution 
to electric for Small SI equipment (there are no comparable options for 
Marine SI) is also expected to be negligible. Gasoline is the power 
source of choice for small and inexpensive equipment due to its low 
initial cost. Gasoline equipment is also inherently portable, which 
make them more attractive to competing electric equipment that must be 
connected with a power grid or use batteries that require frequent 
recharging.
    The EIM is a market-level analysis that estimates the aggregate 
economic impacts of the control program on the relevant market. It is 
not a firm-level analysis and therefore the supply elasticity or 
individual compliance costs facing any particular manufacturer may be 
different from the market average. This difference can be important, 
particular where the rule affects different firms' costs over different 
volumes of production. However, to the extent there are differential 
effects on individual firms, EPA believes that the wide array of 
compliance flexibilities provided in this proposal are adequate to 
address any cost inequities that are likely to arise.
    Finally, consistent with the proposed emission controls, this EIA 
covers engines sold in 49 states. California engines are not included 
because California has its own state-level controls for Small SI and 
Marine SI engines. The sole exceptions are Small SI engines used in 
agriculture and construction applications in California. These engines 
are included in the control program and in this analysis because the 
Clean Air Act pre-empts California from setting standards for these 
engines.
(5) What Are the Key Model Inputs?
    Key model inputs for the EIM are the behavioral parameters, the 
market equilibrium quantities and prices, and the compliance cost 
estimates.
    The model's behavioral paramaters are the price elasticities of 
supply and demand. These parameters reflect how producers and consumers 
of the engines and equipment affected by the standards can be expected 
to change their behavior in response to the costs incurred in complying 
with the standards. More specifically, the price elasticity of supply 
and demand (reflected in the slope of the supply and demand curves) 
measure the price sensitivity of consumers and producers. The price 
elasticities used in this analysis are summarized in Table XII.F-1 and 
are described in more detail in Chapter 9 of the RIA. An ``inelastic'' 
price elasticity (less than one) means that supply or demand is not 
very responsive to price changes (a one percent change in price leads 
to less than one percent change in demand). An ``elastic'' price 
elasticity (more than one) means that supply or demand is sensitive to 
price changes (a one percent change in price leads to more than one 
percent change in demand). A price elasticity of one is unit elastic, 
meaning there is a one-to-one correspondence between a change in price 
and change in demand.

                                 Table XII. F-1.--Behavioral Parameters Used in Small SI/Marine SI Economic Impact Model
--------------------------------------------------------------------------------------------------------------------------------------------------------
               Sector                        Market             Demand elasticity            Source           Supply elasticity            Source
--------------------------------------------------------------------------------------------------------------------------------------------------------
Engine.............................  Small SI and Marine SI  Derived...............  N/A..................  3.8 (elastic)........  EPA Econometric
                                      Engine Market.                                                                                Estimate.
Small SI Equipment.................  All handheld..........  -1.9 (elastic)........  EPA Econometric        3.4 (elastic)........  EPA Econometric
                                                                                      Estimate.                                     Estimate.
                                     Lawn Mowers...........  -0.2 (inelastic)......  EPA Econometric        Same as above........
                                                                                      Estimate.
                                     Other lawn & garden...  -0.9 (inelastic)......  EPA Econometric        Same as above........
                                                                                      Estimate.

[[Page 28233]]

 
                                     Gensets/welders (class  -1.4 (elastic)........  EPA Econometric        3.3 (elastic)........  EPA Econometric
                                      I).                                             Estimate.                                     Estimate.
                                     Gensets/welders (class  -1.1 (elastic)........  EPA Econometric        Same as above........
                                      II).                                            Estimate.
                                     All other non-handheld  -1.0 (unit elastic)...  EPA Econometric        3.4 (elastic) Same as
                                                                                      Estimate.              above.
Marine SI Equipment................  PWC...................  -2.0 (elastic)........  EPA Econometric        3.4 (elastic)........  EPA Econometric
                                                                                      Estimate.                                     Estimate.
                                     All other vessels       Same as above.........  .....................  2.3 (elastic)........  EPA Econometric
                                      types.                                                                                        Estimate.
--------------------------------------------------------------------------------------------------------------------------------------------------------

    The estimated supply and demand elasticities were based on best 
data we could find. We used (1) The industry-level data published by 
the National Bureau of Economic Research (NBER)-Center for Economic 
Studies (Bartlesman, Becker, and Gray, 2000); (2) Current Industrial 
Reports (CIR) series from the U.S. Census Bureau; (3) several data 
series reported in a study by Air Improvement Resource Inc. and 
National Economic Research Associates (AIR/NERA, 2003) for the walk-
behind lawnmowers; (4) the U.S. Census Bureau historical data on 
household income and housing starts (U.S. Census Bureau, 2002; 2004); 
(5) price, wage, and material cost indexes from the Bureau of Labor 
Statistics (BLS) (BLS, 2004a,b,c,d,e); (6) the implicit gross domestic 
product (GDP) price deflator reported by the U.S. Bureau of Economic 
Analysis (BEA, 2004). It should be noted that the aggregate data we 
used to estimate elasticities include data on other markets as well as 
the Small SI or Marine SI markets. If we had been able to obtain 
market-specific data for Small SI or Marine SI only, the estimated 
price elasticities may have been different.
    The estimated supply elasticities for all of the equipment and 
engine markets are elastic, ranging from 2.3 for all recreational 
marine except PWC, to 3.3 for generators, 3.4 for PWCs and all Small SI 
except generators, and 3.8 for engines. This means that quantities 
supplied are expected to be fairly sensitive to price changes (e.g., a 
1% change in price yields a 3.3 percent change in quantity of 
generators produced).
    On the demand side, the Marine SI equipment market estimated demand 
elasticity is elastic, at -2.0. This is consistent with the 
discretionary nature of purchases of recreational marine vessels 
(consumers can easily decide to spend their recreational budget on 
other alternatives).
    The estimated demand elasticity for handheld equipment is elastic, 
at -1.9. This suggests that consumers are more sensitive to price 
changes for handheld equipment than for other Small SI equipment. In 
other words, they are more likely to change their purchase decision for 
a small change in the price of a string trimmer, perhaps opting for 
trimmer shears or deciding to forego trimming altogether.
    The estimated demand elasticity for lawnmowers is very inelastic at 
-0.2. This suggests that consumers of this equipment are not very 
sensitive to price changes. Most of this equipment is sold to 
individual homeowners, who are often required by local authorities to 
keep their lawns trimmed. Household ownership of a gasoline lawnmower 
is often their least expensive option. Lawncare services are more 
expensive since the price for these services includes labor and other 
factors of production. Purchasing other equipment may also not be 
attractive, since electric and diesel mowers are generally more 
expensive and often less convenient. Finally, the option of using 
landscape alternatives (e.g., prairie, wildflower, or rock gardens) may 
not be attractive for homeowners who may also use their yards for 
recreational purposes. For all these reasons, the price sensitivity of 
homeowners to lawnmower prices would be expected to be inelastic.
    All the other demand elasticities, for gensets, welders, 
compressors, and ag/construction equipment, are about unit elastic, at 
-1.0 meaning a 1 percent change in price is expected to result in a 1 
percent change in demand.
    The demand elasticities for the engine markets are internally 
derived as part of the process of running the model. This is an 
important feature of the EIM, which allows it to link the engine and 
equipment components of each model and simulate how compliance costs 
can be expected to ripple through the affected market. In actual 
markets, for example, the quantity of lawnmowers produced in a 
particular period depends on the price of engines (the Small SI engine 
market) and the demand for equipment by residential consumers. 
Similarly, the number of engines produced depends on the demand for 
engines (the lawnmower market) which depends on consumer demand for 
equipment. Changes in conditions in one of these markets will affect 
the others. By designing the model to derive the engine demand 
elasticities, the EIM simulates these connections between supply and 
demand among the product markets and replicates the economic 
interactions between producers and consumers.
    Initial market equilibrium quantities for these markets are 
simulated using the same current year sales quantities used in the 
engineering cost analysis. The initial market equilibrium prices for 
Small SI and Marine SI engines and equipment were derived from industry 
sources and published data and are described in Chapter 9 of the Draft 
RIA.
    The compliance costs used to shock the model, to simulate the 
application of the control program, are the same as the engineering 
costs described in Chapter 6. However, the EIM uses an earlier version 
of the engineering compliance developed for this rule. The net present 
value of the engineering costs used in this analysis (without taking 
the fuel savings into account, at a 3 percent discount rate over the 
period of the analysis) is $10.0 billion, which is about $100 million 
less than the net present value of the final estimated engineering 
costs, $10.1 billion. We do not expect that a difference of this 
magnitude would change the overall results of this economic impact 
analysis, in terms of market impacts and how the costs are expected to 
be shared among stakeholders.
    As explained in Section XII.F.4, the EIM uses both fixed and 
variable engineering costs to shock the initial equilibrium conditions. 
The fixed costs are amortized over the first 5 years of the standards 
and include a 7 percent cost of capital. For some elements of the 
program (i.e., evaporative emission controls), fixed costs are incurred

[[Page 28234]]

throughout the period of analysis due to the need to replace tooling.
    Additional costs that need to be considered in the EIM are the 
operating costs (fuel savings) associated with the evaporative emission 
controls. These fuel savings are not included in the market analysis 
for this economic impact analysis. This is because all available 
evidence suggests that fuel savings do not affect consumer decisions 
with respect to the purchase of this equipment. Unlike motor vehicles 
or other consumer goods, neither Small SI nor Marine SI equipment is 
labeled with expected fuel consumption or expected annual operating 
costs. Therefore, there is no information available for the consumer to 
use to make this decision. Instead consumers base their purchase 
decision on other attributes of the product for which the manufacturer 
provides information. For lawn mowers this may be the horsepower of the 
engine, whether the machine has a bag or has a mulching feature, its 
blade size, etc. For PWC it may be how many people it can carry, its 
maximum speed, its horsepower, etc. In many cases, especially for Small 
SI equipment, the consumer may not even be aware of the fuel savings 
when operating the equipment, especially if he or she uses the same 
portable fuel storage container to fuel several different pieces of 
equipment.
    These fuel savings are included in the social cost analysis. This 
is because they are savings that accrue to society. These savings are 
attributed to consumers of the relevant equipment. As explained in more 
detail in Section 9.3.5 of the Draft RIA, the social cost analysis is 
based on the equivalent of the pre-tax price of gasoline in that 
analysis. Although the consumer will realize a savings equal to the 
pump price of gasoline (post-tax), part of that savings is offset by a 
tax loss to governmental agencies and is thus a loss to consumers of 
the services supported by those taxes. This tax revenue loss, 
considered a transfer payment in this analysis, does not affect the 
benefit-cost analysis results.
(6) What Are the Results of the Economic Impact Modeling?
    Using the model and data described above, we estimated the economic 
impacts of the proposed emission control program. We performed a market 
analysis for all years and all engine and equipment types. In this 
section we present summarized results for selected markets and years. 
More detail can be found in the appendices to Chapter 9 of the RIA and 
in the docket for this rule.\133\ Also included in Appendix 9H to that 
chapter are sensitivity analyses for several key inputs.
---------------------------------------------------------------------------

    \133\ Li, Chi. 2007. Memorandum to Docket EPA-HQ-OAR-2004-0008. 
Detailed Results From Economic Impact Model.
---------------------------------------------------------------------------

    The EIA consists of two parts: a market analysis and a welfare 
analysis. The market analysis looks at expected changes in prices and 
quantities for affected products. The welfare analysis looks at 
economic impacts in terms of annual and present value changes in social 
costs.
    As explained in Section XII.F.4, the EIM is shocked by the sum of 
fixed and variable costs. For the market analysis, this leads to a 
small increase in estimated price impacts for the years 2011 through 
2016, the period during which fixed costs are recovered. The increase 
is small because, for many elements of the program, annual per unit 
fixed costs are smaller than annual per unit variable costs. For the 
welfare analysis, applying both fixed and variable costs means that the 
burden of the social costs attributable to producers and consumers 
remains fixed throughout the period of analysis. This is because 
producers pass the fixed costs to consumers at the same rate as the 
variable costs instead of having to absorb them internally.
(a) Market Impact Analysis
    In the market analysis, we estimate how prices and quantities of 
goods affected by the proposed emission control program can be expected 
to change once the program goes into effect. The analysis relies on the 
initial market equilibrium prices and quantities for each type of 
equipment and the price elasticity of supply and demand. It predicts 
market reactions to the increase in production costs due to the new 
compliance costs (variable and fixed). It should be noted that this 
analysis does not allow any other factors of production to vary. In 
other words, it does not consider that manufacturers may adjust their 
production processes or marketing strategies in response to the control 
program. Also, as explained above, while the markets are shocked by 
both fixed and variable costs, the market shock is not offset by fuel 
savings.
    A summary of the estimated market impacts is presented in Table 
XII.F-2 for 2013, 2018, and 2030. These years were chosen because 2013 
is the year of highest compliance; after 2018, the fixed costs are 
recovered and the market impacts reflect variable costs as well as 
growth in equipment population; and 2030 illustrates the long-term 
impacts of the program.
    Market level impacts are reported for the engine and equipment 
markets separately. This is because the EIM is a two-level model that 
treats these markets separately. However, changes in equipment prices 
and quantities are due to impacts of both direct equipment compliance 
costs and indirect engine compliance costs that are passed through to 
the equipment market from the engine market through higher engine 
prices.
    The average market-level impacts presented in this section are 
designed to provide a broad overview of the expected market impacts 
that is useful when considering the impacts of the rule on the economy 
as a whole. The average price impacts are product-weighted averages of 
the results for the individual engine and equipment categories included 
in that sub-sector (e.g., the estimated Marine SI engine price and 
quantity changes are weighted averages of the estimated results for all 
of the Marine SI engine markets). The average quantity impacts are the 
sum of the decrease in units produced units across sub-markets. Price 
increases and quantity decreases for specific types of engines and 
equipment are likely to be different.
    Although each of the affected equipment in this analysis generally 
requires one engine (the exception being Marine SI sterndrive/
inboards), the estimated decrease in the number of engines produced in 
Table XII.F-2 is less than the estimated decrease in the number of 
equipment produced. At first glance, this result seems counterintuitive 
because it does not reflect the approximate one-to-one correspondence 
between engines and equipment. This discrepancy occurs because the 
engine market-level analysis examines only output changes for engines 
that are produced by independent engine manufacturers and subsequently 
sold to independent equipment manufacturers. Engines produced and 
consumed by vertically integrated equipment/engine manufacturers are 
not explicitly modeled. Therefore, the market-level analysis only 
reflects engines sold on the ``open market,'' and estimates of output 
changes for engines consumed internally are not reflected in this 
number.\134\ Despite the fact that changes

[[Page 28235]]

in consumption of internally consumed engines are not directly reported 
in the market-level analysis results, the costs associated with these 
engines are included in the market-level analysis (as supply shift for 
the equipment markets). In addition, the cost and welfare analyses 
include the compliance costs associated with internally consumed 
engines.
---------------------------------------------------------------------------

    \134\ For example, PWC and handheld equipment producers 
generally integrate equipment and engine manufacturing processes and 
are included in the EIM as one-level equipment markets. Since there 
is no engine market for these engines, the EIM does not include PWC 
and handheld engine consumption changes in engine market-level 
results.
---------------------------------------------------------------------------

Marine SI Market Analysis

    The average price increase for Marine SI engines in 2013, the high 
cost year, is estimated to be about 2.3 percent, or $257. By 2018, this 
average price increase is expected to decline to about 1.7 percent, or 
$196, and remain at that level for later years. The market impact 
analysis predicts that with these increases in engine prices the 
expected average decrease in total sales in 2013 is about 2.0 percent, 
or 8,800 engines. This decreases to about 1.6 percent in 2018, or about 
7,000 engines.
    On the vessel side, the average price change reflects the direct 
equipment compliance costs plus the portion of the engine costs that 
are passed on to the equipment purchaser (via higher engine prices). 
The average price increase in 2013 is expected to be about 1.3 percent, 
or $232. By 2018, this average price increase is expected to decline to 
about 1 percent, or $178. These price increases are expected to vary 
across vessel categories. The category with the largest price increase 
in 2013 is expected to be personal watercraft engines, with an 
estimated price increase of about 2.8 percent in 2013; this is expected 
to decrease to 2.1 percent in 2018. The smallest expected change in 
2013 is expected to be for sterndrive/inboards and outboard 
recreational vessels, which are expected to see price increases of 
about 0.7 percent. The market impact analysis predicts that with these 
increases in vessel prices the expected average decrease in quantity 
produced in 2013 is about 2.7 percent, or 11,000 vessels.\135\ This is 
expected to decrease to about 2.0 percent in 2018, or about 8,600 
vessels. The personal watercraft category is expected to experience the 
largest decline in 2013, about 5.6 percent (4,800 vessels). The 
smallest percentage decrease in production is expected for sterndrive/
inboards at 1.4 percent (1,300 vessels); the smallest absolute decrease 
in quantity is expected for outboard recreational vessels, at 113 
vessels (1.5 percent).
---------------------------------------------------------------------------

    \135\ It should be noted that the absolute change in the number 
of engines and equipment does not match. This is because the 
absolute change in the quantity of engines represents only engines 
sold on the open market. Reductions in engines consumed internally 
by integrated engine/equipment manufacturers are not reflected in 
this number but are captured in the social cost analysis.
---------------------------------------------------------------------------

Small SI Market Analysis

    The average price increase for Small SI engines in 2013, the high 
cost year, is estimated to be about 11.7 percent, or $22. By 2018, this 
average price increase is expected to decline to about 9.1 percent, or 
$17, and remain at that level for later years. The market impact 
analysis predicts that with these increases in engine prices the 
expected average decrease in total sales in 2013 is expected to be 
about 2.3 percent, or 371,000 engines. This is expected to decrease to 
about 1.7 percent in 2018, or about 299,000 engines.
    On the equipment side, the average price change reflects the direct 
equipment compliance costs plus the portion of the engine costs that 
are passed on to the equipment purchaser (via higher engine prices). 
The average price increase for all Small SI equipment in 2013 is 
expected to be about 3.1 percent, or $14. By 2018, this average price 
increase is expected to decline to about 2.4 percent, or $10. The 
average price increase and quantity decrease differs by category of 
equipment. As shown in Table XII.F-2, the price increase for Class I 
equipment is estimated to be about 6.9 percent ($19) in 2013, 
decreasing to 5.5 percent ($15) in 2018. The market impact analysis 
predicts that with these increases in equipment prices the expected 
average decrease in the quantity of Class I equipment produced in 2013 
is about 2.2 percent, or 219,400 units.\136\ This is expected to 
decrease to about 1.8 percent in 2018, or about 189,700 units. For 
Class II equipment, a higher price increase is expected, about 3.9 
percent ($41) in 2013, decreasing to 2.6 percent ($25) in 2018. The 
expected average decrease in the quantity of Class II equipment 
produced in 2013 is about 4.3 percent, or 157,300 units, decreasing to 
2.8 percent, or about 114,000 units, in 2018.
---------------------------------------------------------------------------

    \136\ See previous note.
---------------------------------------------------------------------------

    For the handheld equipment market, prices are expected to increase 
about 0.3 percent for all years, and quantities are expected to 
decrease about 0.6 percent.

                          Table XII.F-2.--Estimated Market Impacts for 2013, 2018, 2030
                                                     [2005$]
----------------------------------------------------------------------------------------------------------------
                                                                   Change in price         Change in quantity
                           Market                            ---------------------------------------------------
                                                                Absolute     Percent      Absolute     Percent
----------------------------------------------------------------------------------------------------------------
                                                      2013
----------------------------------------------------------------------------------------------------------------
Marine:
    Engines.................................................         $257          2.3       -8,846         -2.0
    Equipment...............................................          232          1.3      -10,847         -2.7
        SD/I................................................          252          0.7       -1,336         -1.4
        OB Recreational.....................................          638          0.7         -113         -1.5
        OB Luxury...........................................          206          1.1       -4,579         -2.1
        PWC.................................................          237          2.8       -4,819         -5.6
Small SI:
    Engines.................................................           22         11.7     -371,097         -2.3
    Equipment...............................................           14          3.1     -482,942         -1.9
        Class I.............................................           19          6.9     -219,400         -2.2
        Class II............................................           41          3.9     -157,306         -4.3
        HH..................................................          0.3          0.3     -106,236         -0.6
----------------------------------------------------------------------------------------------------------------

[[Page 28236]]

 
                                                      2018
----------------------------------------------------------------------------------------------------------------
Marine:
    Engines.................................................          196          1.7       -7,002         -1.6
    Equipment...............................................          178          1.0       -8,563         -2.0
        SD/I................................................          195          0.5       -1,072         -1.1
        OB Recreational.....................................          496          0.6          -91         -1.1
        OB Luxury...........................................          160          0.8       -3,634         -1.6
        PWC.................................................          178          2.1       -3,766         -4.2
Small SI:
    Engines.................................................           17          9.1     -298,988         -1.7
    Equipment...............................................           10          2.4     -401,025         -1.4
        Class I.............................................           15          5.5     -189,771         -1.8
        Class II............................................           25          2.6     -113,999         -2.8
        HH..................................................          0.2          0.3      -97,255         -0.5
----------------------------------------------------------------------------------------------------------------
                                                      2030
----------------------------------------------------------------------------------------------------------------
Marine:
    Engines.................................................          195          1.7       -7,728         -1.6
    Equipment...............................................          179          1.0       -9,333         -2.0
        SD/I................................................          195          0.5       -1,161         -1.1
        OB Recreational.....................................          496          0.6          -98         -1.1
        OB Luxury...........................................          160          0.8       -3,998         -1.7
        PWC.................................................          178          2.1       -4,076         -4.2
Small SI:
    Engines.................................................           17          9.1     -354,915         -1.7
    Equipment...............................................           10          2.4     -475,825         -1.4
        Class I.............................................           15          5.6     -225,168         -1.8
        Class II............................................           25          2.6     -135,400         -2.8
        HH..................................................          0.2          0.3     -115,257         -0.5
----------------------------------------------------------------------------------------------------------------

(b) Economic Welfare Analysis
    In the economic welfare analysis we look at the costs to society of 
the proposed program in terms of losses to consumer and producer 
surplus. These surplus losses are combined with the fuel savings to 
estimate the net economic welfare impacts of the proposed program. 
Estimated annual net social costs for selected years are presented in 
Table XII-F-3. This table shows that total social costs for each year 
are slightly less than the total engineering costs. This is because the 
total engineering costs do not reflect the decreased sales of engines 
and equipment that are incorporated in the total social costs.

                   Table XII.F-3.--Estimated Annual Engineering and Social Costs, Through 2038
                                                [2005$, $million]
----------------------------------------------------------------------------------------------------------------
                                                                                        Net
                                       Total                                        engineering     Net social
              Year                  engineering    Total social    Fuel savings        costs           costs
                                       costs           costs                        (including      (including
                                                                                   fuel savings)   fuel savings)
----------------------------------------------------------------------------------------------------------------
2008............................            $9.5            $9.5            $3.1            $6.4            $6.4
2009............................           171.7           168.8            13.7           157.9           155.1
2010............................           191.1           188.0            25.4           165.7           162.6
2011............................           470.5           463.4            64.9           405.7           398.5
2012............................           647.3           638.2           103.5           543.8           534.7
2013............................           652.5           643.4           136.5           516.0           506.9
2014............................           621.1           613.1           161.2           459.9           451.9
2015............................           627.0           619.0           182.3           444.7           436.7
2016............................           520.9           515.2           200.9           320.0           314.2
2017............................           492.6           487.5           216.2           276.4           271.3
2018............................           497.2           492.0           229.9           267.3           262.1
2019............................           503.6           498.4           242.1           261.5           256.2
2020............................           510.0           504.7           253.1           256.9           251.6
2021............................           516.4           511.0           263.3           253.1           247.8
2022............................           522.7           517.3           272.9           249.8           244.4
2023............................           529.1           523.7           281.4           247.7           242.3
2024............................           535.8           530.3           289.3           246.5           241.0
2025............................           542.3           536.7           296.6           245.6           240.0
2026............................           548.7           543.1           303.6           245.1           239.5

[[Page 28237]]

 
2027............................           555.2           549.4           310.1           245.1           239.3
2028............................           561.6           555.8           316.3           245.3           239.5
2029............................           568.0           562.2           322.0           246.1           240.2
2030............................           574.5           568.6           327.3           247.2           241.3
2031............................           580.9           575.0           332.3           248.6           242.6
2032............................           587.4           581.3           337.1           250.3           244.2
2033............................           593.8           587.7           341.7           252.1           246.0
2034............................           600.3           594.1           346.1           254.2           248.0
2035............................           606.7           600.5           350.4           256.3           250.1
2036............................           613.1           606.9           354.5           258.6           252.3
2037............................           619.6           613.2           358.5           261.1           254.7
2038............................           626.0           619.6           362.5           263.6           257.1
NPV at 3% a.....................         9,996.2         9,882.2         4,356.2         5,640.1         5,526.0
NPV at 7% a.....................         5,863.6         5,794.1         2,291.5         3,572.1        3,502.6
----------------------------------------------------------------------------------------------------------------
\a\ EPA EPA presents the present value of cost and benefits estimates using both a three percent and a seven
  percent social discount rate. According to OMB Circular A-4, ``the 3 percent discount rate represents the
  ``social rate of time preference'* * * [which] means the rate at which `society' discounts future consumption
  flows to their present value''; ``the seven percent rate is an estimate of the average before-tax rate of
  return to private capital in the U.S. economy* * * [that] approximates the opportunity cost of capital.''

    Table XII.F-4 shows how total social costs are expected to be 
shared across stakeholders, for selected years. According to these 
results, consumers in the Marine SI market are expected to bear 
approximately 66 percent of the cost of the Marine SI program. This is 
expected to be offset by the fuel savings. Vessel manufacturers are 
expected to bear about 22 percent of that program, and engine 
manufacturers the remaining 11 percent. In the Small SI market, 
consumers are expected to bear 79 percent of the cost of the Small SI 
program. This will also be offset by the fuel savings. Equipment 
manufacturers are expected to bear about 17 percent of that program, 
and engine manufacturers the remaining 4 percent. The estimated 
percentage changes in surplus are the same for all years because the 
initial equilibrium conditions are shocked by both fixed and variable 
costs; producers would pass the fixed costs to consumers at the same 
rate as the variable costs.

                      Table XII.F-4: Summary of Estimated Social Costs for 2013, 2018, 2030
                                               [2005 $, $ million]
----------------------------------------------------------------------------------------------------------------
                                                     Absolute
                     Market                          change in    Percent change   Fuel savings    Total change
                                                      surplus       in  surplus                     in surplus
----------------------------------------------------------------------------------------------------------------
                                                      2013
----------------------------------------------------------------------------------------------------------------
Marine SI:
    Engine Manufacturers........................         -$21.54              11  ..............         -$21.54
    Equipment Manufacturers.....................          -42.23              22  ..............          -42.23
    End User (Households).......................         -125.14              66          $42.27          -82.87
                                                 ---------------------------------------------------------------
        Subtotal................................         -188.91  ..............  ..............         -146.64
                                                 ---------------------------------------------------------------
Small SI:
    Engine Manufacturers........................          -18.36               4  ..............          -18.36
    Equipment Manufacturers.....................          -80.16              18  ..............          -80.16
    End User (Households).......................         -355.95              78           94.26         -261.69
                                                 ---------------------------------------------------------------
        Subtotal................................         -454.47  ..............  ..............         -360.21
                                                 ---------------------------------------------------------------
            Total...............................         -643.38  ..............          136.53         -506.85
----------------------------------------------------------------------------------------------------------------
                                                      2018
----------------------------------------------------------------------------------------------------------------
Marine SI:
    Engine Manufacturers........................          -17.29              11  ..............          -17.29
    Equipment Manufacturers.....................          -34.02              22  ..............          -34.02
    End User (Households).......................         -100.19              66           87.12          -13.07
                                                 ---------------------------------------------------------------
        Subtotal................................         -151.50  ..............  ..............          -64.38
                                                 ---------------------------------------------------------------
Small SI:
    Engine Manufacturers........................          -13.89               4  ..............          -13.89
    Equipment Manufacturers.....................          -57.65              17  ..............          -57.65

[[Page 28238]]

 
    End User (Households).......................         -268.95              79          142.78         -126.17
                                                 ---------------------------------------------------------------
        Subtotal................................         -340.49  ..............  ..............         -197.71
                                                 ---------------------------------------------------------------
            Total...............................         -491.99  ..............          229.90         -262.09
----------------------------------------------------------------------------------------------------------------
                                                      2030
----------------------------------------------------------------------------------------------------------------
Marine SI:
    Engine Manufacturers........................          -18.81              11  ..............          -18.81
    Equipment Manufacturers.....................          -36.97              23  ..............          -36.97
    End User (Households).......................         -108.52              66          149.36           40.84
                                                 ---------------------------------------------------------------
        Subtotal................................         -164.30  ..............  ..............          -14.94
                                                 ---------------------------------------------------------------
Small SI:
    Engine Manufacturers........................          -16.49               4  ..............          -16.49
    Equipment Manufacturers.....................          -68.45              17  ..............          -68.45
    End User (Households).......................         -319.31              79          177.89         -141.42
                                                 ---------------------------------------------------------------
        Subtotal................................         -404.25  ..............  ..............         -226.36
                                                 ---------------------------------------------------------------
            Total...............................         -568.55  ..............          327.25         -241.30
----------------------------------------------------------------------------------------------------------------

    Table XII.F-5 contains more detailed information on the sources of 
the social costs for 2013. This table shows that vessel and equipment 
manufacturers are expected to bear more of the burden of the program 
than engine manufacturers. On the marine side, the loss of producer 
surplus for the vessel manufacturers has two sources. First, they would 
bear part of the burden of the equipment costs. Second, they would also 
bear part of the engine costs, which are passed on to vessel 
manufacturers in the form of higher engine prices. Vessel manufacturers 
would not be able to pass along a greater share of the engine and 
vessel compliance costs to end consumers due to the elastic price 
elasticity of demand for consumers of these vessels. On the Small SI 
side, equipment manufacturers can pass on more of the compliance costs 
to end consumers because the price elasticity of demand in these 
markets is less elastic.

          Table XII.F-5.--Distribution of Estimated Surplus Changes by Market and Stakeholder for 2013
                                                [2005$, million$]
----------------------------------------------------------------------------------------------------------------
                                    Engineering
             Scenario                compliance    Producer     Consumer      Total         Fuel         Net
                                        costs      surplus      surplus      surplus      savings      surplus
----------------------------------------------------------------------------------------------------------------
                                                    Marine SI
----------------------------------------------------------------------------------------------------------------
Engine Manufacturers..............       $133.2       -$21.5  ...........       -$21.5  ...........       -$21.5
----------------------------------------------------------------------------------------------------------------
Equipment Manufacturers...........         59.1        -42.2  ...........        -42.2  ...........        -42.2
Engine Price Changes..............  ...........        -18.7  ...........  ...........  ...........  ...........
Equipment Cost Changes............  ...........        -23.6  ...........  ...........  ...........  ...........
End User (Households).............  ...........  ...........       -125.1       -125.1         42.3        -82.8
Engine Price Changes..............  ...........  ...........        -91.8  ...........  ...........  ...........
Equipment Price Changes...........  ...........  ...........        -33.3  ...........  ...........  ...........
                                   -----------------------------------------------------------------------------
    Subtotal......................        192.2        -63.8       -125.1       -188.9         42.3       -146.6
----------------------------------------------------------------------------------------------------------------
                                                    Small SI
----------------------------------------------------------------------------------------------------------------
Engine Manufacturers..............        371.9        -18.4  ...........        -18.4  ...........        -18.4
----------------------------------------------------------------------------------------------------------------
Equipment Manufacturers...........         88.4        -80.2  ...........        -80.2  ...........        -80.2
Engine Price Changes..............  ...........        -59.0  ...........  ...........  ...........  ...........
Equipment Cost Changes............  ...........        -21.1  ...........  ...........  ...........  ...........
End User (Households).............  ...........  ...........       -355.9       -355.9         94.3       -261.7
Engine Price Changes..............  ...........  ...........       -289.8  ...........  ...........  ...........
Equipment Cost Changes............  ...........  ...........        -66.1  ...........  ...........  ...........
                                   -----------------------------------------------------------------------------
    Subtotal......................        460.3        -98.5       -355.9       -454.5         94.3       -360.2
                                   -----------------------------------------------------------------------------

[[Page 28239]]

 
        Total.....................        652.5       -162.3       -481.1       -643.4        136.6       -506.8
----------------------------------------------------------------------------------------------------------------

    The present value of net social costs of the proposed standards 
through 2038 at a 3 percent discount rate, shown in Table XII.F-6, is 
estimated to be $5.5 billion, taking the fuel savings into account. We 
also performed an analysis using a 7 percent social discount rate.\137\ 
Using that discount rate, the present value of the net social costs 
through 2038 is estimated to be $3.5 billion, including the fuel 
savings.
---------------------------------------------------------------------------

    \137\ EPA has historically presented the present value of cost 
and benefits estimates using both a 3 percent and a 7 percent social 
discount. The 3 percent rate represents a demand-side approach and 
reflects the time preference of consumption (the rate at which 
society is willing to trade current consumption for future 
consumption). The 7 percent rate is a cost-side approach and 
reflects the shadow price of capital.

                     Table XII.F-6.--Estimated Net Social Costs Through 2038 by Stakeholder
                                                [2005$, $million]
----------------------------------------------------------------------------------------------------------------
                                                                            Percentage
                                                                 Total      change in       Fuel      Net change
                           Market                              change in      total       savings     in surplus
                                                                surplus      surplus
----------------------------------------------------------------------------------------------------------------
                                              Net Present Value 3%
----------------------------------------------------------------------------------------------------------------
Marine SI:
    Engine Manufacturers....................................      -$354.4           11  ...........      -$354.4
    Equipment Manufacturers.................................       -688.8           22  ...........       -688.8
    End User (Households)...................................     -2,058.8           66     $1,831.3       -227.5
                                                             ---------------------------------------------------
    Subtotal................................................     -3,102.0  ...........      1,831.3     -1,270.7
Small SI:
    Engine Manufacturers....................................       -275.0            4  ...........       -275.0
    Equipment Manufacturers.................................     -1,171.8           17  ...........     -1,171.8
    End User (Households)...................................     -5,333.4           79      2,524.8     -2,808.6
                                                             ---------------------------------------------------
        Subtotal............................................     -6,780.2  ...........      2,524.8     -4,255.4
                                                             ---------------------------------------------------
            Total...........................................     -9,882.2  ...........      4,356.1     -5,526.1
----------------------------------------------------------------------------------------------------------------
                                              Net Present Value 7%
----------------------------------------------------------------------------------------------------------------
Marine SI:
    Engine Manufacturers....................................       -216.4           11  ...........       -216.4
    Equipment Manufacturers.................................       -417.6           22  ...........       -417.6
    End User (Households)...................................     -1,259.5           66        937.1       -322.8
        Subtotal............................................     -1,893.8  ...........        937.1        956.8
                                                             ---------------------------------------------------
Small SI:
    Engine Manufacturers....................................       -157.8            4  ...........        157.8
    Equipment Manufacturers.................................       -680.4           17      1,354.4        680.4
    End User (Households)...................................     -3,062.1           79      1,354.4      1,707.7
                                                             ---------------------------------------------------
        Subtotal............................................     -3,900.3  ...........  ...........  ...........
                                                             ---------------------------------------------------
            Total...........................................     -5,794.2  ...........      2,291.5     -3,502.6
----------------------------------------------------------------------------------------------------------------

(7) What Are the Significant Limitations of the Economic Impact 
Analysis?
    Every economic impact analysis examining the market and social 
welfare impacts of a regulatory program is limited to some extent by 
limitations in model capabilities, deficiencies in the economic 
literatures with respect to estimated values of key variables necessary 
to configure the model, and data gaps. In this EIA, there are three 
potential sources of uncertainty: (1) Uncertainty resulting from the 
way the EIM is designed, particularly from the use of a partial 
equilibrium model; (2) uncertainty resulting from the values for key 
model parameters, particularly the price elasticity of supply and 
demand; and (3) uncertainty resulting from the values for key model 
inputs, particularly baseline equilibrium price and quantities.
    Uncertainty associated with the economic impact model structure 
arises from the use of a partial equilibrium approach, the use of the 
national level of analysis, and the assumption of perfect competition. 
These features of the model mean it does not take into account impacts 
on secondary markets or the general economy, and it does not

[[Page 28240]]

consider regional impacts. The results may also be biased to the extent 
that firms have some control over market prices, which would result in 
the modeling over-estimating the impacts on producers of affected goods 
and services.
    The values used for the price elasticities of supply and demand are 
critical parameters in the EIM. The values of these parameters have an 
impact on both the estimated change in price and quantity produced 
expected as a result of compliance with the proposed standards and on 
how the burden of the social costs will be shared among producer and 
consumer groups. In selecting the values to use in the EIM it is 
important that they reflect the behavioral responses of the industries 
under analysis.
    Published estimates of price elasticities of supply and demand from 
the economic literature should be used whenever possible. Such 
estimates would be peer reviewed and generally constitute reasonable 
estimates for the industries in question. In this analysis, because we 
were unable to find published supply and demand elasticities for the 
Small SI and Marine SI markets, we estimated these parameters 
econometrically using the procedures described in Chapter 9 of the 
Draft RIA.
    The estimates on the supply elasticity reflect a production 
function approach using data at the industry level. This method was 
chosen because of limitations with the available data. We were not able 
to obtain firm-level or plant-level production data for companies that 
operate in the affected sectors. However, the use of aggregate industry 
level data may not be appropriate and may not be an accurate way to 
estimate the price elasticity of supply compared to firm-level or 
plant-level data. This is because, at the aggregate industry level, the 
size of the data sample is limited to the time series of the available 
years and because aggregate industry data may not reveal each 
individual firm or plant production function (heterogeneity). There may 
be significant differences among the firms that may be hidden in the 
aggregate data but that may affect the estimated elasticity. In 
addition, the use of time series aggregate industry data may introduce 
time trend effects that are difficult to isolate and control.
    To address these concerns, EPA intends to investigate estimates for 
the price elasticity of supply for the affected industries for which 
published estimates are not available, using an alternative method and 
data inputs. This research program will use the cross-sectional data 
model at either the firm level or the plant level from the U.S. Census 
Bureau to estimate these elasticities. We plan to use the results of 
this research, provided the results are robust and they are available 
in time for the analysis for the final rule.
    Finally, uncertainty in measurement of data inputs can have an 
impact on the results of the analysis. This includes measurement of the 
baseline equilibrium prices and quantities and the estimation of future 
year sales. In addition, there may be uncertainty in how similar 
engines and equipment were combined into smaller groups to facilitate 
the analysis. There may also be uncertainty in the compliance cost 
estimations.
    To explore the effects of key sources of uncertainty, we performed 
a sensitivity analysis in which we examine the results of using 
alternative values for the price elasticity of supply and demand, 
alternative baseline prices for certain equipment markets, and 
alternative methods in compliance costs to shock the market. The 
results of these analyses are contained in Appendix 9H of the Draft 
RIA.
    Despite these uncertainties, we believe this economic impact 
analysis provides a reasonable estimate of the expected market impacts 
and social welfare costs of the proposed standards in future. 
Acknowledging benefits omissions and uncertainties, we present a best 
estimate of the social costs based on our interpretation of the best 
available scientific literature and methods supported by EPA's 
Guidelines for Preparing Economic Analyses and the OAQPS Economic 
Analysis Resource Document.

XIII. Public Participation

    We request comment on all aspects of this proposal. This section 
describes how you can participate in this process.
    In 2001 we published a proposed rule to adopt evaporative emission 
standards for marine vessels powered by spark-ignition engines (67 FR 
53050, August 14, 2002). We are withdrawing that proposal and reissuing 
our proposal in this notice. We received several comments on that 
proposed rule and have attempted to take all those comments into 
account in this action. Commenters on the previous proposal who feel 
their concerns have not been addressed should send us updated comments 
expressing any remaining concerns. This proposal includes a variety of 
changes from the earlier proposal, mostly centered on testing methods 
and implementation dates.
    A hearing will be held on Tuesday, June 5, 2007 in Washington, DC. 
The hearing will start at 10 a.m. and continue until testimony is 
complete. See ADDRESSES above for location and phone information.
    Please notify the contact person listed above at least ten days 
before the hearing if you would like to present testimony at a public 
hearing. You should estimate the time you will need for your 
presentation and identify any needed audio/visual equipment. We suggest 
that you bring copies of your statement or other material for the EPA 
panel and the audience. It would also be helpful if you send us a copy 
of your statement or other materials before the hearing.
    We will conduct the hearing informally so technical rules of 
evidence will not apply. We will arrange for a written transcript of 
the hearing and keep the official record of the hearing open for 30 
days to allow you to submit supplementary information. You may make 
arrangements to purchase copies of the transcript directly with the 
court reporter.
    The comment period for this rule will end on August 3, 2007.

XIV. Statutory and Executive Order Reviews

A. Executive Order 12866: Regulatory Planning and Review

    Under section 3(f)(1) of Executive Order (EO) 12866 (58 FR 51735, 
October 4, 1993), this action is an ``economically significant 
regulatory action'' because it is likely to have an annual effect on 
the economy of $100 million or more. Accordingly, EPA submitted this 
action to the Office of Management and Budget (OMB) for review under EO 
12866 and any changes made in response to OMB recommendations have been 
documented in the docket for this action.
    In addition, EPA prepared an analysis of the potential costs and 
benefits associated with this action. This analysis is contained in the 
Draft Regulatory Impact Analysis, which is available in the docket for 
this action and is summarized in Section XII.

B. Paperwork Reduction Act

    The information collection requirements in this proposed rule have 
been submitted for approval to the Office of Management and Budget 
(OMB) under the Paperwork Reduction Act, 44 U.S.C. 3501 et seq. The 
Information Collection Request (ICR) document prepared by EPA has been 
assigned EPA ICR number 2251.01.
    The Agency proposes to collect information to ensure compliance 
with

[[Page 28241]]

the provisions in this rule. This includes a variety of requirements, 
both for engine manufacturers, equipment manufacturers and 
manufacturers of fuel system components. Section 208(a) of the Clean 
Air Act requires that manufacturers provide information the 
Administrator may reasonably require to determine compliance with the 
regulations; submission of the information is therefore mandatory. We 
will consider confidential all information meeting the requirements of 
section 208(c) of the Clean Air Act.
    As shown in Table XIV-1, the total annual burden associated with 
this proposal is about 131,000 hours and $18 million based on a 
projection of 1,100 respondents. The estimated burden for engine 
manufacturers is a total estimate for both new and existing reporting 
requirements. Most information collection is based on annual reporting. 
Burden means the total time, effort, or financial resources expended by 
persons to generate, maintain, retain, or disclose or provide 
information to or for a Federal agency. This includes the time needed 
to review instructions; develop, acquire, install, and utilize 
technology and systems for the purposes of collecting, validating, and 
verifying information, processing and maintaining information, and 
disclosing and providing information; adjust the existing ways to 
comply with any previously applicable instructions and requirements; 
train personnel to be able to respond to a collection of information; 
search data sources; complete and review the collection of information; 
and transmit or otherwise disclose the information.

                                       Table XIV-1.--Estimated Burden for Reporting and Recordkeeping Requirements
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                                                                                                                        Annual operation
               Industry sector                    Number of      Average burden     Annual burden      Annualized       Annual labor     and maintenance
                                                 respondents     per respondent         hours         capital costs         costs             costs
--------------------------------------------------------------------------------------------------------------------------------------------------------
Small SI engine manufacturers...............                58               885            51,301        $5,529,000        $2,065,643        $3,100,306
Small SI equipment & fuel system component                 623             1,568            62,715                 0           497,631           624,066
 mfr. (evaporative).........................
Marine SI engine manufacturers..............                40                19            11,605                 0         2,677,821         8,299,569
Marine SI equipment & fuel system component                380                14             5,241                 0           224,871           383,024
 mfr. (evaporative).........................
                                             -----------------------------------------------------------------------------------------------------------
    Total...................................             1,101             2,486           130,862         5,529,000         5,465,966        12,406,965
                                             ===========================================================================================================
                                                                                                                        Total Annual Cost = 18,012,246
--------------------------------------------------------------------------------------------------------------------------------------------------------

    An agency may not conduct or sponsor, and a person is not required 
to respond to a collection of information unless it displays a 
currently valid OMB control number. The OMB control numbers for EPA's 
regulations in 40 CFR are listed in 40 CFR part 9.
    To comment on the Agency's need for this information, the accuracy 
of the provided burden estimates, and any suggested methods for 
minimizing respondent burden, including the use of automated collection 
techniques, EPA has established a public docket for this rule, which 
includes this ICR, under Docket ID number EPA-HQ-OAR-2004-0008. Submit 
any comments related to the ICR for this proposed rule to EPA and OMB. 
See ADDRESSES section at the beginning of this notice for where to 
submit comments to EPA. Send comments to OMB at the Office of 
Information and Regulatory Affairs, Office of Management and Budget, 
725 17th Street, NW., Washington, DC 20503, Attention: Desk Office for 
EPA. Since OMB is required to make a decision concerning the ICR 
between 30 and 60 days after May 18, 2007, a comment to OMB is best 
assured of having its full effect if OMB receives it by June 18, 2007. 
The final rule will respond to any OMB or public comments on the 
information collection requirements contained in this proposal.

C. Regulatory Flexibility Act

(1) Overview
    The Regulatory Flexibility Act (RFA) generally requires an agency 
to prepare a regulatory flexibility analysis of any rule subject to 
notice and comment rulemaking requirements under the Administrative 
Procedure Act or any other statute unless the agency certifies that the 
rule will not have a significant economic impact on a substantial 
number of small entities. Small entities include small businesses, 
small organizations, and small governmental jurisdictions.
    For purposes of assessing the impacts of this action on small 
entities, small entity is defined as: (1) A small business as defined 
by the Small Business Administration's (SBA) regulations at 13 CFR 
121.201 (see Table XIV-2, below); (2) a small governmental jurisdiction 
that is a government of a city, county, town, school district or 
special district with a population of smaller than 50,000; and (3) a 
small organization that is any not-for-profit enterprise which is 
independently owned and operated and is not dominant in its field. The 
following table provides an overview of the primary SBA small business 
categories potentially affected by this regulation.

 Table XIV-2.--Small Business Definitions for Entities Affected by This
                                  Rule
------------------------------------------------------------------------
                                                             Threshold
                                                            definitions
                Industry                   NAICS a codes     for small
                                                            business b
                                                            (employees)
------------------------------------------------------------------------
Small SI and Marine SI Engine                     333618           1,000
 Manufacturers..........................

[[Page 28242]]

 
Equipment Manufacturers:
    Farm Machinery......................          333111             500
    Lawn and Garden.....................          333112             500
    Construction........................          333120             750
    Sawmill and Woodworking.............          333210             500
    Pumps...............................          333911             500
    Air and Gas Compressors.............          333912             500
    Generators..........................          335312           1,000
Boat Builders...........................          336612             500
Fuel Tank Manufacturers:
    Other Plastic Products..............          326199             500
    Metal Stamping......................          332116             500
    Metal Tank (Heavy Gauge)............          332420             500
Fuel Line Manufacturers:
    Rubber and Plastic Fuel Lines.......          326220            500
------------------------------------------------------------------------
a North American Industry Classification System
b According to SBA's regulations (13 CFR 121), businesses with no more
  than the listed number of employees are considered ``small entities''
  for RFA purposes.

    Pursuant to section 603 of the RFA, EPA prepared an initial 
regulatory flexibility analysis (IRFA) that examines the impact of the 
proposed rule on small entities along with regulatory alternatives that 
could reduce that impact. The IRFA, as summarized below, is available 
for review in the docket and Chapter 10 of the Draft RIA.
(2) Background
    Air pollution is a serious threat to the health and well-being of 
millions of Americans and imposes a large burden on the U.S. economy. 
Ground-level ozone and carbon monoxide are linked to potentially 
serious respiratory health problems, especially respiratory effects and 
environmental degradation, including visibility impairment in and 
around our national parks. (Section II of this preamble and Chapter 2 
of the Draft RIA for this rule describe these pollutants and their 
health effects.) Over the past quarter century, state and federal 
representatives have established emission control programs that 
significantly reduce emissions from individual sources. Many of these 
sources now pollute at only a small fraction of their pre-control 
rates.
    This proposal includes standards that would require manufacturers 
to substantially reduce exhaust emissions and evaporative emissions 
from Marine SI engines and vessels and from Small SI engines and 
equipment. We are proposing the standards under section 213(a)(3) of 
the CAA which directs EPA to set emission standards that ``achieve the 
greatest degree of emission reduction achievable through the 
application of technology'' giving appropriate consideration to cost, 
noise, energy, safety, and lead time. In addition to the general 
authority to regulate nonroad engines under the CAA, Section 428 of 
2004 Consolidated Appropriations Act requires EPA to propose and 
finalize new regulations for nonroad spark-ignition engines below 50 
horsepower.
(3) Summary of Regulated Small Entities
    The standards being proposed for Small SI engines and equipment 
will affect manufacturers of both handheld equipment and nonhandheld 
equipment. Based on EPA certification records, the Small SI nonhandheld 
engine industry is made up primarily of large manufacturers including 
Briggs and Stratton, Tecumseh, Honda, Kohler and Kawasaki. The Small SI 
handheld engine industry is also made up primarily of large 
manufacturers including Electrolux Home Products, MTD, Homelite, Stihl 
and Husqvarna. EPA has identified 10 Small SI engine manufacturers that 
qualify as a small business under SBA definitions. Half of these small 
manufacturers certify gasoline engines and the other half certify 
liquefied petroleum gas (LPG) engines.
    The Small SI equipment market is dominated by a few large 
businesses including Toro, John Deere, MTD, Briggs and Stratton, and 
Electrolux Home Products. While the Small SI equipment market may be 
dominated by just a handful of companies, there are many small 
businesses in the market; however these small businesses account for 
less than 10 percent of equipment sales. We have identified over three 
hundred equipment manufacturers that qualify as a small business under 
the SBA definitions. More than 90 percent of these small companies 
manufacture fewer than 5,000 pieces of equipment per year. The median 
employment level is 65 employees for nonhandheld equipment 
manufacturers and 200 employees for handheld equipment manufacturers. 
The median sales revenue is approximately $9 million for nonhandheld 
equipment manufacturers and $20 million for handheld equipment 
manufacturers.
    EPA has identified 25 manufacturers that produce fuel tanks for the 
Small SI equipment market that meet the SBA definition of a small 
business. Fuel tank manufacturers rely on three different processes for 
manufacturing plastic tanks--rotational molding, blow molding and 
injection molding. EPA has identified small business fuel tank 
manufacturers using the rotational molding and blow molding processes 
but has not identified any small business manufacturers using injection 
molding. In addition, EPA has identified two manufacturers that produce 
fuel lines for the Small SI equipment market that meet the SBA 
definition of a small business. The majority of fuel line in the Small 
SI market is made by large manufacturers including Avon Automotive and 
Dana Corporation.
    The standards being proposed for Marine SI engines and vessels will 
affect manufacturers in the OB/PWC market and the SD/I market. Based on 
EPA certification records, the OB/PWC market is made up primarily of 
large manufacturers including, Brunswick (Mercury), Bombardier 
Recreational

[[Page 28243]]

Products, Yamaha, Honda, Kawasaki, Polaris, Briggs & Stratton, Nissan, 
and Tohatsu. One company that qualifies as a small business under the 
SBA definitions has certified their product as a PWC. This company is 
Surfango who makes a small number of motorized surfboards.
    The SD/I market is made up mostly of small businesses; however, 
these businesses account for less than 20 percent of engine sales. Two 
large manufacturers, Brunswick (Mercruiser) and Volvo Penta, dominate 
the market. We have identified 28 small entities manufacturing SD/I 
marine engines. The third largest company is Indmar, which has much 
fewer than the SBA threshold of 1,000 employees. Based on sales 
estimates, number of employees reported by Thomas Register, and typical 
engine prices, we estimate that the average revenue for the larger 
small SD/I manufacturers is about $50-60 million per year. However, the 
vast majority of the SD/I engine manufacturers produce low production 
volumes of engines and typically have fewer than 50 employees.
    The two largest boat building companies are Brunswick and Genmar. 
Brunswick owns approximately 25 boat companies and Genmar owns 
approximately 12 boat companies. Based on a manufacturer list 
maintained by the U.S. Coast Guard, there are over 1,600 boat builders 
in the United States. We estimate that, based on manufacturer 
identification codes, more than 1,000 of these companies produce boats 
using gasoline marine engines. According to the National Marine 
Manufacturers Association (NMMA), most of these boat builders are small 
businesses. These small businesses range from individuals building one 
boat per year to businesses near the SBA small business threshold of 
500 employees.
    We have identified 15 marine fuel tank manufacturers in the United 
States that qualify as small businesses under the SBA definition. These 
manufacturers include five rotational molders, three blow molders, six 
aluminum fuel tank manufacturers, and one specialty fuel tank 
manufacturer. The small rotational molders average fewer than 50 
employees while the small blow-molders average over 100 employees. 
Moeller qualifies as a large business because they are owned by Moore; 
however, their rotational molding business is a small part of the 
company and operates similar to the smaller businesses. Other blow-
molders are in the same situation such as Attwood which is owned by 
Brunswick.
    We have only identified one small fuel line manufacturer that 
produces for the Marine SI market. Novaflex primarily distributes fuel 
lines made by other manufacturers but does produce its own filler 
necks. Because we expect vessel manufacturers will design their fuel 
systems such that there will not be standing liquid fuel in the fill 
neck (and therefore the proposed low-permeation fuel line requirements 
will not apply to the fill neck), we have not included this 
manufacturer in our analysis. The majority of fuel line in the Marine 
SI market is made by large manufacturers including Goodyear and Parker-
Hannifin.
    To gauge the impact of the proposed standards on small businesses, 
EPA employed a cost-to-sales ratio test to estimate the number of small 
businesses that would be impacted by less than one percent, between one 
and three percent, and above three percent. For this analysis, EPA 
assumed that the costs of complying with the proposed standards are 
completely absorbed by the regulated entity. Overall, EPA projects that 
60 small businesses will be impacted by one to three percent, 18 small 
businesses will be impacted by over three percent, and the remaining 
companies (over 1,000 small businesses) will be impacted by less than 
one percent. Table XIV-3 summarizes the impacts on small businesses 
from the proposed exhaust and evaporative emission standards for Small 
SI engines and equipment and Marine SI engines and vessels. A more 
detailed description of the inputs used for each affected industry 
sector and the methodology used to develop the estimated impact on 
small businesses in each industry sector is included in the IRFA as 
presented in Chapter 10 of the Draft RIA for this rulemaking.

          Table XIV-3.--Summary of Impacts on Small Businesses
------------------------------------------------------------------------
                                                       1-3        > 3
        Industry sector             0-1 percent      percent    percent
------------------------------------------------------------------------
Manufacturers of Marine OB/PWC   1................          0          0
 engines.
Manufacturers of Marine SD/I     4................          5          0
 engines < 373 kW.
Manufacturers of Marine SD/I     2................         17          0
 engines >= 373 kW (high-
 performance).
Boat Builders..................  >1,000...........          0          0
Manufacturers of Fuel Lines and  15...............          0          0
 Fuel Tanks for Marine SI
 Vessels.
Small SI engines and equipment.  314..............         38         18
Manufacturers of Fuel Lines and  27...............          0          0
 Fuel Tanks for Small SI
 Applications.
                                ----------------------------------------
    Total......................  363 + >1,000 boat         60         18
                                  builders.
------------------------------------------------------------------------

(4) Potential Reporting, Recordkeeping, and Compliance
    For any emission control program, EPA must have assurances that the 
regulated products will meet the standards. Historically, EPA's 
programs for Small SI engines and Marine SI engines have included 
provisions requiring that engine manufacturers be responsible for 
providing these assurances. The program that EPA is considering for 
manufacturers subject to this proposal may include testing, reporting, 
and recordkeeping requirements for manufacturers of engines, equipment, 
vessels, and fuel system components including fuel tanks, fuel lines, 
and fuel caps.
    For Small SI engine manufacturers and OB/PWC engine manufacturers, 
EPA is proposing to continue the same reporting, recordkeeping, and 
compliance requirements prescribed in the current regulations. For SD/I 
engine manufacturers, which are not currently subject to EPA 
regulation, EPA is proposing to apply similar reporting, recordkeeping, 
and compliance requirements to those for OB/PWC engine manufacturers. 
Testing requirements for engine manufacturers would include 
certification emission (including deterioration factor) testing and 
production-line testing. Reporting requirements would include emission 
test data and technical data on the engines. Manufacturers would also 
need to keep records of this information.

[[Page 28244]]

    Because of the proposed evaporative emission requirements, there 
would be new reporting, recordkeeping and compliance requirements for 
Small SI equipment manufacturers. Small SI equipment manufacturers 
participating in the proposed transition program would also be subject 
to reporting, recordkeeping and compliance requirements. There may also 
be new reporting, recordkeeping and compliance requirements for fuel 
tank manufacturers, fuel line manufacturers, fuel cap manufacturers and 
marine vessel manufacturers. Testing requirements for these 
manufacturers could include certification emission testing. Reporting 
requirements could include emission test data and technical data on the 
designs. Manufacturers would also need to keep records of this 
information.
(5) Relevant Federal Rules
    For Small SI engines and equipment, the primary federal rules that 
are related to the rule under consideration are EPA's Phase 1 rule for 
Small SI engines (60 FR 34582, July 3, 1995), EPA's Phase 2 rule for 
Small SI nonhandheld engines (64 FR 15208, March 30, 2004), and EPA's 
Phase 2 rule for Small SI handheld engines (65 FR 24268, April 25, 
2000). For Marine SI engines and vessels, the primary federal rule that 
is related to the rule under consideration is EPA's October 1996 final 
rule (61 FR 52088, October 4, 1996).
    Three other federal agencies have regulations that relate to the 
equipment and vessels under consideration. These agencies are the 
Consumer Product Safety Commission (CPSC), United States Department of 
Agriculture (USDA), and the United States Coast Guard (USCG). CPSC has 
safety requirements that apply to walk-behind lawnmowers to protect 
operators of such equipment. USDA has design requirements intended to 
reduce the potential fire threat of Small SI equipment. The USCG has 
safety regulations for marine engine and fuel system designs. The USCG 
safety regulations include standards for exhaust system temperature, 
fuel tank durability and fuel line designs, including specific 
requirements related to system survivability in a fire. Manufacturers 
will need to consider both EPA and other federal standards when 
certifying their products.
(6) Significant Alternatives
    For Small SI engines and equipment, EPA looked at the existing 
Phase 2 rule for small engines, as well as other recent EPA rules, to 
provide potential flexibilities which might be offered with the Phase 3 
standards. For engine manufacturers, the potential flexibilities 
considered included extra time before the Phase 3 requirements would 
apply and reduced testing burden, such as assigned deterioration 
factors for certification purposes and exemption from the production-
line testing requirements. For equipment manufacturers, the potential 
flexibilities considered included extra time before having to use Phase 
3 engines and the ability to request extra time for a variety of 
reasons, including technical hardship, economic hardship, and unusual 
circumstances. For fuel tank and fuel line manufacturers, EPA has tried 
to develop the timing of the proposal to accommodate all manufacturers, 
including small businesses. We also considered offering manufacturers 
the ability to request extra time for a variety of reasons, including 
economic hardship and unusual circumstances.
    For Marine SI engines and vessels, EPA previously convened two 
Small Business Advocacy Review Panel (SBAR Panel, or the Panel) to 
obtain advice and recommendation of representatives of the small 
entities that potentially would be subject to the requirements under 
consideration at the time. The Panels took place in 1999 and 2001 and 
addressed small business issues related to exhaust and evaporative 
emission standards similar to those described in this proposal. 
Nineteen small entities that sell in the Marine SI engine and vessel 
sectors participated as Small Entity Representatives (SERs) in the two 
previous Panels.
    On June 7, 1999, we convened a SBAR Panel to address small entity 
issues related to anticipated exhaust emission standards for SD/I 
marine engines. As part of that Panel, we considered a range of 
regulatory options, including standards that would be expected to 
require the use of catalytic control. With input from the SERs, the 
1999 Panel drafted a report providing findings and recommendations to 
us on how to reduce potential burden on small businesses that may occur 
as a result of this proposed rule. Small business flexibility 
approaches recommended by the 1999 Panel included the following:
     Broad definition of engine families for certification.
     Minimizing compliance testing requirements.
     Design-based certification (as an option to emission 
testing).
     Use of emission credits.
     Delay of the implementation date of the standards.
     Hardship provisions (for economic reasons or under unusual 
circumstances).
     Limited temporary exemptions for small boat builders.
    On May 3, 2001, we convened a SBAR Panel to address potential small 
entity issues for a number of emission programs under consideration. 
One of the programs was evaporative emission standards for boats using 
gasoline engines. With input from SERs, the 2001 Panel drafted a report 
providing findings and recommendations to us on how to reduce potential 
burden on small businesses that may occur as a result of this proposed 
rule. The flexibility approaches recommended by the 2001 Panel included 
the following:
     Broad definition of emission families for certification.
     Design-based certification (as an option to emission 
testing).
     Use of emission credits.
     Delay of the implementation date of the standards.
     Hardship provisions (for economic reasons or under unusual 
circumstances).
    In the time since the 1999 and 2001 SBAR Panels were completed, a 
great deal of development has been performed on exhaust and evaporative 
emission control technology. We considered the flexibilities 
recommended by the 1999 and 2001 Panels (as noted above) in the context 
of this new information.
(7) Panel Process and Panel Outreach
    As required by section 609(b) of the RFA, as amended by SBREFA, EPA 
also has conducted outreach to small entities and convened a SBAR Panel 
to obtain advice and recommendation of representatives of the small 
entities that potentially would be subject to the requirements of this 
rule. On August 17, 2006 EPA's Small Business Advocacy Chairperson 
convened a Panel under section 609(b) of the RFA. In addition to the 
Chair, the Panel consisted of the Division Director the Assessment and 
Standards Division within EPA's Office of Air and Radiation, the Chief 
Counsel for Advocacy of the Small Business Administration, and the 
Administrator of the Office of Information and Regulatory Affairs 
within the Office of Management and Budget.
    As part of the SBAR Panel process we conducted outreach with 
representatives from 25 various small entities that would be affected 
by this rule. The SERs included engine, equipment, fuel tank and fuel 
line manufacturers for the Small SI market and engine, vessel, fuel 
tank and fuel line manufacturers for the Marine SI

[[Page 28245]]

market. We met with these SERs to discuss the potential rulemaking 
approaches and potential options to decrease the impact of the 
rulemaking on their industries. We distributed outreach materials to 
the SERs; these materials included background on the rulemaking, 
possible regulatory approaches, and possible rulemaking alternatives 
(as noted earlier). The Panel met with SERs from the industries that 
will be impacted directly by this rule on September 12, 2006 to discuss 
the outreach materials and receive feedback on the approaches and 
alternatives detailed in the outreach packet. (EPA also met with SERs 
on July 11, 2006 for an initial outreach meeting.) The Panel received 
written comments from the SERs following the meeting in response to 
discussions at the meeting and the questions posed to the SERs by the 
Agency. The SERs were specifically asked to provide comment on 
regulatory alternatives that could help to minimize the rule's impact 
on small businesses.
(8) Panel Recommendations for Small Business Flexibilities
    The Panel recommended that EPA consider and seek comment on a wide 
range of regulatory alternatives to mitigate the impacts of the 
rulemaking on small businesses, including those flexibility options 
described below. The following section summarizes the SBAR Panel 
recommendations. EPA has proposed provisions consistent with each of 
the Panel's recommendations.
    Consistent with the RFA/SBREFA requirements, the Panel evaluated 
the assembled materials and small-entity comments on issues related to 
elements of the IRFA. A copy of the Final Panel Report (including all 
comments received from SERs in response to the Panel's outreach meeting 
(Appendix D) as well as summaries of both outreach meetings that were 
held with the SERs (Appendices B and C)) is included in the docket for 
this proposed rule. A summary of the Panel recommendations is detailed 
below. As noted above, this proposal includes proposed provisions for 
each of the Panel recommendations.
(a) Manufacturer Flexibilities for Small SI Engine Exhaust Standards
    The Panel's recommendations for the Phase 3 exhaust emission 
standards for nonhandheld engines are summarized below. A complete 
discussion of the proposed small business provisions in response to 
each of the Panel recommendations noted below can be found in Section 
V.F of this preamble.
    Additional Lead Time for Nonhandheld Engine Manufacturers--The 
Panel recommended that EPA propose two additional years of lead time 
before the Phase 3 standards take effect for small business engine 
manufacturers. For Class I engines, the effective date for small 
business engine manufacturers would be 2014. For Class II engines, the 
effective date for small business engine manufacturers would be 2013.
    Assigned Deterioration Factors--The Panel recommended EPA propose 
that small business engine manufacturers be allowed the option to use 
EPA-developed assigned deterioration factors in demonstrating 
compliance with the Phase 3 exhaust emission standards.
    Production-Line Testing Exemption--The Panel recommended EPA 
propose that small business engine manufacturers be exempted from the 
production line testing requirements for the Phase 3 exhaust emission 
standards.
    Broader Definition of Engine Family--The Panel recommended that EPA 
propose allowing small business engine manufacturers to group all of 
their Small SI engines into a single engine family for certification by 
engine class and useful life category, subject to good engineering 
judgment.
    Simplified Engine Certification for Equipment Manufacturers--
Generally, it has been engine manufacturers who certify with EPA for 
the exhaust emission standards since the standards are engine-based 
standards. However, a number of equipment manufacturers, especially 
those that make low-volume models, believe it may be necessary for 
equipment manufacturers to certify their own unique engine/muffler 
designs with EPA (but using the same catalyst substrate already used in 
a muffler certified by the engine manufacturer). The Panel recommended 
that EPA propose a simplified engine certification process for small 
business equipment manufacturers in such situations. Under such a 
simplified certification process, the equipment manufacturer would need 
to demonstrate that it is using the same catalyst substrate as the 
approved engine manufacturer's family, provide information on the 
differences between their engine/exhaust system and the engine/exhaust 
system certified by the engine manufacturer, and explain why the 
deterioration data generated by the engine manufacturer would be 
representative for the equipment manufacturer's configuration.
    Additional Lead Time for Small SI Equipment Manufacturers--The 
Panel recommended that EPA propose a transition program that would 
allow small business equipment manufacturers to continue using Phase 2 
engine designs (i.e., engines meeting the Phase 2 exhaust emission 
standards) during the first two years that the Phase 3 standards take 
effect. (For equipment using Class I engines, the provision would apply 
in 2012 and 2013. For equipment using Class II engines, the provision 
would apply in 2011 and 2012.) The Panel also recommended that EPA 
propose to allow small business equipment manufacturers to use Phase 3 
engines without the catalyst during this initial two-year period 
provided the engine manufacturer has demonstrated that the engine 
without the catalyst would comply with the Phase 2 exhaust emission 
standards and labels it appropriately.
    Eligibility for the Small Business Flexibilities--For purposes of 
determining which engine and equipment manufacturers are eligible for 
the small business flexibilities described above, EPA is proposing 
criteria based on a production cut-off of 10,000 nonhandheld engines 
per year for engine manufacturers and 5,000 pieces of nonhandheld 
equipment per year for equipment manufacturers. The Panel recommended 
that EPA propose to allow engine and equipment manufacturers which 
exceed the production cut-off levels noted above but meet the SBA 
definitions for a small business (i.e., fewer than 1,000 employees for 
engine manufacturers or fewer than 500 employees for most types of 
equipment manufacturers) to request treatment as a small business.
(b) Manufacturer Flexibilities for SD/I Marine Exhaust Standards
    The Panel's recommendations for the exhaust emission standards for 
SD/I marine engines are summarized below. A complete discussion of the 
proposed small business provisions in response to each of the Panel 
recommendations noted below can be found in Section III.F of this 
preamble.
    Additional Lead Time for SD/I Engine Manufacturers--The Panel 
recommended that EPA propose an implementation date of 2011 for SD/I 
engines below 373 kW produced by small business marine engine 
manufacturers and an implementation date of 2013 for small business 
manufacturers of high performance SD/I marine engines (at or above 373 
kW). Based on the proposed 2009 implementation date for the remaining 
SD/I engine manufacturers (i.e., the large businesses), these dates 
would provide small business SD/I engine manufacturers with two years 
additional lead time for SD/I engines below 373 kW and four years 
additional lead time for SD/I engines at or above 373 kW.
    Exhaust Emission ABT--EPA is proposing an averaging, banking and

[[Page 28246]]

trading (ABT) program for the SD/I engine standards. Because EPA is 
proposing an ABT program for SD/I engines, the Panel recommended that 
EPA request comment on the desirability of credit trading between high 
performance and other SD/I marine engines and the impact it could have 
on small business.
    Early Credit Generation for ABT--EPA is proposing an early banking 
program for SD/I marine engines. Under the early banking provisions, 
manufacturers can generate ``bonus'' credits for the early introduction 
of engines meeting the proposed emission standards. The Panel supports 
EPA proposing an early banking program and believes that bonus credits 
will provide greater incentive for more small business engine 
manufacturers to introduce advanced technology earlier than would 
otherwise occur.
    Assigned Emission Rates for High Performance SD/I Engines--The 
Panel recommended that EPA propose to allow the use of default emission 
rates that could be used by small business high performance SD/I engine 
manufacturers as part of their certification. Based on currently 
available test data, the proposed default baseline emission levels for 
high performance engines are 30 g/kW-hr HC+NOX and 350 g/kW-
hr CO.
    Alternative Standards for High Performance SD/I Engines--SERs 
expressed concern that that catalysts have not been demonstrated on 
high performance engines and that they may not be practicable for this 
application. While EPA is proposing a standard based on the use of 
catalysts, EPA is requesting comment on a standard for high performance 
SD/I marine engines that could be met without the use of a catalyst. 
(Based on available data, levels of 16 g/kW-hr HC+NOX and 
350 g/kW-hr CO were discussed with the SERs). The Panel recommended EPA 
request comment on a non-catalyst based standard for high performance 
marine engines.
    EPA is proposing to not apply the not-to-exceed (NTE) standards to 
high performance SD/I engines. The Panel supports excluding high 
performance SD/I engines from NTE requirements.
    Broad Engine Families for High Performance SD/I Engines--The Panel 
recommended that EPA propose allowing small businesses to group all of 
their high performance SD/I engines into a single engine family for 
certification, subject to good engineering judgment.
    Simplified Test Procedures for High Performance SD/I Engines--For 
high performance SD/I engines, it may be difficult to hold the engine 
at idle or high power within the tolerances currently specified in 
existing EPA test procedures. The Panel recommended that EPA propose 
less restrictive specifications and tolerances for small businesses 
testing high performance SD/I engines, which would allow the use of 
portable emission measurement equipment.
    Eligibility for the Small Business Flexibilities--For purposes of 
determining which engine manufacturers are eligible for the small 
business flexibilities described above for SD/I engine manufacturers, 
EPA is proposing criteria based on a production cut-off of 5,000 SD/I 
engines per year. The Panel recommended EPA propose to allow engine 
manufacturers that exceed the production cut-off level noted above but 
meet the SBA definitions for a small business (i.e., fewer than 1,000 
employees for engine manufacturers), to request treatment as a small 
business.
(c) Manufacturer Flexibilities for Small SI and Marine SI Evaporative 
Standards
    The Panel's recommendations for the evaporative emission standards 
for Small SI engines and equipment and SD/I marine engines and vessels 
are summarized below. SERs raised many of the same issues regarding 
evaporative emission standards for both Small SI and marine 
applications. In fact, many of the SERs supply fuel system components 
to both industries. For these reasons, the Panel's recommendations on 
regulatory flexibility discussed below would apply to Small SI 
equipment and to SD/I marine vessels except where noted.
    Because the majority of fuel tanks produced for the Small SI 
equipment and the SD/I marine vessel market are made by small 
businesses, the details of the evaporative emissions program under 
consideration and the flexibility provisions shared by EPA with the 
SERs were noted as being available to all fuel tank manufacturers. 
Therefore, the Panel recommendations on regulatory flexibility for fuel 
tank manufacturers discussed below are being proposed to apply to all 
fuel tank manufacturers. A complete discussion of the proposed 
provisions in response to each of the Panel recommendations noted below 
can be found in Section VI.G of this preamble.
    Consideration of Appropriate Lead Time--The Panel recommended that 
EPA propose to implement the fuel tank permeation standards in 2011 
with an additional year (2012) for rotationally molded marine fuel 
tanks. The extra year for rotationally molded marine tanks would give 
manufacturers time to address issues that are specific to the marine 
industry.
    With regard to diurnal emissions control, SERs commented that they 
would like additional time to install carbon canisters in their vessels 
because of deck and hull changes that might be needed to accommodate 
the carbon canisters. SERs commented that they would consider asking 
EPA to allow the use of low-permeation fuel lines prior to 2009 as a 
method of creating an emission neutral flexibility option for providing 
extra time for canisters. The Panel recommended that EPA continue 
discussions with the marine industry and request comment on 
environmentally neutral approaches to provide more flexibility in 
meeting the potential diurnal emission standards.
    Fuel Tank ABT and Early Incentive Program--The Panel recommended 
that EPA propose an ABT program for fuel tank permeation. The Panel 
also recommended that EPA request comment on including service tanks 
(i.e., replacement tanks) in the ABT program. Finally, the Panel 
recommended that EPA request comment on an early incentive program for 
tank permeation.
    Broad Definition of Evaporative Emission Family for Fuel Tanks--The 
Panel recommended that EPA propose a broad emission family definition 
for Small SI fuel tanks and for Marine SI fuel tanks similar to that in 
the regulations for recreational vehicles. Under the recreation vehicle 
evaporative emission regulations, EPA specifies that fuel tank 
permeation emission families be based on type of material (including 
additives such as pigments, plasticizers, and ultraviolet (UV) 
inhibitors), emission control strategy, and production methods. Fuel 
tanks of different sizes, shapes, and wall thicknesses may be grouped 
into the same emission family.
    Compliance Progress Review for Marine Fuel Tanks--While there is 
clearly a difference of opinion among the SERs involved in tank 
manufacturing, some SERs expressed concern that there is not an 
established low-permeation technology available for rotationally molded 
marine fuel tanks. These SERs stated that they are working on 
developing such technology but do not have in-use experience to 
demonstrate the durability of low-permeation rotationally molded fuel 
tanks. The Panel recommended that if a rule is implemented, EPA 
undertake a ``compliance progress review'' assessment with the 
manufacturers. In this effort, EPA should continue to engage on a 
technical level with

[[Page 28247]]

rotationally-molded marine fuel tank manufacturers and material 
suppliers to assess the progress of low-permeation fuel tank 
development and compliance.
    Design-Based Certification--The Panel recommended that EPA propose 
a design-based certification for carbon canisters and fuel tanks. For 
the carbon canisters, the design requirement would call for a ratio of 
carbon volume (liters) to fuel tank capacity (gallons) of 0.04 liter/
gallon for boats less than 26 feet in length, and 0.016 liter/gallon 
for larger boats. The different canister sizes are intended to account 
for the differences between boats normally trailered to the water for 
use versus boats normally stored in the water between uses. For fuel 
tanks, the Panel recommended that EPA propose to allow design-based 
certification for metal tanks and plastic fuel tanks with a continuous 
EVOH barrier.
    SERs commented that the American Boat and Yacht Council (ABYC) and 
the Society of Automotive Engineers (SAE) have industry recommended 
practices for boat designs that must be met as a condition of 
membership in the National Marine Manufacturers Association (NMMA). 
NMMA is working to update these recommended practices to include carbon 
canister installation specifications and a low-permeation fuel line 
designation. The Panel recommended that EPA propose to accept data used 
for meeting the voluntary requirements as part of the EPA 
certification.
    Additional Lead Time for Small SI Fuel Line Requirement--EPA is 
proposing to apply the fuel line permeation requirements beginning with 
the 2008 model year for Small SI nonhandheld equipment. Given the short 
lead time before 2008, small business equipment manufacturers may not 
be ready for such a requirement. The Panel recommended EPA propose a 
2009 implementation date for low-permeation fuel line for small 
business equipment manufacturers producing Small SI nonhandheld 
equipment.
(d) Manufacturer Hardship Provisions
    The Panel recommended that EPA propose hardship programs for 
affected manufacturers. EPA has adopted hardship provisions in a number 
of previous rules. The following section summarizes the hardship 
provisions recommended by the Panel which would be available to engine 
manufacturers, equipment manufacturers, vessel manufacturers, and fuel 
system component manufacturers (i.e., fuel tank, fuel line, and fuel 
cap manufacturers). A discussion of the proposed hardship provisions 
can be found in Sections VIII.C.8, VIII.C.9, and VIII.C.10.
    Unusual Circumstances Hardship--The Panel recommended that EPA 
propose a provision allowing for hardship relief under unusual 
circumstances for manufacturers affected by this rule. Manufacturers 
would be able to apply for hardship relief if circumstances outside 
their control cause the failure to comply and if failure to sell the 
subject engines or equipment would jeopardize the company's solvency. 
An example of an unusual circumstance outside a manufacturer's control 
may be an ``Act of God,'' a fire at the manufacturing plant, or the 
unforeseen shut down of a supplier with no alternative available.
    Economic Hardship--The Panel recommended that EPA propose economic 
hardship provisions for small businesses affected by this rule. Small 
manufacturers would be able to petition EPA for limited additional lead 
time to comply with the standards. A manufacturer would have to make 
the case that it has taken all possible business, technical, and 
economic steps to comply but the burden of compliance costs would have 
a significant impact on the company's solvency.
    We invite comments on all aspects of the proposal and its impacts 
on small entities.

D. Unfunded Mandates Reform Act

    Title II of the Unfunded Mandates Reform Act of 1995 (UMRA), Public 
Law 104-4, establishes requirements for federal agencies to assess the 
effects of their regulatory actions on state, local, and tribal 
governments and the private sector. Under section 202 of the UMRA, EPA 
generally must prepare a written statement, including a cost-benefit 
analysis, for proposed and final rules with ``federal mandates'' that 
may result in expenditures to state, local, and tribal governments, in 
the aggregate, or to the private sector, of $100 million or more in any 
one year. Before promulgating an EPA rule for which a written statement 
is needed, section 205 of the UMRA generally requires that EPA identify 
and consider a reasonable number of regulatory alternatives and adopt 
the least costly, most cost-effective, or least burdensome alternative 
that achieves the objectives of the rule. The provisions of section 205 
do not apply when they are inconsistent with applicable law. Moreover, 
section 205 allows EPA to adopt an alternative other than the least 
costly, most cost-effective, or least burdensome alternative if the 
Administrator publishes with the final rule an explanation of why that 
alternative was not adopted.
    Before EPA establishes any regulatory requirements that may 
significantly or uniquely affect small governments, including tribal 
governments, it must have developed under section 203 of the UMRA a 
small government agency plan. The plan must provide for notifying 
potentially affected small governments, enabling officials of affected 
small governments to have meaningful and timely input in the 
development of EPA regulatory proposals with significant federal 
intergovernmental mandates, and informing, educating, and advising 
small governments on compliance with the regulatory requirements.
    This rule contains no federal mandates for state, local, or tribal 
governments as defined by the provisions of Title II of the UMRA. The 
rule imposes no enforceable duties on any of these governmental 
entities. Nothing in the rule would significantly or uniquely affect 
small governments.
    EPA has determined that this rule contains federal mandates that 
may result in expenditures of more than $100 million to the private 
sector in any single year. EPA believes that the proposal represents 
the least costly, most cost-effective approach to achieve the air 
quality goals of the rule. The costs and benefits associated with the 
proposal are discussed above and in the Draft Regulatory Impact 
Analysis as required by the UMRA.

E. Executive Order 13132: Federalism

    Executive Order 13132, entitled ``Federalism'' (64 FR 43255, August 
10, 1999), requires EPA to develop an accountable process to ensure 
``meaningful and timely input by State and local officials in the 
development of regulatory policies that have federalism implications.'' 
``Policies that have federalism implications'' is defined in the 
Executive Order to include regulations that have ``substantial direct 
effects on the States, on the relationship between the national 
government and the States, or on the distribution of power and 
responsibilities among the various levels of government.''
    Under section 6 of Executive Order 13132, EPA may not issue a 
regulation that has federalism implications, that imposes substantial 
direct compliance costs, and that is not required by statute, unless 
the Federal government provides the funds necessary to pay the direct 
compliance costs incurred by State and local governments, or EPA 
consults with State and local officials early in the process of 
developing the proposed regulation. EPA also may not issue a regulation 
that has federalism implications and that preempts State law, unless 
the Agency consults with

[[Page 28248]]

State and local officials early in the process of developing the 
proposed regulation.
    Section 4 of the Executive Order contains additional requirements 
for rules that preempt State or local law, even if those rules do not 
have federalism implications (i.e., the rules will not have substantial 
direct effects on the States, on the relationship between the national 
government and the states, or on the distribution of power and 
responsibilities among the various levels of government). Those 
requirements include providing all affected State and local officials 
notice and an opportunity for appropriate participation in the 
development of the regulation. If the preemption is not based on 
express or implied statutory authority, EPA also must consult, to the 
extent practicable, with appropriate State and local officials 
regarding the conflict between State law and Federally protected 
interests within the agency's area of regulatory responsibility.
    This proposed rule does have federalism implications. It does not 
propose any significant revisions from current statutory and regulatory 
requirements, but it proposes to codify existing statutory 
requirements. Prior to the passage of Public Law 108-199, the various 
states could adopt and enforce nonroad emission control standards 
previously adopted by the state of California under section 209(e) of 
the Clean Air Act, once California had received authorization from EPA 
to enforce such standards. As part of directing EPA to undertake this 
rulemaking, section 428 of Public Law 108-199 has taken away the 
authority of states to adopt California standards for any nonroad 
spark-ignition engine under 50 horsepower that they had not already 
adopted by September 1, 2003. No state had done so by that date. No 
current state law is affected by the provisions of Public Law 108-199 
mentioned above. Today's action proposes to codify the statutory 
provision prohibiting other states from adopting California standards 
for nonroad spark-ignition engines under 50 horsepower. It does not 
affect the independent authority of California.
    EPA did consult with representatives of various State and local 
governments in developing this rule. EPA has also consulted 
representatives from the National Association of Clean Air Agencies 
(NACAA), which represents state and local air pollution officials. 
These officials participated in two EPA workshops regarding the Small 
SI safety study in which they expressed concern about the language of 
section 428 of Public Law 108-199 limiting the states ability to adopt 
the California standards for nonroad spark-ignition engines under 50 
horsepower and urged EPA to move expeditiously in adopting new Federal 
emission standards for this category.
    In the spirit of Executive Order 13132, and consistent with EPA 
policy to promote communications between EPA and State and local 
governments, EPA specifically solicits comment on this proposed rule 
from State and local officials.

F. Executive Order 13175: Consultation and Coordination With Indian 
Tribal Governments

    Executive Order 13175, entitled ``Consultation and Coordination 
with Indian Tribal Governments'' (65 FR 67249, November 9, 2000), 
requires EPA to develop an accountable process to ensure ``meaningful 
and timely input by tribal officials in the development of regulatory 
policies that have tribal implications.''
    This proposed rule does not have tribal implications as specified 
in Executive Order 13175. This rule will be implemented at the Federal 
level and impose compliance costs only on engine and equipment 
manufacturers. Tribal governments will be affected only to the extent 
they purchase and use equipment with regulated engines. Thus, Executive 
Order 13175 does not apply to this rule. EPA specifically solicits 
additional comment on this proposed rule from tribal officials.

G. Executive Order 13045: Protection of Children From Environmental 
Health and Safety Risks

    Executive Order 13045, ``Protection of Children from Environmental 
Health Risks and Safety Risks'' (62 FR 19885, April 23, 1997) applies 
to any rule that (1) Is determined to be ``economically significant'' 
as defined under Executive Order 12866, and (2) concerns an 
environmental health or safety risk that EPA has reason to believe may 
have a disproportionate effect on children. If the regulatory action 
meets both criteria, section 5-501 of the Order directs the Agency to 
evaluate the environmental health or safety effects of the planned rule 
on children, and explain why the planned regulation is preferable to 
other potentially effective and reasonably feasible alternatives 
considered by the Agency.
    This proposed rule is not subject to the Executive Order because it 
does not involve decisions on environmental health or safety risks that 
may disproportionately affect children.
    The effects of ozone on children's health were addressed in detail 
in EPA's rulemaking to establish the NAAQS for these pollutants, and 
EPA is not revisiting those issues here. EPA believes, however, that 
the emission reductions from the strategies proposed in this rulemaking 
will further reduce air toxic emissions and the related adverse impacts 
on children's health.

H. Executive Order 12898: Federal Actions to Address Environmental 
Justice in Minority Populations and Low-Income Populations.

    Executive Order (EO) 12898 (59 FR 7629 (Feb. 16, 1994)) establishes 
federal executive policy on environmental justice. Its main provision 
directs federal agencies, to the greatest extent practicable and 
permitted by law, to make environmental justice part of their mission 
by identifying and addressing, as appropriate, disproportionately high 
and adverse human health or environmental effects of their programs, 
policies, and activities on minority populations and low-income 
populations in the United States.
    EPA has determined that this proposed rule will not have 
disproportionately high and adverse human health or environmental 
effects on minority or low-income populations because it increases the 
level of environmental protection for all affected populations without 
having any disproportionately high and adverse human health or 
environmental effects on any population, including any minority or low-
income population. This proposed rule will reduce air pollution from 
mobile sources in general and thus decrease the amount of such 
emissions to which all affected populations are exposed.

I. Executive Order 13211: Actions That Significantly Affect Energy 
Supply, Distribution, or Use

    This rule is not a ``significant energy action'' as defined in 
Executive Order 13211, ``Actions Concerning Regulations That 
Significantly Affect Energy Supply, Distribution, or Use'' (66 FR 
28355, May 22, 2001), because it is not likely to have a significant 
adverse effect on the supply, distribution, or use of energy. If 
promulgated, this proposed rule is expected to result in the use of 
emission control technologies that are estimated to reduce nationwide 
fuel consumption by around 100 million gallons per year by 2020.

J. National Technology Transfer Advancement Act

    Section 12(d) of the National Technology Transfer and Advancement

[[Page 28249]]

Act of 1995 (``NTTAA''), Public Law 104-113, section 12(d) (15 U.S.C. 
272 note) directs EPA to use voluntary consensus standards in its 
regulatory activities unless doing so would be inconsistent with 
applicable law or otherwise impractical. Voluntary consensus standards 
are technical standards (e.g., materials specifications, test methods, 
sampling procedures, and business practices) that are developed or 
adopted by voluntary consensus standards bodies. NTTAA directs EPA to 
provide Congress, through OMB, explanations when the Agency decides not 
to use available and applicable voluntary consensus standards.
    This proposed rulemaking involves technical standards. EPA proposes 
to use the test procedures specified in 40 CFR part 1065, as described 
in Section IX. While the Agency identified the test procedures 
specified by the International Organization for Standardization (ISO 
8178) as being potentially applicable, we do not propose to use it in 
this rulemaking. The use of this voluntary consensus standard would be 
impractical because we have been working with engine manufacturers and 
other interested parties in comprehensive improvements to test 
procedures for measuring engine emissions, as reflected by the 
provisions in part 1065. We expect these procedures to form the basis 
for internationally harmonized test procedures that will be adopted by 
ISO, other testing organizations, and other national governments.
    EPA welcomes comments on this aspect of the proposed rulemaking 
and, specifically, invites the public to identify potentially 
applicable voluntary consensus standards and to explain why such 
standards should be used in this regulation.

List of Subjects

40 CFR Part 60

    Administrative practice and procedure, Air pollution control, 
Incorporation by reference, Intergovernmental relations, Reporting and 
recordkeeping requirements.

40 CFR Part 63

    Administrative practice and procedure, Air pollution control, 
Hazardous substances, Incorporation by reference, Intergovernmental 
relations, Reporting and recordkeeping requirements.

40 CFR Part 85

    Confidential business information, Imports, Labeling, Motor vehicle 
pollution, Reporting and recordkeeping requirements, Research, 
Warranties.

40 CFR Part 89

    Environmental protection, Administrative practice and procedure, 
Confidential business information, Imports, Labeling, Motor vehicle 
pollution, Reporting and recordkeeping requirements, Research, Vessels, 
Warranty.

40 CFR Part 90

    Environmental protection, Administrative practice and procedure, 
Confidential business information, Imports, Labeling, Reporting and 
recordkeeping requirements, Research, Warranty.

40 CFR Part 91

    Environmental protection, Administrative practice and procedure, 
Air pollution control, Confidential business information, Imports, 
Labeling, Penalties, Reporting and recordkeeping requirements, 
Warranties.

40 CFR Part 1027

    Environmental protection, Administrative practice and procedure, 
Air pollution control, Imports, Reporting and recordkeeping 
requirements.

40 CFR Parts 1045, 1048, 1051, 1054, and 1060

    Environmental protection, Administrative practice and procedure, 
Air pollution control, Confidential business information, Imports, 
Incorporation by Reference, Labeling, Penalties, Reporting and 
recordkeeping requirements, Warranties.

40 CFR Part 1065

    Environmental protection, Administrative practice and procedure, 
Incorporation by reference, Reporting and recordkeeping requirements, 
Research.

40 CFR Part 1068

    Environmental protection, Administrative practice and procedure, 
Confidential business information, Imports, Motor vehicle pollution, 
Penalties, Reporting and recordkeeping requirements, Warranties.

40 CFR Part 1074

    Environmental protection, Administrative practice and procedure, 
Motor vehicle pollution.

    Dated: April 17, 2007.
Stephen L. Johnson,
Administrator.
    For the reasons set out in the preamble, title 40, chapter I of the 
Code of Federal Regulations is proposed to be amended as set forth 
below.

PART 60--STANDARDS OF PERFORMANCE FOR NEW STATIONARY SOURCES

    1. The authority citation for part 60 continues to read as follows:

    Authority: 42 U.S.C. 7401, et seq.

Subpart JJJJ--[Amended]

    2. Section 60.4231 as proposed on June 12, 2006 (71 FR 33804) is 
proposed to be further amended by revising the section heading and 
paragraphs (a), (b), and (c) and adding paragraph (e) to read as 
follows:


Sec.  60.4231  What emission standards must I meet if I am a 
manufacturer of stationary SI internal combustion engines or equipment 
containing such engines?

    (a) Stationary SI internal combustion engine manufacturers must 
certify their stationary SI ICE with a maximum engine power less than 
or equal to 19 KW (25 HP) manufactured on or after January 1, 2008 to 
the certification emission standards and other requirements for new 
nonroad SI engines in 40 CFR part 90 or 1054, as follows:

------------------------------------------------------------------------
                                                        the engine must
                                                         meet emission
                                                         standards and
                                   and manufacturing        related
 If engine displacement is . . .    dates are . . .    requirements for
                                                          nonhandheld
                                                       engines under . .
                                                               .
------------------------------------------------------------------------
(1) below 225 cc................  January 1, 2008 to  40 CFR part 90.
                                   December 31, 2011.
(2) below 225 cc................  January 1, 2012 or  40 CFR part 1054.
                                   later.
(3) at or above 225 cc..........  January 1, 2008 to  40 CFR part 90.
                                   December 31, 2010.
(4) at or above 225 cc..........  January 1, 2011 or  40 CFR part 1054.
                                   later.
------------------------------------------------------------------------


[[Page 28250]]

    (b) Stationary SI internal combustion engine manufacturers must 
certify their stationary SI ICE with a maximum engine power greater 
than 19 KW (25 HP) that use gasoline and that are manufactured on or 
after the applicable date in Sec.  60.4230(a)(2) to the certification 
emission standards and other requirements for new nonroad SI engines in 
40 CFR part 1048. Stationary SI internal combustion engine 
manufacturers may certify their stationary SI ICE with a maximum engine 
power less than or equal to 30 KW (40 HP) with a total displacement 
less than or equal to 1,000 cubic centimeters (cc) to the certification 
emission standards and other requirements for new nonroad SI engines in 
40 CFR part 90 or 1054, as appropriate.
    (c) Stationary SI internal combustion engine manufacturers must 
certify their stationary SI ICE with a maximum engine power greater 
than 19 KW (25 HP) that are rich burn engines that use LPG and that are 
manufactured on or after the applicable date in Sec.  60.4230(a)(2) to 
the certification emission standards and other requirements for new 
nonroad SI engines in 40 CFR part 1048. Stationary SI internal 
combustion engine manufacturers may certify their stationary SI ICE 
with a maximum engine power less than or equal to 30 KW (40 HP) with a 
total displacement less than or equal to 1,000 cc to the certification 
emission standards and other requirements for new nonroad SI engines in 
40 CFR part 90 or 1054, as appropriate.
* * * * *
    (e) Manufacturers of equipment containing stationary SI internal 
combustion engines meeting the provisions of 40 CFR part 1054 must meet 
the provisions of 40 CFR part 1060, to the extent they apply to 
equipment manufacturers.
    3. Section 60.4238 as proposed on June 12, 2006 (71 FR 33804) is 
revised to read as follows:


Sec.  60.4238  What are my compliance requirements if I am a 
manufacturer of stationary SI internal combustion engines <=19 KW (25 
HP) or a manufacturer of equipment containing such engines?

    Stationary SI internal combustion engine manufacturers who are 
subject to the emission standards specified in Sec.  60.4231(a) must 
certify their stationary SI ICE using the certification procedures 
required in 40 CFR part 90, subpart B, or 40 CFR part 1054, subpart C, 
as applicable, and must test their engines as specified in those parts. 
Manufacturers of equipment containing stationary SI internal combustion 
engines meeting the provisions of 40 CFR part 1054 must meet the 
provisions of 40 CFR part 1060, subpart C, to the extent they apply to 
equipment manufacturers.
    4. Section 60.4239 as proposed on June 12, 2006 (71 FR 33804) is 
revised to read as follows:


Sec.  60.4239  What are my compliance requirements if I am a 
manufacturer of stationary SI internal combustion engines >19 KW (25 
HP) that use gasoline or a manufacturer of equipment containing such 
engines?

    Stationary SI internal combustion engine manufacturers who are 
subject to the emission standards specified in Sec.  60.4231(b) must 
certify their stationary SI ICE using the certification procedures 
required in 40 CFR part 1048, subpart C, and must test their engines as 
specified in that part. Stationary SI internal combustion engine 
manufacturers who certify their stationary SI ICE with a maximum engine 
power less than or equal to 30 KW (40 HP) with a total displacement 
less than or equal to 1,000 cc to the certification emission standards 
and other requirements for new nonroad SI engines in 40 CFR part 90 or 
40 CFR part 1054 must certify their stationary SI ICE using the 
certification procedures required in 40 CFR part 90, subpart B, or 40 
CFR part 1054, subpart C, as applicable, and must test their engines as 
specified in those parts. Manufacturers of equipment containing 
stationary SI internal combustion engines meeting the provisions of 40 
CFR part 1054 must meet the provisions of 40 CFR part 1060, subpart C, 
to the extent they apply to equipment manufacturers.
    5. Section 60.4240 as proposed on June 12, 2006 (71 FR 33804) is 
revised to read as follows:


Sec.  60.4240  What are my compliance requirements if I am a 
manufacturer of stationary SI internal combustion engines >19 KW (25 
HP) that are rich burn engines that use LPG?

    Stationary SI internal combustion engine manufacturers who are 
subject to the emission standards specified in Sec.  60.4231(c) must 
certify their stationary SI ICE using the certification procedures 
required in 40 CFR part 1048, subpart C, and must test their engines as 
specified in that part. Stationary SI internal combustion engine 
manufacturers who certify their stationary SI ICE with a maximum engine 
power less than or equal to 30 KW (40 HP) with a total displacement 
less than or equal to 1,000 cc to the certification emission standards 
and other requirements for new nonroad SI engines in 40 CFR part 90 or 
40 CFR part 1054 must certify their stationary SI ICE using the 
certification procedures required in 40 CFR part 90, subpart B, or 40 
CFR part 1054, subpart C, as applicable, and must test their engines as 
specified in those parts. Manufacturers of equipment containing 
stationary SI internal combustion engines meeting the provisions of 40 
CFR part 1054 must meet the provisions of 40 CFR part 1060, subpart C, 
to the extent they apply to equipment manufacturers.
    6. Section 60.4242 as proposed on June 12, 2006 (71 FR 33804) is 
amended by revising paragraphs (a) and (b) to read as follows:


Sec.  60.4242  What other requirements must I meet if I am a 
manufacturer of stationary SI internal combustion engines or equipment 
containing stationary SI internal combustion engines or a manufacturer 
of equipment containing such engines?

    (a) Stationary SI internal combustion engine manufacturers must 
meet the provisions of 40 CFR part 90, 40 CFR part 1048, or 40 CFR part 
1054, as applicable, as well as 40 CFR part 1068 for engines that are 
certified to the emission standards in 40 CFR part 1048 or 1054, except 
that engines certified pursuant to the voluntary certification 
procedures in Sec.  60.4241 are permitted to provide instructions to 
owners and operators allowing for deviations from certified 
configurations, if such deviations are consistent with the provisions 
of paragraphs Sec.  60.4241(c) through (f). Manufacturers of equipment 
containing stationary SI internal combustion engines meeting the 
provisions of 40 CFR part 1054 must meet the provisions of 40 CFR part 
1060, as applicable. Labels on engines certified to 40 CFR part 1048 
must refer to stationary engines, rather than or in addition to nonroad 
engines, as appropriate.
    (b) An engine manufacturer certifying an engine family or families 
to standards under this subpart that are identical to standards 
applicable under 40 CFR part 90, 40 CFR part 1048, or 40 CFR part 1054 
for that model year may certify any such family that contains both 
nonroad and stationary engines as a single engine family and/or may 
include any such family containing stationary engines in the averaging, 
banking and trading provisions applicable for such engines under those 
parts. This provision also applies to equipment or component 
manufacturers certifying to standards under 40 CFR part 1060.
* * * * *
    7. Section 60.4243 as proposed on June 12, 2006 (71 FR 33804) is 
amended

[[Page 28251]]

by revising paragraph (a) to read as follows:


Sec.  60.4243  What are my compliance requirements if I am an owner or 
operator of a stationary SI internal combustion engine?

    (a) If you are an owner or operator, you must operate and maintain 
the stationary SI internal combustion engine and control device 
according to the manufacturer's written instructions or procedures 
developed by the owner or operator that are approved by the engine 
manufacturer. In addition, owners and operators of certified engines 
may only change those settings that are allowed by the manufacturer to 
ensure compliance with the applicable emission standards. If you own or 
operate a stationary SI internal combustion engine that is certified to 
40 CFR part 90, 1048, 1054, or 1060, you must also meet the 
requirements of 40 CFR parts 90, 1048, 1054, 1060, and/or part 1068, as 
they apply to you.
* * * * *
    8. Section 60.4245 as proposed on June 12, 2006 (71 FR 33804) is 
amended by revising the introductory text and paragraph (a) to read as 
follows:


Sec.  60.4245  What are my notification, reporting, and recordkeeping 
requirements if I am an owner or operator of a stationary SI internal 
combustion engine?

    Owners or operators of stationary SI ICE must meet the following 
notification, reporting and recordkeeping requirements.
    (a) Owners and operators of all stationary SI ICE must keep records 
of the information in paragraphs (a)(1) through (4) of this section.
    (1) All notifications submitted to comply with this subpart and all 
documentation supporting any notification.
    (2) Maintenance conducted on the engine.
    (3) If the stationary SI internal combustion engine is a certified 
engine, documentation from the manufacturer that the engine is 
certified to meet the emission standards and information as required in 
40 CFR parts 90, 1048, 1054, and 1060, as applicable.
    (4) If the stationary SI internal combustion engine is not a 
certified engine, documentation that the engine meets the emission 
standards.
* * * * *
    9. Section 60.4246 as proposed on June 12, 2006 (71 FR 33804) is 
amended by revising the definitions for ``Certified stationary internal 
combustion engine'' and ``Useful life'' to read as follows:


Sec.  60.4246  What definitions apply to this subpart?

* * * * *
    Certified stationary internal combustion engine means an engine 
that belongs to an engine family that has a certificate of conformity 
that complies with the emission standards and requirements in this 
part, or of 40 CFR part 90, 40 CFR part 1048, or 40 CFR part 1054, as 
appropriate.
* * * * *
    Useful life means the period during which the engine is designed to 
properly function in terms of reliability and fuel consumption, without 
being remanufactured, specified as a number of hours of operation or 
calendar years, whichever comes first. The values for useful life for 
stationary SI ICE with a maximum engine power less than or equal to 19 
KW (25 HP) are given in 40 CFR 90.105, 40 CFR 1054.107, and 40 CFR 
1060.101, as appropriate. The values for useful life for stationary SI 
ICE with a maximum engine power greater than 19 KW (25 HP) certified to 
40 CFR part 1048 are given in 40 CFR 1048.101(g). The useful life for 
stationary SI ICE with a maximum engine power greater than 19 KW (25 
HP) certified under the voluntary manufacturer certification program of 
this subpart is 8,000 hours or 10 years, whichever comes first.
* * * * *
    10. Table 1 to subpart JJJJ of part 60 as proposed on June 12, 2006 
(71 FR 33804) is amended by revising footnote a to read as follows:

Table 1 to Subpart JJJJ of Part 60--NOX, NMHC, and CO 
Emission Standards in g/HP-hr for Stationary SI Engines 25 
HP (except Gasoline and Rich Burn LPG Engines)

* * * * *
    a Stationary SI natural gas and lean burn LPG engines 
between 25 and 50 HP may comply with the requirements of 40 CFR part 
1048, instead of this table. Stationary SI internal combustion 
engine manufacturers may certify their stationary SI ICE with a 
maximum engine power less than or equal to 30 KW (40 HP) with a 
total displacement less than or equal to 1,000 cc to the 
certification emission standards and other requirements for new 
nonroad SI engines in 40 CFR part 90 or 1054, as appropriate.

PART 63--NATIONAL EMISSION STANDARDS FOR HAZARDOUS AIR POLLUTANTS 
FOR SOURCE CATEGORIES

    11. The authority citation for part 63 continues to read as 
follows:

    Authority: 42 U.S.C. 7401 et seq.

Subpart A--[Amended]

    12. Section 63.6675 as proposed to be amended on June 12, 2006 (71 
FR 33804) is amended by revising the definitions for ``Certified 
stationary RICE'' and ``Useful life'' to read as follows:


Sec.  63.6675  What definitions apply to this subpart?

* * * * *
    Certified stationary RICE means an engine that belongs to an engine 
family that has a certificate of conformity that complies with the 
emission standards and requirements in this part, or in 40 CFR parts 
89, 90, 1039, 1048, or 1054, as appropriate.
* * * * *
    Useful life means the period during which the engine is designed to 
properly function in terms of reliability and fuel consumption, without 
being remanufactured, specified as a number of hours of operation or 
calendar years, whichever comes first. The values for useful life for 
stationary CI ICE with a displacement of less than 10 liters per 
cylinder are given in 40 CFR 1039.101. The values for useful life for 
stationary CI ICE with a displacement of greater than or equal to 10 
liters per cylinder and less than 30 liters per cylinder are given in 
40 CFR 94.9. The values for useful life for stationary SI ICE with a 
maximum engine power less than or equal to 25 HP are given in 40 CFR 
90.105, 40 CFR 1054.107, or 40 CFR 1060.101, as appropriate. The values 
for useful life for stationary SI ICE with a maximum engine power 
greater than 25 HP certified to 40 CFR part 1048 are given in 40 CFR 
1048.101 and 1048.105. The useful life for stationary SI ICE with a 
maximum engine power greater than 25 HP certified under the voluntary 
manufacturer certification program 40 CFR part 60, subpart JJJJ, is 
8,000 hours or 10 years, whichever comes first.

PART 85--CONTROL OF AIR POLLUTION FROM MOBILE SOURCES

    13. The authority citation for part 85 continues to read as 
follows:

    Authority: 42 U.S.C. 7401-7671q.

Subpart Q--[Removed]

    14. Subpart Q is removed.

Subpart R--[Amended]

    15. Section 85.1713 is amended as follows:
    a. By revising the introductory text and paragraphs (a), 
(c)(3)(iv), and (d) through (k).
    b. By adding paragraph (l).

[[Page 28252]]

    c. By removing and reserving paragraph (c)(3)(v).


Sec.  85.1713  Delegated-assembly exemption.

    The provisions of this section apply with respect to heavy-duty 
highway engines. This section is addressed to engine manufacturers 
unless specified otherwise.
    (a) Shipping an engine separately from an aftertreatment component 
that you have specified as part of its certified configuration will not 
be a violation of the prohibitions in Clean Air Act section 203 (42 
U.S.C. 7522) if you follow the provisions of paragraph (b), (c), or (d) 
of this section.
* * * * *
    (c) * * *
    (3) * * *
    (iv) Audits must involve the assembling companies' facilities, 
procedures, and production records to monitor their compliance with 
your instructions, must include investigation of some assembled 
engines, and must confirm that the number of aftertreatment devices 
shipped were sufficient for the number of engines produced.
* * * * *
    (d) If you manufacture engines and install them in equipment you 
also produce, you must take steps to ensure that your facilities, 
procedures, and production records are set up to ensure that equipment 
and engines are assembled in their proper certified configurations. You 
may demonstrate compliance with the requirements of this section by 
maintaining a database showing how you pair aftertreatment components 
with the appropriate engines.
    (e) The engine's model year does not change based on the date the 
vehicle manufacturer adds the aftertreatment device.
    (f) Once the vehicle manufacturer takes possession of an engine 
exempted under this section and the engine reaches the point of final 
vehicle assembly, the exemption expires and the engine is subject to 
all the prohibitions in Clean Air Act section 203 (42 U.S.C. 7522).
    (g) You must notify us within 15 days if you find from an audit or 
another source that a vehicle manufacturer has failed to meet its 
obligations under this section.
    (h) We may suspend, revoke, or void an exemption under this 
section, as follows:
    (1) We may suspend or revoke your exemption for the entire engine 
family if we determine that any of the engines are not in their 
certified configuration after installation in the vehicle, or if you 
fail to comply with the requirements of this section. If we suspend or 
revoke the exemption for any of your engine families under this 
paragraph (g), this exemption will not apply for future certificates 
unless you demonstrate that the factors causing the nonconformity do 
not apply to the other engine families. We may suspend or revoke the 
exemption for shipments to a single facility where final assembly 
occurs.
    (2) We may void your exemption for the entire engine family if you 
intentionally submit false or incomplete information or fail to keep 
and provide to EPA the records required by this section.
    (i) You are liable for the in-use compliance of any engine that is 
exempt under this section.
    (j) It is a violation of the Act for any person to introduce into 
U.S. commerce a previously exempted engine, including as part of a 
vehicle, without complying fully with the installation instructions.
    (k) [Reserved]
    (l) You may ask us to provide a temporary exemption to allow you to 
complete production of your engines at different facilities, as long as 
you maintain control of the engines until they are in their certified 
configuration. We may require you to take specific steps to ensure that 
such engines are in their certified configuration before reaching the 
ultimate purchaser. You may request an exemption under this paragraph 
(l) in your application for certification, or in a separate submission.
    16. Subpart Y is revised to read as follows:

Subpart Y--Fees for the Motor Vehicle and Engine Compliance Program


Sec.  85.2401  Assessment of fees.

    See 40 CFR part 1027 for the applicable fees associated with 
certifying engines, vehicles, and equipment under this chapter.

PART 90--CONTROL OF EMISSIONS FROM NONROAD SPARK-IGNITION ENGINES 
AT OR BELOW 19 KILOWATTS

    17. The authority citation for part 90 continues to read as 
follows:

    Authority: 42 U.S.C. 7401--7671q.

Subpart A--[Amended]

    18. Section 90.1 is amended by revising paragraphs (d)(1) and 
(d)(5) and adding paragraphs (d)(8) and (h) to read as follows:


Sec.  90.1  Applicability.

* * * * *
    (d) * * *
    (1) Engines that are certified to meet the requirements of 40 CFR 
part 1051, or are otherwise subject to 40 CFR part 1051 (for example, 
engines used in snowmobiles and all-terrain vehicles). This part 
nevertheless applies to engines used in recreational vehicles if the 
manufacturer uses the provisions of 40 CFR 1051.145(a)(3) to exempt 
them from the requirements of 40 CFR part 1051. Compliance with the 
provisions of this part is a required condition of that exemption.
* * * * *
    (5) Engines certified to meet the requirements of 40 CFR part 1048, 
or are otherwise subject to 40 CFR part 1048, subject to the provisions 
of Sec.  90.913.
* * * * *
    (8) Engines that are subject to emission standards under 40 CFR 
part 1054. See 40 CFR 1054.1 to determine when part 1054 applies. Note 
that certain requirements and prohibitions apply to engines built on or 
after January 1, 2009 if they are installed in equipment that will be 
used solely for competition, as described in 40 CFR 1054.1 and 40 CFR 
1068.1; those provisions apply instead of the provisions of this part 
90.
* * * * *
    (h) Although the definition of nonroad engine in Sec.  90.3 
excludes certain engines used in stationary applications, stationary 
engines manufactured after January 1, 2008 are required under 40 CFR 
part 60 to comply with this part.
    19. Section 90.2 is amended by adding paragraph (d) to read as 
follows:


Sec.  90.2  Effective dates.

* * * * *
    (d) Engines used in emergency and rescue equipment as described in 
Sec.  90.1(d)(7) are subject to the provisions of this part through 
December 31, 2009. Starting January 1, 2010 the provisions in 40 CFR 
1054.660 apply instead of those in Sec.  90.1(d)(7).
    20. Section 90.3 is amended by adding a definition for ``Fuel 
line'' in alphabetical order to read as follows:


Sec.  90.3  Definitions.

* * * * *
    Fuel line has the meaning given in 40 CFR 1054.801.
* * * * *
    21. Section 90.7 is amended by adding paragraph (b)(3) to read as 
follows:


Sec.  90.7  Reference materials.

* * * * *

[[Page 28253]]

    (b) * * *
    (3) California Air Resources Board material. The following table 
lists material from the California Air Resources Board that we have 
incorporated by reference. The first column lists the number and name 
of the material. The second column lists the sections of this part 
where we reference it. Anyone may get copies of these materials from 
the California Air Resources Board, 9528 Telstar Ave., El Monte, 
California 91731.

------------------------------------------------------------------------
                                                              Part 90
                Document number and name                     reference
------------------------------------------------------------------------
``Tier 3 standards for Small Off-Road Engines,'' Mobile    Sec.   90.127
 Source Division, California Air Resources Board........
------------------------------------------------------------------------

Subpart B--[Amended]

    22. Section 90.101 is revised to read as follows:


Sec.  90.101  Applicability.

    (a) The requirements of this subpart B are applicable to all 
nonroad engines and vehicles subject to the provisions of subpart A of 
this part.
    (b) In a given model year, you may ask us to approve the use of 
procedures for certification, labeling, reporting, and recordkeeping 
specified in 40 CFR part 1054 or 1068 instead of the comparable 
procedures specified in this part 90. We may approve the request as 
long as it does not prevent us from ensuring that you fully comply with 
the intent of this part.
    23. Section 90.107 is amended by revising paragraph (d)(11)(ii) and 
adding paragraphs (d)(12), (d)(13), (d)(14), and (d)(15) to read as 
follows:


Sec.  90.107  Application for certification.

* * * * *
    (d) * * *
    (11) * * *
    (ii) Provide the applicable useful life as determined under Sec.  
90.105;
    (12) Describe in your application for certification how you comply 
with the requirements of Sec. Sec.  90.127 and 90.129, if applicable.
    (13) A statement indicating whether the engine family contains only 
nonroad engines, only stationary engines, or both;
    (14) Identification of an agent for service located in the United 
States. Service on this agent constitutes service on you or any of your 
officers or employees for any action by EPA or otherwise by the United 
States related to the requirements of this part; and
    (15) For imported engines, identification of the following:
    (i) The port(s) at which the manufacturer will import the engines.
    (ii) The names and addresses of the agents authorized to import the 
engines.
    (iii) The location of test facilities in the United States where 
the manufacturer can test engines if EPA selects them for testing under 
a selective enforcement audit, as specified in subpart F of this part.
* * * * *
    24. Section 90.114 is amended by adding paragraph (g) to read as 
follows:


Sec.  90.114  Requirement of certification--engine information label.

* * * * *
    (g) Manufacturers may add appropriate features to prevent 
counterfeit labels. For example, manufacturers may include the engine's 
unique identification number on the label.
    25. Section 90.116 is amended as follows:
    a. By revising paragraphs (a) introductory text and (d)(5).
    b. By removing and reserving paragraph (e)(1).
    c. By adding paragraph (g).


Sec.  90.116  Certification procedure--determining engine displacement, 
engine class, and engine families.

    (a) Except as specified in paragraph (g) of this section, engine 
displacement must be calculated using nominal engine values and rounded 
to the nearest whole cubic centimeter in accordance with ASTM E29-93a. 
This procedure has been incorporated by reference. See Sec.  90.7.
* * * * *
    (d) * * *
    (5) The engine class. In addition, engines of different 
displacements that are within 15 percent of the largest displacement 
may be included within the same engine family as long as all the 
engines are in the same class;
* * * * *
    (g) Each engine produced under the provisions of Sec.  90.1(b) must 
have a total displacement at or below 1000.0 cc after rounding to the 
nearest 0.1 cc.
    26. Section 90.120 is amended by adding paragraph (b)(3) to read as 
follows:


Sec.  90.120  Certification procedure--use of special test procedures.

* * * * *
    (b) * * *
    (3) A manufacturer may elect to use the test procedures in 40 CFR 
part 1065 as an alternate test procedure without getting advance 
approval by the Administrator or meeting the other conditions of 
paragraph (b)(1) of this section. The manufacturer must identify in its 
application for certification that the engines were tested using the 
procedures in 40 CFR part 1065. For any EPA testing with Phase 1 or 
Phase 2 engines, EPA will use the manufacturer's selected procedures 
for mapping engines, generating duty cycles, and applying cycle-
validation criteria. For any other parameters, EPA may conduct testing 
using either of the specified procedures.
* * * * *
    27. A new Sec.  90.127 is added to subpart B to read as follows:


Sec.  90.127  Fuel line permeation from nonhandheld engines and 
equipment.

    The following permeation standards apply to new nonhandheld engines 
and equipment with respect to fuel lines:
    (a) Emission standards and related requirements. New nonhandheld 
engines and equipment that run on a volatile liquid fuel (such as 
gasoline) must meet the emission standards specified in paragraph 
(a)(1) or (a)(2) of this section starting in the 2009 model year for 
small-volume engine manufacturers and small-volume equipment 
manufacturers (as defined in 40 CFR 1054.801), and in the 2008 model 
year for all other engines and equipment, as follows:
    (1) New nonhandheld engines and equipment must use only fuel lines 
that meet a permeation emission standard of 15 g/m\2\/day when measured 
according to the test procedure described in 40 CFR 1060.515. This 
standard applies to any fuel line that is exposed to liquid fuel during 
normal operation.
    (2) Alternatively, new nonhandheld engines and equipment must use 
only fuel lines that meet standards that apply for these engines in 
California for the same model year (the California standards are 
incorporated by reference in Sec.  90.7). This may involve SHED-based 
measurements for equipment or testing with fuel lines alone. If this 
involves SHED-based measurements, all elements of the emission-control 
system

[[Page 28254]]

must remain in place for fully assembled engines and equipment.
    (3) The emission standards in this section apply with respect to 
discrete fuel line segments of any length. Compliance may also be 
demonstrated using aggregated systems that include multiple sections of 
fuel line with connectors, and fittings. The standard applies with 
respect to the total permeation emissions divided by the wetted 
internal surface area of the assembly. Where it is not practical to 
determine the wetted internal surface area of the assembly, the 
internal surface area per unit length of the assembly may be assumed to 
be equal to the ratio of internal surface area per unit length of the 
hose section of the assembly.
    (4) The emission standards in this section apply over a useful life 
of five years.
    (5) Fuel lines must be labeled in a permanent and legible manner 
with one of the following approaches:
    (i) By meeting the labeling requirements that apply for these 
engines in California.
    (ii) By identifying the certificate holder's corporate name or 
trademark, or the fuel line manufacturer's corporate name or trademark, 
and the fuel line's permeation level. For example, the fuel line may 
identify the emission standard from this section, the applicable SAE 
classification, or the family number identifying compliance with 
California standards. A continuous stripe or other pattern may be added 
to help identify the particular type or grade of fuel line.
    (6) The requirements of this section do not apply to auxiliary 
marine engines.
    (b) Certification requirements. To certify that you meet the 
standards of this section, you must have emission data from your 
testing or from the fuel line manufacturer using the appropriate 
procedures that demonstrate compliance with the standard, including any 
of the following:
    (1) Emission data demonstrating compliance with fuel line 
permeation requirements for model year 2008 equipment sold in 
California. You may satisfy this requirement by presenting an approved 
Executive Order from the California Air Resources Board showing that 
the fuel lines meet the applicable standards in California.
    (2) Emission data demonstrating a level of permeation control that 
meets any of the following industry standards:
    (i) R11A specifications in SAE J30 (incorporated by reference in 
Sec.  90.7).
    (ii) R12 specifications in SAE J30 (incorporated by reference in 
Sec.  90.7).
    (iii) Category 1 specifications in SAE J2260 (incorporated by 
reference in Sec.  90.7).
    (iv) Emission data demonstrating compliance with the fuel line 
permeation standards in 40 CFR 1051.110.
    (c) Prohibitions. (1) Except as specified in paragraph (c)(2) of 
this section, introducing engines or equipment into U.S. commerce 
without meeting all the requirements of this section violates Sec.  
90.1003(a)(1).
    (2) It is not a violation to introduce your engines into U.S. 
commerce if other companies add fuel lines when installing your engines 
in their equipment. However, you must give equipment manufacturers any 
appropriate instructions so that fully assembled equipment will meet 
all the requirements in this section, as described in Sec.  90.128.
    28. A new Sec.  90.128 is added to subpart B to read as follows:


Sec.  90.128  Installation instructions.

    (a) If you sell an engine for someone else to install in a piece of 
nonroad equipment, give the engine installer instructions for 
installing it consistent with the requirements of this part. Include 
all information necessary to ensure that an engine will be installed in 
its certified configuration. In particular, describe the steps needed 
to control evaporative emissions, as described in Sec.  90.127. This 
may include information related to the delayed requirements for small-
volume equipment manufacturers.
    (b) You do not need installation instructions for engines you 
install in your own equipment.
    (c) Provide instructions in writing or in an equivalent format. For 
example, you may post instructions on a publicly available website for 
downloading or printing. If you do not provide the instructions in 
writing, explain in your application for certification how you will 
ensure that each installer is informed of the installation 
requirements.
    (d) Equipment manufacturers failing to follow the engine 
manufacturer's emission-related installation instructions will be 
considered in violation of Sec.  90.1003(a)(3).
    29. A new Sec.  90.129 is added to subpart B to read as follows:


Sec.  90.129  Fuel tank permeation from handheld engines and equipment.

    The following permeation standards apply to certain new handheld 
engines and equipment with respect to fuel tanks:
    (a) Emission standards and related requirements. (1) New handheld 
engines and equipment that run on a volatile liquid fuel (such as 
gasoline) and have been certified to meet applicable fuel tank 
permeation standards in California must meet one of the following 
emission standards starting in the 2009 model year, as follows:
    (i) Engines and equipment must use only fuel tanks that meet a 
permeation emission standard of 2.0 g/m2/day when measured 
according to the applicable test procedure specified by the California 
Air Resources Board.
    (ii) Engines and equipment must use only fuel tanks that meet the 
fuel tank permeation standards in 40 CFR 1060.103.
    (iii) Engines and equipment must use only fuel tanks that meet 
standards that apply for these engines in California for the same model 
year. This may involve SHED-based measurements for equipment or testing 
with fuel tanks alone. If this involves SHED-based measurements, all 
elements of the emission-control system must remain in place for fully 
assembled engines and equipment.
    (2) Engine and equipment manufacturers may generate or use emission 
credits to show compliance with the requirements of this section under 
the averaging program as described in 40 CFR part 1054, subpart H.
    (3) The emission standards in this section apply over a useful life 
of two years.
    (4) Equipment must be labeled in a permanent and legible manner 
with one of the following approaches:
    (i) By meeting the labeling requirements that apply for equipment 
in California.
    (ii) By identifying the certificate holder's corporate name or 
trademark, or the fuel tank manufacturer's corporate name or trademark. 
Also identify the family number identifying compliance with California 
standards or state: ``THIS FUEL TANK COMPLIES WITH U.S. EPA 
STANDARDS.'' This label may be applied to the fuel tank or it may be 
combined with the emission control information label required in Sec.  
90.114. If the label information is not on the fuel tank, the label 
must include a part identification number that is also permanently 
applied to the fuel tank.
    (5) The requirements of this section do not apply to engines or 
equipment with structurally integrated nylon fuel tanks (as defined in 
40 CFR 1054.801).
    (b) Certification requirements. To certify that you meet the 
standards of this section, you must have emission data from your 
testing or from the fuel tank manufacturer using the appropriate 
procedures that demonstrate

[[Page 28255]]

compliance with the standard. You may satisfy this requirement by 
presenting an approved Executive Order from the California Air 
Resources Board showing that the fuel tanks meet the applicable 
standards in California.
    (c) Prohibitions. Introducing equipment into U.S. commerce without 
meeting all the requirements of this section violates Sec.  
90.1003(a)(1).

Subpart C--[Amended]

    30. Section 90.201 is revised to read as follows:


Sec.  90.201  Applicability.

    (a) The requirements of this subpart C are applicable to all Phase 
2 spark-ignition engines subject to the provisions of subpart A of this 
part except as provided in Sec.  90.103(a). These provisions are not 
applicable to any Phase 1 engines. Participation in the averaging, 
banking and trading program is voluntary, but if a manufacturer elects 
to participate, it must do so in compliance with the regulations set 
forth in this subpart. The provisions of this subpart are applicable 
for HC+NOX (NMHC+NOX) emissions but not for CO 
emissions.
    (b) See 40 CFR 1054.740 for special provisions for using emission 
credits generated under this part 90 from Phase 2 engines to 
demonstrate compliance with engines certified under 40 CFR part 1054.
    31. Section 90.210 is amended by adding paragraph (i) to read as 
follows:


Sec.  90.210  End-of-year and final reports.

* * * * *
    (i) For 2007 and later model years, include in your end-of-year and 
final reports an accounting to show a separate balance of emission 
credits for handheld and nonhandheld engines. Use your best judgment to 
differentiate your current balance of banked credits for handheld and 
nonhandheld engines. You may exchange handheld and nonhandheld credits 
to demonstrate compliance with the requirements of this part 90. 
However, emission credits you generate for banking under this part 90 
will be restricted for engines subject to the requirements of 40 CFR 
part 1054.

Subpart G--[Amended]

    32. Section 90.601 is amended by adding paragraph (c) to read as 
follows:


Sec.  90.601  Applicability.

* * * * *
    (c) Importers must complete the appropriate EPA declaration form 
before importing an engine. These forms are available on the Internet 
at http://www.epa.gov/OTAQ/imports/ or by phone at 734-214-4100. 
Importers must keep the forms for five years and make them available 
promptly upon request.
    33. A new Sec.  90.616 is added to subpart G to read as follows:


Sec.  90.616  Model year restrictions related to imported engines and 
equipment.

    The provisions of 40 CFR 1054.695 apply starting January 1, 2009. 
These provisions limit the importation of engines or equipment after 
new emission standards have started to apply where the engines or 
equipment were built before the emission standards took effect.

Subpart J--[Amended]

    34. Section 90.910 is amended by adding paragraph (c) to read as 
follows:


Sec.  90.910  Granting of exemptions.

* * * * *
    (c) Manufacturers may ask EPA to apply the provisions of 40 CFR 
1068.201(i) to engines exempted or excluded under this subpart.

Subpart K--[Amended]

    35. Section 90.1003 is amended by revising paragraph (b)(3) to read 
as follows:


Sec.  90.1003  Prohibited acts.

* * * * *
    (b) * * *
    (3) The following provisions apply for converting nonroad engine to 
use alternative fuels:
    (i) Until December 31, 2009, converting an engine to use a clean 
alternative fuel (as defined in Title II of the Act) is not considered 
a prohibited act under Sec.  90.1003(a) if the vehicle or equipment 
complies with the applicable standard when operating on the alternative 
fuel, and the device or element is replaced upon completion of the 
conversion procedure. Also, in the case of engines converted to dual 
fuel or flexible use, the action must result in the proper functioning 
of the device or element when the nonroad engine operates on 
conventional fuel.
    (ii) The provisions of 40 CFR 1054.635 apply starting January 1, 
2010.
* * * * *
    36. A new Sec.  90.1007 is added to subpart K to read as follows:


Sec.  90.1007  Bonding requirements related to recall and compliance 
assurance.

    The provisions of 40 CFR 1054. 685 and 1054.690 apply starting with 
the 2009 model year. These provisions include measures to ensure that 
certifying manufacturers are able to cover any potential compliance, 
enforcement, or recall actions under the Clean Air Act.

Subpart L--[Amended]

    37. Section 90.1103 is amended by adding paragraph (e) to read as 
follows:


Sec.  90.1103  Emission warranty, warranty period.

* * * * *
    (e) Starting with the 2009 model year, you must meet the conditions 
specified in 40 CFR 1054.120(f) to ensure that owners will be able to 
promptly obtain warranty repairs. Describe in your application for 
certification how you will meet these conditions.

PART 91-- CONTROL OF EMISSIONS FROM MARINE SPARK-IGNITION ENGINES

    38. The authority citation for part 91 continues to read as 
follows:

    Authority: 42 U.S.C. 7401--7671q.

Subpart A--[Amended]

    39. Section 91.1 is amended by adding paragraph (d) to read as 
follows:


Sec.  91.1  Applicability.

* * * * *
    (d) This part does not apply to engines that are subject to 
emission standards under 40 CFR part 1045. See 40 CFR 1045.1 to 
determine when that part 1045 applies. Note that certain requirements 
and prohibitions apply to engines built on or after January 1, 2009 if 
they are installed in equipment that will be used solely for 
competition, as described in 40 CFR 1045.1 and 40 CFR 1068.1; those 
provisions apply instead of the provisions of this part 91.

Subpart B--[Amended]

    40. Section 91.101 is revised to read as follows:


Sec.  91.101  Applicability.

    (a) The requirements of this subpart B are applicable to all 
engines subject to the provisions of subpart A of this part.
    (b) In a given model year, you may ask us to approve the use of 
procedures for certification, labeling, reporting, and recordkeeping 
specified in 40 CFR part 1045 or 1068 instead of the comparable 
procedures specified in this part 91. We may approve the request as 
long as it does not prevent us from ensuring that you fully comply with 
the intent of this part.
    41. Section 91.107 is amended by adding paragraph (d)(12) to read 
as follows:


Sec.  91.107  Application for certification.

* * * * *

[[Page 28256]]

    (d) * * *
    (12) Identification of an agent for service located in the United 
States. Service on this agent constitutes service on you or any of your 
officers or employees for any action by EPA or otherwise by the United 
States related to the requirements of this part.
* * * * *
    42. Section 91.119 is amended by adding paragraph (b)(3) to read as 
follows:


Sec.  91.119  Certification procedure--use of special test procedures.

* * * * *
    (b) * * *
    (3) A manufacturer may elect to use the test procedures in 40 CFR 
part 1065 as an alternate test procedure without getting advance 
approval by the Administrator or meeting the other conditions of 
paragraph (b)(1) of this section. The manufacturer must identify in its 
application for certification that the engines were tested using the 
procedures in 40 CFR part 1065. For any EPA testing with engines 
subject to standards under this part, EPA will use the manufacturer's 
selected procedures for mapping engines, generating duty cycles, and 
applying cycle-validation criteria. For any other parameters, EPA may 
conduct testing using either of the specified procedures.
* * * * *

Subpart K--[Amended]

    43. Section 91.1010 is amended by adding paragraph (c) to read as 
follows:


Sec.  91.1010  Granting of exemptions.

* * * * *
    (c) Manufacturers may ask EPA to apply the provisions of 40 CFR 
1068.201(i) to engines exempted or excluded under this subpart.
    44. A new Sec.  91.1013 is added to subpart K to read as follows:


Sec.  91.1013  Exemption for certified Small SI engines.

    The provisions of 40 CFR 1045.605 apply for engines subject to the 
standards of this part 91. This generally allows manufacturers to use 
marine engines that have been certified to emission standards for 
nonroad spark-ignition engines below 19 kW without recertifying those 
engines under this part 91.
    45. A new part 1027 is added to subchapter U of chapter I to read 
as follows:

PART 1027--FEES FOR ENGINE, VEHICLE, AND EQUIPMENT COMPLIANCE 
PROGRAMS

Sec.
1027.101 To whom do these requirements apply?
1027.105 How much are the fees?
1027.110 What special provisions apply for certification related to 
motor vehicles?
1027.115 What special provisions apply for certification related to 
nonroad and stationary engines?
1027.120 Can I qualify for reduced fees?
1027.125 Can I get a refund?
1027.130 How do I make a fee payment?
1027.135 What provisions apply to a deficient filing?
1027.140 What reporting and recordkeeping requirements apply under 
this part?
1027.150 What definitions apply to this subpart?
1027.155 What abbreviations apply to this subpart?

    Authority: 42 U.S.C. 7401--7671q.


Sec.  1027.101  To whom do these requirements apply?

    (a) This part prescribes fees manufacturers must pay for activities 
related to EPA's engine, vehicle, and equipment compliance program 
(EVECP). This includes activities related to approving certificates of 
conformity and performing tests and taking other steps to verify 
compliance with emission standards. You must pay fees as described in 
this part if you are a manufacturer of any of the following products:
    (1) Motor vehicles and motor vehicle engines we regulate under 40 
CFR part 86. This includes light-duty vehicles, light-duty trucks, 
medium-duty passenger vehicles, highway motorcycles, and heavy-duty 
highway engines and vehicles.
    (2) The following nonroad engines and equipment:
    (i) Locomotives and locomotive engines we regulate under 40 CFR 
part 92 or 1033.
    (ii) Nonroad compression-ignition engines we regulate under 40 CFR 
part 89 or 1039.
    (iii) Marine compression-ignition engines we regulate under 40 CFR 
part 94 or 1042.
    (iv) Marine spark-ignition engines and vessels we regulate under 40 
CFR part 91, 1045, or 1060. We refer to these as Marine SI engines.
    (v) Nonroad spark-ignition engines above 19 kW we regulate under 40 
CFR part 1048. We refer to these as Large SI engines.
    (vi) Recreational vehicles we regulate under 40 CFR part 1051.
    (vii) Nonroad spark-ignition engines and equipment at or below 19 
kW we regulate under 40 CFR part 90, 1054, or 1060. We refer to these 
as Small SI engines.
    (3) The following stationary internal combustion engines:
    (i) Stationary compression-ignition engines we certify under 40 CFR 
part 60, subpart IIII.
    (ii) Stationary spark-ignition engines we certify under 40 CFR part 
60, subpart JJJJ.
    (b) This part applies to applications for certification that we 
receive on or after [EFFECTIVE DATE FOR FINAL RULE]. Earlier 
applications are subject to the provisions of 40 CFR part 85, subpart 
Y, as that provision read prior to [EFFECTIVE DATE FOR FINAL RULE].
    (c) Nothing in this part limits our authority to conduct testing or 
to require you to conduct testing as provided in the Act, including our 
authority to require you to conduct in-use testing under section 208 of 
the Act (42 U.S.C. 7542).
    (d) Paragraph (a) of this section identifies the parts of the CFR 
that define emission standards and other requirements for particular 
types of engines and vehicles. This part 1027 refers to each of these 
other parts generically as the ``standard-setting part.'' For example, 
40 CFR part 1051 is always the standard-setting part for recreational 
vehicles. For some nonroad engines, we allow for certification related 
to evaporative emissions separate from exhaust emissions. In this case, 
40 CFR part 1060 is the standard-setting part for the equipment or fuel 
system components you produce.


Sec.  1027.105  How much are the fees?

    (a) Fees are determined based on the date we receive a complete 
application for certification. Each reference to a year in this subpart 
refers to the calendar year, unless otherwise specified. Paragraph (b) 
of this section specifies baseline fees, which applied for certificates 
received in 2005. For engine and vehicles not yet subject to standards 
in 2005, these values represent the fees that apply initially based on 
available information to characterize what the fees would have been in 
2005. See paragraph (c) of this section for provisions describing how 
we calculate fees for future years.
    (b) The following baseline fees for each application for 
certification:
    (1) Except as specified in paragraph (b)(2) of this section for 
Independent Commercial Importers, the following fees apply for motor 
vehicles and motor vehicle engines:

[[Page 28257]]



------------------------------------------------------------------------
             Category                 Certificate type          Fee
------------------------------------------------------------------------
(i) Light-duty vehicles and trucks  Federal.............         $33,883
(ii) Light-duty vehicles and        California-only.....          16,944
 trucks.
(iii) Medium-duty passenger         Federal.............          33,883
 vehicles.
(iv) Medium-duty passenger          California-only.....          16,944
 vehicles.
(v) Highway motorcycle............  All.................           2,414
(vi) Heavy-duty highway engine....  Federal.............          21,578
(vii) Heavy-duty highway engine...  California-only.....             826
(viii) Complete heavy-duty highway  Federal.............          33,883
 vehicles.
(ix) Complete heavy-duty highway    California-only.....          16,944
 vehicles.
(x) Heavy-duty vehicle............  Evap................             826
------------------------------------------------------------------------

    (2) A fee of $8,387 applies for Independent Commercial Importers 
with respect to the following motor vehicles:
    (i) Light-duty vehicles and light-duty trucks.
    (ii) Medium-duty passenger vehicles.
    (iii) Complete heavy-duty highway vehicles.
    (3) The following fees apply for nonroad and stationary engines, 
vehicles, equipment, and components:

------------------------------------------------------------------------
             Category                 Certificate type          Fee
------------------------------------------------------------------------
(i) Locomotives and locomotive      All.................            $826
 engines.
(ii) Marine compression-ignition    All, including Annex             826
 engines and stationary              VI.
 compression-ignition engines with
 per-cylinder displacement at or
 above 10 liters.
(iii) Other nonroad compression-    All.................           1,822
 ignition engines and stationary
 compression-ignition engines with
 per-cylinder displacement below
 10 liters.
(iv) Large SI engines.............  All.................             826
(v) Marine SI engines and Small SI  Exhaust only........             826
 engines.
(vi) Recreational vehicles........  Exhaust (or combined             826
                                     exhaust and evap).
(vii) Stationary spark-ignition     Exhaust (or combined             826
 engines.                            exhaust and evap).
(viii) Equipment and fuel system    Evap (where separate             241
 components associated with          certification is
 nonroad and stationary spark-       required).
 ignition engines.
------------------------------------------------------------------------

    (c) We will calculate adjusted fees for later years based on 
changes in the Consumer Price Index and the number of certificates. We 
will announce adjusted fees for a given year by January 31 of the 
preceding year.
    (1) We will adjust the values specified in paragraph (b) of this 
section for later years as follows:
    (i) Use the fee identified in Sec.  1027.105(b)(3) through 2014 for 
certification related to evaporative emissions from nonroad and 
stationary engines when a separate fee applies for certification to 
evaporative emission standards. Use the following equation starting 
with 2015:
Certificate FeeCY = [(Op + L) [middot] (CPICY-2/
CPI2006)] [middot] 1.169/[(certMY-2 + 
certMY-3) [middot] 0.5]

Where:

Certificate FeeCY = Fee per certificate for a given year.
Op = operating costs are all of EPA's nonlabor costs for each 
category's compliance program, including any fixed costs associated 
with EPA's testing laboratory, as described in paragraph (d)(1) of 
this section.
L = the labor costs, to be adjusted by the Consumer Price Index, as 
described in paragraph (d)(1) of this section.
CPICY-2 = the Consumer Price Index for the month of 
November two years before the applicable calendar year, as described 
in paragraph (d)(2) of this section.
CPI2006 = 201.8. This is based on the October 2006 value 
of the Consumer Price Index.
OH = 1.169. This is based on EPA overhead, which is applied to all 
costs.
certMY-2 = the total number of certificates 
issued for a fee category in the model year two years before the 
calendar year for the applicable fees as described in paragraph 
(d)(3) of this section.
certMY-3 = the total number of certificates 
issued for a fee category in the model year three years before the 
calendar year for the applicable fees as described in paragraph 
(d)(3) of this section.

    (ii) Use the following equation for all other certificates for 2006 
and later:
Certificate FeeCY = [Op + L [middot] (CPICY-2/
CPI2002)] [middot] 1.169/[(certMY-2 + 
certMY-3) [middot] 0.5]

Where:

CPI2002 = 180.9. This is based on the December 2002 value 
of the Consumer Price Index as described in paragraph (d)(2) of this 
section.

    (2) The fee for any year will remain at the previous year's amount 
until the value calculated in paragraph (c)(1) of this section differs 
by at least $50 from the amount specified for the previous year.
    (d) Except as specified in Sec.  1027.110(a) for motor vehicles and 
motor vehicle engines, we will use the following values to determine 
adjusted fees using the equation in paragraph (c) of this section:
    (1) The following values apply for operating costs and labor costs:

------------------------------------------------------------------------
       Engine or vehicle category               Op               L
------------------------------------------------------------------------
(i) Light-duty, medium-duty passenger,        $3,322,039      $2,548,110
 and complete heavy-duty highway vehicle
 certification..........................
(ii) Light-duty, medium-duty passenger,        2,858,223       2,184,331
 and complete heavy-duty highway vehicle
 in-use testing.........................
(iii) Independent Commercial Importers           344,824         264,980
 identified in Sec.   1027.105(b)(2)....
(iv) Highway motorcycles................         225,726         172,829
(v) Heavy-duty highway engines..........       1,106,224       1,625,680
(vi) Nonroad compression-ignition                486,401         545,160
 engines................................
(vii) Evaporative certificates related             5,039         236,670
 to nonroad and stationary engines......
(viii) All other........................         177,425         548,081
------------------------------------------------------------------------


[[Page 28258]]

    (2) The applicable Consumer Price Index is based on the values 
published by the Bureau of Labor Statistics for all U.S. cities using 
the ``U.S. city average'' area, ``all items,'' and ``not seasonally 
adjusted'' numbers (see ftp://ftp.bls.gov/pub/special.requests/cpi/cpiai.txt). For example, we calculated the 2006 fees using the Consumer 
Price Index for November 2004, which is 191.0.
    (3) Fee categories for counting the number of certificates issued 
are based on the grouping shown in paragraph (d)(1) of this section.
    (e) The following example for calculating the 2006 complete federal 
heavy duty highway vehicle fee illustrates the fee adjustment:

Op = $1,106,224
L = $1,625,680
CPI2002 = 180.9
CPI2004 = 191.0
cert2004 = 131
cert2003 = 95
Fee06 = [$1,106,224 + $1,625,680 [middot] (191.0/180.9)] 
[middot] 1.169/[(131+95) [middot] 0.5] = $29,200.88
Assessed Fee = $29,201


Sec.  1027.110  What special provisions apply for certification related 
to motor vehicles?

    (a) We will adjust fees for 2006 and later years for light-duty, 
medium-duty passenger, and complete heavy-duty highway vehicles as 
follows:
    (1) California-only certificates. Calculate adjusted fees for 
California-only certificates by applying the light-duty, medium-duty 
passenger, and complete heavy-duty highway vehicle certification Op and 
L values to the equation in Sec.  1027.105(c). The total number of 
certificates issued will be the total number of California-only and 
federal light-duty, medium-duty passenger, and complete heavy-duty 
highway vehicle certificates issued during the appropriate model years.
    (2) Federal certificates. Calculate adjusted fees for federal 
certificates with the following three steps:
    (i) Apply the light-duty, medium-duty passenger, and complete 
heavy-duty highway vehicle certification Op and L values to the 
equation in Sec.  1027.105(c) to determine the certification portion of 
the light-duty fee. The total number of certificates issued will be the 
total number of California-only and federal light-duty, medium-duty 
passenger and complete heavy-duty highway vehicle certificates issued 
during the appropriate model years.
    (ii) Apply the light-duty, medium-duty passenger, and complete 
heavy-duty highway vehicle in-use testing Op and L values to the 
equation in Sec.  1027.105(c) to determine the in-use testing portion 
of the fee. The total number of certificates issued will be the total 
number of federal light-duty, medium-duty passenger, and complete 
heavy-duty highway vehicle certificates issued during the appropriate 
model years.
    (iii) Add the certification and in-use testing portions determined 
in paragraphs (a)(2)(i) and (ii) of this section to determine the total 
light-duty, medium-duty passenger, and complete heavy-duty highway 
vehicle fee for each federal certificate.
    (b) For light-duty vehicles, light-duty trucks, medium-duty 
passenger vehicles, highway motorcycles, and complete heavy-duty 
highway vehicles subject to exhaust emission standards, the number of 
certificates issued as specified in Sec.  1027.105(d)(3) is based only 
on engine families with respect to exhaust emissions. A separate fee 
applies for each evaporative family for heavy-duty engines.
    (c) If you manufacture a heavy-duty vehicle that another company 
has certified as an incomplete vehicle such that you exceed the maximum 
fuel tank size specified by the original manufacturer in the applicable 
certificate of conformity, you must submit a new application for 
certification and certification fee for the vehicle.


Sec.  1027.115  What special provisions apply for certification related 
to nonroad and stationary engines?

    (a) For nonroad spark-ignition engines above 19 kW that we regulate 
under 40 CFR part 1048 and for all compression-ignition engines, the 
applicable fee is based only on engine families with respect to exhaust 
emissions.
    (b) For manufacturers certifying recreational vehicles with respect 
to both exhaust and evaporative emission standards, fees are determined 
using one of the following approaches:
    (1) If your engine family includes demonstration of compliance with 
both exhaust and evaporative emission standards, the applicable fee is 
based on certification related to the combined family. No separate fee 
applies for certification with respect to evaporative emission 
standards. These are all considered engine families complying with 
exhaust emissions for determining the number of certificates for 
calculating fees for later years.
    (2) If you have separate families for demonstrating compliance with 
exhaust and evaporative emission standards, a separate fee from the 
appropriate fee category applies for each unique family. Also, the 
number of certificates issued as specified in Sec.  1027.105(d)(3) is 
based on a separate count of emission families for exhaust and 
evaporative emissions for each respective fee category.
    (c) For manufacturers certifying other spark-ignition engines or 
equipment with respect to exhaust and evaporative emission standards, a 
separate fee from the appropriate fee category applies for each unique 
family. A single engine or piece of equipment may involve separate 
emission families and certification fees for exhaust and evaporative 
emissions. Also, the number of certificates issued as specified in 
Sec.  1027.105(d)(3) is based on a separate count of emission families 
for exhaust and evaporative emissions for each respective fee category.
    (d) For any certification related to evaporative emissions from 
engines, equipment, or components not covered by paragraph (a) through 
(c) of this section, the fee applies for each certified product 
independent of certification for exhaust emissions, as illustrated in 
the following examples:
    (1) A fuel tank certified to meet permeation and diurnal emission 
standards would count as a single family for assessing the 
certification fee and for calculating fee amounts for future years.
    (2) If an equipment manufacturer applies for certification to 
generate or use emission credits for fuel, tanks and fuel lines, each 
affected fuel-tank and fuel-line family would count as a single family 
for assessing the certification fee and for calculating fee amounts for 
future years. This fee applies whether or not the equipment 
manufacturer is applying for certification to demonstrate compliance 
with another emission standard, such as running losses.
    (e) If you certify fuel system components under 40 CFR part 1060, a 
single fee applies for each emission family even if those components 
are used with different types of nonroad or stationary engines.
    (f) If your application for certification relates to emission 
standards that apply only in California, you must pay the same fee 
identified for meeting EPA standards.
    (g) For marine compression-ignition engines, if you apply for a 
federal certificate and an Annex VI certificate for the same engine 
family, a single fee applies for the engine family (see 40 CFR parts 94 
and 1042).
    (h) If you produce engines for multiple categories in a single 
engine family, a single fee applies for the engine family. For example, 
40 CFR 60.4210 allows you to produce stationary and nonroad 
compression-ignition engines in a single engine family. If the 
certification fee for the different types of engines is different,

[[Page 28259]]

the fee that applies for these engines is based on the emission 
standards to which you certify the engine family. For example, if you 
certify marine diesel engines to the standards that apply to land-based 
nonroad diesel engines under 40 CFR 94.912, the certification fee is 
based on the rate that applies for land-based nonroad diesel engines.


Sec.  1027.120  Can I qualify for reduced fees?

    (a) Eligibility requirements. To be eligible for a reduced fee, the 
following conditions must be satisfied:
    (1) The certificate is to be used for sale of vehicles or engines 
within the United States; and
    (2) The full fee for an application for certification for a model 
year exceeds 1.0% of the aggregate projected retail sales price of all 
vehicles or engines covered by that certificate.
    (b) Initial reduced fee calculation. (1) If the requirements of 
paragraph (a) of this section are satisfied, the initial fee paid shall 
be $750 or 1.0% of the aggregate projected retail sales price of all 
the vehicles or engines to be covered by the certification application, 
whichever is greater.
    (2) For vehicles or engines that are converted to operate on an 
alternative fuel, using as the basis for the conversion a vehicle or 
engine which is covered by an existing certificate of conformity, the 
cost basis used in this section must be the aggregate projected retail 
value-added to the vehicle or engine by the conversion rather than the 
full cost of the vehicle or engine. To qualify for this provision, the 
existing certificate must cover the same sales area and model year as 
the requested certificate for the converted vehicle or engine.
    (3) For ICI certification applications, the cost basis of this 
section shall be the aggregate projected retail cost of the entire 
vehicle(s) or engine(s), not just the value added by the conversion. If 
the vehicles/engines covered by an ICI certificate are not being 
offered for sale, the manufacturer shall use the fair retail market 
value of the vehicles/engines as the retail sale price required in this 
section. For an ICI application for certification, the retail sales 
price (or fair retail market value) must be based on the applicable 
National Automobile Dealer's Association (NADA) appraisal guide and/or 
other evidence of the actual market value.
    (4) The aggregate cost used in this section must be based on the 
total projected sales of all vehicles and engines under a certificate, 
including vehicles and engines modified under the modification and test 
option in 40 CFR 85.1509 and 89.609. The projection of the number of 
vehicles or engines to be covered by the certificate and their 
projected retail selling price must be based on the latest information 
available at the time of the fee payment.
    (5) A manufacturer may submit a reduced fee as described in this 
section if it is accompanied by a calculation of the fee based on the 
number of vehicles covered and the projected aggregate retail sales 
price as specified on the fee filing form. The reduced fee calculation 
shall be deemed approved unless EPA determines that the criteria of 
this section have not been met. The Agency may make such a 
determination either before or after EPA issues a certificate of 
conformity. If the Agency determines that the requirements of this 
section have not been met, EPA may deny future reduced fee applications 
and require submission of the full fee payment until such time as the 
manufacturer demonstrates to the satisfaction of the Administrator that 
its reduced fee submissions are based on accurate data and that final 
fee payments are made within 45 days of the end of the model year.
    (6) If the reduced fee is denied by the Administrator, the 
applicant will have 30 days from the date of notification of the denial 
to submit the appropriate fee to EPA.
    (c) Revision of the number of vehicles or engines covered by the 
certificate. (1) If after the original certificate, including a 
certificate under which modification and test vehicles are imported 
under 40 CFR 85.1509 and 89.609, is issued, the number of vehicles or 
engines to be produced or imported under the certificate exceeds the 
number indicated on the certificate, the manufacturer or importer 
shall--
    (i) Request that EPA revise the certificate with a number that 
indicates the new projection of the vehicles or engines to be covered 
by the certificate. The revised certificate must be applied for, 
revised and issued before the vehicles or engines are sold or finally 
imported into the United States; and
    (ii) Submit payment of 1.0% of the aggregate projected retail sales 
price of all the vehicles or engines above the number of vehicles or 
engines listed on the certificate to be covered by the application for 
certification.
    (2) A manufacturer must receive a revised certificate prior to the 
sale or final importation of any vehicles or engines, including 
modification and test vehicles, that are not originally included in the 
certificate issued under paragraph (b) of this section, or as indicated 
in a revised certificate issued under paragraph (c)(1) of this section. 
In the event that a certificate is not timely revised such additional 
vehicles or engines are not covered by a certificate of conformity.
    (d) Final reduced fee calculation and adjustment. (1) If the 
initial fee payment is less than the final reduced fee, then the 
manufacturer shall pay the difference between the initial reduced fee 
and the final reduced fee using the provisions of Sec.  1027.130. The 
final reduced fee shall be calculated using the procedures of paragraph 
(c) of this section but using actual production figures rather than 
projections and actual retail sales value rather than projected retail 
sales value.
    (2) This payment shall be paid within 45 days of the end of the 
model year. The total fees paid for a certificate shall not exceed the 
applicable full fee of Sec.  1027.105. If a manufacturer fails to make 
complete payment with 45 days then the Agency may void ab initio the 
applicable certificate. EPA may also refuse to grant reduced fee 
requests submitted under paragraph (b)(5) of this section.
    (3) If the initial fee payment exceeds the final reduced fee then 
the manufacturer may request a refund using the procedures of Sec.  
1027.125.
    (e) Records retention. Manufacturers are subject to the applicable 
maintenance of records requirements of 40 CFR part 86, subpart A. If a 
manufacturer fails to maintain the records or provide such records to 
EPA as required then EPA may void the certificate for which such 
records shall be kept. Manufacturers must retain in their records the 
basis used to calculate the projected sales and fair retail market 
value and the actual sales and retail price for the vehicles and 
engines covered by each certificate that is issued under the reduced 
fee provisions of this section. This information must be retained for a 
period of at least three years after the issuance of the certificate 
and must be provided to the Agency within 30 days of request.


Sec.  1027.125  Can I get a refund?

    (a) We will refund the total fee imposed under this part if you ask 
for a refund after failing to get a certificate for any reason.
    (b) If your actual sales or the actual retail prices in a given 
year are less than you projected for calculating a reduced fee under 
Sec.  1027.120, we will refund the appropriate portion of the fee. We 
will also refund a portion of the initial payment if it exceeds the 
final fee for the engines, vehicles, or equipment covered by the 
certificate application.
    (1) You are eligible for a partial refund related to a certificate 
only if you sold

[[Page 28260]]

engines, vehicles, or equipment under that certificate in the United 
States.
    (2) Include all the following in your request for a partial refund 
of reduced fee payments:
    (i) State that you sold engines, vehicles, or equipment under the 
applicable certificate in the United States.
    (ii) Identify the number of engines, vehicles, or equipment you 
produced or imported under the certificate, and whether the engines, 
vehicles, or equipment have been sold.
    (iii) Identify the reduced fee that you paid under the applicable 
certificate.
    (iv) Identify the actual retail sales price for the engines, 
vehicles, or equipment produced or imported under the certificate.
    (v) Calculate the final value of the reduced fee using actual 
production figures and retail prices.
    (vi) Calculate the refund amount.
    (c) We will approve your request to correct errors in the amount of 
the fee.
    (d) All refunds must be applied for within six months of the end of 
the model year.
    (e) Send refund and correction requests to the Fee Program 
Specialist, U.S. Environmental Protection Agency, Vehicle Programs and 
Compliance Division, 2000 Traverwood Dr., Ann Arbor, MI 48105, online 
at www.Pay.gov., or as specified in guidance by the Administrator.
    (e) You may request to have refund amounts applied to the amount 
due on another application for certification.


Sec.  1027.130  How do I make a fee payment?

    (a) Pay fees to the order of the Environmental Protection Agency in 
U.S. dollars using any of the following methods: money order, bank 
draft, certified check, corporate check, electronic funds transfer, any 
method available for payment online at www.Pay.gov, or as specified in 
EPA guidance
    (b) Send a completed fee filing form to the address designated on 
the form for each fee payment or electronically at www.Pay.gov, or as 
provided in EPA guidance. These forms are available on the Internet at 
http://www.epa.gov/otaq/guidance.htm.
    (c) You must pay the fee amount due before we will start to process 
an application for certification.
    (d) If we deny a reduced fee, you must pay the proper fee within 30 
days after we notify you of our decision.


Sec.  1027.135  What provisions apply to a deficient filing?

    (a) Any filing under this part is deficient if it is not 
accompanied by a completed fee filing form and full payment of the 
appropriate fee.
    (b) A deficient filing will be rejected unless the completed form 
and full payment are submitted within a time limit we specify. We will 
not process an application for certification if the associated filing 
is deficient.


Sec.  1027.140  What reporting and recordkeeping requirements apply 
under this part?

    Under the Paperwork Reduction Act (44 U.S.C. 3501 et seq.), the 
Office of Management and Budget approves the reporting and 
recordkeeping specified in the applicable regulations. The following 
items illustrate the kind of reporting and recordkeeping we require for 
engines, vehicles, and equipment regulated under this part:
    (a) Filling out fee filing forms under Sec.  1027.130.
    (b) Retaining fee records, including reduced fee documentation, 
under Sec.  1027.120.


Sec.  1027.150  What definitions apply to this subpart?

    The definitions in this section apply to this part. As used in this 
part, all undefined terms have the meaning the Act or the standard-
setting part gives to them. The definitions follow:
    Annex VI means MARPOL Annex VI, which is an annex to the 
International Convention on the Prevention of Pollution from Ships, 
1973, as modified by the protocol of 1978 relating thereto. This is an 
international treaty regulating disposal of waste products from marine 
vessels.
    Application for Certification means a manufacturer's submission of 
an application for certification.
    California-only certificate is a certificate of conformity issued 
by EPA showing compliance with emission standards established by 
California.
    Federal certificate is a certificate of conformity issued by EPA 
showing compliance with EPA emission standards specified in one of the 
standard-setting parts specified in Sec.  1027.101(a).
    Light-duty means relating to light-duty vehicles and light-duty 
trucks.
    Manufacturer has the meaning given in section 216(1) of the Act. In 
general, this term includes any person who manufactures an engine, 
vehicle, vessel, or piece of equipment for sale in the United States or 
otherwise introduces a new engine, vehicle, vessel, or piece of 
equipment into commerce in the United States. This includes importers 
who import such products for resale, but not dealers.
    Total number of certificates issued means the number of 
certificates for which fees have been paid. This term is not intended 
to represent multiple certificates that are issued within a single 
family or test group.
    Void has the meaning given in 40 CFR 1068.30.
    We (us, our) means the Administrator of the Environmental 
Protection Agency and any authorized representatives.


Sec.  1027.155  What abbreviations apply to this subpart?

    The following symbols, acronyms, and abbreviations apply to this 
part:

CFR Code of Federal Regulations
EPA U.S. Environmental Protection Agency
Evap Evaporative Emissions
ICI Independent Commercial Importer
    46. A new part 1045 is added to subchapter U of chapter I to read 
as follows:

PART 1045 CONTROL OF EMISSIONS FROM SPARK-IGNITION PROPULSION 
MARINE ENGINES

Subpart A Overview and Applicability
Sec.
1045.1 Does this part apply for my products?
1045.2 Who is responsible for compliance?
1045.5 Which engines are excluded from this part's requirements?
1045.10 How is this part organized?
1045.15 Do any other regulation parts apply to me?
1045.20 What requirements apply to my vessels?
1045.25 How do the requirements related to evaporative emissions 
apply to engines and their fuel systems?
Subpart B Emission Standards and Related Requirements
1045.101 What exhaust emission standards and requirements must my 
engines meet?
1045.103 What exhaust emission standards must my outboard and 
personal watercraft engines meet?
1045.105 What exhaust emission standards must my sterndrive/inboard 
engines meet?
1045.107 What are the standards for evaporative emissions?
1045.110 How must my engines diagnose malfunctions?
1045.115 What other requirements apply?
1045.120 What emission-related warranty requirements apply to me?
1045.125 What maintenance instructions must I give to buyers?
1045.130 What installation instructions must I give to vessel 
manufacturers?
1045.135 How must I label and identify the engines I produce?
1045.140 What is my engine's maximum engine power?
1045.145 Are there interim provisions that apply only for a limited 
time?
Subpart C--Certifying Engine Families
1045.201 What are the general requirements for obtaining a 
certificate of conformity?

[[Page 28261]]

1045.205 What must I include in my application?
1045.210 May I get preliminary approval before I complete my 
application?
1045.220 How do I amend the maintenance instructions in my 
application?
1045.225 How do I amend my application for certification to include 
new or modified engines or change an FEL?
1045.230 How do I select engine families?
1045.235 What emission testing must I perform for my application for 
a certificate of conformity?
1045.240 How do I demonstrate that my engine family complies with 
exhaust emission standards?
1045.245 How do I determine deterioration factors from exhaust 
durability testing?
1045.250 What records must I keep and what reports must I send to 
EPA?
1045.255 What decisions may EPA make regarding my certificate of 
conformity?
Subpart D--Testing Production-line Engines
1045.301 When must I test my production-line engines?
1045.305 How must I prepare and test my production-line engines?
1045.310 How must I select engines for production-line testing?
1045.315 How do I know when my engine family fails the production-
line testing requirements?
1045.320 What happens if one of my production-line engines fails to 
meet emission standards?
1045.325 What happens if an engine family fails the production-line 
testing requirements?
1045.330 May I sell engines from an engine family with a suspended 
certificate of conformity?
1045.335 How do I ask EPA to reinstate my suspended certificate?
1045.340 When may EPA revoke my certificate under this subpart and 
how may I sell these engines again?
1045.345 What production-line testing records must I send to EPA?
1045.350 What records must I keep?
Subpart E--In-use Testing
1045.401 What testing requirements apply to my engines that have 
gone into service?
1045.405 How does this program work?
1045.410 How must I select, prepare, and test my in-use engines?
1045.415 What happens if in-use engines do not meet requirements?
1045.420 What in-use testing information must I report to EPA?
1045.425 What records must I keep?
Subpart F--Test Procedures
1045.501 How do I run a valid emission test?
1045.505 How do I test engines using discrete-mode or ramped-modal 
duty cycles?
1045.515 What are the test procedures related to not-to-exceed 
standards?
1045.520 What testing must I perform to establish deterioration 
factors?
Subpart G--Special Compliance Provisions
1045.601 What compliance provisions apply to these engines?
1045.605 What provisions apply to engines already certified under 
the motor-vehicle program or other nonroad spark-ignition engine 
programs?
1045.620 What are the provisions for exempting engines used solely 
for competition?
1045.630 What is the personal-use exemption?
1045.635 What special provisions apply for small-volume engine 
manufacturers?
1045.640 What special provisions apply to branded engines?
1045.645 What special provisions apply for converting an engine to 
use an alternate fuel?
1045.650 Do the provisions of 40 CFR 1068.260 apply for marine 
engines?
1045.660 How do I certify outboard or personal watercraft engines 
for use in jet boats?
Subpart H--Averaging, Banking, and Trading for Certification
1045.701 General provisions.
1045.705 How do I generate and calculate exhaust emission credits?
1045.706 How do I generate and calculate evaporative emission 
credits?
1045.710 How do I average emission credits?
1045.715 How do I bank emission credits?
1045.720 How do I trade emission credits?
1045.725 What must I include in my application for certification?
1045.730 What ABT reports must I send to EPA?
1045.735 What records must I keep?
1045.745 What can happen if I do not comply with the provisions of 
this subpart?
Subpart I--Definitions and Other Reference Information
1045.801 What definitions apply to this part?
1045.805 What symbols, acronyms, and abbreviations does this part 
use?
1045.810 What materials does this part reference?
1045.815 What provisions apply to confidential information?
1045.820 How do I request a hearing?
1045.825 What reporting and recordkeeping requirements apply under 
this part?
Appendix I to Part 1045--Summary of Previous Emission Standards
Appendix II to Part 1045--Duty Cycles for Propulsion Marine Engines

    Authority: 42 U.S.C. 7401--7671q.

Subpart A--Overview and Applicability


Sec.  1045.1  Does this part apply for my products?

    (a) Except as provided in Sec.  1045.5, the regulations in this 
part 1045 apply as follows:
    (1) The requirements of this part related to exhaust emissions 
apply to new, spark-ignition propulsion marine engines beginning with 
the 2009 model year.
    (2) The requirements of this part related to evaporative emissions 
apply to fuel lines and fuel tanks used with marine engines that use a 
volatile liquid fuel (such as gasoline) beginning with the 2009 model 
year as specified in 40 CFR part 1045.107. This includes fuel lines and 
fuel tanks used with auxiliary marine engines. This also includes 
portable marine fuel tanks and associated fuel lines.
    (b) We specify optional standards for certifying sterndrive/inboard 
engines before the 2009 model year in Sec.  1045.145(a). Engines 
certified to these standards are subject to all the requirements of 
this part as if these optional standards were mandatory.
    (c) See 40 CFR part 91 for requirements that apply to outboard and 
personal watercraft engines not yet subject to the requirements of this 
part 1045.
    (d) The provisions of Sec. Sec.  1045.620 and 1045.801 apply for 
new engines used solely for competition beginning January 1, 2009.


Sec.  1045.2  Who is responsible for compliance?

    The requirements and prohibitions of this part apply to 
manufacturers of engines and fuel-system components as described in 
Sec.  1045.1. The requirements of this part are generally addressed to 
manufacturers subject to this part's requirements. The term ``you'' 
generally means the certifying manufacturer. For provisions related to 
exhaust emissions, this generally means the engine manufacturer, 
especially for issues related to certification (including production-
line testing, reporting, etc.). For provisions related to certification 
with respect to evaporative emissions, this generally means the 
manufacturer of fuel-system components. Vessel manufacturers must meet 
applicable requirements as described in Sec.  1045.20.


Sec.  1045.5  Which engines are excluded from this part's requirements?

    (a) Auxiliary engines. The exhaust emission standards of this part 
do not apply to auxiliary marine engines. See 40 CFR part 90, 1048, or 
1054 for the exhaust emission standards that apply.
    (b) Hobby engines and vessels. This part does not apply with 
respect to reduced-scale models of vessels that are not capable of 
transporting a person.


Sec.  1045.10  How is this part organized?

    This part 1045 is divided into the following subparts:
    (a) Subpart A of this part defines the applicability of this part 
1045 and gives an overview of regulatory requirements.

[[Page 28262]]

    (b) Subpart B of this part describes the emission standards and 
other requirements that must be met to certify engines under this part. 
Note that Sec.  1045.145 discusses certain interim requirements and 
compliance provisions that apply only for a limited time.
    (c) Subpart C of this part describes how to apply for a certificate 
of conformity.
    (d) Subpart D of this part describes general provisions for testing 
production-line engines.
    (e) Subpart E of this part describes general provisions for testing 
in-use engines.
    (f) Subpart F of this part describes how to test your engines 
(including references to other parts of the Code of Federal 
Regulations).
    (g) Subpart G of this part and 40 CFR part 1068 describe 
requirements, prohibitions, and other provisions that apply to engine 
manufacturers, vessel manufacturers, owners, operators, rebuilders, and 
all others.
    (h) Subpart H of this part describes how you may generate and use 
exhaust and evaporative emission credits to certify your engines and 
vessels.
    (i) Subpart I of this part contains definitions and other reference 
information.


Sec.  1045.15  Do any other regulation parts apply to me?

    (a) Part 1060 of this chapter describes standards and procedures 
that apply for evaporative emissions from engines fueled by gasoline or 
other volatile liquid fuels and the associated fuel systems. See Sec.  
1045.107 for information about how that part applies.
    (b) Part 1065 of this chapter describes procedures and equipment 
specifications for testing engines. Subpart F of this part 1045 
describes how to apply the provisions of part 1065 of this chapter to 
determine whether engines meet the emission standards in this part.
    (c) The requirements and prohibitions of part 1068 of this chapter 
apply to everyone, including anyone who manufactures, imports, 
installs, owns, operates, or rebuilds any of the engines subject to 
this part 1045, or vessels powered by these engines. Part 1068 of this 
chapter describes general provisions, including these seven areas:
    (1) Prohibited acts and penalties for engine manufacturers, vessel 
manufacturers, and others.
    (2) Rebuilding and other aftermarket changes.
    (3) Exclusions and exemptions for certain engines.
    (4) Importing engines.
    (5) Selective enforcement audits of your production.
    (6) Defect reporting and recall.
    (7) Procedures for hearings.
    (d) Other parts of this chapter apply if referenced in this part.


Sec.  1045.20  What requirements apply to my vessels?

    (a) If you manufacture vessels with engines certified to the 
exhaust emission standards in this part, your vessels must meet all 
emission standards with the engine and fuel system installed.
    (b) You may need to certify your vessels or fuel systems as 
described in 40 CFR 1060.1 and 1060.601. If you produce vessels subject 
to this part without obtaining a certificate, you must still meet the 
requirements of 40 CFR 1060.101(e) and (f) and keep records as 
described in 40 CFR 1060.210.
    (c) You must identify and label vessels you produce under this 
section consistent with the requirements of Sec.  1045.135 and 40 CFR 
part 1060.
    (d) You must follow all emission-related installation instructions 
from the certifying manufacturers as described in Sec.  1045.130 and 40 
CFR 1068.105. If you do not follow the installation instructions, we 
may consider your vessel to be not covered by the certificates of 
conformity. Introduction of such vessels into U.S. commerce violates 40 
CFR 1068.101.


Sec.  1045.25  How do the requirements related to evaporative emissions 
apply to engines and their fuel systems?

    (a) Engine manufacturers must provide the installation instructions 
required by Sec.  1045.130 to the ultimate purchasers of the engine. 
These instructions may be combined with the maintenance instructions 
required by Sec.  1045.125.
    (b) Engines sold with attached fuel lines or installed fuel tanks 
must be covered by the appropriate certificates of conformity issued 
under 40 CFR part 1060.
    (c) Fuel lines intended to be used with new engines and new 
portable fuel tanks must be certified to the applicable requirements of 
40 CFR part 1060.
    (d) All persons installing engines certified under this part 1045 
must follow the certifying manufacturer's emission-related installation 
instructions (see Sec.  1045.130 and 40 CFR 1068.105).

Subpart B--Emission Standards and Related Requirements


Sec.  1045.101  What exhaust emission standards and requirements must 
my engines meet?

    (a) You must show that your engines meet the following 
requirements:
    (1) Outboard and personal watercraft engines must meet the exhaust 
emission standards in Sec.  1045.103.
    (2) Sterndrive/inboard engines must meet the exhaust emission 
standards in Sec.  1045.105. Sterndrive/inboard engines may also meet 
the optional standards in Sec.  1045.145.
    (3) Sterndrive/inboard engines must meet the engine-diagnostic 
requirements in Sec.  1045.110.
    (4) All engines must meet the requirements in Sec.  1045.115.
    (b) It is important that you read Sec.  1045.145 to determine if 
there are other interim requirements or interim compliance provisions 
that apply for a limited time.


Sec.  1045.103  What exhaust emission standards must my outboard and 
personal watercraft engines meet?

    (a) Emission standards. Starting in the 2009 model year, exhaust 
emissions from your outboard and personal watercraft engines may not 
exceed emission standards as follows:
    (1) Measure emissions using the applicable steady-state test 
procedures described in subpart F of this part.
    (2) The exhaust emission standards from the following table apply:

Table 1 to Sec.   1045.103--Emission Standards for Outboard and Personal
                      Watercraft Engines (g/kW-hr)
------------------------------------------------------------------------
  Maximum Engine  Power (P)          HC+NOX                  CO
------------------------------------------------------------------------
P <= 40 kW..................  28 - 0.3 x P........  500 - 5.0 x P
P > 40 kW...................  16.0................  300
------------------------------------------------------------------------


[[Page 28263]]

    (3) For engines with maximum engine power at or below 40 kW, round 
the calculated HC+NOX emission standard to the nearest 0.1 
g/kW-hr; round the calculated CO emission standard to the nearest g/kW-
hr.
    (b) Averaging, banking, and trading. You may generate or use 
emission credits under the averaging, banking, and trading (ABT) 
program described in subpart H of this part for demonstrating 
compliance with HC+NOX emission standards. For CO emissions, 
you may generate or use emission credits for averaging as described in 
subpart H of this part, but not for banking or trading. To generate or 
use emission credits, you must specify a family emission limit for each 
pollutant you include in the ABT program for each engine family. These 
family emission limits serve as the emission standards for the engine 
family with respect to all required testing instead of the standards 
specified in this section. An engine family meets emission standards 
even if its family emission limit is higher than the standard, as long 
as you show that the whole averaging set of applicable engine families 
meets the emission standards using emission credits and the engines 
within the family meet the family emission limit. The following are the 
maximum values you may specify for family emission limits:
    (1) For engines with maximum engine power at or below 4.3 kW, the 
maximum value of the family emission limit for HC+NOX is 
81.0 g/kW-hr. For all other engines, the maximum value of the family 
emission limit for HC+NOX is defined by the following 
formula, with results rounded to the nearest 0.1 g/kW-hr:

FELmax,HC+NOX= 0.25(151 + 557/P0.9) + 6.0.

    (2) For engines with maximum engine power above 40 kW, the maximum 
value of the family emission limit for CO is 450 g/kW-hr. For all other 
engines, the maximum value is defined by the following formula, with 
results rounded to the nearest g/kW-hr:

FELmax,CO = 650 - 5.0 x P

    (c) Not-to-exceed standards. Exhaust emissions may not exceed the 
not-to-exceed standards, as follows:
    (1) Measure emissions using the not-to-exceed procedures in subpart 
F of this part:
    (2) Determine the not-to-exceed standard, rounded to the same 
number of decimal places as the emission standard in Table 1 of this 
section, from the following equation:

Not-to-exceed standard = (STD) x (M)

Where:

STD = The standard specified in paragraph (a) of this section if you 
certify without using ABT for that pollutant; or the FEL for that 
pollutant if you certify using ABT.
M = The NTE multiplier for that pollutant, as defined in paragraph 
(c)(3) of this section.

    (3) Use one of the two sets of NTE multipliers from the following 
table across the applicable zone specified in Sec.  1045.515:

            Table 2 to Sec.   1045.103--NTE Multipliers for Outboard and Personal Watercraft Engines
----------------------------------------------------------------------------------------------------------------
            Approach                 Pollutant       Subzone 1       Subzone 2       Subzone 3       Subzone 4
----------------------------------------------------------------------------------------------------------------
Primary.........................          HC+NOX            1.20            1.20            1.20            1.60
                                              CO            1.50            1.50            1.50            1.50
Alternative 1...................          HC+NOX            2.00            0.80            0.80            2.00
                                              CO            3.00            1.50            1.00            1.00
Alternative 2...................          HC+NOX            1.00            1.00            1.00            3.00
                                              CO            1.50            1.00            1.00            2.00
----------------------------------------------------------------------------------------------------------------

    (d) Fuel types. The exhaust emission standards in this section 
apply for engines using the fuel type on which the engines in the 
engine family are designed to operate. You must meet the numerical 
emission standards for hydrocarbons in this section based on the 
following types of hydrocarbon emissions for engines powered by the 
following fuels:
    (1) Alcohol-fueled engines: THCE emissions.
    (2) Natural gas-fueled engines: NMHC emissions.
    (3) Other engines: THC emissions.
    (e) Useful life. Your engines must meet the exhaust emission 
standards in paragraphs (a) through (c) of this section over the full 
useful life as follows:
    (1) For outboard engines, the minimum useful life is 350 hours of 
engine operation or 10 years, whichever comes first.
    (2) For personal watercraft engines, the minimum useful life is 350 
hours of engine operation or 5 years, whichever comes first.
    (3) You must specify a longer useful life in terms of hours for the 
engine family if the average service life of your vehicles is longer 
than the minimum value, as follows:
    (i) Except as allowed by paragraph (e)(3)(ii) of this section, your 
useful life (in hours) may not be less than either of the following:
    (A) Your projected operating life from advertisements or other 
marketing materials for any engines in the engine family.
    (B) Your basic mechanical warranty for any engines in the engine 
family.
    (ii) Your useful life may be based on the average service life of 
vehicles in the engine family if you show that the average service life 
is less than the useful life required by paragraph (e)(3)(i) of this 
section, but more than the minimum useful life (350 hours of engine 
operation). In determining the actual average service life of vehicles 
in an engine family, we will consider all available information and 
analyses. Survey data is allowed but not required to make this showing.
    (f) Applicability for testing. The duty-cycle emission standards in 
this subpart apply to all testing performed according to the procedures 
in Sec.  1045.505, including certification, production-line, and in-use 
testing. The not-to-exceed standards apply for all testing performed 
according to the procedures of subpart F of this part.


Sec.  1045.105  What exhaust emission standards must my sterndrive/
inboard engines meet?

    (a) Emission standards. Starting in the 2009 model year, exhaust 
emissions from your sterndrive/inboard engines may not exceed emission 
standards as follows:
    (1) Measure emissions using the applicable steady-state test 
procedures described in subpart F of this part.
    (2) The exhaust emission standards from the following table apply:

[[Page 28264]]



  Table 1 to Sec.   1045.105--Emission Standards for Sterndrive/Inboard
                            Engines (g/kW-hr)
------------------------------------------------------------------------
               Engine type                    HC+NOX            CO
------------------------------------------------------------------------
Primary standard for sterndrive/inboard              5.0            75.0
 engines................................
Alternate standards for high-performance             5.0             350
 engines................................
------------------------------------------------------------------------

    (b) Averaging, banking, and trading. You may generate or use 
emission credits under the averaging, banking, and trading (ABT) 
program described in subpart H of this part for demonstrating 
compliance with HC+NOX and CO emission standards. To 
generate or use emission credits, you must specify a family emission 
limit for each pollutant you include in the ABT program for each engine 
family. These family emission limits serve as the emission standards 
for the engine family with respect to all required testing instead of 
the standards specified in this section. An engine family meets 
emission standards even if its family emission limit is higher than the 
standard, as long as you show that the whole averaging set of 
applicable engine families meets the emission standards using emission 
credits and the engines within the family meet the family emission 
limit. The following are the maximum values you may specify for family 
emission limits:
    (1) For high-performance engines, 30.0 g/kW-hr for 
HC+NOX and 350 g/kW-hr for CO.
    (2) For other engines, 16.0 g/kW-hr for HC+NOX and 150 
g/kW-hr for CO.
    (c) Not-to-exceed standards. Exhaust emissions may not exceed the 
not-to-exceed standards for all sterndrive/inboard engines except high-
performance engines, as follows:
    (1) Measure emissions using the not-to-exceed procedures in subpart 
F of this part:
    (2) Determine the not-to-exceed standard, rounded to the same 
number of decimal places as the emission standard in Table 1 of this 
section from the following equation:

Not-to-exceed standard = (STD) (M)

Where:

STD = The standard specified in paragraph (a) of this section if you 
certify without using ABT for that pollutant; or the FEL for that 
pollutant if you certify using ABT.
M = The NTE multiplier for that pollutant, as defined in paragraph 
(c)(3) of this section.
(3) Use the NTE multipliers from the following table across the 
applicable zone specified in Sec.  1045.515:

                   Table 2 to Sec.   1045.105--NTE Multipliers for Sterndrive/Inboard Engines
----------------------------------------------------------------------------------------------------------------
                    Pollutant                        Subzone 1       Subzone 2       Subzone 3       Subzone 4
----------------------------------------------------------------------------------------------------------------
HC+NOX..........................................            1.50            1.00            1.00            1.50
CO..............................................            3.50            1.00            1.00            1.00
----------------------------------------------------------------------------------------------------------------

    (d) Fuel types. The exhaust emission standards in this section 
apply for engines using the fuel type on which the engines in the 
engine family are designed to operate. You must meet the numerical 
emission standards for hydrocarbons in this section based on the 
following types of hydrocarbon emissions for engines powered by the 
following fuels:
    (1) Alcohol-fueled engines: THCE emissions.
    (2) Natural gas-fueled engines: NMHC emissions.
    (3) Other engines: THC emissions.
    (e) Useful life. Your engines must meet the exhaust emission 
standards in paragraphs (a) through (c) of this section over their full 
useful life, as follows:
    (1) For high-performance engines with maximum engine power above 
485 kW, the minimum useful life is 50 hours of operation or 1 year, 
whichever comes first. For high-performance engines with maximum engine 
power at or below 485 kW, the minimum useful life is 150 hours of 
operation or 3 years, whichever comes first.
    (2) For all other engines, the minimum useful life is 480 hours of 
operation or ten years, whichever comes first. However, you may request 
in your application for certification that we approve a shorter useful 
life for an engine family. We may approve a shorter useful life, in 
hours of engine operation but not in years, if we determine that these 
engines will rarely operate longer than the shorter useful life. If 
engines identical to those in the engine family have already been 
produced and are in use, your demonstration must include documentation 
from such in-use engines. In other cases, your demonstration must 
include an engineering analysis of information equivalent to such in-
use data, such as data from research engines or similar engine models 
that are already in production. Your demonstration must also include 
any overhaul interval that you recommend, any mechanical warranty that 
you offer for the engine or its components, and any relevant customer 
design specifications. Your demonstration may include any other 
relevant information. The useful life value may not be shorter than any 
of the following:
    (i) 150 hours of operation.
    (ii) Your recommended overhaul interval.
    (iii) Your mechanical warranty for the engine.
    (3) You must specify a longer useful life in terms of hours for the 
engine family if the average service life of your vehicles is longer 
than the minimum value, as follows:
    (i) Except as allowed by paragraph (e)(3)(ii) of this section, your 
useful life (in hours) may not be less than either of the following:
    (A) Your projected operating life from advertisements or other 
marketing materials for any engines in the engine family.
    (B) Your basic mechanical warranty for any engines in the engine 
family.
    (ii) Your useful life may be based on the average service life of 
vehicles in the engine family if you show that the average service life 
is less than the useful life required by paragraph (e)(3)(i) of this 
section, but more than the minimum useful life (480 hours of engine 
operation). In determining the actual average service life of vehicles 
in an engine family, we will consider all available information and 
analyses. Survey data is allowed but not required to make this showing.
    (f) Applicability for testing. The duty-cycle emission standards in 
this section

[[Page 28265]]

apply to all testing performed according to the procedures in Sec.  
1045.505, including certification, production-line, and in-use testing. 
The not-to-exceed standards apply for all testing performed according 
to the procedures of subpart F of this part.


Sec.  1045.107  What are the standards for evaporative emissions?

    Fuel systems must meet the evaporative emission requirements of 40 
CFR part 1060 as specified in this section. The useful life of these 
standards is five years for personal watercraft and ten years for all 
other vessels.
    (a) Fuel line permeation. Nonmetal fuel lines must meet the 
permeation requirements specified in 40 CFR 1060.102 for EPA NR fuel 
lines starting in the 2009 model year. Metal fuel lines are not subject 
to emission standards.
    (b) Tank permeation. Fuel tanks must meet the permeation 
requirements specified in 40 CFR 1060.103. Portable fuel tanks and fuel 
tanks for personal watercraft must meet permeation standards starting 
in the 2011 model year. Other installed fuel tanks must meet permeation 
standards starting in the 2012 model year. Vessel manufacturers may 
generate or use emission credits to show compliance with the 
requirements of this paragraph under the averaging, banking, and 
trading (ABT) program, as described in subpart H of this part. Starting 
in the 2014 model year for personal watercraft and in the 2015 model 
year for other installed fuel tanks, family emission limits may not 
exceed 5.0 g/m2/day if testing occurs at a nominal 
temperature of 28[deg] C, or 8.3 g/m2/day if testing occurs 
at a nominal temperature of 40[deg]C. Portable fuel tank manufacturers 
may not generate or use emission credits under subpart H of this part. 
See Sec.  1045.145(e) for special provisions related to the timing of 
these requirements.
    (c) Running loss. The running loss requirements specified in 40 CFR 
part 1060 do not apply.
    (d) Diurnal emissions. Installed fuel tanks must meet the diurnal 
emission requirements specified in 40 CFR 1060.105. Fuel tanks for 
personal watercraft must meet diurnal emission standards starting in 
the 2009 model year. Other installed fuel tanks must meet diurnal 
emission standards starting in the 2010 model year. Fuel tanks meeting 
the definition of portable marine fuel tank in Sec.  1045.801 must 
comply with the diurnal requirements for portable nonroad fuel tanks in 
40 CFR part 1060 starting in the 2009 model year.
    (e) Other requirements. The requirements of 40 CFR 1060.101(e) and 
(f) apply to vessel manufacturers even if they do not obtain a 
certificate.


Sec.  1045.110  How must my engines diagnose malfunctions?

    The following engine-diagnostic requirements apply to sterndrive/
inboard engines only:
    (a) Equip your engines with a diagnostic system. Equip each engine 
with a diagnostic system that will detect significant malfunctions in 
its emission control system using one of the following protocols:
    (1) If your emission control strategy depends on maintaining air-
fuel ratios at stoichiometry, an acceptable diagnostic design would 
identify malfunction whenever the air-fuel ratio does not cross 
stoichiometry for one minute of intended closed-loop operation. You may 
use other diagnostic strategies if we approve them in advance.
    (2) If the protocol described in paragraph (a)(1) of this section 
does not apply to your engine, you must use an alternative approach 
that we approve in advance. Your alternative approach must generally 
detect when the emission control system is not functioning properly.
    (3) Diagnostic systems approved by the California Air Resources 
Board for use with sterndrive/inboard engines fully satisfy the 
requirements of this section.
    (b) Use a malfunction-indicator light (MIL). The MIL must be 
readily visible to the operator; it may be any color except red. When 
the MIL goes on, it must display ``Check Engine,'' ``Service Engine 
Soon,'' or a similar message that we approve. You may use sound in 
addition to the light signal. The MIL must go on under each of these 
circumstances:
    (1) When a malfunction occurs, as described in paragraph (a) of 
this section.
    (2) When the diagnostic system cannot send signals to meet the 
requirement of paragraph (b)(1) of this section.
    (3) When the engine's ignition is in the ``key-on'' position before 
starting or cranking. The MIL should go out after engine starting if 
the system detects no malfunction.
    (c) Control when the MIL can go out. If the MIL goes on to show a 
malfunction, it must remain on during all later engine operation until 
servicing corrects the malfunction. If the engine is not serviced, but 
the malfunction does not recur for three consecutive engine starts 
during which the malfunctioning system is evaluated and found to be 
working properly, the MIL may stay off during later engine operation.
    (d) Store trouble codes in computer memory. Record and store in 
computer memory any diagnostic trouble codes showing a malfunction that 
should illuminate the MIL. The stored codes must identify the 
malfunctioning system or component as uniquely as possible. Make these 
codes available through the data link connector as described in 
paragraph (g) of this section. You may store codes for conditions that 
do not turn on the MIL. The system must store a separate code to show 
when the diagnostic system is disabled (from malfunction or tampering).
    (e) Make data, access codes, and devices accessible. Make all 
required data accessible to us without any access codes or devices that 
only you can supply. Ensure that anyone servicing your engine can read 
and understand the diagnostic trouble codes stored in the onboard 
computer with generic tools and information.
    (f) Consider exceptions for certain conditions. Your diagnostic 
systems may disregard trouble codes for the first three minutes after 
engine starting. You may ask us to approve diagnostic-system designs 
that disregard trouble codes under other conditions that would produce 
an unreliable reading, damage systems or components, or cause other 
safety risks.
    (g) Follow standard references for formats, codes, and connections. 
Follow conventions defined in the following documents (incorporated by 
reference in Sec.  1045.810) or ask us to approve using updated 
versions of (or variations from) these documents:
    (1) ISO 9141-2 Road vehicles--Diagnostic systems--Part 2: CARB 
requirements for interchange of digital information, February 1994.
    (2) ISO 14230-4 Road vehicles--Diagnostic systems--Keyword Protocol 
2000--Part 4: Requirements for emission-related systems, June 2000.


Sec.  1045.115  What other requirements apply?

    The following requirements apply with respect to engines that are 
required to meet the emission standards of this part:
    (a) Crankcase emissions. Crankcase emissions may not be discharged 
directly into the ambient atmosphere from any engine throughout its 
useful life.
    (b) Torque broadcasting. Electronically controlled engines must 
broadcast their speed and output shaft torque (in newton-meters). 
Engines may alternatively broadcast a surrogate value

[[Page 28266]]

for determining torque. Engines must broadcast engine parameters such 
that they can be read with a remote device, or broadcast them directly 
to their controller area networks. This information is necessary for 
testing engines in the field (see 40 CFR part 1065, subpart J). Small-
volume engine manufacturers may omit this requirement.
    (c) EPA access to broadcast information. If we request it, you must 
provide us any hardware or tools we would need to readily read, 
interpret, and record all information broadcast by an engine's on-board 
computers and electronic control modules. If you broadcast a surrogate 
parameter for torque values, you must provide us what we need to 
convert these into torque units. We will not ask for hardware or tools 
if they are readily available commercially.
    (d) [Reserved]
    (e) Adjustable parameters. Engines that have adjustable parameters 
must meet all the requirements of this part for any adjustment in the 
physically adjustable range. An operating parameter is not considered 
adjustable if you permanently seal it or if it is not normally 
accessible using ordinary tools. We may require that you set adjustable 
parameters to any specification within the adjustable range during any 
testing, including certification testing, production-line testing, or 
in-use testing.
    (f) Prohibited controls. You may not design your engines with 
emission-control devices, systems, or elements of design that cause or 
contribute to an unreasonable risk to public health, welfare, or safety 
while operating. For example, this would apply if the engine emits a 
noxious or toxic substance it would otherwise not emit that contributes 
to such an unreasonable risk.
    (g) Defeat devices. You may not equip your engines with a defeat 
device. A defeat device is an auxiliary emission control device that 
reduces the effectiveness of emission controls under conditions that 
the engine may reasonably be expected to encounter during normal 
operation and use. This does not apply to auxiliary emission control 
devices you identify in your certification application if any of the 
following is true:
    (1) The conditions of concern were substantially included in the 
applicable duty-cycle test procedures described in subpart F of this 
part.
    (2) You show your design is necessary to prevent engine (or vessel) 
damage or accidents.
    (3) The reduced effectiveness applies only to starting the engine.


Sec.  1045.120  What emission-related warranty requirements apply to 
me?

    (a) General requirements. You must warrant to the ultimate 
purchaser and each subsequent purchaser that the new engine, including 
all parts of its emission control system, meets two conditions:
    (1) It is designed, built, and equipped so it conforms at the time 
of sale to the ultimate purchaser with the requirements of this part.
    (2) It is free from defects in materials and workmanship that may 
keep it from meeting these requirements.
    (b) Warranty period. Your emission-related warranty must be valid 
during the periods specified in this paragraph (b). You may offer an 
emission-related warranty more generous than we require. The emission-
related warranty for the engine may not be shorter than any published 
warranty you offer without charge for the engine. Similarly, the 
emission-related warranty for any component may not be shorter than any 
published warranty you offer without charge for that component. If an 
engine has no hour meter, we base the warranty periods in this 
paragraph (b) only on the engine's age (in years). The warranty period 
begins when the engine is placed into service.
    (1) The minimum warranty period for outboard engines is 175 hours 
of engine operation or 5 years, whichever comes first. The minimum 
warranty period for personal watercraft engines is 175 hours of engine 
operation or 30 months, whichever comes first.
    (2) The minimum warranty period for sterndrive/inboard engines is 
shown in the following table:

                 Table 1 to Sec.   1045.120--Warranty Periods for Sterndrive/inboard Engines \1\
----------------------------------------------------------------------------------------------------------------
         Maximum engine power                  Electronic components                Mechanical components
----------------------------------------------------------------------------------------------------------------
P < 373 kW............................  3 years/480 hours..................  3 years/480 hours.
373 <= P < 485 kW.....................  3 years/480 hours..................  3 years/150 hours.
P >= 485 kW...........................  3 years/480 hours..................  1 year/50 hours.
----------------------------------------------------------------------------------------------------------------
\1\ The warranty period expires after the specified time period or number of operating hours, whichever comes
  first.

    (c) Components covered. The emission-related warranty covers all 
components whose failure would increase an engine's emissions of any 
pollutant, including those listed in 40 CFR part 1068, Appendix I, and 
those from any other system you develop to control emissions. The 
emission-related warranty covers these components even if another 
company produces the component. Your emission-related warranty does not 
cover components whose failure would not increase an engine's emissions 
of any pollutant.
    (d) Limited applicability. You may deny warranty claims under this 
section if the operator caused the problem through improper maintenance 
or use, as described in 40 CFR 1068.115.
    (e) Owners manual. Describe in the owners manual the emission-
related warranty provisions from this section that apply to the engine.


Sec.  1045.125  What maintenance instructions must I give to buyers?

    Give the ultimate purchaser of each new engine written instructions 
for properly maintaining and using the engine, including the emission 
control system as described in this section. The maintenance 
instructions also apply to service accumulation on your emission-data 
engines as described in Sec.  1045.245 and in 40 CFR part 1065.
    (a) Critical emission-related maintenance. Critical emission-
related maintenance includes any adjustment, cleaning, repair, or 
replacement of critical emission-related components. This may also 
include additional emission-related maintenance that you determine is 
critical if we approve it in advance. You may schedule critical 
emission-related maintenance on these components if you meet the 
following conditions:
    (1) You demonstrate that the maintenance is reasonably likely to be 
done at the recommended intervals on in-use engines. We will accept 
scheduled maintenance as reasonably likely to occur if you satisfy any 
of the following conditions:
    (i) You present data showing that any lack of maintenance that 
increases

[[Page 28267]]

emissions also unacceptably degrades the engine's performance.
    (ii) You present survey data showing that at least 80 percent of 
engines in the field get the maintenance you specify at the recommended 
intervals.
    (iii) You provide the maintenance free of charge and clearly say so 
in maintenance instructions for the customer.
    (iv) You otherwise show us that the maintenance is reasonably 
likely to be done at the recommended intervals.
    (2) You may not schedule critical emission-related maintenance 
within the useful life period for aftertreatment devices, pulse-air 
valves, fuel injectors, oxygen sensors, electronic control units, 
superchargers, or turbochargers, except as specified in paragraph (b) 
or (c) of this section.
    (b) Recommended additional maintenance. You may recommend any 
additional amount of maintenance on the components listed in paragraph 
(a) of this section, as long as you state clearly that these 
maintenance steps are not necessary to keep the emission-related 
warranty valid. If operators do the maintenance specified in paragraph 
(a) of this section, but not the recommended additional maintenance, 
this does not allow you to disqualify those engines from in-use testing 
or deny a warranty claim. Do not take these maintenance steps during 
service accumulation on your emission-data engines.
    (c) Special maintenance. You may specify more frequent maintenance 
to address problems related to special situations, such as atypical 
engine operation. You must clearly state that this additional 
maintenance is associated with the special situation you are 
addressing.
    (d) Noncritical emission-related maintenance. Subject to the 
provisions of this paragraph (d), you may schedule any amount of 
emission-related inspection or maintenance that is not covered by 
paragraph (a) of this section (i.e., maintenance that is neither 
explicitly identified as critical emission-related maintenance, nor 
that we approve as critical emission-related maintenance). Noncritical 
emission-related maintenance generally includes changing spark plugs, 
re-seating valves, or any other emission-related maintenance on the 
components we specify in 40 CFR part 1068, Appendix I. You must state 
in the owners manual that these steps are not necessary to keep the 
emission-related warranty valid. If operators fail to do this 
maintenance, this does not allow you to disqualify those engines from 
in-use testing or deny a warranty claim. Do not take these inspection 
or maintenance steps during service accumulation on your emission-data 
engines.
    (e) Maintenance that is not emission-related. For maintenance 
unrelated to emission controls, you may schedule any amount of 
inspection or maintenance. You may also take these inspection or 
maintenance steps during service accumulation on your emission-data 
engines, as long as they are reasonable and technologically necessary. 
This might include adding engine oil, changing air, fuel, or oil 
filters, servicing engine-cooling systems, and adjusting idle speed, 
governor, engine bolt torque, valve lash, or injector lash. You may 
perform this nonemission-related maintenance on emission-data engines 
at the least frequent intervals that you recommend to the ultimate 
purchaser (but not the intervals recommended for severe service).
    (f) Source of parts and repairs. State clearly on the first page of 
your written maintenance instructions that a repair shop or person of 
the owner's choosing may maintain, replace, or repair emission control 
devices and systems. Your instructions may not require components or 
service identified by brand, trade, or corporate name. Also, do not 
directly or indirectly condition your warranty on a requirement that 
the engine be serviced by your franchised dealers or any other service 
establishments with which you have a commercial relationship. You may 
disregard the requirements in this paragraph (f) if you do one of two 
things:
    (1) Provide a component or service without charge under the 
purchase agreement.
    (2) Get us to waive this prohibition in the public's interest by 
convincing us the engine will work properly only with the identified 
component or service.
    (g) Payment for scheduled maintenance. Owners are responsible for 
properly maintaining their engines. This generally includes paying for 
scheduled maintenance. However, manufacturers must pay for scheduled 
maintenance during the useful life if it meets all the following 
criteria:
    (1) Each affected component was not in general use on similar 
engines before the applicable dates shown in paragraph (5) of the 
definition of new propulsion marine engine in Sec.  1045.801.
    (2) The primary function of each affected component is to reduce 
emissions.
    (3) The cost of the scheduled maintenance is more than 2 percent of 
the price of the engine.
    (4) Failure to perform the maintenance would not cause clear 
problems that would significantly degrade the engine's performance.
    (h) Owners manual. Explain the owner's responsibility for proper 
maintenance in the owners manual.


Sec.  1045.130  What installation instructions must I give to vessel 
manufacturers?

    (a) If you sell an engine for someone else to install in a vessel, 
give the engine installer instructions for installing it consistent 
with the requirements of this part. Include all information necessary 
to ensure that an engine will be installed in its certified 
configuration.
    (b) Make sure these instructions have the following information:
    (1) Include the heading: ``Emission-related installation 
instructions''.
    (2) State: ``Failing to follow these instructions when installing a 
certified engine in a vessel violates federal law (40 CFR 1068.105(b)), 
subject to fines or other penalties as described in the Clean Air 
Act.''.
    (3) Describe the instructions needed to properly install the 
exhaust system and any other components. Include instructions 
consistent with the requirements of Sec.  1045.205(t).
    (4) Describe the steps needed to control evaporative emissions as 
described in Sec.  1045.107. This will generally require notification 
that the installer and/or vessel manufacturer must meet the 
requirements of Sec.  1045.107 and 40 CFR part 1060.
    (5) Describe any necessary steps for installing the diagnostic 
system described in Sec.  1045.110.
    (6) Describe any limits on the range of applications needed to 
ensure that the engine operates consistently with your application for 
certification. For example, if your engines are certified only for 
personal watercraft, tell vessel manufacturers not to install the 
engines in vessels longer than 4.0 meters.
    (7) Describe any other instructions to make sure the installed 
engine will operate according to design specifications in your 
application for certification. For example, this may include specified 
limits for catalyst systems, such as exhaust backpressure, catalyst 
location, and temperature profiles during engine operation.
    (8) State: ``If you install the engine in a way that makes the 
engine's emission control information label hard to read during normal 
engine maintenance, you must place a duplicate label on the vessel, as 
described in 40 CFR 1068.105.''.
    (c) You do not need installation instructions for engines you 
install in your own vessels.

[[Page 28268]]

    (d) Provide instructions in writing or in an equivalent format. For 
example, you may post instructions on a publicly available website for 
downloading or printing. If you do not provide the instructions in 
writing, explain in your application for certification how you will 
ensure that each installer is informed of the installation 
requirements.


Sec.  1045.135  How must I label and identify the engines I produce?

    The provisions of this section apply to engine manufacturers.
    (a) Assign each engine a unique identification number and 
permanently affix, engrave, or stamp it on the engine in a legible way.
    (b) At the time of manufacture, affix a permanent and legible label 
identifying each engine. The label must be--
    (1) Attached in one piece so it is not removable without being 
destroyed or defaced. However, you may use two-piece labels for engines 
below 19 kW if there is not enough space on the engine to apply a one-
piece label.
    (2) Secured to a part of the engine needed for normal operation and 
not normally requiring replacement.
    (3) Durable and readable for the engine's entire life.
    (4) Written in English.
    (c) The label must--
    (1) Include the heading ``EMISSION CONTROL INFORMATION''.
    (2) Include your full corporate name and trademark. You may 
identify another company and use its trademark instead of yours if you 
comply with the provisions of Sec.  1045.640.
    (3) Include EPA's standardized designation for the engine family 
(and subfamily, where applicable).
    (4) State the engine's displacement (in liters) and maximum engine 
power; however, you may omit the displacement from the label if all the 
engines in the engine family have the same per-cylinder displacement 
and total displacement.
    (5) State the date of manufacture [MONTH and YEAR]; however, you 
may omit this from the label if you stamp or engrave it on the engine.
    (6) State the FELs to which the engines are certified (in g/kW-hr) 
if certification depends on the ABT provisions of subpart H of this 
part.
    (7) Identify the emission control system. Use terms and 
abbreviations consistent with SAE J1930 (incorporated by reference in 
Sec.  1045.810). You may omit this information from the label if there 
is not enough room for it and you put it in the owners manual instead.
    (8) List specifications and adjustments for engine tuneups; 
however, you may omit this information from the label if there is not 
enough room for it and you put it in the owners manual instead.
    (9) Identify the fuel type and any requirements for fuel and 
lubricants; however, you may omit this information from the label if 
there is not enough room for it and you put it in the owners manual 
instead.
    (10) State: ``THIS ENGINE COMPLIES WITH U.S. EPA REGULATIONS FOR 
[MODEL YEAR] SPARK-IGNITION MARINE ENGINES.''.
    (11) If your durability demonstration for sterndrive/inboard 
engines is limited to fresh water, state: ``THIS ENGINE IS NOT INTENDED 
FOR USE IN SALTWATER.''.
    (d) You may add information to the emission control information 
label to identify other emission standards that the engine meets or 
does not meet (such as California standards). You may also add other 
information to ensure that the engine will be properly maintained and 
used.
    (e) You may ask us to approve modified labeling requirements in 
this part 1045 if you show that it is necessary or appropriate. We will 
approve your request if your alternate label is consistent with the 
requirements of this part.
    (f) If you obscure the engine label while installing the engine in 
the vessel such that the label cannot be read during normal 
maintenance, you must place a duplicate label on the vessel. If others 
install your engine in their vessels in a way that obscures the engine 
label, we require them to add a duplicate label on the vessel (see 40 
CFR 1068.105); in that case, give them the number of duplicate labels 
they request and keep the following records for at least five years:
    (1) Written documentation of the request from the vessel 
manufacturer.
    (2) The number of duplicate labels you send for each engine family 
and the date you sent them.


Sec.  1045.140  What is my engine's maximum engine power?

    (a) An engine configuration's maximum engine power is the maximum 
brake power point on the nominal power curve for the engine 
configuration, as defined in this section. Round the power value to the 
nearest whole kilowatt.
    (b) The nominal power curve of an engine configuration is the 
relationship between maximum available engine brake power and engine 
speed for an engine, using the mapping procedures of 40 CFR part 1065, 
based on the manufacturer's design and production specifications for 
the engine. This information may also be expressed by a torque curve 
that relates maximum available engine torque with engine speed.
    (c) The nominal power curve must be within the range of the actual 
power curves of production engines considering normal production 
variability. If after production begins it is determined that your 
nominal power curve does not represent production engines, we may 
require you to amend your application for certification under Sec.  
1045.225.


Sec.  1045.145  Are there interim provisions that apply only for a 
limited time?

    The provisions in this section apply instead of other provisions in 
this part. This section describes when these interim provisions apply.
    (a) Small-volume engine manufacturers. Special provisions apply to 
you for sterndrive/inboard engines if you are a small-volume engine 
manufacturer subject to the requirements of this part. Contact us 
before 2009 if you intend to use any of the following provisions:
    (1) You may delay complying with otherwise emission standards and 
other requirements that would otherwise apply until the 2013 model year 
for high-performance engines and until the 2011 model year for other 
sterndrive/inboard engines. Add a permanent label to a readily visible 
part of each engine exempted under this paragraph (a)(1). This label 
must include at least the following items:
    (i) The label heading ``EMISSION CONTROL INFORMATION''.
    (ii) Your corporate name and trademark.
    (iii) Engine displacement (in liters), rated power, and model year 
of the engine or whom to contact for further information.
    (iv) The following statement: ``THIS ENGINE IS EXEMPT UNDER 40 CFR 
1045.145(a)(1) FROM EMISSION STANDARDS AND RELATED REQUIREMENTS.''.
    (2) You may use the provisions of 40 CFR 1068.250 to further delay 
compliance with emission standards; however, you must use a base engine 
that has been certified if such an engine is available.
    (b) Early banking. You may generate emission credits for 
sterndrive/inboard engines before the 2009 model year (or before the 
2011 model year for small-volume engine manufacturers), as follows:
    (1) You must begin actual production of early-compliant engines by 
September 1, 2008 (or before September

[[Page 28269]]

1, 2010 for small-volume engine manufacturers).
    (2) You may not generate emission credits under this paragraph (b) 
with engines you produce after December 31, 2008 (or December 31, 2010 
for small-volume engine manufacturers).
    (3) Early-compliant engines must be certified to the standards and 
requirements for sterndrive/inboard engines under this part 1045, with 
family emission limits at or below the emission standards in Sec.  
1045.105.
    (4) You must calculate emission credits by comparing the engine's 
family emission limits with assigned baseline levels of 16 g/kW-hr for 
HC+NOX and 150 g/kW-hr for CO.
    (5) Calculate emission credits using a multiplier based on the 
number of model years before the standards start to apply. The 
multipliers are 1.25 for one year early, 1.5 for two years early, and 
2.0 for three or more years early. For example, multiply your 
calculated emission credits generated from compliant 2008 model year 
engines by 1.25 or, if emission standards are delayed for your engines 
until 2011 under paragraph (a)(1) of this section, multiply those 
calculated emission credits by 2.0.
    (6) You may not use the provisions of this paragraph (b) to 
generate emission credits for engines whose point of first retail sale 
is in California.
    (7) HC+NOX or CO credits you generate under this 
paragraph (b) may be banked for up to three model years after the model 
year in which the emission standards start to apply.
    (c) Early compliance with evaporative emission standards. You may 
fuel tanks that do not meet the otherwise applicable permeation 
standards without violating the prohibition in 40 CFR 1068.101(a)(1) if 
you earn evaporative allowances, as follows:
    (1) You may earn an evaporative allowance from one fuel tank 
certified to EPA's evaporative emission standards by producing it 
before EPA's evaporative emission standards start to apply. You may use 
this evaporative allowance by selling one fuel tank that does not meet 
the permeation emission standards that would otherwise apply. For 
example, you can earn an evaporative allowance by selling a low-
permeation fuel tank for personal watercraft before the 2011 model 
year, in which case you could sell a high-permeation fuel tank for a 
personal watercraft in 2011. You must meet all the other requirements 
related to evaporative emissions that apply.
    (2) You must add a label to exempted fuel tanks you produce under 
this paragraph (c) with the following statement: ``EXEMPT FROM EMISSION 
STANDARDS UNDER 40 CFR 1045.145(c)''.
    (3) Evaporative allowances you earn under this paragraph (c) from 
portable fuel tanks may be used only for other portable fuel tanks. 
Similarly, evaporative allowances from personal watercraft fuel tanks 
may be used only for personal watercraft fuel tanks and evaporative 
allowances from other installed fuel tanks may be used only for other 
installed fuel tanks.
    (4) You may not use the allowances you generate under this 
paragraph (c) for portable fuel tanks and personal watercraft fuel 
tanks in 2014 or later model years. Similarly, you may not use the 
allowances you generate under this paragraph (c) for other installed 
fuel tanks in 2015 or later model years.
    (d) Useful life for evaporative emission standards. A useful life 
period of two years applies for fuel tanks certified to meet the 
permeation emission standards in Sec.  1045.110(b) in 2013 and earlier 
model years. However, for fuel tanks with a family emission limit above 
or below the otherwise applicable standard, calculate emission credits 
under Sec.  1054.706 based on the useful life values specified in Sec.  
1045.107.

Subpart C--Certifying Engine Families


Sec.  1045.201  What are the general requirements for obtaining a 
certificate of conformity?

    Engine manufacturers must certify their engines with respect to the 
exhaust emission standards in this part. Manufacturers of engines, 
equipment, or fuel-system components may need to certify their products 
with respect to evaporative emission standards as described in 40 CFR 
1060.1 and 1060.601. The following general requirements apply for 
obtaining a certificate of conformity:
    (a) You must send us a separate application for a certificate of 
conformity for each engine family. A certificate of conformity is valid 
starting with the indicated effective date, but it is not valid for any 
production after December 31 of the model year for which it is issued. 
No certificate will be issued after December 31 of the model year.
    (b) The application must contain all the information required by 
this part and must not include false or incomplete statements or 
information (see Sec.  1045.255).
    (c) We may ask you to include less information than we specify in 
this subpart, as long as you maintain all the information required by 
Sec.  1045.250.
    (d) You must use good engineering judgment for all decisions 
related to your application (see 40 CFR 1068.5).
    (e) An authorized representative of your company must approve and 
sign the application.
    (f) See Sec.  1045.255 for provisions describing how we will 
process your application.
    (g) We may require you to deliver your test engines to a facility 
we designate for our testing (see Sec.  1045.235(c)).


Sec.  1045.205  What must I include in my application?

    This section specifies the information that must be in your 
application, unless we ask you to include less information under Sec.  
1045.201(c). We may require you to provide additional information to 
evaluate your application.
    (a) Describe the engine family's specifications and other basic 
parameters of the engine's design and emission controls. List the fuel 
type on which your engines are designed to operate (for example, all-
season gasoline). List each distinguishable engine configuration in the 
engine family. For each engine configuration, list the maximum engine 
power and the range of values for maximum engine power resulting from 
production tolerances, as described in Sec.  1045.140.
    (b) Explain how the emission control systems operate. Describe in 
detail all system components for controlling exhaust emissions, 
including all auxiliary emission control devices (AECDs) and all fuel-
system components you will install on any production or test engine. 
Identify the part number of each component you describe. For this 
paragraph (b), treat as separate AECDs any devices that modulate or 
activate differently from each other. Include sufficient detail to 
allow us to evaluate whether the AECDs are consistent with the defeat 
device prohibition of Sec.  1045.115.
    (c) For sterndrive/inboard engines, explain how the engine 
diagnostic system works, describing especially the engine conditions 
(with the corresponding diagnostic trouble codes) that cause the 
malfunction-indicator light to go on. Propose what you consider to be 
extreme conditions under which the diagnostic system should disregard 
trouble codes, as described in Sec.  1045.110.
    (d) Describe the engines you selected for testing and the reasons 
for selecting them.
    (e) Describe the test equipment and procedures that you used, 
including any special or alternate test procedures you used.

[[Page 28270]]

    (f) Describe how you operated the emission-data engine before 
testing, including the duty cycle and the number of engine operating 
hours used to stabilize emission levels. Explain why you selected the 
method of service accumulation. Describe any scheduled maintenance you 
did.
    (g) List the specifications of the test fuel to show that it falls 
within the required ranges we specify in 40 CFR part 1065.
    (h) Identify the engine family's useful life.
    (i) Include the maintenance and warranty instructions you will give 
to the ultimate purchaser of each new engine (see Sec. Sec.  1045.120 
and 1045.125).
    (j) Include the emission-related installation instructions you will 
provide if someone else installs your engines in a vessel (see Sec.  
1045.130).
    (k) Describe your emission control information label (see Sec.  
1045.135).
    (l) Identify the emission standards or FELs to which you are 
certifying engines in the engine family.
    (m) Identify the engine family's deterioration factors and describe 
how you developed them (see Sec.  1045.245). Present any emission test 
data you used for this.
    (n) State that you operated your emission-data engines as described 
in the application (including the test procedures, test parameters, and 
test fuels) to show you meet the requirements of this part.
    (o) Present emission data to show that you meet emission standards, 
as follows:
    (1) Present emission data by mode for hydrocarbons (such as THC or 
THCE, as applicable), NOX, and CO on an emission-data engine 
to show your engines meet the duty-cycle emission standards we specify 
in Sec.  1045.101. Show emission figures before and after applying 
deterioration factors for each engine. If we specify more than one 
grade of any fuel type (for example, low-temperature and all-season 
gasoline), you need to submit test data only for one grade, unless the 
regulations of this part specify otherwise for your engine.
    (2) Note that Sec. Sec.  1045.235 and 1045.245 allow you to submit 
an application in certain cases without new emission data.
    (p) State that all the engines in the engine family comply with the 
not-to-exceed emission standards we specify in subpart B of this part 
for all normal operation and use when tested as specified in Sec.  
1045.515. Describe any relevant testing, engineering analysis, or other 
information in sufficient detail to support your statement.
    (q) Report all test results, including those from invalid tests, 
whether or not they were conducted according to the test procedures of 
subpart F of this part. If you measure CO2, report those 
emission levels. We may ask you to send other information to confirm 
that your tests were valid under the requirements of this part and 40 
CFR parts 1060 and 1065.
    (r) Describe all adjustable operating parameters (see Sec.  
1045.115(e)), including production tolerances. Include the following in 
your description of each parameter:
    (1) The nominal or recommended setting.
    (2) The intended physically adjustable range.
    (3) The limits or stops used to establish adjustable ranges.
    (4) Information showing why the limits, stops, or other means of 
inhibiting adjustment are effective in preventing adjustment of 
parameters on in-use engines to settings outside your intended 
physically adjustable ranges.
    (s) Provide the information to read, record, and interpret all the 
information broadcast by an engine's onboard computers and electronic 
control units. State that, upon request, you will give us any hardware, 
software, or tools we would need to do this. If you broadcast a 
surrogate parameter for torque values, you must provide us what we need 
to convert these into torque units. You may reference any appropriate 
publicly released standards that define conventions for these messages 
and parameters. Format your information consistent with publicly 
released standards.
    (t) Confirm that your emission-related installation instructions 
specify how to ensure that sampling of exhaust emissions will be 
possible after engines are installed in vessels and placed in service. 
Show how to sample exhaust emissions in a way that prevents diluting 
the exhaust sample with ambient air.
    (u) Unconditionally certify that all the engines in the engine 
family comply with the requirements of this part, other referenced 
parts of the CFR, and the Clean Air Act.
    (v) Include good-faith estimates of U.S.-directed production 
volumes. Include a justification for the estimated production volumes 
if they are substantially different than actual production volumes in 
earlier years for similar models.
    (w) Include the information required by other subparts of this 
part. For example, include the information required by Sec.  1045.725 
if you participate in the ABT program.
    (x) Include other applicable information, such as information 
specified in this part or 40 CFR part 1068 related to requests for 
exemptions.
    (y) Name an agent for service located in the United States. Service 
on this agent constitutes service on you or any of your officers or 
employees for any action by EPA or otherwise by the United States 
related to the requirements of this part.
    (z) For imported engines, identify the following:
    (1) The port(s) at which you will import your engines.
    (2) The names and addresses of the agents you have authorized to 
import your engines.
    (3) The location of test facilities in the United States where you 
can test your engines if we select them for testing under a selective 
enforcement audit, as specified in 40 CFR part 1068, subpart E.


Sec.  1045.210  May I get preliminary approval before I complete my 
application?

    If you send us information before you finish the application, we 
will review it and make any appropriate determinations, especially for 
questions related to engine family definitions, auxiliary emission 
control devices, deterioration factors, testing for service 
accumulation, maintenance, and compliance with not-to-exceed standards. 
Decisions made under this section are considered to be preliminary 
approval, subject to final review and approval. We will generally not 
reverse a decision where we have given you preliminary approval, unless 
we find new information supporting a different decision. If you request 
preliminary approval related to the upcoming model year or the model 
year after that, we will make best-efforts to make the appropriate 
determinations as soon as practicable. We will generally not provide 
preliminary approval related to a future model year more than two years 
ahead of time.


Sec.  1045.220  How do I amend the maintenance instructions in my 
application?

    You may amend your emission-related maintenance instructions after 
you submit your application for certification, as long as the amended 
instructions remain consistent with the provisions of Sec.  1045.125. 
You must send the Designated Compliance Officer a written request to 
amend your application for certification for an engine family if you 
want to change the emission-related maintenance instructions in a way 
that could affect emissions. In your request, describe the

[[Page 28271]]

proposed changes to the maintenance instructions. We will disapprove 
your request if we determine that the amended instructions are 
inconsistent with maintenance you performed on emission-data engines. 
If operators follow the original maintenance instructions rather than 
the newly specified maintenance, this does not allow you to disqualify 
those engines from in-use testing or deny a warranty claim.
    (a) If you are changing the specified maintenance in a way that 
could affect emissions, you may distribute the new maintenance 
instructions to your customers only after we approve your request.
    (b) You need not request approval if you are making only minor 
corrections (such as correcting typographical mistakes), clarifying 
your maintenance instructions, or changing instructions for maintenance 
unrelated to emission control.


Sec.  1045.225  How do I amend my application for certification to 
include new or modified engines or change an FEL?

    Before we issue you a certificate of conformity, you may amend your 
application to include new or modified engine configurations, subject 
to the provisions of this section. After we have issued your 
certificate of conformity, you may send us an amended application 
requesting that we include new or modified engine configurations within 
the scope of the certificate, subject to the provisions of this 
section. You must amend your application if any changes occur with 
respect to any information included in your application.
    (a) You must amend your application before you take any of the 
following actions:
    (1) Add an engine configuration to an engine family. In this case, 
the engine configuration added must be consistent with other engine 
configurations in the engine family with respect to the criteria listed 
in Sec.  1045.230.
    (2) Change an engine configuration already included in an engine 
family in a way that may affect emissions, or change any of the 
components you described in your application for certification. This 
includes production and design changes that may affect emissions any 
time during the engine's lifetime.
    (3) Modify an FEL for an engine family as described in paragraph 
(f) of this section.
    (b) To amend your application for certification, send the 
Designated Compliance Officer the following information:
    (1) Describe in detail the addition or change in the engine model 
or configuration you intend to make.
    (2) Include engineering evaluations or data showing that the 
amended engine family complies with all applicable requirements. You 
may do this by showing that the original emission-data engine is still 
appropriate for showing that the amended family complies with all 
applicable requirements.
    (3) If the original emission-data engine for the engine family is 
not appropriate to show compliance for the new or modified engine 
configuration, include new test data showing that the new or modified 
engine configuration meets the requirements of this part.
    (c) We may ask for more test data or engineering evaluations. You 
must give us these within 30 days after we request them.
    (d) For engine families already covered by a certificate of 
conformity, we will determine whether the existing certificate of 
conformity covers your newly added or modified engine. You may ask for 
a hearing if we deny your request (see Sec.  1045.820).
    (e) For engine families already covered by a certificate of 
conformity, you may start producing the new or modified engine 
configuration anytime after you send us your amended application and 
before we make a decision under paragraph (d) of this section. However, 
if we determine that the affected engines do not meet applicable 
requirements, we will notify you to cease production of the engines and 
may require you to recall the engines at no expense to the owner. 
Choosing to produce engines under this paragraph (e) is deemed to be 
consent to recall all engines that we determine do not meet applicable 
emission standards or other requirements and to remedy the 
nonconformity at no expense to the owner. If you do not provide 
information required under paragraph (c) of this section within 30 
days, you must stop producing the new or modified engines.
    (f) You may ask us to approve a change to your FEL in certain cases 
after the start of production. The changed FEL may not apply to engines 
you have already introduced into U.S. commerce, except as described in 
this paragraph (f). If we approve a changed FEL after the start of 
production, you must include the new FEL on the emission control 
information label for all engines produced after the change. You may 
ask us to approve a change to your FEL in the following cases:
    (1) You may ask to raise your FEL for your engine family at any 
time. In your request, you must show that you will still be able to 
meet the emission standards as specified in subparts B and H of this 
part. If you amend your application by submitting new test data to 
include a newly added or modified engine, as described in paragraph 
(b)(3) of this section, use the appropriate FELs with corresponding 
production volumes to calculate your production-weighted average FEL 
for the model year, as described in subpart H of this part. If you 
amend your application without submitting new test data, you must use 
the higher FEL for the entire family to calculate your production-
weighted average FEL under subpart H of this part.
    (2) You may ask to lower the FEL for your engine family only if you 
have test data from production engines showing that emissions are below 
the proposed lower FEL. The lower FEL applies only to engines you 
produce after we approve the new FEL. Use the appropriate FELs with 
corresponding production volumes to calculate your production-weighted 
average FEL for the model year, as described in subpart H of this part.


Sec.  1045.230  How do I select engine families?

    (a) For purposes of certification, divide your product line into 
families of engines that are expected to have similar emission 
characteristics throughout the useful life as described in this 
section. Your engine family is limited to a single model year.
    (b) Group engines in the same engine family if they are the same in 
all the following aspects:
    (1) The combustion cycle and fuel.
    (2) The cooling system (for example, raw-water vs. separate-circuit 
cooling).
    (3) Method of air aspiration (for example, turbocharged vs. 
naturally aspirated).
    (4) The number, location, volume, and composition of catalytic 
converters.
    (5) The number, arrangement, and approximate bore diameter of 
cylinders.
    (6) Method of control for engine operation, other than governing 
(i.e., mechanical or electronic).
    (7) The numerical level of the emission standards that apply to the 
engine.
    (c) You may subdivide a group of engines that is identical under 
paragraph (b) of this section into different engine families if you 
show the expected emission characteristics are different during the 
useful life.
    (d) You may group engines that are not identical with respect to 
the things listed in paragraph (b) of this section in the same engine 
family, as follows:
    (1) In unusual circumstances, you may group such engines in the 
same

[[Page 28272]]

engine family if you show that their emission characteristics during 
the useful life will be similar.
    (2) If you are a small-volume engine manufacturer, you may group 
all your high-performance engines into a single engine family.
    (3) The provisions of this paragraph (e) do not exempt any engines 
from meeting all the emission standards and requirements in subpart B 
of this part.


Sec.  1045.235  What emission testing must I perform for my application 
for a certificate of conformity?

    This section describes the emission testing you must perform to 
show compliance with the emission standards in Sec.  1045.101(a). See 
Sec.  1045.205(p) regarding emission testing related to the not-to-
exceed standards. See Sec. Sec.  1045.240 and 1045.245 and 40 CFR part 
1065, subpart E, regarding service accumulation before emission 
testing.
    (a) Select an emission-data engine from each engine family for 
testing as described in 40 CFR 1065.401. Select the engine with a 
configuration that is most likely to exceed the exhaust emission 
standards, using good engineering judgment. Consider the emission 
levels of all exhaust constituents over the full useful life of the 
engine when operated in a vessel.
    (b) Test your emission-data engines using the procedures and 
equipment specified in subpart F of this part.
    (c) We may measure emissions from any of your test engines or other 
engines from the engine family, as follows:
    (1) We may decide to do the testing at your plant or any other 
facility. If we do this, you must deliver the test engine to a test 
facility we designate. The test engine you provide must include 
appropriate manifolds, aftertreatment devices, electronic control 
units, and other emission-related components not normally attached 
directly to the engine block. If we do the testing at your plant, you 
must schedule it as soon as possible and make available the 
instruments, personnel, and equipment we need.
    (2) If we measure emissions on one of your test engines, the 
results of that testing become the official emission results for the 
engine. Unless we later invalidate these data, we may decide not to 
consider your data in determining if your engine family meets 
applicable requirements.
    (3) We may set the adjustable parameters of your emission-data 
engine to any point within the physically adjustable ranges (see Sec.  
1045.115(e)).
    (4) We may calibrate your emission-data engine within normal 
production tolerances for anything we do not consider an adjustable 
parameter.
    (d) You may ask to use emission data from a previous model year 
instead of doing new tests, but only if all the following are true:
    (1) The engine family from the previous model year differs from the 
current engine family only with respect to model year or other 
characteristics unrelated to emissions.
    (2) The emission-data engine from the previous model year remains 
the appropriate emission-data engine under paragraph (b) of this 
section.
    (3) The data show that the emission-data engine would meet all the 
requirements that apply to the engine family covered by the application 
for certification. For engines originally tested under the provisions 
of 40 CFR part 91, you may consider those test procedures to be 
equivalent to the procedures we specify in subpart F of this part.
    (e) We may require you to test a second engine of the same or 
different configuration in addition to the engine tested under 
paragraph (b) of this section.
    (f) If you use an alternate test procedure under 40 CFR 1065.10 and 
later testing shows that such testing does not produce results that are 
equivalent to the procedures specified in subpart F of this part, we 
may reject data you generated using the alternate procedure.


Sec.  1045.240  How do I demonstrate that my engine family complies 
with exhaust emission standards?

    (a) For purposes of certification, your engine family is considered 
in compliance with the emission standards in Sec.  1045.103 or Sec.  
1045.105 if all emission-data engines representing that family have 
test results showing deteriorated emission levels at or below these 
standards. Note that your FELs are considered to be the applicable 
emission standards with which you must comply if you participate in the 
ABT program in subpart H of this part.
    (b) Your engine family is deemed not to comply if any emission-data 
engine representing that family has test results showing a deteriorated 
emission level above an applicable emission standard from Sec.  
1045.101 for any pollutant.
    (c) Determine a deterioration factor to compare emission levels 
from the emission-data engine with the applicable emission standards. 
Section 1045.245 specifies how to test engines to develop deterioration 
factors that represent the expected deterioration in emissions over 
your engines' full useful life. Your deterioration factors must take 
into account any available data from in-use testing with similar 
engines. Small-volume engine manufacturers may use assigned 
deterioration factors that we establish. Apply deterioration factors as 
follows:
    (1) Additive deterioration factor for exhaust emissions. For 
engines that do not use aftertreatment technology, use an additive 
deterioration factor for exhaust emissions. An additive deterioration 
factor is the difference between exhaust emissions at the end of useful 
life and exhaust emissions at the low-hour test point. Adjust the 
official emission results for each tested engine at the selected test 
point by adding the factor to the measured emissions. If the 
deterioration factor is less than zero, use zero. Additive 
deterioration factors must be specified to one more decimal place than 
the emission standard.
    (2) Multiplicative deterioration factor for exhaust emissions. For 
engines that use aftertreatment technology, such as catalytic 
converters, use a multiplicative deterioration factor for exhaust 
emissions. A multiplicative deterioration factor is the ratio of 
exhaust emissions at the end of useful life to exhaust emissions at the 
low-hour test point. Adjust the official emission results for each 
tested engine at the selected test point by multiplying the measured 
emissions by the deterioration factor. If the deterioration factor is 
less than one, use one. Multiplicative deterioration factors must be 
specified to one more significant figure than the emission standard.
    (d) Adjust the official emission results for each tested engine at 
the selected test point by multiplying the measured emissions by the 
deterioration factor, then rounding the adjusted figure to the same 
number of decimal places as the emission standard. Compare the rounded 
emission levels to the emission standard for each emission-data engine. 
In the case of HC+NOX standards, add the emission results 
and apply the deterioration factor to the sum of the pollutants before 
rounding. However, if your deterioration factors are based on emission 
measurements that do not cover the vehicle's full useful life, apply 
the deterioration factor to each pollutant and then add the results 
before rounding.
    (e) Small-volume engine manufacturers may establish emission levels 
for certification without testing, as follows:
    (1) For high-performance engines, you may use a family emission 
limit of 30.0 g/kW-hr for HC+NOX emissions and 350 g/kW-hr 
for CO emissions.
    (2) For other four-stroke sterndrive/inboard engines, you may use a 
family emission limit of 22.0 g/kW-hr for

[[Page 28273]]

HC+NOX emissions and 150 g/kW-hr for CO emissions.
    (3) Note that you must use emission credits under the provisions of 
subpart H of this part to show that you meet applicable requirements if 
you use family emission limits as specified in this paragraph (e). 
Also, if you use these family emission limits, you must use them for 
both HC+NOX and CO emissions.


Sec.  1045.245  How do I determine deterioration factors from exhaust 
durability testing?

    Establish deterioration factors to determine whether your engines 
will meet the exhaust emission standards for each pollutant throughout 
the useful life, as described in subpart B of this part and Sec.  
1045.240. This section describes how to determine deterioration 
factors, either with pre-existing test data or with new emission 
measurements.
    (a) You may ask us to approve deterioration factors for an engine 
family based on emission measurements from similar engines if you have 
already given us these data for certifying the other engines in the 
same or earlier model years. Use good engineering judgment to decide 
whether the two engines are similar.
    (b) If you are unable to determine deterioration factors for an 
engine family under paragraph (a) of this section, select engines, 
subsystems, or components for testing. Determine deterioration factors 
based on service accumulation and related testing. Include 
consideration of wear and other causes of deterioration expected under 
typical consumer use. Determine deterioration factors as follows:
    (1) You must measure emissions from the emission-data engine at a 
low-hour test point and the end of the useful life. You may also test 
at evenly spaced intermediate points. Collect emission data using 
measurements to one more decimal place than the emission standard.
    (2) Operate the engine over a representative duty cycle for a 
period at least as long as the useful life (in hours). You may operate 
the engine continuously. You may also use an engine installed in a 
vessel to accumulate service hours instead of running the engine only 
in the laboratory.
    (3) You may perform maintenance on emission-data engines as 
described in Sec.  1045.125 and 40 CFR part 1065, subpart E.
    (4) If you measure emissions at only two points to calculate your 
deterioration factor, base your calculations on a linear relationship 
connecting these two data points for each pollutant. If you measure 
emissions at three or more points, use a linear least-squares fit of 
your test data for each pollutant to calculate your deterioration 
factor.
    (5) If you test more than one engine to establish deterioration 
factors, average the deterioration factors from all the engines before 
rounding.
    (6) Use good engineering judgment for all aspects of the effort to 
establish deterioration factors under this paragraph (b).
    (7) You may use other testing methods to determine deterioration 
factors, consistent with good engineering judgment, as long as we 
approve those methods in advance.
    (c) Include the following information in your application for 
certification:
    (1) If you use test data from a different engine family, explain 
why this is appropriate and include all the emission measurements on 
which you base the deterioration factor.
    (2) If you do testing to determine deterioration factors, describe 
the form and extent of service accumulation, including the method you 
use to accumulate hours.


Sec.  1045.250  What records must I keep and what reports must I send 
to EPA?

    (a) If you produce engines under any provisions of this part that 
are related to production volumes, send the Designated Compliance 
Officer a report within 30 days after the end of the model year 
describing the total number of engines you produced in each engine 
family. For example, if you use special provisions intended for small-
volume engine manufacturers, report your production volumes to show 
that you do not exceed the applicable limits.
    (b) Organize and maintain the following records:
    (1) A copy of all applications and any summary information you send 
us.
    (2) Any of the information we specify in Sec.  1045.205 that you 
were not required to include in your application.
    (3) A detailed history of each emission-data engine. For each 
engine, describe all of the following:
    (i) The emission-data engine's construction, including its origin 
and buildup, steps you took to ensure that it represents production 
engines, any components you built specially for it, and all the 
components you include in your application for certification.
    (ii) How you accumulated engine operating hours (service 
accumulation), including the dates and the number of hours accumulated.
    (iii) All maintenance, including modifications, parts changes, and 
other service, and the dates and reasons for the maintenance.
    (iv) All your emission tests, including documentation on routine 
and standard tests, as specified in part 40 CFR part 1065, and the date 
and purpose of each test.
    (v) All tests to diagnose engine or emission control performance, 
giving the date and time of each and the reasons for the test.
    (vi) Any other significant events.
    (4) Production figures for each engine family divided by assembly 
plant.
    (5) Keep a list of engine identification numbers for all the 
engines you produce under each certificate of conformity.
    (c) Keep data from routine emission tests (such as test cell 
temperatures and relative humidity readings) for one year after we 
issue the associated certificate of conformity. Keep all other 
information specified in paragraph (a) of this section for eight years 
after we issue your certificate.
    (d) Store these records in any format and on any media, as long as 
you can promptly send us organized, written records in English if we 
ask for them. You must keep these records readily available. We may 
review them at any time.
    (e) Send us copies of any engine maintenance instructions or 
explanations if we ask for them.


Sec.  1045.255  What decisions may EPA make regarding my certificate of 
conformity?

    (a) If we determine your application is complete and shows that the 
engine family meets all the requirements of this part and the Act, we 
will issue a certificate of conformity for your engine family for that 
model year. We may make the approval subject to additional conditions.
    (b) We may deny your application for certification if we determine 
that your engine family fails to comply with emission standards or 
other requirements of this part or the Act. Our decision may be based 
on a review of all information available to us. If we deny your 
application, we will explain why in writing.
    (c) In addition, we may deny your application or suspend or revoke 
your certificate if you do any of the following:
    (1) Refuse to comply with any testing or reporting requirements.
    (2) Submit false or incomplete information (paragraph (e) of this 
section applies if this is fraudulent).
    (3) Render inaccurate any test data.
    (4) Deny us from completing authorized activities (see 40 CFR 
1068.20). This includes a failure to provide reasonable assistance.

[[Page 28274]]

    (5) Produce engines for importation into the United States at a 
location where local law prohibits us from carrying out authorized 
activities.
    (6) Fail to supply requested information or amend your application 
to include all engines being produced.
    (7) Take any action that otherwise circumvents the intent of the 
Act or this part.
    (d) We may void your certificate if you do not keep the records we 
require or do not give us information as required under this part or 
the Act.
    (e) We may void your certificate if we find that you intentionally 
submitted false or incomplete information.
    (f) If we deny your application or suspend, revoke, or void your 
certificate, you may ask for a hearing (see Sec.  1045.820).

Subpart D--Testing Production-line Engines


Sec.  1045.301  When must I test my production-line engines?

    (a) If you produce engines that are subject to the requirements of 
this part, you must test them as described in this subpart, except as 
follows:
    (1) Small-volume engine manufacturers may omit testing under this 
subpart.
    (2) We may exempt engine families with a projected U.S.-directed 
production volume below 150 units from routine testing under this 
subpart. Request this exemption in the application for certification 
and include your basis for projecting a production volume below 150 
units. You must promptly notify us if your actual production exceeds 
150 units during the model year. If you exceed the production limit or 
if there is evidence of a nonconformity, we may require you to test 
production-line engines under this subpart, or under 40 CFR part 1068, 
subpart E, even if we have approved an exemption under this paragraph 
(a)(2).
    (b) We may suspend or revoke your certificate of conformity for 
certain engine families if your production-line engines do not meet the 
requirements of this part or you do not fulfill your obligations under 
this subpart (see Sec. Sec.  1045.325 and 1045.340).
    (c) Other regulatory provisions authorize us to suspend, revoke, or 
void your certificate of conformity, or order recalls for engine 
families without regard to whether they have passed these production-
line testing requirements. The requirements of this subpart do not 
affect our ability to do selective enforcement audits, as described in 
40 CFR part 1068. Individual engines in families that pass these 
production-line testing requirements must also conform to all 
applicable regulations of this part and 40 CFR part 1068.
    (d) You may ask to use an alternate program for testing production-
line engines. In your request, you must show us that the alternate 
program gives equal assurance that your products meet the requirements 
of this part. We may waive some or all of this subpart's requirements 
if we approve your alternate program.
    (e) If you certify an engine family with carryover emission data, 
as described in Sec.  1045.235(c), and these equivalent engine families 
consistently pass the production-line testing requirements over the 
preceding two-year period, you may ask for a reduced testing rate for 
further production-line testing for that family. The minimum testing 
rate is one engine per engine family. If we reduce your testing rate, 
we may limit our approval to any number of model years. In determining 
whether to approve your request, we may consider the number of engines 
that have failed the emission tests.
    (f) We may ask you to make a reasonable number of production-line 
engines available for a reasonable time so we can test or inspect them 
for compliance with the requirements of this part. See 40 CFR 1068.27.


Sec.  1045.305  How must I prepare and test my production-line engines?

    This section describes how to prepare and test production-line 
engines. You must assemble the test engine in a way that represents the 
assembly procedures for other engines in the engine family. You must 
ask us to approve any deviations from your normal assembly procedures 
for other production engines in the engine family.
    (a) Test procedures. Test your production-line engines using the 
applicable testing procedures in subpart F of this part to show you 
meet the duty-cycle emission standards in subpart B of this part. The 
not-to-exceed standards apply for this testing, but you need not do 
additional testing to show that production-line engines meet the not-
to-exceed standards.
    (b) Modifying a test engine. Once an engine is selected for testing 
(see Sec.  1045.310), you may adjust, repair, prepare, or modify it or 
check its emissions only if one of the following is true:
    (1) You document the need for doing so in your procedures for 
assembling and inspecting all your production engines and make the 
action routine for all the engines in the engine family.
    (2) This subpart otherwise specifically allows your action.
    (3) We approve your action in advance.
    (c) Engine malfunction. If an engine malfunction prevents further 
emission testing, ask us to approve your decision to either repair the 
engine or delete it from the test sequence.
    (d) Setting adjustable parameters. Before any test, we may require 
you to adjust any adjustable parameter to any setting within its 
physically adjustable range.
    (1) We may require you to adjust idle speed outside the physically 
adjustable range as needed, but only until the engine has stabilized 
emission levels (see paragraph (e) of this section). We may ask you for 
information needed to establish an alternate minimum idle speed.
    (2) We may specify adjustments within the physically adjustable 
range by considering their effect on emission levels, as well as how 
likely it is someone will make such an adjustment with in-use engines.
    (e) Stabilizing emission levels. You may operate the engine to 
stabilize the emission levels before you test production-line engines. 
Using good engineering judgment, operate your engines in a way that 
represents the way production engines will be used. You may operate 
each engine for no more than the greater of two periods:
    (1) 12 hours.
    (2) The number of hours you operated your emission-data engine for 
certifying the engine family (see 40 CFR part 1065, subpart E, or the 
applicable regulations governing how you should prepare your test 
engine).
    (f) Damage during shipment. If shipping an engine to a remote 
facility for production-line testing makes necessary an adjustment or 
repair, you must wait until after the initial emission test to do this 
work. We may waive this requirement if the test would be impossible or 
unsafe, or if it would permanently damage the engine. Report to us in 
your written report under Sec.  1045.345 all adjustments or repairs you 
make on test engines before each test.
    (g) Retesting after invalid tests. You may retest an engine if you 
determine an emission test is invalid under subpart F of this part. 
Explain in your written report reasons for invalidating any test and 
the emission results from all tests. If you retest an engine, you may 
ask us to substitute results of the new tests for the original ones. 
You must ask us within ten days of testing. We will generally answer 
within ten days after we receive your information.

[[Page 28275]]

Sec.  1045.310  How must I select engines for production-line testing?

    (a) Test engines from each engine family as described in this 
section based on test periods, as follows:
    (1) For engine families with projected U.S.-directed production 
volume of at least 1,600, the test periods are consecutive quarters (3 
months). However, if your annual production period is less than 12 
months long, you may take the following alternative approach to define 
quarterly test periods:
    (i) If your annual production period is 120 days or less, the whole 
model year constitutes a single test period.
    (ii) If your annual production period is 121 to 210 days, divide 
the annual production period evenly into two test periods.
    (iii) If your annual production period is 211 to 300 days, divide 
the annual production period evenly into three test periods.
    (iv) If your annual production period is 301 days or longer, divide 
the annual production period evenly into four test periods.
    (2) For engine families with projected U.S.-directed production 
volume below 1,600, the whole model year constitutes a single test 
period.
    (b) Early in each test period, randomly select and test an engine 
from the end of the assembly line for each engine family.
    (1) In the first test period for newly certified engines, randomly 
select and test one more engine. Then, calculate the required sample 
size for the model year as described in paragraph (c) of this section.
    (2) In later test periods of the same model year, combine the new 
test result with all previous testing in the model year. Then, 
calculate the required sample size for the model year as described in 
paragraph (c) of this section.
    (3) In the first test period for engine families relying on 
previously submitted test data, combine the new test result with the 
last test result from the previous model year. Then, calculate the 
required sample size for the model year as described in paragraph (c) 
of this section. Use the last test result from the previous model year 
only for this first calculation. For all subsequent calculations, use 
only results from the current model year.
    (c) Calculate the required sample size for each engine family. 
Separately calculate this figure for HC+NOX and CO. The 
required sample size is the greater of these calculated values. Use the 
following equation:

N = [(t95 x [sigma])/(x - STD)]2 + 1

Where:

N = Required sample size for the model year.
t95 = 95% confidence coefficient, which depends on the 
number of tests completed, n, as specified in the table in paragraph 
(c)(1) of this section. It defines 95% confidence intervals for a 
one-tail distribution.
x = Mean of emission test results of the sample.
STD = Emission standard (or family emission limit, if applicable).
[sigma] = Test sample standard deviation (see paragraph (c)(2) of 
this section).

    (1) Determine the 95% confidence coefficient, t95, from 
the following table:

----------------------------------------------------------------------------------------------------------------
        n                 t95                 n                 t95                 n                 t95
----------------------------------------------------------------------------------------------------------------
              2               6.31                 12               1.80                 22               1.72
              3               2.92                 13               1.78                 23               1.72
              4               2.35                 14               1.77                 24               1.71
              5               2.13                 15               1.76                 25               1.71
              6               2.02                 16               1.75                 26               1.71
              7               1.94                 17               1.75                 27               1.71
              8               1.90                 18               1.74                 28               1.70
              9               1.86                 19               1.73                 29               1.70
             10               1.83                 20               1.73                30+               1.70
             11               1.81                 21               1.72    .................  .................
----------------------------------------------------------------------------------------------------------------

    (2) Calculate the standard deviation, [sigma], for the test sample 
using the following formula:

[sigma] = [[Sigma](Xi - x)2/(n - 
1)]1/2

Where:

Xi = Emission test result for an individual engine.
n = The number of tests completed in an engine family.

    (d) Use final deteriorated test results to calculate the variables 
in the equations in paragraph (c) of this section (see Sec.  
1045.315(a)).
    (e) After each new test, recalculate the required sample size using 
the updated mean values, standard deviations, and the appropriate 95-
percent confidence coefficient.
    (f) Distribute the remaining engine tests evenly throughout the 
rest of the year. You may need to adjust your schedule for selecting 
engines if the required sample size changes. If your scheduled 
quarterly testing for the remainder of the model year is sufficient to 
meet the calculated sample size, you may wait until the next quarter to 
do additional testing. Continue to randomly select engines from each 
engine family.
    (g) Continue testing until one of the following things happens:
    (1) After completing the minimum number of tests required in 
paragraph (b) of this section, the number of tests completed in an 
engine family, n, is greater than the required sample size, N, and the 
sample mean, x, is less than or equal to the emission standard. For 
example, if N = 5.1 after the fifth test, the sample-size calculation 
does not allow you to stop testing.
    (2) The engine family does not comply according to Sec.  1045.315.
    (3) You test 30 engines from the engine family.
    (4) You test one percent of your projected annual U.S.-directed 
production volume for the engine family, rounded to the nearest whole 
number. Do not count an engine under this paragraph (g)(4) if it fails 
to meet an applicable emission standard.
    (5) You choose to declare that the engine family does not comply 
with the requirements of this subpart.
    (h) If the sample-size calculation allows you to stop testing for 
one pollutant but not another, you must continue measuring emission 
levels of all pollutants for any additional tests required under this 
section. However, you need not continue making the calculations 
specified in this section for the pollutant for which testing is not 
required. This paragraph (h) does not affect the number of tests 
required under this section or the remedial steps required under Sec.  
1045.320.
    (i) You may elect to test more randomly chosen engines than we 
require under this section. Include these engines in the sample-size 
calculations.

[[Page 28276]]

Sec.  1045.315  How do I know when my engine family fails the 
production-line testing requirements?

    This section describes the pass-fail criteria for the production-
line testing requirements. We apply these criteria on an engine-family 
basis. See Sec.  1045.320 for the requirements that apply to individual 
engines that fail a production-line test.
    (a) Calculate your test results as follows:
    (1) Initial and final test results. Calculate and round the test 
results for each engine. If you do several tests on an engine, 
calculate the initial test results, then add them together and divide 
by the number of tests and round for the final test results on that 
engine.
    (2) Final deteriorated test results. Apply the deterioration factor 
for the engine family to the final test results (see Sec.  
1045.240(c)).
    (3) Round deteriorated test results. Round the results to the 
number of decimal places in the emission standard expressed to one more 
decimal place.
    (b) Construct the following CumSum Equation for each engine family 
for HC+NOX and CO emissions:

Ci = Max [0 or Ci-1 + Xi - (STD + 0.25 
x [sigma])]

Where:

Ci = The current CumSum statistic.
Ci-1 = The previous CumSum statistic. For the first test, 
the CumSum statistic is 0 (i.e. C1 = 0).
Xi = The current emission test result for an individual 
engine.
STD = Emission standard (or family emission limit, if applicable).

    (c) Use final deteriorated test results to calculate the variables 
in the equation in paragraph (b) of this section (see Sec.  
1045.315(a)).
    (d) After each new test, recalculate the CumSum statistic.
    (e) If you test more than the required number of engines, include 
the results from these additional tests in the CumSum Equation.
    (f) After each test, compare the current CumSum statistic, 
Ci, to the recalculated Action Limit, H, defined as H = 5.0 
x [sigma].
    (g) If the CumSum statistic exceeds the Action Limit in two 
consecutive tests, the engine family fails the production-line testing 
requirements of this subpart. Tell us within ten working days if this 
happens. You may request to amend the application for certification to 
raise the FEL of the entire engine family as described in Sec.  
1045.225(f).
    (h) If you amend the application for certification for an engine 
family under Sec.  1045.225, do not change any previous calculations of 
sample size or CumSum statistics for the model year.


Sec.  1045.320  What happens if one of my production-line engines fails 
to meet emission standards?

    (a) If you have a production-line engine with final deteriorated 
test results exceeding one or more emission standards (see Sec.  
1045.315(a)), the certificate of conformity is automatically suspended 
for that failing engine. You must take the following actions before 
your certificate of conformity can cover that engine:
    (1) Correct the problem and retest the engine to show it complies 
with all emission standards.
    (2) Include in your written report a description of the test 
results and the remedy for each engine (see Sec.  1045.345).
    (b) You may request to amend the application for certification to 
raise the FEL of the entire engine family at this point (see Sec.  
1045.225).


Sec.  1045.325  What happens if an engine family fails the production-
line testing requirements?

    (a) We may suspend your certificate of conformity for an engine 
family if it fails under Sec.  1045.315. The suspension may apply to 
all facilities producing engines from an engine family, even if you 
find noncompliant engines only at one facility.
    (b) We will tell you in writing if we suspend your certificate in 
whole or in part. We will not suspend a certificate until at least 15 
days after the engine family fails. The suspension is effective when 
you receive our notice.
    (c) Up to 15 days after we suspend the certificate for an engine 
family, you may ask for a hearing (see Sec.  1045.820). If we agree 
before a hearing occurs that we used erroneous information in deciding 
to suspend the certificate, we will reinstate the certificate.
    (d) Section 1045.335 specifies steps you must take to remedy the 
cause of the engine family's production-line failure. All the engines 
you have produced since the end of the last test period are presumed 
noncompliant and should be addressed in your proposed remedy. We may 
require you to apply the remedy to engines produced earlier if we 
determine that the cause of the failure is likely to have affected the 
earlier engines.
    (e) You may request to amend the application for certification to 
raise the FEL of the engine family before or after we suspend your 
certificate if you meet the requirements of Sec.  1045.225(f). We will 
approve your request if the failure is not caused by a defect and it is 
clear that you used good engineering judgment in establishing the 
original FEL.


Sec.  1045.330  May I sell engines from an engine family with a 
suspended certificate of conformity?

    You may sell engines that you produce after we suspend the engine 
family's certificate of conformity under Sec.  1045.315 only if one of 
the following occurs:
    (a) You test each engine you produce and show it complies with 
emission standards that apply.
    (b) We conditionally reinstate the certificate for the engine 
family. We may do so if you agree to recall all the affected engines 
and remedy any noncompliance at no expense to the owner if later 
testing shows that the engine family still does not comply.


Sec.  1045.335  How do I ask EPA to reinstate my suspended certificate?

    (a) Send us a written report asking us to reinstate your suspended 
certificate. In your report, identify the reason for noncompliance, 
propose a remedy for the engine family, and commit to a date for 
carrying it out. In your proposed remedy include any quality control 
measures you propose to keep the problem from happening again.
    (b) Give us data from production-line testing that shows the 
remedied engine family complies with all the emission standards that 
apply.


Sec.  1045.340  When may EPA revoke my certificate under this subpart 
and how may I sell these engines again?

    (a) We may revoke your certificate for an engine family in the 
following cases:
    (1) You do not meet the reporting requirements.
    (2) Your engine family fails to comply with the requirements of 
this subpart and your proposed remedy to address a suspended 
certificate under Sec.  1045.325 is inadequate to solve the problem or 
requires you to change the engine's design or emission control system.
    (b) To sell engines from an engine family with a revoked 
certificate of conformity, you must modify the engine family and then 
show it complies with the requirements of this part.
    (1) If we determine your proposed design change may not control 
emissions for the engine's full useful life, we will tell you within 
five working days after receiving your report. In this case we will 
decide whether production-line testing will be enough for us to 
evaluate the change or whether you need to do more testing.
    (2) Unless we require more testing, you may show compliance by 
testing production-line engines as described in this subpart.

[[Page 28277]]

    (3) We will issue a new or updated certificate of conformity when 
you have met these requirements.


Sec.  1045.345  What production-line testing records must I send to 
EPA?

    Do all the following things unless we ask you to send us less 
information:
    (a) Within 30 calendar days of the end of each test period, send us 
a report with the following information:
    (1) Describe any facility used to test production-line engines and 
state its location.
    (2) State the total U.S.-directed production volume and number of 
tests for each engine family.
    (3) Describe how you randomly selected engines.
    (4) Describe each test engine, including the engine family's 
identification and the engine's model year, build date, model number, 
identification number, and number of hours of operation before testing.
    (5) Identify how you accumulated hours of operation on the engines 
and describe the procedure and schedule you used.
    (6) Provide the test number; the date, time and duration of 
testing; test procedure; initial test results before and after 
rounding; final test results; and final deteriorated test results for 
all tests. Provide the emission results for all measured pollutants. 
Include information for both valid and invalid tests and the reason for 
any invalidation.
    (7) Describe completely and justify any nonroutine adjustment, 
modification, repair, preparation, maintenance, or test for the test 
engine if you did not report it separately under this subpart. Include 
the results of any emission measurements, regardless of the procedure 
or type of engine.
    (8) Provide the CumSum analysis required in Sec.  1045.315 and the 
sample-size calculation required in Sec.  1045.310 for each engine 
family.
    (9) Report on each failed engine as described in Sec.  1045.320.
    (10) State the date the test period ended for each engine family.
    (b) We may ask you to add information to your written report so we 
can determine whether your new engines conform with the requirements of 
this subpart.
    (c) An authorized representative of your company must sign the 
following statement:
    We submit this report under sections 208 and 213 of the Clean Air 
Act. Our production-line testing conformed completely with the 
requirements of 40 CFR part 1045. We have not changed production 
processes or quality-control procedures for test engines in a way that 
might affect emission controls. All the information in this report is 
true and accurate to the best of my knowledge. I know of the penalties 
for violating the Clean Air Act and the regulations. (Authorized 
Company Representative)
    (d) Send electronic reports of production-line testing to the 
Designated Compliance Officer using an approved information format. If 
you want to use a different format, send us a written request with 
justification for a waiver.
    (e) We will send copies of your reports to anyone from the public 
who asks for them. Section 1045.815 describes how we treat information 
you consider confidential.


Sec.  1045.350  What records must I keep?

    (a) Organize and maintain your records as described in this 
section. We may review your records at any time.
    (b) Keep paper records of your production-line testing for eight 
years after you complete all the testing required for an engine family 
in a model year. You may use any additional storage formats or media if 
you like.
    (c) Keep a copy of the written reports described in Sec.  1045.345.
    (d) Keep the following additional records:
    (1) A description of all test equipment for each test cell that you 
can use to test production-line engines.
    (2) The names of supervisors involved in each test.
    (3) The name of anyone who authorizes adjusting, repairing, 
preparing, or modifying a test engine and the names of all supervisors 
who oversee this work.
    (4) If you shipped the engine for testing, the date you shipped it, 
the associated storage or port facility, and the date the engine 
arrived at the testing facility.
    (5) Any records related to your production-line tests that are not 
in the written report.
    (6) A brief description of any significant events during testing 
not otherwise described in the written report or in this section.
    (7) Any information specified in Sec.  1045.345 that you do not 
include in your written reports.
    (e) If we ask, you must give us a more detailed description of 
projected or actual production figures for an engine family. We may ask 
you to divide your production figures by maximum engine power, 
displacement, fuel type, or assembly plant (if you produce engines at 
more than one plant).
    (f) Keep a list of engine identification numbers for all the 
engines you produce under each certificate of conformity. Give us this 
list within 30 days if we ask for it.
    (g) We may ask you to keep or send other information necessary to 
implement this subpart.

Subpart E--In-use Testing


Sec.  1045.401  What testing requirements apply to my engines that have 
gone into service?

    (a) We may perform in-use testing of any engine subject to the 
standards of this part. If you produce outboard or personal watercraft 
engines that are subject to the requirements of this part, you must 
test them as described in this subpart. The testing requirements 
described in this subpart do not apply to sterndrive/inboard engines. 
This generally involves testing engines in the field or removing them 
for measurement in a laboratory.
    (b) We may approve an alternate plan for showing that in-use 
engines comply with the requirements of this part if one of the 
following is true:
    (1) You produce 200 or fewer engines per year in the selected 
engine family.
    (2) You identify a unique aspect of your engine applications that 
keeps you from doing the required in-use testing.
    (c) We may void your certificate of conformity for an engine family 
if you do not meet your obligations under this part.
    (d) Independent of your responsibility to test in-use engines, we 
may choose at any time to do our own testing of your in-use engines.
    (e) If in-use testing shows that engines fail to meet emission 
standards or other requirements of this part, we may pursue a recall or 
other remedy as allowed by the Act (see Sec.  1045.415).


Sec.  1045.405  How does this program work?

    (a) You must test in-use engines for exhaust emissions from the 
families we select. We may select up to 25 percent of your engine 
families in any model year or one engine family if you have three or 
fewer families. When we select an engine family for testing, we may 
specify that you preferentially test engines based on the type of 
vessel. In addition, we may identify specific modes of operation or 
sampling times. You may choose to test additional engine families that 
we do not select.
    (b) The provisions of this paragraph (b) describe how test families 
are selected, depending on when we receive the application for 
certification.
    (1) If we receive the application by December 31 of a given 
calendar year for the following model year (for example, by December 
31, 2009 for model year

[[Page 28278]]

2010), we would expect to select engine families for testing by 
February 28 of the model year. If we have not completed the selection 
of engine families by February 28, you may select your own engine 
families for in-use testing. In this case, you must make your 
selections and notify us which engine families you have selected by 
March 31. You should consider the following factors in selecting engine 
families, in priority order:
    (i) Select an engine family that has not recently been tested in an 
in-use testing regimen (and passed) under the provisions of this 
subpart. This should generally involve engine families that have not 
been selected in the previous two model years. If design changes have 
required new testing for certification, we would consider that this 
engine family has not been selected for in-use testing.
    (ii) Select an engine family if we have approved an alternative 
approach to establishing a deterioration factor under Sec.  
1045.245(b)(7).
    (iii) Select the engine family with the highest projected U.S.-
directed production volume.
    (2) If we receive an application for a given model year after 
December 31 of the previous calendar year, you must conduct in-use 
testing with that engine family without regard to the limitations 
specified in paragraph (a) of this section, unless we waive this 
requirement. We will generally waive testing under this paragraph 
(b)(2) only for small-volume engine manufacturers or in the case where 
similar testing was recently completed for a related engine family.
    (c) Send us an in-use testing plan for engine families selected for 
testing. Complete the testing within 24 calendar months after we 
approve your plan. Send us the in-use testing plan according to the 
following deadlines:
    (1) Within 12 calendar months after we direct you to test a 
particular engine family.
    (2) By February 28 of the following year if you select engine 
families for testing under paragraph (b)(1) of this section.
    (3) Within 12 calendar months after we approve certification for 
engine families subject to the requirements of paragraph (b)(2) of this 
section.
    (d) You may need to test engines from more than one model year at a 
given time.


Sec.  1045.410  How must I select, prepare, and test my in-use engines?

    (a) You may make arrangements to select representative test engines 
from your own fleet or from other independent sources.
    (b) For the selected engine families, select engines that you or 
your customers have--
    (1) Operated for at least 50 percent of the engine family's useful 
life (see Sec.  1045.103(e));
    (2) Not maintained or used in an abnormal way; and
    (3) Documented in terms of total hours of operation, maintenance, 
operating conditions, and storage.
    (c) Use the following methods to determine the number of engines 
you must test in each engine family:
    (1) Test at least two engines if you produce 2,000 or fewer engines 
in the model year from all engine families, or if you produce 500 or 
fewer engines from the selected engine family. Otherwise, test at least 
four engines.
    (2) If you successfully complete an in-use test program on an 
engine family and later certify an equivalent engine family with 
carryover emission data, as described in Sec.  1045.235(d)(1), then 
test at least one engine instead of the testing rates in paragraph 
(c)(1) of this section.
    (3) If you test the minimum required number of engines and all 
comply fully with emission standards, you may stop testing.
    (4) For each engine that fails any applicable standard, test two 
more. Regardless of measured emission levels, you do not have to test 
more than ten engines in an engine family. You may do more tests than 
we require.
    (5) You may concede that the engine family does not comply before 
testing a total of ten engines.
    (d) You may do minimal maintenance to set components of a test 
engine to specifications for anything we do not consider an adjustable 
parameter (see Sec.  1045.205(r)). Limit maintenance to what is in the 
owner's instructions for engines with that amount of service and age. 
Document all maintenance and adjustments.
    (e) You may do repeat measurements with a test engine; however, you 
must conduct the same number of tests on each engine.
    (f) For a test program on an engine family, choose one of the 
following methods to test your engines:
    (1) Remove the selected engines for testing in a laboratory. Use 
the applicable steady-state and transient procedures in subpart F of 
this part to show compliance with the duty-cycle standards in Sec.  
1045.103(a) or Sec.  1045.105(a). We may direct you to measure 
emissions on the dynamometer using the test procedures in Sec.  
1045.515 to show compliance with the not-to-exceed standards in Sec.  
1045.103(c) or Sec.  1045.105(c).
    (2) Test the selected engines while they remain installed in the 
vessel. Use the procedures in Sec.  1045.515. Measure emissions during 
normal operation of the vessel to show compliance with the not-to-
exceed standards in Sec.  1045.103(c) or Sec.  1045.105(c). We may 
direct you to include specific areas of normal operation.
    (g) You may ask us to waive parts of the prescribed test procedures 
if they are not necessary to determine in-use compliance.
    (h) Calculate the average emission levels for an engine family from 
the results for the set of tested engines. Round them to the number of 
decimal places in the emission standards expressed to one more decimal 
place.


Sec.  1045.415  What happens if in-use engines do not meet 
requirements?

    (a) Determine the reason each in-use engine exceeds the emission 
standards.
    (b) If the average emission levels calculated in Sec.  1045.410(h) 
exceed any of the emission standards that apply, notify us within 
fifteen days of completing testing on this family. Otherwise follow the 
reporting instructions in Sec.  1045.420.
    (c) We will consider failure rates, average emission levels, and 
any defects--among other things--to decide on taking remedial action 
under this subpart (see 40 CFR 1068.505). We may consider the results 
from any voluntary additional testing you perform. We may also consider 
information related to testing from other engine families showing that 
you designed them to exceed the minimum requirements for controlling 
emissions. We may order a recall before or after you complete testing 
of an engine family if we determine a substantial number of engines do 
not conform to section 213 of the Act or to this part. The scope of the 
recall may include other engine families in the same or different model 
years if the cause of the problem identified in paragraph (a) of this 
section applies more broadly than the tested engine family, as allowed 
by the Act.
    (d) If in-use testing reveals a design or manufacturing defect that 
prevents engines from meeting the requirements of this part, you must 
correct the defect as soon as possible for any future production for 
engines in every family affected by the defect. See 40 CFR 1068.501 for 
additional requirements related to defect reporting.
    (e) You may voluntarily recall an engine family for emission 
failures, as described in 40 CFR 1068.535, unless

[[Page 28279]]

we have ordered a recall for that family under 40 CFR 1068.505.
    (f) You have the right to a hearing before we order you to recall 
your engines or implement an alternative remedy (see Sec.  1045.820).


Sec.  1045.420  What in-use testing information must I report to EPA?

    (a) In a report to us within three months after you finish testing 
an engine family, do all the following:
    (1) Identify the engine family, model, serial number, and date of 
manufacture.
    (2) [Reserved]
    (3) Describe the specific reasons for disqualifying any engines for 
not being properly maintained or used.
    (4) For each engine selected for testing, include the following 
information:
    (i) Estimate the hours each engine was used before testing.
    (ii) Describe all maintenance, adjustments, modifications, and 
repairs to each test engine.
    (5) State the date and time of each test attempt.
    (6) Include the results of all emission testing, including 
incomplete or invalidated tests, if any.
    (b) Send electronic reports of in-use testing to the Designated 
Compliance Officer using an approved information format. If you want to 
use a different format, send us a written request with justification 
for a waiver.
    (c) We will send copies of your reports to anyone from the public 
who asks for them. See Sec.  1045.815 for information on how we treat 
information you consider confidential.
    (d) We may ask for more information.


Sec.  1045.425  What records must I keep?

    (a) Organize and maintain your records as described in this 
section. We may review your records at any time, so it is important to 
keep required information readily available.
    (b) Keep paper records of your in-use testing for one full year 
after you complete all the testing required for an engine family in a 
model year. You may use any additional storage formats or media if you 
like.
    (c) Keep a copy of the written reports described in Sec.  1045.420.
    (d) Keep any additional records related to the procurement process.

Subpart F--Test Procedures


Sec.  1045.501  How do I run a valid emission test?

    (a) Applicability. This subpart is addressed to you as a 
manufacturer, but it applies equally to anyone who does testing for 
you, and to us when we perform testing to determine if your engines 
meet emission standards.
    (b) General requirements. Use the equipment and procedures for 
spark-ignition engines in 40 CFR part 1065 to determine whether engines 
meet the duty-cycle emission standards in Sec. Sec.  1045.103 and 
1045.105. Measure the emissions of all regulated pollutants as 
specified in 40 CFR part 1065. Use the applicable duty cycles specified 
in Sec.  1045.505. Section 1045.515 describes the supplemental 
procedures for evaluating whether engines meet the not-to-exceed 
emission standards in Sec. Sec.  1045.103(c) and 1045.105(c).
    (c) Fuels. Use the fuels and lubricants specified in 40 CFR part 
1065, subpart H, for all the testing we require in this part, except as 
specified in Sec.  1045.515. For service accumulation, use the test 
fuel or any commercially available fuel that is representative of the 
fuel that in-use engines will use.
    (d) Laboratory conditions. Ambient conditions for duty-cycle 
testing must be within the ranges specified in 40 CFR 1065.520, except 
that atmospheric pressure must be between 94.0 and 103.325 kPa. 
Humidity levels must represent actual in-use humidity levels. Emissions 
may not be corrected for the effects of test temperature, pressure, or 
humidity.
    (e) Special and alternate procedures. If you are unable to run the 
test cycle specified in this part for your engine (such as with 
constant-speed engines), use an alternate test cycle that will result 
in a cycle-weighted emission measurement equivalent to the expected 
average in-use emissions. This cycle must be approved under 40 CFR 
1065.10. You may use other special or alternate procedures to the 
extent we allow them under 40 CFR 1065.10.
    (f) Laboratory testing with portable analyzers. You may use 
portable emission measurement systems for any laboratory testing with 
high-performance engines, as specified in 40 CFR 1065.901(b), without 
requesting approval.


Sec.  1045.505  How do I test engines using discrete-mode or ramped-
modal duty cycles?

    (a) This section describes how to test engines under steady-state 
conditions. We allow you to perform tests with either discrete-mode or 
ramped-modal sampling. You must use the modal testing method for 
certification and all other testing you perform for an engine family. 
If we test your engines to confirm that they meet emission standards, 
we will use the modal testing method you select for your own testing. 
We may also perform other testing as allowed by the Clean Air Act. 
Conduct duty-cycle testing as follows:
    (1) For discrete-mode testing, sample emissions separately for each 
mode, then calculate an average emission level for the whole cycle 
using the weighting factors specified for each mode. In each mode, 
operate the engine for at least 5 minutes, then sample emissions for at 
least 1 minute. Calculate cycle statistics for each mode and compare 
with the specified values in 40 CFR 1065.514 to confirm that the test 
is valid.
    (2) For ramped-modal testing, start sampling at the beginning of 
the first mode and continue sampling until the end of the last mode. 
Calculate emissions and cycle statistics the same as for transient 
testing as specified in 40 CFR part 1065, subpart G.
    (b) Measure emissions by testing the engine on a dynamometer to 
determine whether it meets the emission standards in Sec.  1045.101(a). 
Use the 5-mode duty cycle or the corresponding ramped-modal cycle 
described in Appendix I of this part.
    (c) During idle mode, operate the engine with the following 
parameters:
    (1) Hold the speed within your specifications.
    (2) Set the engine to operate at its minimum fueling rate.
    (3) Keep engine torque under 5 percent of maximum torque at maximum 
test speed.
    (d) For full-load operating modes, operate the engine at wide-open 
throttle.
    (e) See 40 CFR part 1065 for detailed specifications of tolerances 
and calculations.


Sec.  1045.515  What are the test procedures related to not-to-exceed 
standards?

    (a) This section describes the procedures to determine whether your 
engines meet the not-to-exceed emission standards in Sec. Sec.  
1045.103(c) and 1045.105(c). These procedures may include any normal 
engine operation and ambient conditions that the engines may experience 
in use. Paragraphs (b) and (c) of this section define the limits of 
what we will consider normal engine operation and ambient conditions. 
Use the test procedures we specify in Sec.  1045.501, except for the 
provisions we specify in this section. Measure emissions with one of 
the following procedures:
    (1) For laboratory testing of installed engines, remove the 
selected engines from the vessel. You may use an engine dynamometer to 
simulate normal operation, as described in this section.
    (2) For laboratory testing of outboard engines, you may use an 
engine dynamometer to simulate normal operation, as described in this 
section, or you may test it using the procedures

[[Page 28280]]

specified in paragraph (3) of this paragraph (a).
    (3) Test selected sterndrive/inboard engines and personal 
watercraft engines while they remain installed in the vessel. Test 
selected outboard engines in their in-use configuration while mounted 
appropriately on a vessel. In 40 CFR part 1065, subpart J, we describe 
the equipment and sampling methods for testing engines in the field. 
Use fuel meeting the specifications of 40 CFR part 1065, subpart H, or 
a fuel typical of what you would expect the engine to use in service.
    (b) Engine testing may occur under a range of ambient conditions as 
follows:
    (1) Engine testing may occur under the following ranges of ambient 
conditions without correcting measured emission levels:
    (i) Barometric pressure must be between 94.0 and 103.325 kPa.
    (ii) Ambient air temperature must be between 13 and 35 [deg]C.
    (iii) Ambient water temperature must be between 5 and 27 [deg]C.
    (iv) Any ambient humidity level.
    (2) Engine testing may occur outside the conditions described in 
paragraph (b)(1) of this section, as long as measured values are 
corrected to be equivalent to the nearest end of the specified range 
using good engineering practice.
    (c) An engine's emissions may not exceed the NTE standards in Sec.  
1045.103(c) or Sec.  1045.105(c) for any continuous sampling period of 
at least 30 seconds under the following ranges of engine operation:
    (1) Engine operation during the emission sampling period may 
include any nominally steady-state combination of speeds and loads 
within the applicable zone defined by segments on an engine's power vs. 
speed map specified in paragraph (c)(2) of this section, except as 
follows:
    (i) You may request that we specify a narrower zone, as long as the 
modified zone includes all points where your engines are expected to 
normally operate in use, but not including any points at which engine 
speed is below 40 percent of maximum test speed or engine load is below 
25.3 percent of maximum torque at maximum test speed.
    (ii) You must notify us if you design your engines for normal in-
use operation outside the specified zone. If we learn that normal in-
use operation for your engines includes other speeds and loads, we may 
specify a broader zone, as long as the modified zone is limited to 
normal in-use operation for speeds greater than 40 percent of maximum 
test speed and loads greater than 25.3 percent of maximum torque at 
maximum test speed.
    (2) The NTE zone for testing engines under this section is defined 
by the following segments on an engine's torque vs. speed map, as 
illustrated in Figure 1 of this section:
    (i) Speed at or above 40 percent of maximum test speed.
    (ii) Speeds and torques below the line defined by the following 
equation:
    Normalized torque = 1.5 x normalized speed - 0.16
    (iii) Speeds and torques at or below the engine's mapped torque 
values.
    (iv) Speeds at or below 100 percent of maximum test speed.
    (v) Speeds and torques above the line defined by the following 
equation:
    Normalized torque = (normalized speed)\1.5\ - 0.08
    (vi) Torques at or above 25.3 percent of maximum torque at maximum 
test speed.
    (3) The NTE zone described in paragraph (c)(2) of this section is 
divided into the following subzones for determining the applicable NTE 
standards, as illustrated in Figure 1 of this section:
    (i) Subzone 1 includes all operation in the NTE zone characterized 
by speeds above 90 percent of maximum test speed or loads above 100 
percent of maximum torque at maximum test speed.
    (ii) Subzone 2 includes all operation in the NTE zone characterized 
by speeds above 70 percent of maximum test speed or loads above 80 
percent of maximum torque at maximum test speed, but excluding Subzone 
1.
    (iii) Subzone 3 includes all operation in the NTE zone 
characterized by speeds above 50 percent of maximum test speed, but 
excluding Subzones 1 and 2.
    (iv) Subzone 4 includes all operation in the NTE zone excluding 
Subzones 1, 2, and 3.
    (4) The sampling period may not begin until the engine has reached 
stable operating temperatures. For example, this would exclude engine 
operation after starting until the thermostat starts modulating coolant 
temperature. The sampling period may also not include engine starting.

Figure 1 to Sec.  1045.515--NTE Zone and Subzones

[[Page 28281]]

[GRAPHIC] [TIFF OMITTED] TP18MY07.005

Sec.  1045.520  What testing must I perform to establish deterioration 
factors?

    Sections 1045.240 and 1045.245 describe the required methods for 
testing to establish deterioration factors for an engine family.

Subpart G--Special Compliance Provisions


Sec.  1045.601  What compliance provisions apply to these engines?

    Engine and vessel manufacturers, as well as owners, operators, and 
rebuilders of engines subject to the requirements of this part, and all 
other persons, must observe the provisions of this part, the 
requirements and prohibitions in 40 CFR part 1068, and the provisions 
of the Act.


Sec.  1045.605  What provisions apply to engines already certified 
under the motor-vehicle program or other nonroad spark-ignition engine 
programs?

    (a) General provisions. If you are an engine manufacturer, this 
section allows you to introduce new propulsion marine engines into U.S. 
commerce if they are already certified to the requirements that apply 
to spark-ignition engines under 40 CFR parts 85 and 86 or part 1048 for 
the appropriate model year. For outboard or personal watercraft 
engines, you may also introduce the engines into U.S. commerce if they 
are already certified to the requirements that apply to engines under 
40 CFR part 1054 for the appropriate model year. If you comply with all 
the provisions of this section, we consider the certificate issued 
under 40 CFR part 86, 1048, or 1054 for each engine to also be a valid 
certificate of conformity under this part 1045 for its model year, 
without a separate application for certification under the requirements 
of this part 1045.
    (b) Vessel-manufacturer provisions. If you are not an engine 
manufacturer, you may produce vessels using motor-vehicle engines or 
nonroad spark-ignition engines under this section as long as you meet 
all the requirements and conditions specified in paragraph (d) of this 
section. If you modify the engine in any of the ways described in 
paragraph (d)(2) of this section, we will consider you a manufacturer 
of a new propulsion marine engine. Such engine modifications prevent 
you from using the provisions of this section.
    (c) Liability. Engines for which you meet the requirements of this 
section are exempt from all the requirements and prohibitions of this 
part, except for those specified in this section. Engines exempted 
under this section must meet all the applicable requirements from 40 
CFR parts 85 and 86, or part 1048, or part 1054. This applies to engine 
manufacturers, vessel manufacturers who use these engines, and all 
other persons as if these engines were used in applications other than 
for installation as propulsion marine engines. The prohibited acts of 
40 CFR 1068.101(a)(1) apply to these new engines and vessels; however, 
we consider the certificate issued under 40 CFR part 86, 1048, or 1054 
for each engine to also be a valid certificate of conformity under this 
part 1045 for its model year. If we make a determination that these 
engines do not conform to the regulations during their useful life, we 
may require you to recall them under 40 CFR part 86 or 1068.
    (d) Specific requirements. If you are an engine or vessel 
manufacturer and meet all the following criteria and

[[Page 28282]]

requirements regarding your new propulsion marine engine, the engine is 
eligible for an exemption under this section:
    (1) Your engine must be covered by a valid certificate of 
conformity issued under 40 CFR part 86, 1048, or 1054.
    (2) You must not make any changes to the certified engine that 
could reasonably be expected to increase its exhaust emissions for any 
pollutant, or its evaporative emissions. For example, if you make any 
of the following changes to one of these engines, you do not qualify 
for this exemption:
    (i) Change any fuel-system or evaporative-system parameters from 
the certified configuration (this does not apply to refueling 
controls).
    (ii) Change, remove, or fail to properly install any other 
component, element of design, or calibration specified in the engine 
manufacturer's application for certification. This includes 
aftertreatment devices and all related components.
    (iii) Modify or design the marine engine cooling system so that 
temperatures or heat rejection rates are outside the original engine 
manufacturer's specified ranges.
    (3) You must show that less than 5 percent of the engine family's 
total sales in the United States are used in marine applications. This 
includes engines used in any application without regard to which 
company manufactures the vessel or equipment. Show this as follows:
    (i) If you are the original manufacturer of the engine, base this 
showing on your sales information.
    (ii) In all other cases, you must get the original manufacturer of 
the engine to confirm this based on its sales information.
    (4) You must ensure that the engine has the label we require under 
40 CFR part 86, 1048, or 1054.
    (5) You must add a permanent supplemental label to the engine in a 
position where it will remain clearly visible after installation in the 
vessel. In the supplemental label, do the following:
    (i) Include the heading: ``MARINE ENGINE EMISSION CONTROL 
INFORMATION''.
    (ii) Include your full corporate name and trademark. You may 
instead include the full corporate name and trademark of another 
company you choose to designate.
    (iii) State: ``THIS ENGINE WAS ADAPTED FOR MARINE USE WITHOUT 
AFFECTING ITS EMISSION CONTROLS.''.
    (iv) If the modified engine is certified as a motor-vehicle engine, 
also state: ``THE EMISSION CONTROL SYSTEM DEPENDS ON THE USE OF FUEL 
MEETING SPECIFICATIONS THAT APPLY FOR MOTOR-VEHICLE APPLICATIONS. 
OPERATING THE ENGINE ON OTHER FUELS MAY BE A VIOLATION OF FEDERAL 
LAW.''.
    (v) State the date you finished modifying the engine (month and 
year), if applicable.
    (6) The original and supplemental labels must be readily visible 
after the engine is installed in the vessel or, if the vessel obscures 
the engine's emission control information label, the vessel 
manufacturer must attach duplicate labels, as described in 40 CFR 
1068.105.
    (7) Send the Designated Compliance Officer a signed letter by the 
end of each calendar year (or less often if we tell you) with all the 
following information:
    (i) Identify your full corporate name, address, and telephone 
number.
    (ii) List the engine or vessel models you expect to produce under 
this exemption in the coming year and describe your basis for meeting 
the sales restrictions of paragraph (d)(3) of this section.
    (iii) State: ``We produce each listed [engine or vessel] model 
without making any changes that could increase its certified emission 
levels, as described in 40 CFR 1045.605.''.
    (e) Failure to comply. If your engines do not meet the criteria 
listed in paragraph (d) of this section, they will be subject to the 
standards, requirements, and prohibitions of this part 1045 and the 
certificate issued under 40 CFR part 86, 1048, or 1054 will not be 
deemed to also be a certificate issued under this part 1045. 
Introducing these engines into U.S. commerce without a valid exemption 
or certificate of conformity under this part violates the prohibitions 
in 40 CFR 1068.101(a)(1).
    (f) Data submission. We may require you to send us emission test 
data on one of the duty cycles specified in subpart F of this part.
    (g) Participation in averaging, banking and trading. Engines 
adapted for marine use under this section may not generate or use 
emission credits under this part 1045. These engines may generate 
credits under the ABT provisions in 40 CFR part 86 or 1054. These 
engines must use emission credits under 40 CFR part 86 or 1054 if they 
are certified to an FEL that exceeds a standard that applies under 40 
CFR part 86 or 1054.


Sec.  1045.620  What are the provisions for exempting engines used 
solely for competition?

    The provisions of this section apply for new engines and vessels 
built on or after January 1, 2009.
    (a) We may grant you an exemption from the standards and 
requirements of this part for a new engine on the grounds that it is to 
be used solely for competition. The requirements of this part, other 
than those in this section, do not apply to engines that we exempt for 
use solely for competition.
    (b) We will exempt engines that we determine will be used solely 
for competition. The basis of our determination is described in 
paragraphs (c) and (d) of this section. Exemptions granted under this 
section are good for only one model year and you must request renewal 
for each subsequent model year. We will not approve your renewal 
request if we determine the engine will not be used solely for 
competition.
    (c) Engines meeting all the following criteria are considered to be 
used solely for competition:
    (1) Neither the engine nor any vessels containing the engine may be 
displayed for sale in any public dealership or otherwise offered for 
sale to the general public.
    (2) Sale of the vessel in which the engine is installed must be 
limited to professional racing teams, professional racers, or other 
qualified racers.
    (3) The engine and the vessel in which it is installed must have 
performance characteristics that are substantially superior to 
noncompetitive models.
    (4) The engines are intended for use only as specified in paragraph 
(e) of this section.
    (d) You may ask us to approve an exemption for engines not meeting 
the criteria listed in paragraph (c) of this section as long as you 
have clear and convincing evidence that the engines will be used solely 
for competition.
    (e) Engines are considered to be used solely for competition only 
if their use is limited to competition events sanctioned by the U.S. 
Coast Guard or another public organization with authorizing permits for 
participating competitors. Operation of such engines may include only 
racing events or trials to qualify for racing events. Authorized 
attempts to set speed records (and the associated official trials) are 
also considered racing events. Engines will not be considered to be 
used solely for competition if they are ever used for any recreational 
or other noncompetitive purpose. Use of exempt engines in any 
recreational events, such as poker runs

[[Page 28283]]

and lobsterboat races, is a violation of 40 CFR 1068.101(b)(4).
    (f) You must permanently label engines exempted under this section 
to clearly indicate that they are to be used only for competition. 
Failure to properly label an engine will void the exemption for that 
engine.
    (g) If we request it, you must provide us any information we need 
to determine whether the engines are used solely for competition. This 
would include documentation regarding the number of engines and the 
ultimate purchaser of each engine as well as any documentation showing 
a vessel manufacturer's request for an exempted engine. Keep these 
records for five years.


Sec.  1045.630  What is the personal-use exemption.

    This section applies to individuals who manufacture recreational 
vessels for personal use. If you and your vessel meet all the 
conditions of this section, the vessel and its engine are considered to 
be exempt from the standards and requirements of this part that apply 
to new engines, including standards and requirements related to 
evaporative emissions. For example, you are not required to use 
certified fuel system components or otherwise obtain certificates of 
conformity showing that the vessel meets evaporative emission 
standards, and you do not need to install a certified engine.
    (a) The vessel may not be manufactured from a previously certified 
vessel, nor may it be manufactured from a partially complete vessel 
that is equivalent to a certified vessel. The vessel must be 
manufactured primarily from unassembled components, but may incorporate 
some preassembled components. For example, fully preassembled steering 
assemblies may be used. You may also power the vessel with an engine 
that was previously used in a highway or land-based nonroad 
application.
    (b) The vessel may not be sold within five years after the date of 
final assembly.
    (c) No individual may manufacture more than one vessel in any ten-
year period under this exemption.
    (d) You may not use the vessel in any revenue-generating service or 
for any other commercial purpose. For example, this exemption does not 
apply for vessels used in commercial fishing or charter service.
    (e) This exemption may not be used to circumvent the requirements 
of this part or the requirements of the Clean Air Act. For example, 
this exemption would not cover a case in which a person sells an almost 
completely assembled vessel to another person, who would then complete 
the assembly. This would be considered equivalent to the sale of the 
complete new vessel. This section also does not allow engine 
manufacturers to produce new engines that are exempt from emission 
standards and it does not provide an exemption from the prohibition 
against tampering with certified engines.


Sec.  1045.635  What special provisions apply for small-volume engine 
manufacturers?

    This section describes how we apply the special provisions in this 
part for small-volume engine manufacturers.
    (a) If you qualify under paragraph (1) of the definition of small-
volume engine manufacturer in Sec.  1045.801, the small-volume engine 
manufacturer provisions apply as specified in this part.
    (b) If you are a small business (as defined by the Small Business 
Administration at 13 CFR 121.201) that manufactures marine spark-
ignition engines, but you do not qualify under paragraph (1) of the 
definition of small-volume engine manufacturer in Sec.  1045.801, you 
may ask us to designate you to be a small-volume engine manufacturer. 
You may do this whether you began manufacturing engines before, during, 
or after 2007. We may set other reasonable conditions that are 
consistent with the intent of this section and the Act. For example, we 
may refuse to designate a company making outboard engines as a small 
business if annual worldwide production of outboard engines exceeded 
5,000 units in any calendar year.
    (c) If you use any of the provisions of this part that apply 
specifically to small-volume engine manufacturers and we find that you 
exceed the production limits or otherwise do not qualify as a small-
volume engine manufacturer, we may consider you to be in violation of 
the requirements that apply for companies that are not small-volume 
engine manufacturers for those engines produced in excess of the 
specified production limits.


Sec.  1045.640  What special provisions apply to branded engines?

    The following provisions apply if you identify the name and 
trademark of another company instead of your own on your emission 
control information label, as provided by Sec.  1045.135(c)(2):
    (a) You must have a contractual agreement with the other company 
that obligates that company to take the following steps:
    (1) Meet the emission warranty requirements that apply under Sec.  
1045.120. This may involve a separate agreement involving reimbursement 
of warranty-related expenses.
    (2) Report all warranty-related information to the certificate 
holder.
    (b) In your application for certification, identify the company 
whose trademark you will use and describe the arrangements you have 
made to meet your requirements under this section.
    (c) You remain responsible for meeting all the requirements of this 
chapter, including warranty and defect-reporting provisions.


Sec.  1045.645  What special provisions apply for converting an engine 
to use an alternate fuel?

    (a) Converting a certified new engine to run on a different fuel 
violates 40 CFR 1068.101(a)(1) if the modified engine is not covered by 
a certificate of conformity.
    (b) Converting a certified engine that is not new to run on a 
different fuel violates 40 CFR 1068.101(b)(1) if the modified engine is 
not covered by a certificate of conformity. We may specify alternate 
certification provisions consistent with the requirements of this part.


Sec.  1045.650  Do the provisions of 40 CFR 1068.260 apply for marine 
engines?

    The provisions of 40 CFR 1068.260 related to delegated final 
assembly do not apply for marine spark-ignition engines certified under 
this part 1045. This means that for engines requiring exhaust 
aftertreatment (such as catalysts), the engine manufacturers must 
either install the aftertreatment on the engine before introducing it 
into U.S. commerce or ship the aftertreatment along with the engine.


Sec.  1045.660  How do I certify outboard or personal watercraft 
engines for use in jet boats?

    (a) This section describes how to certify outboard or personal 
watercraft engines for use in jet boats. To be certified under this 
section, the jet boat engines must be identical in all physical 
respects to the corresponding outboard or personal watercraft engines, 
but may differ slightly with respect to engine calibrations.
    (b) The outboard or personal watercraft engines must meet all the 
applicable requirements for outboard or personal watercraft engines and 
must be labeled accordingly. Jet boat engines certified under this 
section must meet all the applicable requirements for jet boat engines.
    (c) The jet boat engines must be in an engine family separate from 
the outboard or personal watercraft engines.

[[Page 28284]]

    (d) Jet boat engine families may use emission credits from outboard 
or personal watercraft engine families, as described in Sec.  
1045.701(d).

Subpart H--Averaging, Banking, and Trading for Certification


Sec.  1045.701  General provisions.

    (a) You may average, bank, and trade (ABT) emission credits for 
purposes of certification as described in this subpart to show 
compliance with the standards of this part. Participation in this 
program is voluntary.
    (b) The definitions of subpart I of this part apply to this 
subpart. The following definitions also apply:
    (1) Actual emission credits means emission credits you have 
generated that we have verified by reviewing your final report.
    (2) Averaging set means a set of engines in which emission credits 
may be exchanged only with other engines in the same averaging set.
    (3) Broker means any entity that facilitates a trade of emission 
credits between a buyer and seller.
    (4) Buyer means the entity that receives emission credits as a 
result of a trade.
    (5) Family means engine family for exhaust credits or emission 
family for evaporative credits.
    (6) Reserved emission credits means emission credits you have 
generated that we have not yet verified by reviewing your final report.
    (7) Seller means the entity that provides emission credits during a 
trade.
    (8) Standard means the emission standard that applies under subpart 
B of this part for engines or fuel-system components not participating 
in the ABT program of this subpart.
    (9) Trade means to exchange emission credits, either as a buyer or 
seller.
    (c) You may not average or exchange banked or traded exhaust 
credits with evaporative credits, or vice versa. Evaporative credits 
generated by any vessels under this part may be used by any vessels 
under this part. Exhaust credits may be exchanged only within an 
averaging set. Except as specified in paragraph (d) of this section, 
the following criteria define the applicable averaging sets:
    (1) Sterndrive/inboard engines.
    (2) Outboard and personal watercraft engines.
    (d) Sterndrive/inboard engines certified under Sec.  1045.660 for 
jet boats may use HC+NOX exhaust credits generated from 
outboard and personal watercraft engines, as long as the credit-using 
engine is the same model as an engine model from an outboard or 
personal watercraft family. The HC+NOX FEL cap for such jet 
boat families is the HC+NOX standard for outboard and 
personal watercraft engines. U.S.-directed sales from a jet boat family 
using the provisions of this paragraph (d) may not be greater than the 
U.S.-directed sales of the same engine model for outboard or personal 
watercraft engines in any model year.
    (e) You may not generate evaporative credits based on permeation 
measurements from metal fuel tanks or portable marine fuel tanks.
    (f) You may not use emission credits generated under this subpart 
to offset any emissions that exceed an FEL or standard. This applies 
for all testing, including certification testing, in-use testing, 
selective enforcement audits, and other production-line testing. 
However, if exhaust emissions from an engine exceed an exhaust FEL or 
standard (for example, during a selective enforcement audit), you may 
use emission credits to recertify the family with a higher FEL that 
applies only to future production.
    (g) Families that use emission credits for one or more pollutants 
may not generate positive emission credits for another pollutant.
    (h) Emission credits may be used in the model year they are 
generated (averaging) and in future model years (banking), except that 
CO emission credits for outboard and personal watercraft engines may 
not be banked.
    (i) You may increase or decrease an exhaust FEL during the model 
year by amending your application for certification under Sec.  
1045.225.


Sec.  1045.705  How do I generate and calculate exhaust emission 
credits?

    The provisions of this section apply for calculating exhaust 
emission credits for HC+NOX or CO. You may generate exhaust 
emission credits only if you are a certifying engine manufacturer.
    (a) For each participating family, calculate positive or negative 
emission credits relative to the otherwise applicable emission 
standard. Calculate positive emission credits for a family that has an 
FEL below the standard. Calculate negative emission credits for a 
family that has an FEL above the standard. Sum your positive and 
negative credits for the model year before rounding. Round calculated 
emission credits to the nearest kilogram (kg), using consistent units 
throughout the following equation:

Emission credits (kg) = (Std--FEL) x (Volume) x (Power) x (LIFE) x (LF) 
x (10-3)
Where:

Std = the emission standard, in g/kW-hr.
FEL = the family emission limit for the family, in g/kW-hr.
Volume = the number of engines eligible to participate in the 
averaging, banking, and trading program within the given family 
during the model year, as described in paragraph (c) of this 
section.
Power = the average value of maximum engine power of all the engine 
configurations within a family, calculated on a production-weighted 
basis, in kilowatts.
LIFE = the estimated engine lifetime for calculating emission 
credits, in hours. Use 480 hours for high-performance engines with 
maximum engine power at or below 485 kW. Use 250 hours for high-
performance engines with maximum engine power above 485 kW. For 
other engines use the useful life for the given family.
LF = load factor. Use 0.207. We may specify a different load factor 
if we approve the use of special test procedures for an engine 
family under 40 CFR 1065.10(c)(2), consistent with good engineering 
judgment.

    (b) [Reserved]
    (c) In your application for certification, base your showing of 
compliance on projected production volumes for engines whose point of 
first retail sale is in the United States. As described in Sec.  
1045.730, compliance with the requirements of this subpart is 
determined at the end of the model year based on actual production 
volumes for engines whose point of first retail sale is in the United 
States. Do not include any of the following engines to calculate 
emission credits:
    (1) Engines exempted under subpart G of this part or under 40 CFR 
part 1068.
    (2) Engines intended for export, unless there is reason to believe 
that the engines will be later imported into the United States after 
installation in equipment.
    (3) Engines that are subject to state emission standards for that 
model year. However, this restriction does not apply if we determine 
that the state standards and requirements are equivalent to those of 
this part and that engines sold in such a state will not generate 
credits under the state program. For example, you may not include 
engines certified for California if it has more stringent emission 
standards for these engines or those engines generate or use emission 
credits under the California program.
    (4) Engines not subject to the requirements of this part, such as 
those excluded under Sec.  1045.5.
    (5) Any other engines, where we indicate elsewhere in this part 
1045 that they are not to be included in the calculations of this 
subpart.

[[Page 28285]]

Sec.  1045.706  How do I generate and calculate evaporative emission 
credits?

    The provisions of this section apply for calculating evaporative 
emission credits. This applies only for fuel tank permeation. You may 
generate credits only if you are a certifying vessel manufacturer.
    (a) For each participating vessel, calculate positive or negative 
emission credits relative to the otherwise applicable emission 
standard. Calculate positive emission credits for a family that has an 
FEL below the standard. Calculate negative emission credits for a 
family that has an FEL above the standard. Sum your positive and 
negative credits for the model year before rounding. Round calculated 
emission credits to the nearest kilogram (kg), using consistent units 
throughout the following equation:

Emission credits (kg) = (Std-FEL) x (Total Area) x (UL) x (AF) x (365) 
x (10-3)

Where:
Std = the emission standard, in g/m2/day.
FEL = the family emission limit for the family, in g/m2/
day, as described in paragraph (b) of this section.
Total Area = The combined internal surface area of all fuel tanks in 
the family, in m2.
UL = the useful life for the given family, in years.
AF = adjustment factor. Use 1.0 for fuel tank testing performed at 
28 [deg]C and 0.60 for testing performed at 40 [deg]C.

    (b) Determine the FEL for calculating credits under paragraph (a) 
of this section using any of the following values:
    (1) The FEL to which the fuel tank is certified, as long as the FEL 
is at or below 3.0 g/m2/day.
    (2) 10.4 g/m2/day. However, if you use this value to 
establish the FEL for any of your fuel tanks, you must use this value 
to establish the FEL for every tank not covered by paragraph (b)(1) of 
this section.
    (3) The measured permeation rate of the fuel tank or the measured 
permeation rate of a thinner-walled tank of the same material. However, 
if you use this approach to establish the FEL for any of your fuel 
tanks, you must establish an FEL based on emission measurements for 
every tank not covered by paragraph (b)(1) of this section.
    (c) In your application for certification, base your showing of 
compliance on projected production volumes for vessels whose point of 
first retail sale is in the United States. As described in Sec.  
1045.730, compliance with the requirements of this subpart is 
determined at the end of the model year based on actual production 
volumes for vessels whose point of first retail sale is in the United 
States. Do not include any of the following vessels to calculate 
emission credits:
    (1) Vessels exempted under subpart G of this part or under 40 CFR 
part 1068.
    (2) Vessels intended for export.
    (3) Vessels that are subject to state emission standards for that 
model year. However, this restriction does not apply if we determine 
that the state standards and requirements are equivalent to those of 
this part and that vessels sold in such a state will not generate 
credits under the state program. For example, you may not include 
vessels certified for California if it has more stringent emission 
standards for these vessels or that vessels generate or use emission 
credits under the California program.
    (4) Vessels not subject to the requirements of this part, such as 
those excluded under Sec.  1045.5.
    (5) Any other vessels, where we indicate elsewhere in this part 
1045 that they are not to be included in the calculations of this 
subpart.


Sec.  1045.710  How do I average emission credits?

    (a) Averaging is the exchange of emission credits among your 
families. You may average emission credits only within the same 
averaging set.
    (b) You may certify one or more families to an FEL above the 
emission standard, subject to the FEL caps and other provisions in 
subpart B of this part, if you show in your application for 
certification that your projected balance of all emission-credit 
transactions in that model year is greater than or equal to zero.
    (c) If you certify a family to an FEL that exceeds the otherwise 
applicable standard, you must obtain enough emission credits to offset 
the family's deficit by the due date for the final report required in 
Sec.  1045.730. The emission credits used to address the deficit may 
come from your other families that generate emission credits in the 
same model year, from emission credits you have banked, or from 
emission credits you obtain through trading.


Sec.  1045.715  How do I bank emission credits?

    (a) Banking is the retention of emission credits by the 
manufacturer generating the emission credits for use in averaging or 
trading in future model years. You may use banked emission credits only 
within the averaging set in which they were generated.
    (b) In your application for certification, designate any emission 
credits you intend to bank. These emission credits will be considered 
reserved credits. During the model year and before the due date for the 
final report, you may redesignate these emission credits for averaging 
or trading.
    (c) You may use banked emission credits from the previous model 
year for averaging or trading before we verify them, but we may revoke 
these emission credits if we are unable to verify them after reviewing 
your reports or auditing your records.
    (d) Reserved credits become actual emission credits only when we 
verify them in reviewing your final report.


Sec.  1045.720  How do I trade emission credits?

    (a) Trading is the exchange of emission credits between 
manufacturers. You may use traded emission credits for averaging, 
banking, or further trading transactions. Traded emission credits may 
be used only within the averaging set in which they were generated.
    (b) You may trade actual emission credits as described in this 
subpart. You may also trade reserved emission credits, but we may 
revoke these emission credits based on our review of your records or 
reports or those of the company with which you traded emission credits. 
You may trade banked credits to any certifying engine or vessel 
manufacturer.
    (c) If a negative emission credit balance results from a 
transaction, both the buyer and seller are liable, except in cases we 
deem to involve fraud. See Sec.  1045.255(e) for cases involving fraud. 
We may void the certificates of all families participating in a trade 
that results in a manufacturer having a negative balance of emission 
credits. See Sec.  1045.745.


Sec.  1045.725  What must I include in my application for 
certification?

    (a) You must declare in your application for certification your 
intent to use the provisions of this subpart for each family that will 
be certified using the ABT program. You must also declare the FELs you 
select for the family for each pollutant for which you are using the 
ABT program. Your FELs must comply with the specifications of subpart B 
of this part, including the FEL caps. FELs must be expressed to the 
same number of decimal places as the emission standard.
    (b) Include the following in your application for certification:
    (1) A statement that, to the best of your belief, you will not have 
a negative balance of emission credits for any averaging set when all 
emission credits are calculated at the end of the year.

[[Page 28286]]

    (2) Detailed calculations of projected emission credits (positive 
or negative) based on projected production volumes. If your family will 
generate positive emission credits, state specifically where the 
emission credits will be applied (for example, to which family they 
will be applied in averaging, whether they will be traded, or whether 
they will be reserved for banking). If you have projected negative 
emission credits for a family, state the source of positive emission 
credits to offset the negative emission credits. Describe whether the 
emission credits are actual or reserved and whether they will come from 
averaging, banking, trading, or a combination of these. Identify from 
which of your families or from which manufacturer the emission credits 
will come.


Sec.  1045.730  What ABT reports must I send to EPA?

    (a) If any of your families are certified using the ABT provisions 
of this subpart, you must send an end-of-year report within 90 days 
after the end of the model year and a final report within 270 days 
after the end of the model year. We may waive the requirement to send 
the end-of year report, as long as you send the final report on time.
    (b) Your end-of-year and final reports must include the following 
information for each family participating in the ABT program:
    (1) Family designation.
    (2) The emission standards that would otherwise apply to the 
family.
    (3) The FEL for each pollutant. If you changed an FEL during the 
model year, identify each FEL you used and calculate the positive or 
negative emission credits under each FEL. Also, describe how the FEL 
can be identified for each engine you produced. For example, you might 
keep a list of engine or vessel identification numbers that correspond 
with certain FEL values.
    (4) The projected and actual production volumes for the model year 
with a point of retail sale in the United States, as described in 
Sec. Sec.  1045.705(c) and 1045.706(c). For fuel tanks, state the 
production volume in terms of total surface area. If you changed an 
engine's FEL during the model year, identify the actual production 
volume associated with each FEL.
    (5) Maximum engine power for each engine configuration, and the 
production-weighted average engine power for the family.
    (6) Useful life.
    (7) Calculated positive or negative emission credits for the whole 
family. Identify any emission credits that you traded, as described in 
paragraph (d)(1) of this section.
    (c) Your end-of-year and final reports must include the following 
additional information:
    (1) Show that your net balance of emission credits from all your 
participating families in each averaging set in the applicable model 
year is not negative.
    (2) State whether you will reserve any emission credits for 
banking.
    (3) State that the report's contents are accurate.
    (d) If you trade emission credits, you must send us a report within 
90 days after the transaction, as follows:
    (1) As the seller, you must include the following information in 
your report:
    (i) The corporate names of the buyer and any brokers.
    (ii) A copy of any contracts related to the trade.
    (iii) The families that generated emission credits for the trade, 
including the number of emission credits from each family.
    (2) As the buyer, you must include the following information in 
your report:
    (i) The corporate names of the seller and any brokers.
    (ii) A copy of any contracts related to the trade.
    (iii) How you intend to use the emission credits, including the 
number of emission credits you intend to apply to each family (if 
known).
    (e) Send your reports electronically to the Designated Compliance 
Officer using an approved information format. If you want to use a 
different format, send us a written request with justification for a 
waiver.
    (f) Correct errors in your end-of-year report or final report as 
follows:
    (1) You may correct any errors in your end-of-year report when you 
prepare the final report, as long as you send us the final report by 
the time it is due.
    (2) If you or we determine within 270 days after the end of the 
model year that errors mistakenly decrease your balance of emission 
credits, you may correct the errors and recalculate the balance of 
emission credits. You may not make these corrections for errors that 
are determined more than 270 days after the end of the model year. If 
you report a negative balance of emission credits, we may disallow 
corrections under this paragraph (f)(2).
    (3) If you or we determine anytime that errors mistakenly increase 
your balance of emission credits, you must correct the errors and 
recalculate the balance of emission credits.


Sec.  1045.735  What records must I keep?

    (a) You must organize and maintain your records as described in 
this section. We may review your records at any time.
    (b) Keep the records required by this section for at least eight 
years after the due date for the end-of-year report. You may not use 
emission credits for any engines or vessel if you do not keep all the 
records required under this section. You must therefore keep these 
records to continue to bank valid credits. Store these records in any 
format and on any media, as long as you can promptly send us organized, 
written records in English if we ask for them. You must keep these 
records readily available. We may review them at any time.
    (c) Keep a copy of the reports we require in Sec. Sec.  1045.725 
and 1045.730.
    (d) Keep the following additional records for each engine or vessel 
you produce that generates or uses emission credits under the ABT 
program:
    (1) Family designation.
    (2) Engine or vessel identification number.
    (3) FEL and useful life.
    (4) Maximum engine power or internal surface area of the fuel tank.
    (5) Build date and assembly plant.
    (e) We may require you to keep additional records or to send us 
relevant information not required by this section.


Sec.  1045.745  What can happen if I do not comply with the provisions 
of this subpart?

    (a) For each family participating in the ABT program, the 
certificate of conformity is conditional upon full compliance with the 
provisions of this subpart during and after the model year. You are 
responsible to establish to our satisfaction that you fully comply with 
applicable requirements. We may void the certificate of conformity for 
a family if you fail to comply with any provisions of this subpart.
    (b) You may certify your family to an FEL above an emission 
standard based on a projection that you will have enough emission 
credits to offset the deficit for the family. However, we may void the 
certificate of conformity if you cannot show in your final report that 
you have enough actual emission credits to offset a deficit for any 
pollutant in a family.
    (c) We may void the certificate of conformity for a family if you 
fail to keep records, send reports, or give us information we request.
    (d) You may ask for a hearing if we void your certificate under 
this section (see Sec.  1045.820).

[[Page 28287]]

Subpart I--Definitions and Other Reference Information


Sec.  1045.801  What definitions apply to this part?

    The following definitions apply to this part. The definitions apply 
to all subparts unless we note otherwise. All undefined terms have the 
meaning the Act gives to them. The definitions follow:
    Act means the Clean Air Act, as amended, 42 U.S.C. 7401--7671q.
    Adjustable parameter means any device, system, or element of design 
that someone can adjust (including those which are difficult to access) 
and that, if adjusted, may affect emissions or engine performance 
during emission testing or normal in-use operation. This includes, but 
is not limited to, parameters related to injection timing and fueling 
rate. You may ask us to exclude a parameter that is difficult to access 
if it cannot be adjusted to affect emissions without significantly 
degrading engine performance, or if you otherwise show us that it will 
not be adjusted in a way that affects emissions during in-use 
operation.
    Aftertreatment means relating to a catalytic converter, particulate 
filter, or any other system, component, or technology mounted 
downstream of the exhaust valve (or exhaust port) whose design function 
is to decrease emissions in the engine exhaust before it is exhausted 
to the environment. Exhaust-gas recirculation (EGR) and turbochargers 
are not aftertreatment.
    Amphibious vehicle means a vehicle with wheels or tracks that is 
designed primarily for operation on land and secondarily for operation 
in water.
    Applicable emission standard or applicable standard means an 
emission standard to which an engine is subject; or, where an engine 
has been or is being certified another standard or FEL, applicable 
emission standards means the FEL and other standards to which the 
engine has been or is being certified. This definition does not apply 
to subpart H of this part.
    Auxiliary emission control device means any element of design that 
senses temperature, motive speed, engine RPM, transmission gear, or any 
other parameter for the purpose of activating, modulating, delaying, or 
deactivating the operation of any part of the emission control system.
    Brake power means the usable power output of the engine, not 
including power required to fuel, lubricate, or heat the engine, 
circulate coolant to the engine, or to operate aftertreatment devices.
    Calibration means the set of specifications and tolerances specific 
to a particular design, version, or application of a component or 
assembly capable of functionally describing its operation over its 
working range.
    Certification means relating to the process of obtaining a 
certificate of conformity for an engine family that complies with the 
emission standards and requirements in this part.
    Certified emission level means the highest deteriorated emission 
level in an engine family for a given pollutant from either transient 
or steady-state testing.
    Crankcase emissions means airborne substances emitted to the 
atmosphere from any part of the engine crankcase's ventilation or 
lubrication systems. The crankcase is the housing for the crankshaft 
and other related internal parts.
    Critical emission-related component means any of the following 
components:
    (1) Electronic control units, aftertreatment devices, fuel-metering 
components, EGR-system components, crankcase-ventilation valves, all 
components related to charge-air compression and cooling, and all 
sensors and actuators associated with any of these components.
    (2) Any other component whose primary purpose is to reduce 
emissions.
    Designated Compliance Officer means the Manager, Heavy-Duty and 
Nonroad Engine Group (6405-J), U.S. Environmental Protection Agency, 
1200 Pennsylvania Ave., NW., Washington, DC 20460.
    Designated Enforcement Officer means the Director, Air Enforcement 
Division (2242A), U.S. Environmental Protection Agency, 1200 
Pennsylvania Ave., NW.,Washington, DC 20460.
    Deteriorated emission level means the emission level that results 
from applying the appropriate deterioration factor to the official 
emission result of the emission-data engine.
    Deterioration factor means the relationship between emissions at 
the end of useful life and emissions at the low-hour test point, 
expressed in one of the following ways:
    (1) For multiplicative deterioration factors, the ratio of 
emissions at the end of useful life to emissions at the low-hour test 
point.
    (2) For additive deterioration factors, the difference between 
emissions at the end of useful life and emissions at the low-hour test 
point.
    Discrete-mode means relating to the discrete-mode type of steady-
state test described in Sec.  1045.505.
    Emission control system means any device, system, or element of 
design that controls or reduces the emissions of regulated pollutants 
from an engine.
    Emission-data engine means an engine that is tested for 
certification. This includes engines tested to establish deterioration 
factors.
    Emission-related maintenance means maintenance that substantially 
affects emissions or is likely to substantially affect emission 
deterioration.
    Engine has the meaning given in 40 CFR 1068.30. This includes 
complete and partially complete engines.
    Engine configuration means a unique combination of engine hardware 
and calibration within an engine family. Engines within a single engine 
configuration differ only with respect to normal production 
variability.
    Engine family has the meaning given in Sec.  1045.230.
    Engine manufacturer means the manufacturer of the engine. See the 
definition of ``manufacturer'' in this section.
    Evaporative means relating to fuel emissions controlled by 40 CFR 
part 1060. This generally includes emissions that result from 
permeation of fuel through the fuel-system materials, from ventilation 
of the fuel system.
    Excluded means relating to an engine that either:
    (1) Has been determined not to be a nonroad engine, as specified in 
40 CFR 1068.30; or
    (2) Is a nonroad engine that, according to Sec.  1045.5, is not 
subject to this part 1045.
    Exempted has the meaning given in 40 CFR 1068.30.
    Exhaust-gas recirculation means a technology that reduces emissions 
by routing exhaust gases that had been exhausted from the combustion 
chamber(s) back into the engine to be mixed with incoming air before or 
during combustion. The use of valve timing to increase the amount of 
residual exhaust gas in the combustion chamber(s) that is mixed with 
incoming air before or during combustion is not considered exhaust-gas 
recirculation for the purposes of this part.
    Family emission limit (FEL) means an emission level declared by the 
manufacturer to serve in place of an otherwise applicable emission 
standard under the ABT program in subpart H of this part. The family 
emission limit must be expressed to the same number of decimal places 
as the emission standard it replaces. The family emission limit serves 
as the emission standard for the engine family with respect to all 
required testing.
    Fuel line means all hose, tubing, and primer bulbs containing or 
exposed to liquid fuel, including hose or tubing

[[Page 28288]]

that delivers fuel to or from the engine. This includes hose or tubing 
for the filler neck if any portion of the filler-neck material 
continues to be exposed to liquid fuel after a refueling event in which 
an operator fills the fuel tank as full as possible.
    Fuel system means all components involved in transporting, 
metering, and mixing the fuel from the fuel tank to the combustion 
chamber(s), including the fuel tank, fuel tank cap, fuel pump, fuel 
filters, fuel lines, carburetor or fuel-injection components, and all 
fuel-system vents.
    Fuel type means a general category of fuels such as gasoline or 
natural gas. There can be multiple grades within a single fuel type, 
such as low-temperature or all-season gasoline.
    Good engineering judgment has the meaning given in 40 CFR 1068.30. 
See 40 CFR 1068.5 for the administrative process we use to evaluate 
good engineering judgment.
    High-performance means relating to a sterndrive/inboard engine with 
maximum engine power at or above 373 kW that has design features to 
enhance power output such that the expected operating time until 
rebuild is substantially shorter than 480 hours.
    Hydrocarbon (HC) means the hydrocarbon group on which the emission 
standards are based for each fuel type, as described in subpart B of 
this part.
    Identification number means a unique specification (for example, a 
model number/serial number combination) that allows someone to 
distinguish a particular engine from other similar engines.
    Jet boat means a vessel that uses an installed internal combustion 
engine powering a water jet pump as its primary source of propulsion 
and is designed with open area for carrying passengers.
    Low-hour means relating to an engine that has stabilized emissions 
and represents the undeteriorated emission level. This would generally 
involve less than 30 hours of operation.
    Manufacture means the physical and engineering process of 
designing, constructing, and assembling an engine or vessel.
    Manufacturer has the meaning given in section 216(1) of the Act. In 
general, this term includes any person who manufactures an engine or 
vessel for sale in the United States or otherwise introduces a new 
marine engine into U.S. commerce. This includes importers who import 
engines or vessels for resale, but not dealers. All manufacturing 
entities under the control of the same person are considered to be a 
single manufacturer.
    Marine engine means a nonroad engine that is installed or intended 
to be installed on a vessel. This includes a portable auxiliary marine 
engine only if its fueling, cooling, or exhaust system is an integral 
part of the vessel. There are two kinds of marine engines:
    (1) Propulsion marine engine means a marine engine that moves a 
vessel through the water or directs the vessel's movement.
    (2) Auxiliary marine engine means a marine engine not used for 
propulsion.
    Marine vessel has the meaning given in 1 U.S.C. 3, except that it 
does not include amphibious vehicles. The definition in 1 U.S.C. 3 very 
broadly includes every craft capable of being used as a means of 
transportation on water.
    Maximum engine power has the meaning given in Sec.  1045.140.
    Maximum test speed has the meaning given in 40 CFR 1065.1001.
    Model year means one of the following things:
    (1) For freshly manufactured vessels and engines (see definition of 
``new propulsion marine engine,'' paragraph (1)), model year means one 
of the following:
    (i) Calendar year.
    (ii) Your annual new model production period if it is different 
than the calendar year. This must include January 1 of the calendar 
year for which the model year is named. It may not begin before January 
2 of the previous calendar year and it must end by December 31 of the 
named calendar year. For seasonal production periods not including 
January 1, model year means the calendar year in which the production 
occurs, unless you choose to certify the applicable engine family with 
the following model year. For example, if your production period is 
June 1, 2010 through November 30, 2010, your model year would be 2010 
unless you choose to certify the engine family for model year 2011.
    (2) For an engine that is converted to a propulsion marine engine 
after being placed into service as a motor-vehicle engine or a 
stationary engine, model year means the calendar year in which the 
engine was originally produced (see definition of ``new propulsion 
marine engine,'' paragraph (2)).
    (3) For an engine originally produced for use as a nonroad engine 
but not as a propulsion marine engine that is later converted to 
operate as a propulsion marine engine, model year means the calendar 
year in which the engine was originally produced (see definition of 
``new propulsion marine engine,'' paragraph (3)).
    (4) For engines that are not freshly manufactured but are installed 
in new vessels, model year means the calendar year in which the engine 
is installed in the new vessel (see definition of ``new propulsion 
marine engine,'' paragraph (4)).
    (5) For imported engines:
    (i) For imported engines described in paragraph (5)(i) of the 
definition of ``new propulsion marine engine,'' model year has the 
meaning given in paragraphs (1) through (4) of this definition.
    (ii) For imported engines described in paragraph (5)(ii) of the 
definition of ``new propulsion marine engine,'' model year means the 
calendar year in which the engine is modified.
    (iii) For imported engines described in paragraph (5)(iii) of the 
definition of ``new nonroad engine,'' model year means the calendar 
year in which the importation occurs.
    New vessel means either of the following things:
    (1) A vessel for which the ultimate purchaser has never received 
the equitable or legal title. The product is no longer new when the 
ultimate purchaser receives this title or it is placed into service, 
whichever comes first.
    (2) An imported vessel that has already been placed into service, 
where it has an engine not covered by a certificate of conformity 
issued under this part at the time of importation that was manufactured 
after the requirements of this part start to apply (see Sec.  1045.1).
    New portable fuel tanks and fuel lines means portable fuel tanks 
and fuel lines that have not yet been placed into service, or which are 
otherwise offered for sales as new products.
    New propulsion marine engine or new engine means any of the 
following things:
    (1) A freshly manufactured propulsion marine engine for which the 
ultimate purchaser has never received the equitable or legal title. 
This kind of engine might commonly be thought of as ``brand new.'' In 
the case of this paragraph (1), the engine is new from the time it is 
produced until the ultimate purchaser receives the title or the product 
is placed into service, whichever comes first.
    (2) An engine intended to be used as a propulsion marine engine 
that was originally manufactured as a motor-vehicle engine, a nonroad 
engine that is not a propulsion marine engine, or a stationary engine. 
In this case, the engine is no longer a motor-vehicle,

[[Page 28289]]

nonpropulsion, or stationary engine and becomes a ``new propulsion 
marine engine''. The engine is no longer new when it is placed into 
marine service.
    (3) A propulsion marine engine that has been previously placed into 
service in an application we exclude under Sec.  1045.5, where that 
engine is installed in a vessel that is covered by this part 1045. The 
engine is no longer new when it is placed into marine service covered 
by this part 1045. For example, this would apply to a auxiliary marine 
engine that is becomes a propulsion marine engine.
    (4) An engine not covered by paragraphs (1) through (3) of this 
definition that is intended to be installed in a new vessel. The engine 
is no longer new when the ultimate purchaser receives a title for the 
vessel or the product is placed into service, whichever comes first. 
This generally includes installation of used engines in new vessels.
    (5) An imported marine engine, subject to the following provisions:
    (i) An imported marine engine covered by a certificate of 
conformity issued under this part that meets the criteria of one or 
more of paragraphs (1) through (4) of this definition, where the 
original engine manufacturer holds the certificate, is new as defined 
by those applicable paragraphs.
    (ii) An imported marine engine covered by a certificate of 
conformity issued under this part, where someone other than the 
original engine manufacturer holds the certificate (such as when the 
engine is modified after its initial assembly), becomes new when it is 
imported. It is no longer new when the ultimate purchaser receives a 
title for the engine or it is placed into service, whichever comes 
first.
    (iii) An imported propulsion marine engine that is not covered by a 
certificate of conformity issued under this part at the time of 
importation is new, but only if it was produced on or after the dates 
shown in the following table. This addresses uncertified engines and 
vessels initially placed into service that someone seeks to import into 
the United States. Importation of this kind of engine (or vessel 
containing such an engine) is generally prohibited by 40 CFR part 1068.

    Applicability of Emission Standards for Propulsion Marine Engines
------------------------------------------------------------------------
                                                         Initial model
                     Engine type                        year of emission
                                                           standards
------------------------------------------------------------------------
Outboard.............................................               1998
Personal watercraft..................................               1999
Sterndrive/inboard...................................               2009
------------------------------------------------------------------------

    Noncompliant engine means an engine that was originally covered by 
a certificate of conformity but is not in the certified configuration 
or otherwise does not comply with the conditions of the certificate.
    Nonconforming engine means an engine not covered by a certificate 
of conformity that would otherwise be subject to emission standards.
    Nonmethane hydrocarbon has the meaning given in 40 CFR 1065.1001. 
This generally means the difference between the emitted mass of total 
hydrocarbons and the emitted mass of methane.
    Nonroad means relating to nonroad engines, or vessels, or equipment 
that include nonroad engines.
    Nonroad engine has the meaning given in 40 CFR 1068.30. In general, 
this means all internal-combustion engines except motor vehicle 
engines, stationary engines, engines used solely for competition, or 
engines used in aircraft.
    Official emission result means the measured emission rate for an 
emission-data engine on a given duty cycle before the application of 
any deterioration factor.
    Outboard engine means an assembly of a spark-ignition engine and 
drive unit used to propel a vessel from a properly mounted position 
external to the hull of the vessel. An outboard drive unit is partially 
submerged during operation and can be tilted out of the water when not 
in use.
    Owners manual means a document or collection of documents prepared 
by the engine manufacturer for the owner or operator to describe 
appropriate engine maintenance, applicable warranties, and any other 
information related to operating or keeping the engine. The owners 
manual is typically provided to the ultimate purchaser at the time of 
sale.
    Oxides of nitrogen has the meaning given in 40 CFR part 1065.1001.
    Personal watercraft means a vessel less than 4.0 meters (13 feet) 
in length that uses an installed internal combustion engine powering a 
water jet pump as its primary source of propulsion and is designed with 
no open load carrying area that would retain water. The vessel is 
designed to be operated by a person or persons positioned on, rather 
than within the confines of the hull. A vessel using an outboard engine 
as its primary source of propulsion is not a personal watercraft.
    Personal watercraft engine means a spark-ignition engine used to 
propel a personal watercraft.
    Placed into service means put into initial use for its intended 
purpose.
    Point of first retail sale means the location at which the initial 
retail sale occurs. This generally means an equipment dealership, but 
may also include an engine seller or distributor in cases where loose 
engines are sold to the general public for uses such as replacement 
engines.
    Portable marine fuel tank has the meaning given in 40 CFR 1060.801.
    Ramped-modal means relating to the ramped-modal type of steady-
state test described in Sec.  1045.505.
    Revoke has the meaning given in 40 CFR 1068.30. In general this 
means to terminate the certificate or an exemption for an engine 
family.
    Round has the meaning given in 40 CFR 1065.1001.
    Scheduled maintenance means adjusting, repairing, removing, 
disassembling, cleaning, or replacing components or systems 
periodically to keep a part or system from failing, malfunctioning, or 
wearing prematurely. It also may mean actions you expect are necessary 
to correct an overt indication of failure or malfunction for which 
periodic maintenance is not appropriate.
    Small-volume engine manufacturer means one of the following:
    (1) An engine manufacturer that had U.S.-directed production of 
sterndrive/inboard engines in 2007, with annual worldwide production of 
no more than 5,000 sterndrive/inboard engines in any calendar year. For 
manufacturers owned by a parent company, this production limit applies 
to the production of the parent company and all its subsidiaries.
    (2) An engine manufacturer that we designate to be a small-volume 
engine manufacturer under Sec.  1045.635.
    Spark-ignition means relating to a gasoline-fueled engine or any 
other type of engine with a spark plug (or other sparking device) and 
with operating characteristics significantly similar to the theoretical 
Otto combustion cycle. Spark-ignition engines usually use a throttle to 
regulate intake air flow to control power during normal operation.
    Steady-state means relating to emission tests in which engine speed 
and load are held at a finite set of essentially constant values. 
Steady-state tests are either discrete-mode tests or ramped-modal 
tests.

[[Page 28290]]

    Sterndrive/inboard engine means a spark-ignition engine that is 
used to propel a vessel, but is not an outboard engine or a personal 
watercraft engine. This includes engines on propeller-driven vessels, 
jet boats, air boats, and hovercraft.
    Stoichiometric means relating to the particular ratio of air and 
fuel such that if the fuel were fully oxidized, there would be no 
remaining fuel or oxygen. For example, stoichiometric combustion in a 
gasoline-fueled engine typically occurs at an air-to-fuel mass ratio of 
about 14.7:1.
    Suspend has the meaning given in 40 CFR 1068.30. In general this 
means to temporarily discontinue the certificate or an exemption for an 
engine family.
    Test engine means an engine in a test sample.
    Test sample means the collection of engines selected from the 
population of an engine family for emission testing. This may include 
testing for certification, production-line testing, or in-use testing.
    Total hydrocarbon has the meaning given in 40 CFR 1065.1001. This 
generally means the combined mass of organic compounds measured by the 
specified procedure for measuring total hydrocarbon, expressed as a 
hydrocarbon with a hydrogen-to-carbon mass ratio of 1.85:1.
    Total hydrocarbon equivalent has the meaning given in 40 CFR 
1065.1001. This generally means the sum of the carbon mass 
contributions of non-oxygenated hydrocarbons, alcohols and aldehydes, 
or other organic compounds that are measured separately as contained in 
a gas sample, expressed as exhaust hydrocarbon from petroleum-fueled 
locomotives. The hydrogen-to-carbon ratio of the equivalent hydrocarbon 
is 1.85:1.
    Ultimate purchaser means, with respect to any new vessel or new 
marine propulsion engine, the first person who in good faith purchases 
such new vessel or new engine for purposes other than resale.
    United States has the meaning given in 40 CFR 1068.30.
    Upcoming model year means for an engine family the model year after 
the one currently in production.
    U.S.-directed production volume means the number of engine units, 
subject to the requirements of this part, produced by a manufacturer 
for which the manufacturer has a reasonable assurance that sale was or 
will be made to ultimate purchasers in the United States.
    Useful life means the period during which a vehicle is required to 
comply with all applicable emission standards, specified as a given 
number of hours of operation or calendar years, whichever comes first. 
See Sec. Sec.  1045.103(e), 1045.105(e), and 1045.107. If an engine has 
no hour meter, the specified number of hours does not limit the period 
during which an in-use engine is required to comply with emission 
standards, unless the degree of service accumulation can be verified 
separately.
    Variable-speed engine means an engine that is not a constant-speed 
engine.
    Vessel means marine vessel.
    Void has the meaning given in 40 CFR 1068.30. In general this means 
to invalidate a certificate or an exemption both retroactively and 
prospectively.
    Volatile liquid fuel means any fuel other than diesel or biodiesel 
that is a liquid at atmospheric pressure and has a Reid Vapor Pressure 
higher than 2.0 pounds per square inch.
    We (us, our) means the Administrator of the Environmental 
Protection Agency and any authorized representatives.
    Wide-open throttle means maximum throttle opening. Unless this is 
specified at a given speed, it refers to maximum throttle opening at 
maximum speed. For electronically controlled or other engines with 
multiple possible fueling rates, wide-open throttle also means the 
maximum fueling rate at maximum throttle opening under test conditions.


Sec.  1045.805  What symbols, acronyms, and abbreviations does this 
part use?

    The following symbols, acronyms, and abbreviations apply to this 
part:

ABT Averaging, banking, and trading.
AECD Auxiliary emission control device.
CFR Code of Federal Regulations.
CO carbon monoxide.
CO2 carbon dioxide.
EPA Environmental Protection Agency.
FEL Family Emission Limit.
g gram.
HC hydrocarbon.
hr hour.
kPa kilopascals.
kW kilowatt.
m meter.
NARA National Archives and Records Administration.
NMHC nonmethane hydrocarbons.
NOX oxides of nitrogen (NO and NO2).
NTE not-to-exceed.
psig pounds per square inch of gauge pressure.
RPM revolutions per minute.
SAE Society of Automotive Engineers.
THC total hydrocarbon.
THCE total hydrocarbon equivalent.
U.S.C. United States Code.


Sec.  1045.810  What materials does this part reference?

    Documents listed in this section have been incorporated by 
reference into this part. The Director of the Federal Register approved 
the incorporation by reference as prescribed in 5 U.S.C. 552(a) and 1 
CFR part 51. Anyone may inspect copies at the U.S. EPA, Air and 
Radiation Docket and Information Center, 1301 Constitution Ave., NW., 
Room B102, EPA West Building, Washington, DC 20460 or at the National 
Archives and Records Administration (NARA). For information on the 
availability of this material at NARA, call 202-741-6030, or go to: 
http://www.archives.gov/federal_register/code_of_federal_regulations/ibr_locations.html.
    (a) SAE material. Table 1 of this section lists material from the 
Society of Automotive Engineers that we have incorporated by reference. 
The first column lists the number and name of the material. The second 
column lists the sections of this part where we reference it. Anyone 
may purchase copies of these materials from the Society of Automotive 
Engineers, 400 Commonwealth Drive, Warrendale, PA 15096 or www.sae.org. 
Table 1 follows:

               Table 1 to Sec.   1045.810.--SAE Materials
------------------------------------------------------------------------
                                                           Part 1045
               Document number and name                    reference
------------------------------------------------------------------------
SAE J1930, Electrical/Electronic Systems Diagnostic             1045.135
 Terms, Definitions, Abbreviations, and Acronyms,
 revised May 1998....................................
------------------------------------------------------------------------

    (b) ISO material. Table 2 of this section lists material from the 
International Organization for Standardization that we have 
incorporated by reference. The first column lists the number and name 
of the material. The second column lists the section of this part where 
we reference it. Anyone may purchase copies of these materials from the 
International Organization for Standardization, Case Postale 56, CH-

[[Page 28291]]

1211 Geneva 20, Switzerland or www.iso.org. Table 2 follows:

               Table 2 to Sec.   1045.810.--ISO Materials
------------------------------------------------------------------------
           Document number and name               Part 1045  reference
------------------------------------------------------------------------
ISO 9141-2 Road vehicles--Diagnostic systems-- 1045.110
 Part 2: CARB requirements for interchange of
 digital information, February 1994.
ISO 14230-4 Road vehicles--Diagnostic          1045.110
 systems--Keyword Protocol 2000--Part 4:
 Requirements for emission-related systems,
 June 2000.
------------------------------------------------------------------------

Sec.  1045.815  What provisions apply to confidential information?

    (a) Clearly show what you consider confidential by marking, 
circling, bracketing, stamping, or some other method.
    (b) We will store your confidential information as described in 40 
CFR part 2. Also, we will disclose it only as specified in 40 CFR part 
2. This applies both to any information you send us and to any 
information we collect from inspections, audits, or other site visits.
    (c) If you send us a second copy without the confidential 
information, we will assume it contains nothing confidential whenever 
we need to release information from it.
    (d) If you send us information without claiming it is confidential, 
we may make it available to the public without further notice to you, 
as described in 40 CFR 2.204.


Sec.  1045.820  How do I request a hearing?

    (a) You may request a hearing under certain circumstances, as 
described elsewhere in this part. To do this, you must file a written 
request, including a description of your objection and any supporting 
data, within 30 days after we make a decision.
    (b) For a hearing you request under the provisions of this part, we 
will approve your request if we find that your request raises a 
substantial factual issue.
    (c) If we agree to hold a hearing, we will use the procedures 
specified in 40 CFR part 1068, subpart G.


Sec.  1045.825  What reporting and recordkeeping requirements apply 
under this part?

    Under the Paperwork Reduction Act (44 U.S.C. 3501 et seq.), the 
Office of Management and Budget approves the reporting and 
recordkeeping specified in the applicable regulations. The following 
items illustrate the kind of reporting and recordkeeping we require for 
engines and vessels regulated under this part:
    (a) We specify the following requirements related to engine 
certification in this part 1045:
    (1) In Sec.  1045.20 we require vessel manufacturers to label their 
vessels if they are relying on component certification.
    (2) In Sec.  1045.135 we require engine manufacturers to keep 
certain records related to duplicate labels sent to vessel 
manufacturers.
    (3) In Sec.  1045.145 we include various reporting and 
recordkeeping requirements related to interim provisions.
    (4) In subpart C of this part we identify a wide range of 
information required to certify engines.
    (5) In Sec. Sec.  1045.345 and 1045.350 we specify certain records 
related to production-line testing.
    (6) In Sec. Sec.  1045.420 and 1045.425 we specify certain records 
related to in-use testing.
    (7) In subpart G of this part we identify several reporting and 
recordkeeping items for making demonstrations and getting approval 
related to various special compliance provisions.
    (8) In Sec. Sec.  1045.725, 1045.730, and 1045.735 we specify 
certain records related to averaging, banking, and trading.
    (b) We specify the following requirements related to vessel or 
component certification in 40 CFR part 1060:
    (1) In 40 CFR 1060.20 we give an overview of principles for 
reporting information.
    (2) In 40 CFR part 1060, subpart C, we identify a wide range of 
information required to certify products.
    (3) In 40 CFR 1060.301 we require manufacturers to make engines or 
vessels available for our testing if we make such a request.
    (4) In 40 CFR 1060.505 we specify information needs for 
establishing various changes to published test procedures.
    (c) We specify the following requirements related to testing in 40 
CFR part 1065:
    (1) In 40 CFR 1065.2 we give an overview of principles for 
reporting information.
    (2) In 40 CFR 1065.10 and 1065.12 we specify information needs for 
establishing various changes to published test procedures.
    (3) In 40 CFR 1065.25 we establish basic guidelines for storing 
test information.
    (4) In 40 CFR 1065.695 we identify data that may be appropriate for 
collecting during testing of in-use engines using portable analyzers.
    (d) We specify the following requirements related to the general 
compliance provisions in 40 CFR part 1068:
    (1) In 40 CFR 1068.5 we establish a process for evaluating good 
engineering judgment related to testing and certification.
    (2) In 40 CFR 1068.25 we describe general provisions related to 
sending and keeping information.
    (3) In 40 CFR 1068.27 we require manufacturers to make engines 
available for our testing or inspection if we make such a request.
    (4) In 40 CFR 1068.105 we require vessel manufacturers to keep 
certain records related to duplicate labels from engine manufacturers.
    (5) In 40 CFR 1068.120 we specify recordkeeping related to 
rebuilding engines.
    (6) In 40 CFR part 1068, subpart C, we identify several reporting 
and recordkeeping items for making demonstrations and getting approval 
related to various exemptions.
    (7) In 40 CFR part 1068, subpart D, we identify several reporting 
and recordkeeping items for making demonstrations and getting approval 
related to importing engines.
    (8) In 40 CFR 1068.450 and 1068.455 we specify certain records 
related to testing production-line engines in a selective enforcement 
audit.
    (9) In 40 CFR 1068.501 we specify certain records related to 
investigating and reporting emission-related defects.
    (10) In 40 CFR 1068.525 and 1068.530 we specify certain records 
related to recalling nonconforming engines.

[[Page 28292]]

Appendix I to Part 1045--Summary of Previous Emission Standards

    (a) The following standard applies to marine spark-ignition 
engines produced before the model years specified in Sec.  1045.1, 
at the end of the phase-in period specified in 40 CFR 91.104:
    (1) For engines below 4.3 kW, the HC+NOX standard is 
81.00 g/kW-hr.
    (2) For engines at or above 4.3 kW, the following 
HC+NOX standard applies:

STD = 6.00 + 0.250 [middot] (151 + 557/P0.9)

Where:

STD = The HC+NOX emission standard, in g/kW-hr.
P = The average power of an engine family, in kW.

    (b) See 40 CFR 91.104 for standards that applied during the 
phase-in period.

Appendix II to Part 1045--Duty Cycles for Propulsion Marine Engines

    (a) The following duty cycle applies for discrete-mode testing:

----------------------------------------------------------------------------------------------------------------
                                                                                      Torque         Weighting
                 E4 mode no.                           Engine speed \1\           (percent) \2\       factors
----------------------------------------------------------------------------------------------------------------
1............................................  Maximum Test Speed..............            100              0.06
2............................................  80 %............................             71.6            0.14
3............................................  60 %............................             46.5            0.15
4............................................  40 %............................             25.3            0.25
5............................................  Idle............................              0             0.40
----------------------------------------------------------------------------------------------------------------
\1\ Speed terms are defined in 40 CFR part 1065. Percent speed values are relative to maximum test speed.
\2\ Except as noted in Sec.   1045.505, the percent torque is relative to maximum torque at maximum test speed.

    (b) The following duty cycle applies for ramped-modal testing:

----------------------------------------------------------------------------------------------------------------
                                           Time in mode
                RMC mode                     (seconds)       Engine  speed \1, 2\       Torque (percent) \2, 3\
----------------------------------------------------------------------------------------------------------------
1a Steady-state.........................             225  Idle......................  0.
1b Transition...........................              20  Linear Transition.........  Linear Transition.
2a Steady-state.........................              63  Maximum Test Speed........  100.
2b Transition...........................              20  Linear Transition.........  Linear Transition.
*3a Steady-state........................             271  40%.......................  25.3.
3b Transition...........................              20  Linear Transition.........  Linear Transition.
4a Steady-state.........................             151  80%.......................  71.6.
4b Transition...........................              20  Linear Transition.........  Linear Transition.
5a Steady-state.........................             161  60%.......................  46.5.
5b Transition...........................              20  Linear Transition.........  Linear Transition.
6 Steady-state..........................             229  Idle......................  0.
----------------------------------------------------------------------------------------------------------------
\1\ Speed terms are defined in 40 CFR part 1065. Percent values are relative to maximum test speed.
\2\ Advance from one mode to the next within a 20-second transition phase. During the transition phase, command
  linear progressions of speed and torque from the speed setting and torque setting of the current mode to the
  speed setting and torque setting of the next mode.
\3\ The percent torque is relative to maximum torque at maximum test speed.

PART 1048--CONTROL OF EMISSIONS FROM NEW, LARGE NONROAD SPARK-
IGNITION ENGINES

    47. The authority citation for part 1048 continues to read as 
follows:

    Authority: 42 U.S.C. 7401--7671q.

Subpart A--[Amended]

    48. Section 1048.1 is amended by revising paragraph (d) to read as 
follows:


Sec.  1048.1  Does this part apply to me?

* * * * *
    (d) In certain cases, the regulations in this part 1048 apply to 
engines with maximum engine power at or below 19 kW that would 
otherwise be covered by 40 CFR part 90 or 1054. See 40 CFR 90.913 or 
1054.615 for provisions related to this allowance.
    49. A new Sec.  1048.2 is added to read as follows:


Sec.  1048.2  Who is responsible for compliance?

    The regulations in this part 1048 contain provisions that affect 
both engine manufacturers and others. However, the requirements of this 
part are generally addressed to the engine manufacturer. The term 
``you'' generally means the engine manufacturer, as defined in Sec.  
1048.801, especially for issues related to certification (including 
production-line testing, reporting, etc.).
    50. Section 1048.5 is amended by revising paragraph (b) and adding 
paragraph (c) to read as follows:


Sec.  1048.5  Which engines are excluded from this part's requirements?

* * * * *
    (b) Propulsion marine engines. See 40 CFR parts 91 and 1045. This 
part applies with respect to auxiliary marine engines.
    (c) Engines that are certified to meet the requirements of 40 CFR 
parts 92 or 1033 (locomotive engines), or are otherwise subject to 40 
CFR parts 92 or 1033.
    51. Section 1048.10 is amended by revising the introductory text to 
read as follows:


Sec.  1048.10  How is this part organized?

    This part 1048 is divided into the following subparts:
* * * * *
    52. Section 1048.15 is amended by revising the section heading to 
read as follows:


Sec.  1048.15  Do any other regulation parts apply to me?

Subpart B--[Amended]

    53. Section 1048.101 is amended by adding paragraph (a)(2)(iv) and 
revising paragraphs (f) and (h) to read as follows:


Sec.  1048.101  What exhaust emission standards must my engines meet?

* * * * *
    (a) * * *
    (2) * * *

[[Page 28293]]

    (iv) Constant-speed engines and severe-duty engines.
* * * * *
    (f) Small engines. Certain engines with total displacement at or 
below 1000 cc may comply with the requirements of 40 CFR part 90 or 
1054 instead of complying with the requirements of this part, as 
described in Sec.  1048.615.
* * * * *
    (h) Applicability for testing. The duty-cycle emission standards in 
this subpart apply to all testing performed according to the procedures 
in Sec. Sec.  1048.505 and 1048.510, including certification, 
production-line, and in-use testing. The field-testing standards apply 
for all testing performed according to the procedures of subpart F of 
this part.
    54. Section 1048.105 is revised to read as follows:


Sec.  1048.105  What evaporative emission standards and requirements 
apply?

    Starting in the 2007 model year, new engines that run on a volatile 
liquid fuel (such as gasoline) must meet the emission standards of this 
section over a useful life of five years. Note that Sec.  1048.245 
allows you to use design-based certification instead of generating new 
emission data. Auxiliary marine engines must meet the evaporative 
emission standards in 40 CFR 1045.107 instead of the standards in this 
section.
    (a) Fuel line permeation. For nonmetallic fuel lines, you must 
specify and use products that meet the Category 1 specifications for 
permeation in SAE J2260 (incorporated by reference in Sec.  1048.810).
    (b) [Reserved]
    (c) Diurnal emissions. Evaporative hydrocarbon emissions may not 
exceed 0.2 grams per gallon of fuel tank capacity when measured using 
the test procedures specified in 40 CFR 1060.525, except that 
permeation emissions may not be subtracted from the measured value. 
Diurnal emission controls must continue to function during engine 
operation.
    (d) Running loss. Liquid fuel in the fuel tank may not reach 
boiling during continuous engine operation in the final installation at 
an ambient temperature of 30 [deg]C. Note that gasoline with a Reid 
vapor pressure of 62 kPa (9 psi) begins to boil at about 53 [deg]C at 
atmospheric pressure, and at about 60 [deg]C for fuel tanks that hold 
pressure as described in Sec.  1048.245(e)(1)(i).
    (e) Installation. If other companies install your engines in their 
equipment, you may introduce your engines into U.S. commerce without 
meeting all the requirements in this section. However, you must give 
equipment manufacturers any appropriate instructions so that fully 
assembled equipment will meet all the requirements in this section, as 
described in Sec.  1048.130. Introducing equipment into U.S. commerce 
without meeting all the requirements of this section violates 40 CFR 
1068.101(a)(1).
    55. Section 1048.110 is amended by revising paragraphs (c) and (d) 
to read as follows:


Sec.  1048.110  How must my engines diagnose malfunctions?

* * * * *
    (c) Control when the MIL can go out. If the MIL goes on to show a 
malfunction or system error, it must remain on during all later engine 
operation until servicing corrects the malfunction. If the engine is 
not serviced, but the malfunction or system error does not recur for 
three consecutive engine starts during which the malfunctioning system 
is evaluated and found to be working properly, the MIL may stay off 
during later engine operation.
    (d) Store trouble codes in computer memory. Record and store in 
computer memory any diagnostic trouble codes showing a malfunction that 
should illuminate the MIL. The stored codes must identify the 
malfunctioning system or component as uniquely as possible. Make these 
codes available through the data link connector as described in 
paragraph (g) of this section. You may store codes for conditions that 
do not turn on the MIL. The system must store a separate code to show 
when the diagnostic system is disabled.
* * * * *
    56. Section 1048.115 is amended by revising the section heading, 
introductory text, and paragraph (e) to read as follows:


Sec.  1048.115  What other requirements apply?

    Engines that are required to meet the emission standards of this 
part must meet the following requirements:
* * * * *
    (e) Adjustable parameters. Engines that have adjustable parameters 
must meet all the requirements of this part for any adjustment in the 
physically adjustable range. An operating parameter is not considered 
adjustable if you permanently seal it or if it is not normally 
accessible using ordinary tools. We may require that you set adjustable 
parameters to any specification within the adjustable range during any 
testing, including certification testing, production-line testing, or 
in-use testing.
* * * * *
    57. Section 1048.120 is amended by revising paragraph (c) to read 
as follows:


Sec.  1048.120  What emission-related warranty requirements apply to 
me?

* * * * *
    (c) Components covered. The emission-related warranty covers all 
components whose failure would increase an engine's emissions of any 
pollutant, including those listed in 40 CFR part 1068, Appendix I, and 
those from any other system you develop to control emissions. The 
emission-related warranty covers these components even if another 
company produces the component. Your emission-related warranty does not 
cover components whose failure would not increase an engine's emissions 
of any pollutant.
* * * * *
    58. Section 1048.125 is amended by revising paragraph (d) to read 
as follows:


Sec.  1048.125  What maintenance instructions must I give to buyers?

* * * * *
    (d) Noncritical emission-related maintenance. Subject to the 
provisions of this paragraph (d), you may schedule any amount of 
emission-related inspection or maintenance that is not covered by 
paragraph (a) of this section (i.e., maintenance that is neither 
explicitly identified as critical emission-related maintenance, nor 
that we approve as critical emission-related maintenance). Noncritical 
emission-related maintenance generally includes changing spark plugs, 
re-seating valves, or any other emission-related maintenance on the 
components we specify in 40 CFR part 1068, Appendix I. You must state 
in the owners manual that these steps are not necessary to keep the 
emission-related warranty valid. If operators fail to do this 
maintenance, this does not allow you to disqualify those engines from 
in-use testing or deny a warranty claim. Do not take these inspection 
or maintenance steps during service accumulation on your emission-data 
engines.
* * * * *
    59. Section 1048.135 is amended by revising paragraphs (c)(5), 
(c)(11), (c)(17), and (f) to read as follows:


Sec.  1048.135  How must I label and identify the engines I produce?

* * * * *
    (c) * * *
    (5) State the date of manufacture [MONTH and YEAR]; however, you 
may omit this from the label if you stamp or engrave it on the engine.
* * * * *

[[Page 28294]]

    (11) Identify the emission standards to which you have certified 
the engine (in g/kW-hr).
* * * * *
    (17) If your engines are certified to the voluntary standards in 
Sec.  1048.140, state: ``BLUE SKY SERIES'' and identify the standard to 
which you certify the engines.
* * * * *
    (f) If you obscure the engine label while installing the engine in 
the equipment such that the label cannot be read during normal 
maintenance, you must place a duplicate label on the equipment. If 
others install your engine in their equipment in a way that obscures 
the engine label, we require them to add a duplicate label on the 
equipment (see 40 CFR 1068.105); in that case, give them the number of 
duplicate labels they request and keep the following records for at 
least five years:
    (1) Written documentation of the request from the equipment 
manufacturer.
    (2) The number of duplicate labels you send for each engine family 
and the date you sent them.
    60. Section 1048.140 is revised to read as follows:


Sec.  1048.140  What are the provisions for certifying Blue Sky Series 
engines?

    This section defines voluntary standards for a recognized level of 
superior emission control for engines designated as ``Blue Sky Series'' 
engines. If you certify an engine family under this section, it is 
subject to all the requirements of this part as if these voluntary 
standards were mandatory. To receive a certificate of conformity as 
``Blue Sky Series,'' you must certify to one of the sets of exhaust 
emission standards in the following table:

   Table 1 to Sec.   1048.140.--Standards for Blue Sky Series Engines
                                (g/kW-hr)
------------------------------------------------------------------------
 Standards for steady-state and        Standards for  field-testing
    transient test procedures                   procedures
------------------------------------------------------------------------
      HC+NOX             CO             HC+NOX                CO
------------------------------------------------------------------------
        0.80           4.4                1.10                 6.6
        0.60           4.4                0.84                 6.6
        0.40           4.4                0.56                 6.6
        0.20           4.4                0.28                 6.6
        0.10           4.4                0.14                 6.6
------------------------------------------------------------------------

Subpart C--[Amended]

    61. Section 1048.201 is amended by revising paragraph (a) to read 
as follows:


Sec.  1048.201  What are the general requirements for obtaining a 
certificate of conformity?

    (a) You must send us a separate application for a certificate of 
conformity for each engine family. A certificate of conformity is valid 
starting with the indicated effective date, but it is not valid for any 
production after December 31 of the model year for which it is issued. 
No certificate will be issued after December 31 of the model year.
* * * * *
    62. Section 1048.205 is amended by revising paragraphs (b), (p)(1), 
(q), (r) introductory text, (y), and (aa) to read as follows:


Sec.  1048.205  What must I include in my application?

* * * * *
    (b) Explain how the emission control systems operate. Describe the 
evaporative emission controls. Also describe in detail all system 
components for controlling exhaust emissions, including all auxiliary 
emission control devices (AECDs) and all fuel-system components you 
will install on any production or test engine. Identify the part number 
of each component you describe. For this paragraph (b), treat as 
separate AECDs any devices that modulate or activate differently from 
each other. Include sufficient detail to allow us to evaluate whether 
the AECDs are consistent with the defeat device prohibition of Sec.  
1048.115.
* * * * *
    (p) * * *
    (1) Present exhaust emission data for HC, NOX, and CO on 
an emission-data engine to show your engines meet the applicable duty-
cycle emission standards we specify in Sec.  1048.101. Show emission 
figures before and after applying deterioration factors for each 
engine. Include emission results for each mode if you do discrete-mode 
testing under Sec.  1048.505. Include test data for each type of fuel 
from 40 CFR part 1065, subpart H, on which you intend for engines in 
the engine family to operate (for example, gasoline, liquefied 
petroleum gas, methanol, or natural gas). If we specify more than one 
grade of any fuel type (for example, a summer grade and winter grade of 
gasoline), you need to submit test data only for one grade unless the 
regulations of this part specify otherwise for your engine. Note that 
Sec.  1048.235 allows you to submit an application in certain cases 
without new emission data.
* * * * *
    (q) State that all the engines in the engine family comply with the 
field-testing emission standards we specify in Sec.  1048.101(c) for 
all normal operation and use when tested as specified in Sec.  
1048.515. Describe any relevant testing, engineering analysis, or other 
information in sufficient detail to support your statement.
    (r) For engines not subject to transient testing requirements in 
Sec.  148.101(a), include information showing how your emission 
controls will function during normal in-use transient operation. For 
example, this might include the following:
* * * * *
    (y) Include good-faith estimates of U.S.-directed production 
volumes. Include a justification for the estimated production volumes 
if they are substantially different than actual production volumes in 
earlier years for similar models.
* * * * *
    (aa) Name an agent for service located in the United States. 
Service on this agent constitutes service on you or any of your 
officers or employees for any action by EPA or otherwise by the United 
States related to the requirements of this part.
    63. Section 1048.220 is amended by revising the introductory text 
to read as follows:


Sec.  1048.220  How do I amend the maintenance instructions in my 
application?

    You may amend your emission-related maintenance instructions after 
you submit your application for certification, as long as the amended 
instructions remain consistent with the provisions of Sec.  1048.125. 
You must send the Designated Compliance Officer a written request to 
amend your application for certification for an engine family if you 
want to change the emission-related maintenance instructions in a way 
that could affect emissions. In your request, describe the proposed 
changes to the maintenance instructions. We will disapprove your 
request if we determine that the amended instructions are inconsistent 
with maintenance you performed on emission-data engines. If operators 
follow the original maintenance instructions rather than the newly 
specified maintenance, this does not allow you to disqualify those 
engines from in-use testing or deny a warranty claim.
* * * * *
    64. Section 1048.225 is revised to read as follows:

[[Page 28295]]

Sec.  1048.225  How do I amend my application for certification to 
include new or modified engine configurations?

    Before we issue you a certificate of conformity, you may amend your 
application to include new or modified engine configurations, subject 
to the provisions of this section. After we have issued your 
certificate of conformity, you may send us an amended application 
requesting that we include new or modified engine configurations within 
the scope of the certificate, subject to the provisions of this 
section. You must amend your application if any changes occur with 
respect to any information included in your application.
    (a) You must amend your application before you take any of the 
following actions:
    (1) Add an engine configuration to an engine family. In this case, 
the engine configuration added must be consistent with other engine 
configurations in the engine family with respect to the criteria listed 
in Sec.  1048.230.
    (2) Change an engine configuration already included in an engine 
family in a way that may affect emissions, or change any of the 
components you described in your application for certification. This 
includes production and design changes that may affect emissions any 
time during the engine's lifetime.
    (b) To amend your application for certification, send the 
Designated Compliance Officer the following information:
    (1) Describe in detail the addition or change in the engine model 
or configuration you intend to make.
    (2) Include engineering evaluations or data showing that the 
amended engine family complies with all applicable requirements. You 
may do this by showing that the original emission-data engine is still 
appropriate for showing that the amended family complies with all 
applicable requirements.
    (3) If the original emission-data engine for the engine family is 
not appropriate to show compliance for the new or modified engine 
configuration, include new test data showing that the new or modified 
engine configuration meets the requirements of this part.
    (c) We may ask for more test data or engineering evaluations. You 
must give us these within 30 days after we request them.
    (d) For engine families already covered by a certificate of 
conformity, we will determine whether the existing certificate of 
conformity covers your newly added or modified engine. You may ask for 
a hearing if we deny your request (see Sec.  1048.820).
    (e) For engine families already covered by a certificate of 
conformity, you may start producing the new or modified engine 
configuration anytime after you send us your amended application and 
before we make a decision under paragraph (d) of this section. However, 
if we determine that the affected engines do not meet applicable 
requirements, we will notify you to cease production of the engines and 
may require you to recall the engines at no expense to the owner. 
Choosing to produce engines under this paragraph (e) is deemed to be 
consent to recall all engines that we determine do not meet applicable 
emission standards or other requirements and to remedy the 
nonconformity at no expense to the owner. If you do not provide 
information required under paragraph (c) of this section within 30 
days, you must stop producing the new or modified engines.
    65. Section 1048.230 is amended by revising paragraphs (a) and (d) 
to read as follows:


Sec.  1048.230  How do I select engine families?

    (a) For purposes of certification, divide your product line into 
families of engines that are expected to have similar emission 
characteristics throughout the useful life as described in this 
section. Your engine family is limited to a single model year.
* * * * *
    (d) In unusual circumstances, you may group engines that are not 
identical with respect to the things listed in paragraph (b) of this 
section in the same engine family if you show that their emission 
characteristics during the useful life will be similar.
* * * * *
    66. Section 1048.235 is amended by revising paragraph (d)(1) to 
read as follows:


Sec.  1048.235  What emission testing must I perform for my application 
for a certificate of conformity?

* * * * *
    (d) * * *
    (1) The emission family from the previous model year differs from 
the current emission family only with respect to model year or other 
characteristics unrelated to emissions. You may also ask to add a 
configuration subject to Sec.  1048.225.
* * * * *
    67. Section 1048.240 is amended by revising paragraphs (c)(1) and 
(c)(2) to read as follows:


Sec.  1048.240  How do I demonstrate that my engine family complies 
with exhaust emission standards?

* * * * *
    (c) * * *
    (1) Multiplicative deterioration factor. Except as specified in 
paragraph (c)(2) of this section, use a multiplicative deterioration 
factor for exhaust emissions. A multiplicative deterioration factor is 
the ratio of exhaust emissions at the end of useful life to exhaust 
emissions at the low-hour test point. Adjust the official emission 
results for each tested engine at the selected test point by 
multiplying the measured emissions by the deterioration factor. If the 
factor is less than one, use one.
    (2) Additive deterioration factor. Use an additive deterioration 
factor for exhaust emissions if engines do not use aftertreatment 
technology. Also, you may use an additive deterioration factor for 
exhaust emissions for a particular pollutant if all the emission-data 
engines in the engine family have low-hour emission levels below 0.3 g/
kW-hr (for CO or HC+NOX, as appropriate), unless a 
multiplicative deterioration factor is more appropriate. For example, 
you should use a multiplicative deterioration factor if emission 
increases are best represented by the ratio of exhaust emissions at the 
end of the useful life to exhaust emissions at the low-hour test point. 
An additive deterioration factor is the difference between exhaust 
emissions at the end of useful life and exhaust emissions at the low-
hour test point. Adjust the official emission results for each tested 
engine at the selected test point by adding the factor to the measured 
emissions. If the factor is less than zero, use zero.
* * * * *
    68. Section 1048.245 is amended by revising paragraphs (c) and 
(e)(1)(i) to read as follows:


Sec.  1048.245  How do I demonstrate that my engine family complies 
with evaporative emission standards?

* * * * *
    (c) Use good engineering judgment to develop a test plan to 
establish deterioration factors to show how much emissions increase at 
the end of the useful life.
* * * * *
    (e) * * *
    (1) * * *
    (i) Use a tethered or self-closing gas cap on a fuel tank that 
stays sealed up to a positive pressure of 24.5 kPa (3.5 psig); however, 
they may contain air inlets that open when there is a vacuum pressure 
inside the tank. Nonmetal fuel tanks must also use one of the

[[Page 28296]]

qualifying designs for controlling permeation emissions specified in 40 
CFR 1060.240.
* * * * *
    69. Section 1048.250 is amended by redesignating paragraphs (a) 
through (d) as paragraphs (b) through (e), respectively, and adding a 
new paragraph (a) to read as follows:


Sec.  1048.250  What records must I keep and make available to EPA?

    (a) If you produce vehicles under any provisions of this part that 
are related to production volumes, send the Designated Compliance 
Officer a report within 30 days after the end of the model year 
describing the total number of vehicles you produced in each engine 
family. For example, if you use special provisions intended for small-
volume manufacturers, report your production volumes to show that you 
do not exceed the applicable limits.
* * * * *
    70. Section 1048.255 is amended by revising the section heading and 
paragraph (d) to read as follows:


Sec.  1048.255  What decisions may EPA make regarding my certificate of 
conformity?

* * * * *
    (d) We may void your certificate if you do not keep the records we 
require or do not give us information as required under this part or 
the Act.
* * * * *

Subpart D--[Amended]

    71. Section 1048.301 is amended by revising paragraphs (a) and (c) 
to read as follows:


Sec.  1048.301  When must I test my production-line engines?

    (a) If you produce engines that are subject to the requirements of 
this part, you must test them as described in this subpart, except as 
follows:
    (1) [Reserved]
    (2) We may exempt engine families with a projected U.S.-directed 
production volume below 150 units from routine testing under this 
subpart. Request this exemption in the application for certification 
and include your basis for projecting a production volume below 150 
units. You must promptly notify us if your actual production exceeds 
150 units during the model year. If you exceed the production limit or 
if there is evidence of a nonconformity, we may require you to test 
production-line engines under this subpart, or under 40 CFR part 1068, 
subpart E, even if we have approved an exemption under this paragraph 
(a)(2).
* * * * *
    (c) Other regulatory provisions authorize us to suspend, revoke, or 
void your certificate of conformity, or order recalls for engine 
families without regard to whether they have passed these production-
line testing requirements. The requirements of this subpart do not 
affect our ability to do selective enforcement audits, as described in 
part 1068 of this chapter. Individual engines in families that pass 
these production-line testing requirements must also conform to all 
applicable regulations of this part and part 1068 of this chapter.
* * * * *
    72. Section 1048.305 is amended by adding introductory text and 
revising paragraphs (a), (d), and (g) to read as follows:


Sec.  1048.305  How must I prepare and test my production-line engines?

    This section describes how to prepare and test production-line 
engines. You must assemble the test engine in a way that represents the 
assembly procedures for other engines in the engine family. You must 
ask us to approve any deviations from your normal assembly procedures 
for other production engines in the engine family.
    (a) Test procedures. Test your production-line engines using either 
the steady-state or transient testing procedures specified in subpart F 
of this part to show you meet the duty-cycle emission standards in 
subpart B of this part. The field-testing standards apply for this 
testing, but you need not do additional testing to show that 
production-line engines meet the field-testing standards.
* * * * *
    (d) Setting adjustable parameters. Before any test, we may require 
you to adjust any adjustable parameter to any setting within its 
physically adjustable range.
    (1) We may require you to adjust idle speed outside the physically 
adjustable range as needed, but only until the engine has stabilized 
emission levels (see paragraph (e) of this section). We may ask you for 
information needed to establish an alternate minimum idle speed.
    (2) We may specify adjustments within the physically adjustable 
range by considering their effect on emission levels, as well as how 
likely it is someone will make such an adjustment with in-use engines.
* * * * *
    (g) Retesting after invalid tests. You may retest an engine if you 
determine an emission test is invalid under subpart F of this part. 
Explain in your written report reasons for invalidating any test and 
the emission results from all tests. If you retest an engine, you may 
ask us to substitute results of the new tests for the original ones. 
You must ask us within ten days of testing. We will generally answer 
within ten days after we receive your information.
    73. Section 1048.310 is amended by revising paragraphs (a), (c) 
introductory text, (c)(2), (f), (g), and (h) to read as follows:


Sec.  1048.310  How must I select engines for production-line testing?

    (a) Use test results from two engines each quarter to calculate the 
required sample size for the model year for each engine family.
* * * * *
    (c) Calculate the required sample size for each engine family. 
Separately calculate this figure for HC+NOX and CO. The 
required sample size is the greater of these calculated values. Use the 
following equation:

N = [(t95 x [sigma])/(x - STD)]2 + 1

Where:

N = Required sample size for the model year.
t95 = 95% confidence coefficient, which depends on the 
number of tests completed, n, as specified in the table in paragraph 
(c)(1) of this section. It defines 95% confidence intervals for a 
one-tail distribution.
x = Mean of emission test results of the sample.
STD = Emission standard.
 [sigma] = Test sample standard deviation (see paragraph (c)(2) of 
this section). * * *
    (2) Calculate the standard deviation, [sigma], for the test sample 
using the following formula:

[sigma] = [[Sigma](Xi - x)2/(n - 
1)]1/2

Where:

Xi = Emission test result for an individual engine.
n = The number of tests completed in an engine family.

* * * * *
    (f) Distribute the remaining tests evenly throughout the rest of 
the year. You may need to adjust your schedule for selecting engines if 
the required sample size changes. If your scheduled quarterly testing 
for the remainder of the model year is sufficient to meet the 
calculated sample size, you may wait until the next quarter to do 
additional testing. Continue to randomly select engines from each 
engine family.
    (g) Continue testing until one of the following things happens:
    (1) After completing the minimum number of tests required in 
paragraph (b) of this section, the number of tests completed in an 
engine family, n, is greater than the required sample size, N, and the 
sample mean, x, is less than or

[[Page 28297]]

equal to the emission standard. For example, if N = 5.1 after the fifth 
test, the sample-size calculation does not allow you to stop testing.
    (2) The engine family does not comply according to Sec.  1048.315.
    (3) You test 30 engines from the engine family.
    (4) You test one percent of your projected annual U.S.-directed 
production volume for the engine family, rounded to the nearest whole 
number. Do not count an engine under this paragraph (g)(4) if it fails 
to meet an applicable emission standard. You may stop testing after you 
test one percent of your production volume even if you have not tested 
the number of engines specified in paragraph (b) of this section. For 
example, if projected volume is 475 engines, test two engines in each 
of the first two quarters and one engine in the third quarter to 
fulfill your testing requirements under this section for that engine 
family.
    (5) You choose to declare that the engine family does not comply 
with the requirements of this subpart.
    (h) If the sample-size calculation allows you to stop testing for 
one pollutant but not another, you must continue measuring emission 
levels of all pollutants for any additional tests required under this 
section. However, you need not continue making the calculations 
specified in this section for the pollutant for which testing is not 
required. This paragraph (h) does not affect the number of tests 
required under this section or the remedial steps required under Sec.  
1048.320.
* * * * *
    74. Section 1048.315 is amended by revising paragraphs (a) and (b) 
to read as follows:


Sec.  1048.315  How do I know when my engine family fails the 
production-line testing requirements?

* * * * *
    (a) Calculate your test results as follows:
    (1) Initial and final test results. Calculate and round the test 
results for each engine. If you do several tests on an engine, 
calculate the initial test results, then add them together and divide 
by the number of tests and round for the final test results on that 
engine.
    (2) Final deteriorated test results. Apply the deterioration factor 
for the engine family to the final test results (see Sec.  
1048.240(c)).
    (3) Round deteriorated test results. Round the results to the 
number of decimal places in the emission standard expressed to one more 
decimal place.
    (b) Construct the following CumSum Equation for each engine family 
for HC+NOX and CO emissions:

Ci = Max [0 or Ci-1 + Xi - (STD + 0.25 
x [sigma])]

Where:

Ci = The current CumSum statistic.
Ci-1 = The previous CumSum statistic. For the first test, 
the CumSum statistic is 0 (i.e., C1 = 0).
Xi = The current emission test result for an individual 
engine.
STD = Emission standard.
* * * * *
    75. Section 1048.325 is amended by revising the section heading and 
paragraph (c) to read as follows:


Sec.  1048.325  What happens if an engine family fails the production-
line testing requirements?

* * * * *
    (c) Up to 15 days after we suspend the certificate for an engine 
family, you may ask for a hearing (see Sec.  1048.820). If we agree 
before a hearing occurs that we used erroneous information in deciding 
to suspend the certificate, we will reinstate the certificate.
* * * * *
    76. Section 1048.345 is amended by revising paragraphs (a)(4), 
(a)(5), (a)(8), and (c) to read as follows:


Sec.  1048.345  What production-line testing records must I send to 
EPA?

* * * * *
    (a) * * *
    (4) Describe each test engine, including the engine family's 
identification and the engine's model year, build date, model number, 
identification number, and number of hours of operation before testing.
    (5) Identify how you accumulated hours of operation on the engines 
and describe the procedure and schedule you used.
* * * * *
    (8) Provide the CumSum analysis required in Sec.  1048.315 and the 
sample-size calculation required in Sec.  1048.310 for each engine 
family.
* * * * *
    (c) An authorized representative of your company must sign the 
following statement:
    We submit this report under Sections 208 and 213 of the Clean Air 
Act. Our production-line testing conformed completely with the 
requirements of 40 CFR part 1048. We have not changed production 
processes or quality-control procedures for test engines in a way that 
might affect emission controls. All the information in this report is 
true and accurate, to the best of my knowledge. I know of the penalties 
for violating the Clean Air Act and the regulations. (Authorized 
Company Representative)
* * * * *
    77. Section 1048.350 is amended by revising paragraphs (b) and (e) 
to read as follows:


Sec.  1048.350  What records must I keep?

* * * * *
    (b) Keep paper records of your production-line testing for eight 
years after you complete all the testing required for an engine family 
in a model year. You may use any additional storage formats or media if 
you like.
* * * * *
    (e) If we ask, you must give us projected or actual production 
figures for an engine family. We may ask you to divide your production 
figures by maximum engine power, displacement, fuel type, or assembly 
plant (if you produce engines at more than one plant).
* * * * *

Subpart E--[Amended]

    78. Section 1048.410 is amended by revising paragraph (e) to read 
as follows:


Sec.  1048.410  How must I select, prepare, and test my in-use engines?

* * * * *
    (e) You may do repeat measurements with a test engine; however, you 
must conduct the same number of tests on each engine.
* * * * *
    79. Section 1048.415 is amended by revising paragraphs (c) and (d) 
to read as follows:


Sec.  1048.415  What happens if in-use engines do not meet 
requirements?

* * * * *
    (c) We will consider failure rates, average emission levels, and 
any defects--among other things--to decide on taking remedial action 
under this subpart (see 40 CFR 1068.505). We may consider the results 
from any voluntary additional testing you perform. We may also consider 
information related to testing from other engine families showing that 
you designed them to exceed the minimum requirements for controlling 
emissions. We may order a recall before or after you complete testing 
of an engine family if we determine a substantial number of engines do 
not conform to section 213 of the Act or to this part. The scope of the 
recall may include other engine families in the same or different model 
years if the cause of the problem identified in paragraph (a) of this 
section applies more broadly than the tested engine family, as allowed 
by the Act.

[[Page 28298]]

    (d) If in-use testing reveals a design or manufacturing defect that 
prevents engines from meeting the requirements of this part, you must 
correct the defect as soon as possible for any future production for 
engines in every family affected by the defect. See 40 CFR 1068.501 for 
additional requirements related to defect reporting.
* * * * *

Subpart F--[Amended]

    80. Section 1048.501 is amended by removing paragraph (h), removing 
and reserving paragraph (e), and revising paragraph (c) to read as 
follows:


Sec.  1048.501  How do I run a valid emission test?

* * * * *
    (c) Use the fuels and lubricants specified in 40 CFR part 1065, 
subpart H, to perform valid tests for all the testing we require in 
this part, except as noted in Sec.  1048.515. For service accumulation, 
use the test fuel or any commercially available fuel that is 
representative of the fuel that in-use engines will use.
* * * * *
    81. Section 1048.505 is amended by revising paragraphs (a) and 
(b)(1) to read as follows:


Sec.  1048.505  What transient duty cycles apply for laboratory 
testing?

* * * * *
    (a) You may perform steady-state testing with either discrete-mode 
or ramped-modal cycles, as follows:
    (1) For discrete-mode testing, sample emissions separately for each 
mode, then calculate an average emission level for the whole cycle 
using the weighting factors specified for each mode. Calculate cycle 
statistics for each mode and compare with the specified values in 40 
CFR 1065.514 to confirm that the test is valid. Operate the engine and 
sampling system as follows:
    (i) Engines with lean NOX aftertreatment. For lean-burn engines 
that depend on aftertreatment to meet the NOX emission 
standard, operate the engine for 5-6 minutes, then sample emissions for 
1-3 minutes in each mode.
    (ii) Engines without lean NOX aftertreatment. For other engines, 
operate the engine for at least 5 minutes, then sample emissions for at 
least 1 minute in each mode.
    (2) For ramped-modal testing, start sampling at the beginning of 
the first mode and continue sampling until the end of the last mode. 
Calculate emissions and cycle statistics the same as for transient 
testing as specified in 40 CFR part 1065, subpart G.
    (b) * * *
    (1) For engines from an engine family that will be used only in 
variable-speed applications, use one of the following duty cycles:
    (i) The following duty cycle applies for discrete-mode testing:

                                           Table 1 to Sec.   1048.505
----------------------------------------------------------------------------------------------------------------
                                                                                     Observed        Weighting
                  C2 mode No.                           Engine speed \1\            torque \2\        factors
----------------------------------------------------------------------------------------------------------------
1.............................................  Maximum test speed..............              25            0.06
2.............................................  Intermediate test...............             100            0.02
3.............................................  Intermediate test...............              75            0.05
4.............................................  Intermediate test...............              50            0.32
5.............................................  Intermediate test...............              25            0.30
6.............................................  Intermediate test...............              10            0.10
7.............................................  Idle............................               0           0.15
----------------------------------------------------------------------------------------------------------------
\1\ Speed terms are defined in 40 CFR part 1065.
\2\ The percent torque is relative to the maximum torque at the given engine speed.

    (ii) The following duty cycle applies for ramped-modal testing:

                                           Table 2 to Sec.   1048.505
----------------------------------------------------------------------------------------------------------------
                                           Time in mode
                RMC mode                     (seconds)       Engine speed \1\ \2\      Torque  (percent) \2\ \3\
----------------------------------------------------------------------------------------------------------------
1a Steady-state.........................             119  Warm Idle.................  0.
1b Transition...........................              20  Linear Transition.........  Linear Transition.
2a Steady-state.........................              29  Intermediate Speed........  100.
2b Transition...........................              20  Intermediate Speed........  Linear Transition.
3a Steady-state.........................             150  Intermediate Speed........  10.
3b Transition...........................              20  Intermediate Speed........  Linear Transition.
4a Steady-state.........................              80  Intermediate Speed........  75.
4b Transition...........................              20  Intermediate Speed........  Linear Transition.
5a Steady-state.........................             513  Intermediate Speed........  25.
5b Transition...........................              20  Intermediate Speed........  Linear Transition.
6a Steady-state.........................             549  Intermediate Speed........  50.
6b Transition...........................              20  Linear Transition.........  Linear Transition.
7a Steady-state.........................              96  Maximum test speed........  25.
7b Transition...........................              20  Linear Transition.........  Linear Transition.
8 Steady-state..........................             124  Warm Idle.................  0.
----------------------------------------------------------------------------------------------------------------
\1\ Speed terms are defined in 40 CFR part 1065.
\2\ Advance from one mode to the next within a 20-second transition phase. During the transition phase, command
  a linear progression from the torque setting of the current mode to the torque setting of the next mode.
\3\ The percent torque is relative to maximum torque at the commanded engine speed.


[[Page 28299]]

* * * * *
    82. Section 1048.510 is amended by revising paragraphs (a) and 
(c)(1) to read as follows:


Sec.  1048.510  What transient duty cycles apply for laboratory 
testing?

    (a) Starting with the 2007 model year, measure emissions by testing 
the engine on a dynamometer with the duty cycle described in Appendix 
II to determine whether it meets the transient emission standards in 
Sec.  1048.101(a).
* * * * *
    (c) * * *
    (1) Operate the engine for the first 180 seconds of the appropriate 
duty cycle, then allow it to idle without load for 30 seconds. At the 
end of the 30-second idling period, start measuring emissions as the 
engine operates over the prescribed duty cycle. For severe-duty 
engines, this engine warm-up procedure may include up to 15 minutes of 
operation over the appropriate duty cycle.
* * * * *

Subpart G--[Amended]

    83. Section 1048.605 is amended by revising paragraph (d)(7)(ii) to 
read as follows:


Sec.  1048.605  What provisions apply to engines certified under the 
motor-vehicle program?

* * * * *
    (d) * * *
    (7) * * *
    (ii) List the engine or equipment models you expect to produce 
under this exemption in the coming year and describe your basis for 
meeting the sales restrictions of paragraph (d)(3) of this section.
* * * * *
    84. Section 1048.610 is amended by revising paragraphs (d)(7)(ii) 
and (g) to read as follows:


Sec.  1048.610  What provisions apply to vehicles certified under the 
motor-vehicle program?

* * * * *
    (d) * * *
    (7) * * *
    (ii) List the equipment models you expect to produce under this 
exemption in the coming year and describe your basis for meeting the 
sales restrictions of paragraph (d)(3) of this section.
* * * * *
    (g) Participation in averaging, banking and trading. Vehicles 
adapted for nonroad use under this section may generate credits under 
the ABT provisions in 40 CFR part 86. These vehicles must be included 
in the calculation of the applicable fleet average in 40 CFR part 86.
    85. Section 1048.615 is amended by revising paragraphs (a)(1), 
(a)(3) and (d) to read as follows:


Sec.  1048.615  What are the provisions for exempting engines designed 
for lawn and garden applications?

* * * * *
    (a) * * *
    (1) The engine must have a total displacement of 1000.0 cc or less.
* * * * *
    (3) The engine must be in an engine family that has a valid 
certificate of conformity showing that it meets emission standards for 
Class II engines under 40 CFR part 90 or 1054 for the appropriate model 
year.
* * * * *
    (d) Engines exempted under this section are subject to all the 
requirements affecting engines under 40 CFR part 90 or 1054. The 
requirements and restrictions of 40 CFR part 90 or 1054 apply to anyone 
manufacturing these engines, anyone manufacturing equipment that uses 
these engines, and all other persons in the same manner as if these 
engines had a total maximum engine power at or below 19 kW.
    86. Section 1048.630 is revised to read as follows:


Sec.  1048.630  What are the provisions for exempting engines used 
solely for competition?

    (a) We may grant you an exemption from the standards and 
requirements of this part for a new engine on the grounds that it is to 
be used solely for competition. The requirements of this part, other 
than those in this section, do not apply to engines that we exempt for 
use solely for competition.
    (b) We will exempt engines that we determine will be used solely 
for competition. The basis of our determination is described in 
paragraphs (c) and (d) of this section. Exemptions granted under this 
section are good for only one model year and you must request renewal 
for each subsequent model year. We will not approve your renewal 
request if we determine the engine will not be used solely for 
competition.
    (c) Engines meeting all the following criteria are considered to be 
used solely for competition:
    (1) Neither the engine nor any equipment containing the engine may 
be displayed for sale in any public dealership or otherwise offered for 
sale to the general public.
    (2) Sale of the equipment in which the engine is installed must be 
limited to professional competition teams, professional competitors, or 
other qualified competitors. Keep records documenting this, such as a 
letter requesting an exempted engine.
    (3) The engine and the equipment in which it is installed must have 
performance characteristics that are substantially superior to 
noncompetitive models.
    (4) The engines are intended for use only as specified in paragraph 
(e) of this section.
    (d) You may ask us to approve an exemption for engines not meeting 
the applicable criteria listed in paragraph (c) of this section as long 
as you have clear and convincing evidence that the engines will be used 
solely for competition.
    (e) Engines are considered to be used solely for competition only 
if their use is limited to competition events sanctioned by a state or 
federal government agency or another widely recognized public 
organization with authorizing permits for participating competitors. 
Operation of such engines may include only competition events or trials 
to qualify for competition events. Authorized attempts to set 
performance records (and the associated official trials) are also 
considered competition events. Engines will not be considered to be 
used solely for competition if they are ever used for any recreational 
or other noncompetitive purpose. Any use of exempt engines in 
recreational events is a violation of 40 CFR 1068.101.
    (f) You must permanently label engines exempted under this section 
to clearly indicate that they are to be used only for competition. 
Failure to properly label an engine will void the exemption for that 
engine.
    (g) If we request it, you must provide us any information we need 
to determine whether the engines or equipment are used solely for 
competition. This would include documentation regarding the number of 
engines and the ultimate purchaser of each engine. Keep these records 
for five years.

Subpart I--[Amended]

    87. Section 1048.801 is amended as follows:
    a. By revising the definitions for ``Constant-speed operation'', 
``Designated Compliance Officer'', ``Emission-control system'', 
``Maximum engine power'', ``Nonmethane hydrocarbon'', ``Official 
emission result'', ``Oxides of nitrogen'',``Small-volume engine 
manufacturer'', ``Steady-state'', ``Total hydrocarbon equivalent'', and 
``Useful life''.
    b. By revising paragraph (1) of the definition for ``New nonroad 
engine''.

[[Page 28300]]

    c. By adding text to paragraph (5)(ii) of the definition for 
``Model year''.
    d. By adding a definition of ``Engine'' and adding a paragraph 
(5)(iii) to the definition for ``Model year''.


Sec.  1048.801  What definitions apply to this part?

* * * * *
    Constant-speed operation has the meaning given in 40 CFR 1065.1001.
* * * * *
    Designated Compliance Officer means the Manager, Heavy-Duty and 
Nonroad Engine Group (6405-J), U.S. Environmental Protection Agency, 
1200 Pennsylvania Ave., NW., Washington, DC 20460.
* * * * *
    Emission-control system means any device, system, or element of 
design that controls or reduces the emissions of regulated pollutants 
from an engine.
* * * * *
    Engine has the meaning given in 40 CFR 1068.30. This includes 
complete and partially complete engines.
* * * * *
    Maximum engine power has one of the following meanings:
    (1) For engines at or below 50 kW, maximum engine power has the 
meaning given in 40 CFR 90.3 for 2010 and earlier model years and in 40 
CFR 1054.140 for 2011 and later model years.
    (2) For engines above 50 kW, maximum engine power has the meaning 
given in 40 CFR 1039.140.
* * * * *
    Model year means one of the following things: * * *
    (5) * * *
    (ii) For imported engines described in paragraph (5)(ii) of the 
definition of ``new nonroad engine,'' model year means the calendar 
year in which the engine is modified.
    (iii) For imported engines described in paragraph (5)(iii) of the 
definition of ``new nonroad engine,'' model year means the calendar 
year in which the importation occurs.
* * * * *
    New nonroad engine means any of the following things:
    (1) A freshly manufactured nonroad engine for which the ultimate 
purchaser has never received the equitable or legal title. This kind of 
engine might commonly be thought of as ``brand new.'' In the case of 
this paragraph (1), the engine is new from the time it is produced 
until the ultimate purchaser receives the title or the product is 
placed into service, whichever comes first.
* * * * *
    Nonmethane hydrocarbon has the meaning given in 40 CFR 1065.1001.
* * * * *
    Official emission result means the measured emission rate for an 
emission-data engine on a given duty cycle before the application of 
any deterioration factor.
* * * * *
    Oxides of nitrogen has the meaning given in 40 CFR 1065.1001.
* * * * *
    Small-volume engine manufacturer means one of the following:
    (1) An engine manufacturer with U.S.-directed production volumes of 
engines subject to the requirements of this part totaling no more than 
2,000 units in any year. For manufacturers owned by a parent company, 
this production limit applies to the production of the parent company 
and all its subsidiaries.
    (2) An engine manufacturer with fewer than 200 employees. This 
includes any employees working for parent or subsidiary companies.
* * * * *
    Steady-state has the meaning given in 40 CFR 1065.1001.
* * * * *
    Total hydrocarbon equivalent has the meaning given in 40 CFR 
1065.1001.
* * * * *
    Useful life means the period during which the engine is designed to 
properly function in terms of reliability and fuel consumption, without 
being remanufactured, specified as a number of hours of operation or 
calendar years, whichever comes first. It is the period during which a 
new nonroad engine is required to comply with all applicable emission 
standards. See Sec.  1048.101(g). If an engine has no hour meter, the 
specified number of hours does not limit the period during which an in-
use engine is required to comply with emission standards, unless the 
degree of service accumulation can be verified separately.
* * * * *
    88. Section 1048.810 is amended by revising paragraph (b) before 
the table to read as follows:


Sec.  1048.810  What materials does this part reference?

* * * * *
    (b) SAE material. Table 2 of this section lists material from the 
Society of Automotive Engineers that we have incorporated by reference. 
The first column lists the number and name of the material. The second 
column lists the sections of this part where we reference it. Anyone 
may purchase copies of these materials from the Society of Automotive 
Engineers, 400 Commonwealth Drive, Warrendale, PA 15096 or www.sae.org. 
Table 1 follows:
* * * * *
    89. A new Sec.  1048.825 is added to read as follows:


Sec.  1048.825  What reporting and recordkeeping requirements apply 
under this part?

    Under the Paperwork Reduction Act (44 U.S.C. 3501 et seq), the 
Office of Management and Budget approves the reporting and 
recordkeeping specified in the applicable regulations. The following 
items illustrate the kind of reporting and recordkeeping we require for 
engines and equipment regulated under this part:
    (a) We specify the following requirements related to engine 
certification in this part 1048:
    (1) In Sec.  1048.20 we require manufacturers of stationary engines 
to label their engines in certain cases.
    (2) In Sec.  1048.135 we require engine manufacturers to keep 
certain records related to duplicate labels sent to equipment 
manufacturers.
    (3) In Sec.  1048.145 we include various reporting and 
recordkeeping requirements related to interim provisions.
    (4) In subpart C of this part we identify a wide range of 
information required to certify engines.
    (5) In Sec. Sec.  1048.345 and 1048.350 we specify certain records 
related to production-line testing.
    (6) In Sec. Sec.  1048.420 and 1048.425 we specify certain records 
related to in-use testing.
    (7) In subpart G of this part we identify several reporting and 
recordkeeping items for making demonstrations and getting approval 
related to various special compliance provisions.
    (b) [Reserved]
    (c) We specify the following requirements related to testing in 40 
CFR part 1065:
    (1) In 40 CFR 1065.2 we give an overview of principles for 
reporting information.
    (2) In 40 CFR 1065.10 and 1065.12 we specify information needs for 
establishing various changes to published test procedures.
    (3) In 40 CFR 1065.25 we establish basic guidelines for storing 
test information.
    (4) In 40 CFR 1065.695 we identify data that may be appropriate for 
collecting during testing of in-use engines using portable analyzers.
    (d) We specify the following requirements related to the general 
compliance provisions in 40 CFR part 1068:

[[Page 28301]]

    (1) In 40 CFR 1068.5 we establish a process for evaluating good 
engineering judgment related to testing and certification.
    (2) In 40 CFR 1068.25 we describe general provisions related to 
sending and keeping information
    (3) In 40 CFR 1068.27 we require manufacturers to make engines 
available for our testing or inspection if we make such a request.
    (4) In 40 CFR 1068.105 we require equipment manufacturers to keep 
certain records related to duplicate labels from engine manufacturers.
    (5) In 40 CFR 1068.120 we specify recordkeeping related to 
rebuilding engines.
    (6) In 40 CFR part 1068, subpart C, we identify several reporting 
and recordkeeping items for making demonstrations and getting approval 
related to various exemptions.
    (7) In 40 CFR part 1068, subpart D, we identify several reporting 
and recordkeeping items for making demonstrations and getting approval 
related to importing engines.
    (8) In 40 CFR 1068.450 and 1068.455 we specify certain records 
related to testing production-line engines in a selective enforcement 
audit.
    (9) In 40 CFR 1068.501 we specify certain records related to 
investigating and reporting emission-related defects.
    (10) In 40 CFR 1068.525 and 1068.530 we specify certain records 
related to recalling nonconforming engines.

Appendix I to Part 1048 [Removed]

    90. Appendix I to part 1048 is removed and reserved.

PART 1051--CONTROL OF EMISSIONS FROM RECREATIONAL ENGINES AND 
VEHICLES

    91. The authority citation for part 1051 continues to read as 
follows:

    Authority: 42 U.S.C. 7401-7671q.

Subpart A--Amended]

    92. Section 1051.1 is amended by revising paragraph (a)(4) to read 
as follows:


Sec.  1051.1  Does this part apply for my vehicles or engines?

    (a) * * *
    (4) Offroad utility vehicles with engines with displacement less 
than or equal to 1000 cc, maximum engine power less than or equal to 30 
kW, and maximum vehicle speed higher than 25 miles per hour. Offroad 
utility vehicles that are subject to this part are subject to the same 
requirements as ATVs. This means that any requirement that applies to 
ATVs also applies to these offroad utility vehicles, without regard to 
whether the regulatory language mentions offroad utility vehicles.
* * * * *
    93. A new Sec.  1051.2 is added to read as follows:


Sec.  1051.2  Who is responsible for compliance?

    The regulations in this part 1051 contain provisions that affect 
both vehicle manufacturers and others. However, the requirements of 
this part are generally addressed to the vehicle manufacturer. The term 
``you'' generally means the vehicle manufacturer, as defined in Sec.  
1051.801, especially for issues related to certification (including 
production-line testing, reporting, etc.).
    94. Section 1051.5 is amended by revising paragraph (a) to read as 
follows:


Sec.  1051.5  Which engines are excluded from this part's requirements?

    (a)(1) You may exclude vehicles with compression-ignition engines. 
See 40 CFR parts 89 and 1039 for regulations that cover these engines.
    (2) Vehicles with a combined total vehicle dry weight under 20.0 
kilograms are excluded from this part. Spark-ignition engines in these 
vehicles must instead meet emission standards specified in 40 CFR parts 
90 and 1054. See 40 CFR 90.103(a) and the definition of handheld in 40 
CFR 1054.801.
* * * * *
    95. Section 1051.10 is amended by revising the introductory text to 
read as follows:


Sec.  1051.10  How is this part organized?

    This part 1051 is divided into the following subparts:
* * * * *
    96. Section 1051.25 is amended by revising paragraphs (a) and (c) 
to read as follows:


Sec.  1051.25  What requirements apply when installing certified 
engines in recreational vehicles?

    (a) If you manufacture recreational vehicles with engines certified 
under Sec.  1051.20, you must certify your vehicle with respect to the 
evaporative emission standards in Sec.  1051.110, but you need not 
certify the vehicle with respect to exhaust emissions under this part. 
The vehicle must nevertheless meet all emission standards with the 
engine installed.
* * * * *
    (c) If you obscure the engine label while installing the engine in 
the vehicle such that the label cannot be read during normal 
maintenance, you must place a duplicate label on the vehicle as 
described in 40 CFR 1068.105.

Subpart B--[Amended]

    97. Section 1051.115 is amended by revising the section heading and 
introductory text to read as follows:


Sec.  1051.115  What other requirements apply?

    Vehicles that are required to meet the emission standards of this 
part must meet the following requirements:
* * * * *
    98. Section 1051.120 is amended by revising paragraph (c) to read 
as follows:


Sec.  1051.120  What emission-related warranty requirements apply to 
me?

* * * * *
    (c) Components covered. The emission-related warranty covers all 
components whose failure would increase an engine's emissions of any 
pollutant, including those listed in 40 CFR part 1068, Appendix I, and 
those from any other system you develop to control emissions. The 
emission-related warranty covers these components even if another 
company produces the component. Your emission-related warranty does not 
cover components whose failure would not increase an engine's emissions 
of any pollutant.
* * * * *
    99. Section 1051.125 is amended by revising paragraph (d) to read 
as follows:


Sec.  1051.125  What maintenance instructions must I give to buyers?

* * * * *
    (d) Noncritical emission-related maintenance. Subject to the 
provisions of this paragraph (d), you may schedule any amount of 
emission-related inspection or maintenance that is not covered by 
paragraph (a) of this section (i.e., maintenance that is neither 
explicitly identified as critical emission-related maintenance, nor 
that we approve as critical emission-related maintenance). Noncritical 
emission-related maintenance generally includes changing spark plugs, 
re-seating valves, or any other emission-related maintenance on the 
components we specify in 40 CFR part 1068, Appendix I. You must state 
in the owners manual that these steps are not necessary to keep the 
emission-related warranty valid. If operators fail to do this 
maintenance, this does not allow you to disqualify those vehicles from 
in-use testing or deny a warranty claim. Do not take these inspection 
or maintenance steps during service accumulation on your emission-data 
vehicles.
* * * * *
    100. Section 1051.135 is amended by removing and reserving 
paragraph (f)

[[Page 28302]]

and revising paragraphs (c)(6) and (c)(7) to read as follows:


Sec.  1051.135  How must I label and identify the vehicles I produce?

* * * * *
    (c) * * *
    (6) State the date of manufacture [MONTH and YEAR]; however, you 
may omit this from the label if you stamp or engrave it on the engine 
or vehicle.
    (7) State the exhaust emission standards or FELs to which the 
vehicles are certified (in g/km or g/kW-hr). Also, starting in the 2009 
model year, state the FEL that applies for the fuel tank if it is 
different than the otherwise applicable standard.
* * * * *
    101. Section 1051.137 is amended by revising the introductory text 
read as follows:


Sec.  1051.137  What are the consumer labeling requirements?

    Label every vehicle certified under this part with a removable 
hang-tag showing its emission characteristics relative to other models. 
The label should be attached securely to the vehicle before it is 
offered for sale in such a manner that it would not be accidentally 
removed prior to sale. Use the applicable equations of this section to 
determine the normalized emission rate (NER) from the FEL for your 
vehicle. If the vehicle is certified without a family emission limit 
that is different than the otherwise applicable standard, use the final 
deteriorated emission level. Round the resulting normalized emission 
rate for your vehicle to one decimal place. If the calculated NER value 
is less than zero, consider NER to be zero for that vehicle. We may 
specify a standardized format for labels. At a minimum, the tag should 
include: The manufacturer's name, vehicle model name, engine 
description (500 cc two-stroke with DFI), the NER, and a brief 
explanation of the scale (for example, note that 0 is the cleanest and 
10 is the least clean).
* * * * *
    102. A new Sec.  1051.140 is added to read as follows:


Sec.  1051.140  What is my vehicle's maximum engine power and 
displacement?

    This section describes how to quantify your vehicle's maximum 
engine power and displacement for the purposes of this part.
    (a) An engine configuration's maximum engine power is the maximum 
brake power point on the nominal power curve for the engine 
configuration, as defined in this section. Round the power value to the 
nearest 0.5 kilowatts. The nominal power curve of an engine 
configuration is the relationship between maximum available engine 
brake power and engine speed for an engine, using the mapping 
procedures of 40 CFR part 1065, based on the manufacturer's design and 
production specifications for the engine. This information may also be 
expressed by a torque curve that relates maximum available engine 
torque with engine speed.
    (b) An engine configuration's displacement is the intended swept 
volume of the engine rounded to the nearest 0.5 cubic centimeter. The 
swept volume of the engine is the product of the internal cross-section 
area of the cylinders, the stroke length, and the number of cylinders. 
For example, for a one-cylinder engine with a circular cylinder having 
an internal diameter of 6.00 cm and a 6.25 cm stroke length, the 
rounded displacement would be: (1) x (6.00/2)\2\ x ([pi]) x (6.25) = 
176.5 cc. Calculate the engine's intended swept volume from the design 
specifications for the cylinders using enough significant figures allow 
determination of the displacement to the nearest 0.1 cc.
    (c) The nominal power curve and intended swept volume must be 
within the range of the actual power curves and swept volumes of 
production engines considering normal production variability. If after 
production begins it is determined that either your nominal power curve 
or your intended swept volume does not represent production engines, we 
may require you to amend your application for certification under Sec.  
1051.225.

Subpart C--[Amended]

    103. Section 1051.201 is amended by revising paragraph (a) to read 
as follows:


Sec.  1051.201  What are the general requirements for obtaining a 
certificate of conformity?

    (a) You must send us a separate application for a certificate of 
conformity for each engine family. A certificate of conformity is valid 
starting with the indicated effective date, but it is not valid for any 
production after December 31 of the model year for which it is issued. 
No certificate will be issued after December 31 of the model year.
* * * * *
    104. Section 1051.205 is amended by revising paragraphs (b), 
(o)(1), (t), and (w) to read as follows:


Sec.  1051.205  What must I include in my application?

* * * * *
    (b) Explain how the emission control systems operate. Describe the 
evaporative emission controls. Also describe in detail all system 
components for controlling exhaust emissions, including all auxiliary 
emission control devices (AECDs) and all fuel-system components you 
will install on any production or test vehicle or engine. Identify the 
part number of each component you describe. For this paragraph (b), 
treat as separate AECDs any devices that modulate or activate 
differently from each other. Include sufficient detail to allow us to 
evaluate whether the AECDs are consistent with the defeat device 
prohibition of Sec.  1051.115.
* * * * *
    (o) * * *
    (1) Present exhaust emission data for hydrocarbons (such as NMHC or 
THCE, as applicable), NOX, and CO on an emission-data 
vehicle to show your vehicles meet the exhaust emission standards as 
specified in subpart B of this part. Show emission figures before and 
after applying deterioration factors for each vehicle or engine. If we 
specify more than one grade of any fuel type (for example, a summer 
grade and winter grade of gasoline), you need to submit test data only 
for one grade unless the regulations of this part specify otherwise for 
your engine.
* * * * *
    (t) Include good-faith estimates of U.S.-directed production 
volumes. Include a justification for the estimated production volumes 
if they are substantially different than actual production volumes in 
earlier years for similar models.
* * * * *
    (w) Name an agent for service located in the United States. Service 
on this agent constitutes service on you or any of your officers or 
employees for any action by EPA or otherwise by the United States 
related to the requirements of this part.
    105. Section 1051.220 is amended by revising the introductory text 
to read as follows:


Sec.  1051.220  How do I amend the maintenance instructions in my 
application?

    You may amend your emission-related maintenance instructions after 
you submit your application for certification, as long as the amended 
instructions remain consistent with the provisions of Sec.  1051.125. 
You must send the Designated Compliance Officer a request to amend your 
application for certification for an engine family if you want to 
change the emission-related

[[Page 28303]]

maintenance instructions in a way that could affect emissions. In your 
request, describe the proposed changes to the maintenance instructions. 
We will disapprove your request if we determine that the amended 
instructions are inconsistent with maintenance you performed on 
emission-data vehicles. If operators follow the original maintenance 
instructions rather than the newly specified maintenance, this does not 
allow you to disqualify those engines from in-use testing or deny a 
warranty claim.
* * * * *
    106. Section 1051.225 is revised to read as follows:


Sec.  1051.225  How do I amend my application for certification to 
include new or modified vehicle configurations or to change an FEL?

    Before we issue you a certificate of conformity, you may amend your 
application to include new or modified vehicle configurations, subject 
to the provisions of this section. After we have issued your 
certificate of conformity, you may send us an amended application 
requesting that we include new or modified vehicle configurations 
within the scope of the certificate, subject to the provisions of this 
section. You must amend your application if any changes occur with 
respect to any information included in your application.
    (a) You must amend your application before you take any of the 
following actions:
    (1) Add a vehicle configuration to an engine family. In this case, 
the vehicle configuration added must be consistent with other vehicle 
configurations in the engine family with respect to the criteria listed 
in Sec.  1051.230.
    (2) Change a vehicle configuration already included in an engine 
family in a way that may affect emissions, or change any of the 
components you described in your application for certification. This 
includes production and design changes that may affect emissions any 
time during the engine's lifetime.
    (3) Modify an FEL for an engine family, as described in paragraph 
(f) of this section.
    (b) To amend your application for certification, send the 
Designated Compliance Officer the following information:
    (1) Describe in detail the addition or change in the vehicle model 
or configuration you intend to make.
    (2) Include engineering evaluations or data showing that the 
amended engine family complies with all applicable requirements. You 
may do this by showing that the original emission-data vehicle is still 
appropriate for showing that the amended family complies with all 
applicable requirements.
    (3) If the original emission-data vehicle for the engine family is 
not appropriate to show compliance for the new or modified vehicle 
configuration, include new test data showing that the new or modified 
vehicle configuration meets the requirements of this part.
    (c) We may ask for more test data or engineering evaluations. You 
must give us these within 30 days after we request them.
    (d) For engine families already covered by a certificate of 
conformity, we will determine whether the existing certificate of 
conformity covers your new or modified vehicle configuration. You may 
ask for a hearing if we deny your request (see Sec.  1051.820).
    (e) For engine families already covered by a certificate of 
conformity, you may start producing the new or modified vehicle 
configuration any time after you send us your amended application, 
before we make a decision under paragraph (d) of this section. However, 
if we determine that the affected vehicles do not meet applicable 
requirements, we will notify you to cease production of the vehicles 
and may require you to recall the vehicles at no expense to the owner. 
Choosing to produce vehicles under this paragraph (e) is deemed to be 
consent to recall all vehicles that we determine do not meet applicable 
emission standards or other requirements and to remedy the 
nonconformity at no expense to the owner. If you do not provide 
information required under paragraph (c) of this section within 30 
days, you must stop producing the new or modified vehicle 
configuration.
    (f) You may ask us to approve a change to your FEL in certain cases 
after the start of production. The changed FEL may not apply to 
vehicles you have already introduced into commerce, except as described 
in this paragraph (f). If we approve a changed FEL after the start of 
production, you must include the new FEL on the emission control 
information label for all vehicles produced after the change. You may 
ask us to approve a change to your FEL in the following cases:
    (1) You may ask to raise your FEL for your engine family at any 
time. In your request, you must show that you will still be able to 
meet the emission standards as specified in subparts B and H of this 
part. If you amend your application by submitting new test data to 
include a newly added or modified vehicle, as described in paragraph 
(b)(3) of this section, use the appropriate FELs with corresponding 
production volumes to calculate your average emission level for the 
model year, as described in subpart H of this part. If you amend your 
application without submitting new test data, you must use the higher 
FEL for the entire family to calculate your average emission level 
under subpart H of this part.
    (2) You may ask to lower the FEL for your engine family only if you 
have test data from production engines showing that the engines have 
emissions below the proposed lower FEL. The lower FEL applies only to 
engines you produce after we approve the new FEL. Use the appropriate 
FELs with corresponding production volumes to calculate your average 
emission level for the model year, as described in subpart H of this 
part.
    107. Section 1051.230 is amended by revising the paragraphs (a) and 
(e)(1) to read as follows:


Sec.  1051.230  How do I select engine families?

    (a) For purposes of certification, divide your product line into 
families of vehicles as described in this section. Except as specified 
in paragraph (f) of this section, you must have separate engine 
families for meeting exhaust and evaporative emissions. Your engine 
family is limited to a single model year.
* * * * *
    (e) * * *
    (1) In unusual circumstances, you may group such vehicles in the 
same engine family if you show that their emission characteristics 
during the useful life will be similar.
* * * * *
    108. Section 1051.235 is amended by revising paragraph (d)(1)(i) to 
read as follows:


Sec.  1051.235  What emission testing must I perform for my application 
for a certificate of conformity?

* * * * *
    (d) * * *
    (1) * * *
    (i) The engine family from the previous model year differs from the 
current engine family only with respect to model year or other 
characteristics unrelated to emissions. You may also ask to add a 
configuration subject to Sec.  1051.225.
* * * * *
    109. Section 1051.240 is amended by revising paragraph (c)(1) to 
read as follows:


Sec.  1051.240  How do I demonstrate that my engine family complies 
with exhaust emission standards?

* * * * *

[[Page 28304]]

    (c) * * *
    (1) For vehicles that use aftertreatment technology, such as 
catalytic converters, use a multiplicative deterioration factor for 
exhaust emissions. A multiplicative deterioration factor is the ratio 
of exhaust emissions at the end of the useful life and exhaust 
emissions at the low-hour test point. In these cases, adjust the 
official emission results for each tested vehicle or engine at the 
selected test point by multiplying the measured emissions by the 
deterioration factor. If the factor is less than one, use one. 
Multiplicative deterioration factors must be specified to three 
significant figures.
* * * * *
    110. Section 1051.243 is amended by revising the introductory text 
and paragraph (b)(6) to read as follows:


Sec.  1051.243  How do I determine deterioration factors from exhaust 
durability testing?

    Establish deterioration factors to determine whether your engines 
will meet exhaust emission standards for each pollutant throughout the 
useful life, as described in subpart B of this part and Sec.  1051.240. 
This section describes how to determine deterioration factors, either 
with pre-existing test data or with new emission measurements.
* * * * *
    (b) * * *
    (6) You may use other testing methods to determine deterioration 
factors, consistent with good engineering judgment, as long as we 
approve those methods in advance.
* * * * *
    111. Section 1051.245 is amended by revising paragraph (e)(1) to 
read as follows:


Sec.  1051.245  How do I demonstrate that my engine family complies 
with evaporative emission standards?

* * * * *
    (e) * * *
    (1) For certification to the standards specified in Sec.  
1051.110(a) with the control technologies shown in the following table:

   Table 1 of Sec.   1051.245.--Design-Certification Technologies for
                       Controlling Tank Permeation
------------------------------------------------------------------------
                                             Then you may design-certify
If the tank permeability control technology   with a tank emission level
                  is. . .                              of. . .
------------------------------------------------------------------------
(i) A metal fuel tank with no non-metal      1.5 g/m2/day.
 gaskets or with gaskets made from a low-
 permeability material..
(ii) A metal fuel tank with non-metal        1.5 g/m2/day.
 gaskets with an exposed surface area of
 1000 mm2 or less. 1.5.
------------------------------------------------------------------------

* * * * *
    112. Section 1051.250 is amended by redesignating paragraphs (a) 
through (d) as paragraphs (b) through (e), respectively, and adding a 
new paragraph (a) to read as follows:


Sec.  1051.250  What records must I keep and make available to EPA?

    (a) If you produce vehicles under any provisions of this part that 
are related to production volumes, send the Designated Compliance 
Officer a report within 30 days after the end of the model year 
describing the total number of vehicles you produced in each engine 
family. For example, if you use special provisions intended for small-
volume manufacturers, report your production volumes to show that you 
do not exceed the applicable limits.
* * * * *

Subpart D--[Amended]

    113. Section 1051.301 is amended by revising paragraphs (a), (c), 
(e), and (h) introductory text to read as follows:


Sec.  1051.301  When must I test my production-line vehicles or 
engines?

    (a) If you produce vehicles that are subject to the requirements of 
this part, you must test them as described in this subpart, except as 
follows:
    (1) Small-volume manufacturers may omit testing under this subpart.
    (2) We may exempt engine families with a projected U.S.-directed 
production volume below 150 units from routine testing under this 
subpart. Request this exemption in the application for certification 
and include your basis for projecting a production volume below 150 
units. You must promptly notify us if your actual production exceeds 
150 units during the model year. If you exceed the production limit or 
if there is evidence of a nonconformity, we may require you to test 
production-line engines under this subpart, or under 40 CFR part 1068, 
subpart E, even if we have approved an exemption under this paragraph 
(a)(2).
* * * * *
    (c) Other regulatory provisions authorize us to suspend, revoke, or 
void your certificate of conformity, or order recalls for engine 
families without regard to whether they have passed these production-
line testing requirements. The requirements of this subpart do not 
affect our ability to do selective enforcement audits, as described in 
part 1068 of this chapter. Individual vehicles and engines in families 
that pass these production-line testing requirements must also conform 
to all applicable regulations of this part and part 1068 of this 
chapter.
* * * * *
    (e) If you certify an engine family with carryover emission data, 
as described in Sec.  1051.235(c), and these equivalent engine families 
consistently pass the production-line testing requirements over the 
preceding two-year period, you may ask for a reduced testing rate for 
further production-line testing for that family. The minimum testing 
rate is one vehicle or engine per engine family. If we reduce your 
testing rate, we may limit our approval to any number of model years. 
In determining whether to approve your request, we may consider the 
number of vehicles or engines that have failed the emission tests.
* * * * *
    (h) Vehicles certified to the following standards are exempt from 
the production-line testing requirements of this subpart if no engine 
families in the averaging set have family emission limits that are 
different than the otherwise applicable standard:
* * * * *
    114. Section 1051.305 is amended by adding introductory text and 
revising paragraph (d) to read as follows:


Sec.  1051.305  How must I prepare and test my production-line vehicles 
or engines?

    This section describes how to prepare and test production-line 
vehicles or engines. Test the engine if your vehicle is certified to g/
kW-hr standards; otherwise test the vehicle. You must assemble the test 
vehicle or engine in a way that represents the assembly procedures for 
other vehicles or engines in the engine family. You must ask us to 
approve any deviations from your normal assembly procedures for other 
production vehicles or engines in the engine family.
* * * * *
    (d) Setting adjustable parameters. Before any test, we may require 
you to adjust any adjustable parameter to any

[[Page 28305]]

setting within its physically adjustable range.
    (1) We may require you to adjust idle speed outside the physically 
adjustable range as needed, but only until the vehicle or engine has 
stabilized emission levels (see paragraph (e) of this section). We may 
ask you for information needed to establish an alternate minimum idle 
speed.
    (2) We may specify adjustments within the physically adjustable 
range by considering their effect on emission levels, as well as how 
likely it is someone will make such an adjustment with in-use vehicles.
    (3) We may specify an air-fuel ratio within the adjustable range 
specified in Sec.  1051.115(d).
* * * * *
    115. Section 1051.310 is amended by revising paragraphs (a), (b), 
(c) introductory text, (c)(2), (f), (g), and (h) to read as follows:


Sec.  1051.310  How must I select vehicles or engines for production-
line testing?

    (a) Test engines from each engine family as described in this 
section based on test periods, as follows:
    (1) For engine families with projected U.S.-directed production 
volume of at least 1,600, the test periods are consecutive quarters (3 
months). However, if your annual production period is less than 12 
months long, you may take the following alternative approach to define 
quarterly test periods:
    (i) If your annual production period is 120 days or less, the whole 
model year constitutes a single test period.
    (ii) If your annual production period is 121 to 210 days, divide 
the annual production period evenly into two test periods.
    (iii) If your annual production period is 211 to 300 days, divide 
the annual production period evenly into three test periods.
    (iv) If your annual production period is 301 days or longer, divide 
the annual production period evenly into four test periods.
    (2) For engine families with projected U.S.-directed production 
volume below 1,600, the whole model year constitutes a single test 
period.
    (b) Early in each test period, randomly select and test an engine 
from the end of the assembly line for each engine family.
    (1) In the first test period for newly certified engines, randomly 
select and test one more engine. Then, calculate the required sample 
size for the model year as described in paragraph (c) of this section.
    (2) In later test periods of the same model year, combine the new 
test result with all previous testing in the model year. Then, 
calculate the required sample size for the model year as described in 
paragraph (c) of this section.
    (3) In the first test period for engine families relying on 
previously submitted test data, combine the new test result with the 
last test result from the previous model year. Then, calculate the 
required sample size for the model year as described in paragraph (c) 
of this section. Use the last test result from the previous model year 
only for this first calculation. For all subsequent calculations, use 
only results from the current model year.
    (c) Calculate the required sample size for each engine family. 
Separately calculate this figure for HC, NOX (or HC + 
NOX), and CO. The required sample size is the greater of 
these calculated values. Use the following equation:

N = [(t95 x [sigma])/(x - STD)]2 + 1

Where:

N = Required sample size for the model year.
t95 = 95% confidence coefficient, which depends on the 
number of tests completed, n, as specified in the table in paragraph 
(c)(1) of this section. It defines 95% confidence intervals for a 
one-tail distribution.
x = Mean of emission test results of the sample.
STD = Emission standard (or family emission limit, if applicable).
[sigma] = Test sample standard deviation (see paragraph (c)(2) of 
this section).
* * * * *
    (2) Calculate the standard deviation, [sigma], for the test sample 
using the following formula:

[sigma] = [[Sigma](Xi-x)2/(n-1)]\1/2\
Where:

Xi = Emission test result for an individual vehicle or 
engine.
n = The number of tests completed in an engine family.
* * * * *
    (f) Distribute the remaining tests evenly throughout the rest of 
the year. You may need to adjust your schedule for selecting vehicles 
or engines if the required sample size changes. If your scheduled 
quarterly testing for the remainder of the model year is sufficient to 
meet the calculated sample size, you may wait until the next quarter to 
do additional testing. Continue to randomly select vehicles or engines 
from each engine family.
    (g) Continue testing until one of the following things happens:
    (1) After completing the minimum number of tests required in 
paragraph (b) of this section, the number of tests completed in an 
engine family, n, is greater than the required sample size, N, and the 
sample mean, x, is less than or equal to the emission standard. For 
example, if N = 5.1 after the fifth test, the sample-size calculation 
does not allow you to stop testing.
    (2) The engine family does not comply according to Sec.  1051.315.
    (3) You test 30 vehicles or engines from the engine family.
    (4) You test one percent of your projected annual U.S.-directed 
production volume for the engine family, rounded to the nearest whole 
number. Do not count a vehicle or engine under this paragraph (g)(4) if 
it fails to meet an applicable emission standard.
    (5) You choose to declare that the engine family does not comply 
with the requirements of this subpart.
    (h) If the sample-size calculation allows you to stop testing for 
one pollutant but not another, you must continue measuring emission 
levels of all pollutants for any additional tests required under this 
section. However, you need not continue making the calculations 
specified in this section for the pollutant for which testing is not 
required. This paragraph (h) does not affect the number of tests 
required under this section or the remedial steps required under Sec.  
1051.320.
* * * * *
    116. Section 1051.315 is amended by revising paragraphs (a), (b), 
and (g) to read as follows:


Sec.  1051.315  How do I know when my engine family fails the 
production-line testing requirements?

* * * * *
    (a) Calculate your test results as follows:
    (1) Initial and final test results. Calculate and round the test 
results for each engine. If you do several tests on an engine, 
calculate the initial test results, then add them together and divide 
by the number of tests and round for the final test results on that 
engine.
    (2) Final deteriorated test results. Apply the deterioration factor 
for the engine family to the final test results (see Sec.  
1051.240(c)).
    (3) Round deteriorated test results. Round the results to the 
number of decimal places in the emission standard expressed to one more 
decimal place.
    (b) Construct the following CumSum Equation for each engine family 
for HC, NOX (HC+NOX), and CO emissions:

Ci = Max [0 or Ci-1 + Xi - (STD + 0.25 
x [sigma])]

Where:

Ci = The current CumSum statistic.

[[Page 28306]]

Ci-1 = The previous CumSum statistic. For the first test, 
the CumSum statistic is 0 (i.e., C1 = 0).
Xi = The current emission test result for an individual 
vehicle or engine.
STD = Emission standard (or family emission limit, if applicable).
* * * * *
    (g) If the CumSum statistic exceeds the Action Limit in two 
consecutive tests, the engine family fails the production-line testing 
requirements of this subpart. Tell us within ten working days if this 
happens. You may request to amend the application for certification to 
raise the FEL of the engine family as described in Sec.  1051.225(f).
* * * * *
    117. Section 1051.325 is amended by revising the section heading 
and paragraphs (c) and (e) to read as follows:


Sec.  1051.325  What happens if an engine family fails the production-
line testing requirements?

* * * * *
    (c) Up to 15 days after we suspend the certificate for an engine 
family, you may ask for a hearing (see Sec.  1051.820). If we agree 
before a hearing occurs that we used erroneous information in deciding 
to suspend the certificate, we will reinstate the certificate.
* * * * *
    (e) You may request to amend the application for certification to 
raise the FEL of the engine family before or after we suspend your 
certificate if you meet the requirements of Sec.  1051.225(f). We will 
approve your request if it is clear that you used good engineering 
judgment in establishing the original FEL.
    118. Section 1051.345 is amended by revising paragraphs (a)(4), 
(a)(8), and (c) to read as follows:


Sec.  1051.345  What production-line testing records must I send to 
EPA?

* * * * *
    (a) * * *
    (4) Describe each test vehicle or engine, including the engine 
family's identification and the vehicle's model year, build date, model 
number, identification number, and number of hours of operation before 
testing.
* * * * *
    (8) Provide the CumSum analysis required in Sec.  1051.315 and the 
sample-size calculation required in Sec.  1051.310 for each engine 
family.
* * * * *
    (c) An authorized representative of your company must sign the 
following statement:
    We submit this report under Sections 208 and 213 of the Clean Air 
Act. Our production-line testing conformed completely with the 
requirements of 40 CFR part 1051. We have not changed production 
processes or quality-control procedures for test engines (or vehicles) 
in a way that might affect emission controls. All the information in 
this report is true and accurate, to the best of my knowledge. I know 
of the penalties for violating the Clean Air Act and the regulations. 
(Authorized Company Representative)
* * * * *
    119. Section 1051.350 is amended by revising paragraphs (b) and (e) 
to read as follows:


Sec.  1051.350  What records must I keep?

* * * * *
    (b) Keep paper records of your production-line testing for eight 
years after you complete all the testing required for an engine family 
in a model year. You may use any additional storage formats or media if 
you like.
* * * * *
    (e) If we ask, you must give us projected or actual production 
figures for an engine family. We may ask you to divide your production 
figures by maximum engine power, displacement, fuel type, or assembly 
plant (if you produce vehicles or engines at more than one plant).
* * * * *

Subpart F--[Amended]

    120. Section 1051.505 is amended by revising paragraphs (a)(1) and 
(a)(2) to read as follows:


Sec.  1051.505  What special provisions apply for testing snowmobiles?

* * * * *
    (a) * * *
    (1) For discrete-mode testing, sample emissions separately for each 
mode, then calculate an average emission level for the whole cycle 
using the weighting factors specified for each mode. In each mode, 
operate the engine for at least 5 minutes, then sample emissions for at 
least 1 minute. Calculate cycle statistics for each mode and compare 
with the specified values in 40 CFR 1065.514 to confirm that the test 
is valid.
    (2) For ramped-modal testing, start sampling at the beginning of 
the first mode and continue sampling until the end of the last mode. 
Calculate emissions and cycle statistics the same as for transient 
testing as specified in 40 CFR part 1065, subpart G.
* * * * *

Subpart G--[Amended]

    121. Section 1051.605 is amended by revising paragraph (d)(7)(ii) 
to read as follows:


Sec.  1051.605  What provisions apply to engines already certified 
under the motor-vehicle program or the Large Spark-ignition program?

* * * * *
    (d) * * *
    (7) * * *
    (ii) List the engine or vehicle models you expect to produce under 
this exemption in the coming year and describe your basis for meeting 
the sales restrictions of paragraph (d)(3) of this section.
* * * * *
    122. Section 1051.610 is amended by revising paragraphs (d)(7)(ii) 
and (g) to read as follows:


Sec.  1051.610  What provisions apply to vehicles already certified 
under the motor-vehicle program?

* * * * *
    (d) * * *
    (7) * * *
    (ii) List the vehicle models you expect to produce under this 
exemption in the coming year and describe your basis for meeting the 
sales restrictions of paragraph (d)(3) of this section.
* * * * *
    (g) Participation in averaging, banking and trading. Vehicles 
adapted for recreational use under this section may not generate or use 
emission credits under this part 1051. These vehicles may generate 
credits under the ABT provisions in 40 CFR part 86. These vehicles must 
use emission credits under 40 CFR part 86 if they are certified to an 
FEL that exceeds an emission standard that applies.
    123. Section 1051.635 is amended by revising paragraph (a) to read 
as follows:


Sec.  1051.635  What provisions apply to new manufacturers that are 
small businesses?

    (a) If you are a small business (as defined by the Small Business 
Administration at 13 CFR 121.201) that manufactures recreational 
vehicles, but does not otherwise qualify for the small-volume 
manufacturer provisions of this part, you may ask us to designate you 
to be a small-volume manufacturer. You may do this whether you began 
manufacturing recreational vehicles before, during, or after 2002.
* * * * *
    124. A new Sec.  1051.650 is added to read as follows:

[[Page 28307]]

Sec.  1051.650  What special provisions apply for converting a vehicle 
to use an alternate fuel?

    (a) Converting a certified new vehicle to run on a different fuel 
violates 40 CFR 1068.101(a)(1) if the modified vehicle is not covered 
by a certificate of conformity.
    (b) Converting a certified vehicle that is not new to run on a 
different fuel violates 40 CFR 1068.101(b)(1) if the modified vehicle 
is not covered by a certificate of conformity. We may specify alternate 
certification provisions consistent with the requirements of this part.

Subpart H--[Amended]

    125. Section 1051.701 is amended by revising paragraph (a) and 
adding paragraph (h) to read as follows:


Sec.  1051.701  General provisions.

    (a) You may average, bank, and trade emission credits for purposes 
of certification as described in this subpart to show compliance with 
the standards of this part. To do this you must certify your engines to 
Family Emission Limits (FELs) and show that your average emission 
levels for all your engine families together are below the emission 
standards in subpart B of this part, or that you have sufficient 
credits to offset a credit deficit for the model year (as calculated in 
Sec.  1051.720).
* * * * *
    (h) Families that use emission credits for one pollutant may not 
generate positive emission credits for another pollutant.
    126. Section 1051.720 is amended by revising paragraph (a)(2) to 
read as follows:


Sec.  1051.720  How do I calculate my average emission level or 
emission credits?

    (a) * * *
    (2) For vehicles that have standards expressed as g/kW-hr and a 
useful life in kilometers, convert the useful life to kW-hr based on 
the maximum power output observed over the emission test and an assumed 
vehicle speed of 30 km/hr as follows: UL (kW-hr) = UL (km) x Maximum 
Engine Power (kW) / 30 km/hr. (Note: It is not necessary to include a 
load factor, since credit exchange is not allowed between vehicles 
certified to g/kW-hr standards and vehicles certified to g/km 
standards.)
* * * * *
    127. Section 1051.730 is amended by revising paragraphs (b)(4) and 
(b)(5) to read as follows:


Sec.  1051.730  What ABT reports must I send to EPA?

* * * * *
    (b) * * *
    (4) The projected and actual production volumes for the model year 
with a point of retail sale in the United States, as described in Sec.  
1051.701(d). If you changed an FEL during the model year, identify the 
actual production volume associated with each FEL.
    (5) For vehicles that have standards expressed as g/kW-hr, maximum 
engine power for each vehicle configuration, and the production-
weighted average engine power for the engine family.
* * * * *
    128. Section 1051.735 is amended by revising paragraph (b) to read 
as follows:


Sec.  1051.735  What records must I keep?

* * * * *
    (b) Keep the records required by this section for at least eight 
years after the due date for the end-of-year report. You may not use 
emission credits on any engines if you do not keep all the records 
required under this section. You must therefore keep these records to 
continue to bank valid credits. Store these records in any format and 
on any media, as long as you can promptly send us organized, written 
records in English if we ask for them. You must keep these records 
readily available. We may review them at any time.
* * * * *

Subpart I--[Amended]

    129. Section 1051.801 is amended as follows:
    a. By removing the definition for ``Maximum test power''.
    b. By revising the definitions for ``Designated Compliance 
Officer'', ``Emission-control system'', ``Maximum engine power'', 
``Nonmethane hydrocarbon'', ``Official emission result'', 
``Recreational'', and ``Total hydrocarbon equivalent''.
    c. By revising paragraphs (1)(ii) and (3) of the definition for 
``Model year'' and paragraphs (1) and (3) of the definition for 
``New''.
    d. By adding paragraph (5)(iii) to the definition for ``Model 
year''.
    e. By adding a definition for ``Low-permeability material''.


Sec.  1051.801  What definitions apply to this part?

* * * * *
    Designated Compliance Officer means one of the following things:
    (1) For snowmobiles, Designated Compliance Officer means the 
Manager, Heavy-Duty and Nonroad Engine Group (6405-J), U.S. 
Environmental Protection Agency, 1200 Pennsylvania Ave., NW., 
Washington, DC 20460.
    (2) For all other vehicles, Designated Compliance Officer means the 
Manager, Light-Duty Engine Group, U.S. Environmental Protection Agency, 
2000 Traverwood Drive, Ann Arbor, MI 48105.
* * * * *
    Emission-control system means any device, system, or element of 
design that controls or reduces the emissions of regulated pollutants 
from an engine.
* * * * *
    Low-permeability material has the meaning given in 40 CFR 1060.801.
* * * * *
    Maximum engine power has the meaning given in 40 CFR 90.3 for 2010 
and earlier model years and in Sec.  1051.140 for 2011 and later model 
years.
* * * * *
    Model year means one of the following things:
    (1) * * *
    (ii) Your annual new model production period if it is different 
than the calendar year. This must include January 1 of the calendar 
year for which the model year is named. It may not begin before January 
2 of the previous calendar year and it must end by December 31 of the 
named calendar year. For seasonal production periods not including 
January 1, model year means the calendar year in which the production 
occurs, unless you choose to certify the applicable emission family 
with the following model year. For example, if your production period 
is June 1, 2010 through November 30, 2010, your model year would be 
2010 unless you choose to certify the emission family for model year 
2011.
* * * * *
    (3) For a nonroad engine that has been previously placed into 
service in an application covered by 40 CFR part 90, 91, 1048, or 1054, 
where that engine is installed in a piece of equipment that is covered 
by this part 1051, model year means the calendar year in which the 
engine was originally produced (see definition of ``new,'' paragraph 
(3)).
* * * * *
    (5) * * *
    (iii) For imported engines described in paragraph (5)(iii) of the 
definition of ``new,'' model year means the calendar year in which the 
importation occurs.
* * * * *
    New means relating to any of the following things:
    (1) A freshly manufactured vehicle for which the ultimate purchaser 
has never received the equitable or legal title. This kind of vehicle 
might commonly be thought of as ``brand new.'' In the case of this 
paragraph (1), the vehicle is new from the time it is produced until 
the

[[Page 28308]]

ultimate purchaser receives the title or the product is placed into 
service, whichever comes first.
* * * * *
    (3) A nonroad engine that has been previously placed into service 
in an application covered by 40 CFR part 90, 91, 1048, or 1054, where 
that engine is installed in a piece of equipment that is covered by 
this part 1051. The engine is no longer new when it is placed into 
service in a recreational vehicle covered by this part 1051. For 
example, this would apply to a marine propulsion engine that is no 
longer used in a marine vessel.
* * * * *
    Nonmethane hydrocarbon has the meaning given in 40 CFR 1065.1001.
* * * * *
    Official emission result means the measured emission rate for an 
emission-data vehicle on a given duty cycle before the application of 
any deterioration factor.
* * * * *
    Recreational means, for purposes of this part, relating to 
snowmobiles, all-terrain vehicles, off-highway motorcycles, and other 
vehicles that we regulate under this part. Note that 40 CFR parts 90 
and 1054 apply to engines used in other recreational vehicles.
* * * * *
    Total hydrocarbon equivalent has the meaning given in 40 CFR 
1065.1001.
* * * * *
    130. Section 1051.810 is amended by revising paragraph (a) to read 
as follows:


Sec.  1051.810  What materials does this part reference?

* * * * *
    (a) ASTM material. Table 1 of this section lists material from the 
American Society for Testing and Materials that we have incorporated by 
reference. The first column lists the number and name of the material. 
The second column lists the sections of this part where we reference 
it. Anyone may purchase copies of these materials from the American 
Society for Testing and Materials, 100 Barr Harbor Dr., P.O. Box C700, 
West Conshohocken, PA 19428 or www.astm.com. Table 1 follows:

               Table 1 of Sec.   1051.810.--ASTM Materials
------------------------------------------------------------------------
                                                             Part 1051
                Document number and name                     reference
------------------------------------------------------------------------
ASTM D471-98, Standard Test Method for Rubber Property--        1051.501
 Effect of Liquids......................................
------------------------------------------------------------------------

* * * * *
    131. A new Sec.  1051.825 is added to read as follows:


Sec.  1051.825  What reporting and recordkeeping requirements apply 
under this part?

    Under the Paperwork Reduction Act (44 U.S.C. 3501 et seq), the 
Office of Management and Budget approves the reporting and 
recordkeeping specified in the applicable regulations. The following 
items illustrate the kind of reporting and recordkeeping we require for 
vehicles regulated under this part:
    (a) We specify the following requirements related to certification 
in this part 1051:
    (1) In Sec. Sec.  1051.20 and 1051.25 we describe special 
provisions for manufacturers to certify recreational engines instead of 
vehicles.
    (2) [Reserved]
    (3) In Sec.  1051.145 we include various reporting and 
recordkeeping requirements related to interim provisions.
    (4) In subpart C of this part we identify a wide range of 
information required to certify vehicles.
    (5) In Sec. Sec.  1051.345 and 1051.350 we specify certain records 
related to production-line testing.
    (6) [Reserved]
    (7) In Sec.  1051.501 we specify information needs for establishing 
various changes to published vehicle-based test procedures.
    (8) In subpart G of this part we identify several reporting and 
recordkeeping items for making demonstrations and getting approval 
related to various special compliance provisions.
    (9) In Sec. Sec.  1051.725, 1051.730, and 1051.735 we specify 
certain records related to averaging, banking, and trading.
    (b) [Reserved]
    (c) We specify the following requirements related to testing in 40 
CFR part 1065:
    (1) In 40 CFR 1065.2 we give an overview of principles for 
reporting information.
    (2) In 40 CFR 1065.10 and 1065.12 we specify information needs for 
establishing various changes to published engine-based test procedures.
    (3) In 40 CFR 1065.25 we establish basic guidelines for storing 
test information.
    (4) In 40 CFR 1065.695 we identify data that may be appropriate for 
collecting during testing of in-use engines or vehicles using portable 
analyzers.
    (d) We specify the following requirements related to the general 
compliance provisions in 40 CFR part 1068:
    (1) In 40 CFR 1068.5 we establish a process for evaluating good 
engineering judgment related to testing and certification.
    (2) In 40 CFR 1068.25 we describe general provisions related to 
sending and keeping information.
    (3) In 40 CFR 1068.27 we require manufacturers to make engines or 
vehicles available for our testing or inspection if we make such a 
request.
    (4) In 40 CFR 1068.105 we require manufacturers to keep certain 
records related to duplicate labels from engine manufacturers.
    (5) In 40 CFR 1068.120 we specify recordkeeping related to 
rebuilding engines.
    (6) In 40 CFR part 1068, subpart C, we identify several reporting 
and recordkeeping items for making demonstrations and getting approval 
related to various exemptions.
    (7) In 40 CFR part 1068, subpart D, we identify several reporting 
and recordkeeping items for making demonstrations and getting approval 
related to importing engines or vehicles.
    (8) In 40 CFR 1068.450 and 1068.455 we specify certain records 
related to testing production-line engines in a selective enforcement 
audit.
    (9) In 40 CFR 1068.501 we specify certain records related to 
investigating and reporting emission-related defects.
    (10) In 40 CFR 1068.525 and 1068.530 we specify certain records 
related to recalling nonconforming vehicles.
    132. A new part 1054 is added to subchapter U of chapter I to read 
as follows:

PART 1054--CONTROL OF EMISSIONS FROM NEW, SMALL NONROAD SPARK-
IGNITION ENGINES AND EQUIPMENT

Subpart A--Overview and Applicability
Sec.

[[Page 28309]]

1054.1 Does this part apply for my engines and equipment?
1054.2 Who is responsible for compliance?
1054.5 Which nonroad engines are excluded from this part's 
requirements?
1054.10 How is this part organized?
1054.15 Do any other regulation parts apply to me?
1054.20 What requirements apply to my equipment?
Subpart B--Emission Standards and Related Requirements
1054.101 What exhaust emission standards and requirements must my 
engines meet?
1054.103 What exhaust emission standards must my handheld engines 
meet?
1054.105 What exhaust emission standards must my nonhandheld engines 
meet?
1054.107 What is the useful life period for meeting exhaust emission 
standards?
1054.110 What evaporative emission standards must my equipment meet?
1054.115 What other requirements apply?
1054.120 What emission-related warranty requirements apply to me?
1054.125 What maintenance instructions must I give to buyers?
1054.130 What installation instructions must I give to equipment 
manufacturers?
1054.135 How must I label and identify the engines I produce?
1054.136 How must I permanently label the equipment I produce?
1054.140 What is my engine's maximum engine power and displacement?
1054.145 Are there interim provisions that apply only for a limited 
time?
Subpart C--Certifying Emission Families
1054.201 What are the general requirements for obtaining a 
certificate of conformity?
1054.205 What must I include in my application?
1054.210 May I get preliminary approval before I complete my 
application?
1054.220 How do I amend the maintenance instructions in my 
application?
1054.225 How do I amend my application for certification to include 
new or modified engines or fuel systems or change an FEL?
1054.230 How do I select emission families?
1054.235 What exhaust emission testing must I perform for my 
application for a certificate of conformity?
1054.240 How do I demonstrate that my emission family complies with 
exhaust emission standards?
1054.245 How do I determine deterioration factors from exhaust 
durability testing?
1054.250 What records must I keep and what reports must I send to 
EPA?
1054.255 What decisions may EPA make regarding my certificate of 
conformity?
Subpart D--Production-Line Testing
1054.300 Applicability.
1054.301 When must I test my production-line engines?
1054.305 How must I prepare and test my production-line engines?
1054.310 How must I select engines for production-line testing?
1054.315 How do I know when my engine family fails the production-
line testing requirements?
1054.320 What happens if one of my production-line engines fails to 
meet emission standards?
1054.325 What happens if an engine family fails the production-line 
testing requirements?
1054.330 May I sell engines from an engine family with a suspended 
certificate of conformity?
1054.335 How do I ask EPA to reinstate my suspended certificate?
1054.340 When may EPA revoke my certificate under this subpart and 
how may I sell these engines again?
1054.345 What production-line testing records must I send to EPA?
1054.350 What records must I keep?
Subpart E--In-Use Testing
1054.401 General provisions.
Subpart F--Test Procedures
1054.501 How do I run a valid emission test?
1054.505 How do I test engines?
1054.520 What testing must I perform to establish deterioration 
factors?
Subpart G--Special Compliance Provisions
1054.601 What compliance provisions apply to these engines?
1054.610 What is the exemption for delegated final assembly?
1054.612 What special provisions apply for equipment manufacturers 
modifying certified engines?
1054.615 What is the exemption for engines certified to standards 
for Large SI engines?
1054.620 What are the provisions for exempting engines used solely 
for competition?
1054.625 What requirements apply under the Transition Program for 
Equipment Manufacturers?
1054.626 What special provisions apply to equipment imported under 
the Transition Program for Equipment Manufacturers?
1054.627 How does the Transition Program for Equipment Manufacturers 
relate to evaporative emissions?
1054.630 What provisions apply for importation of individual items 
for personal use?
1054.635 What special provisions apply for small-volume engine and 
equipment manufacturers?
1054.640 What special provisions apply to branded engines?
1054.645 What special provisions apply for converting an engine to 
use an alternate fuel?
1054.650 What special provisions apply for adding or changing 
governors?
1054.655 What special provisions apply to installing and removing 
altitude kits?
1054.660 What are the provisions for exempting emergency rescue 
equipment?
1054.685 What are my recall responsibilities?
1054.690 What are the bond requirements for importing certified 
engines and equipment?
1054.695 What restrictions apply to assigning a model year to 
imported engines and equipment?
Subpart H--Averaging, Banking, and Trading for Certification
1054.701 General provisions.
1054.705 How do I generate and calculate exhaust emission credits?
1054.706 How do I generate and calculate evaporative emission 
credits?
1054.710 How do I average emission credits?
1054.715 How do I bank emission credits?
1054.720 How do I trade emission credits?
1054.725 What must I include in my application for certification?
1054.730 What ABT reports must I send to EPA?
1054.735 What records must I keep?
1054.740 What special provisions apply for generating and using 
emission credits?
1054.745 What can happen if I do not comply with the provisions of 
this subpart?
Subpart I--Definitions and Other Reference Information
1054.801 What definitions apply to this part?
1054.805 What symbols, acronyms, and abbreviations does this part 
use?
1054.810 What materials does this part reference?
1054.815 What provisions apply to confidential information?
1054.820 How do I request a hearing?
1054.825 What reporting and recordkeeping requirements apply under 
this part?
Appendix I to Part 1054--Summary of Previous Emission Standards
Appendix II to Part 1054--Duty Cycles for Laboratory Testing
Appendix III to Part 1054--High-Altitude Counties

    Authority: 42 U.S.C. 7401-7671q.

Subpart A--Overview and Applicability


Sec.  1054.1  Does this part apply for my engines and equipment?

    (a) Except as provided in Sec.  1054.5, the regulations in this 
part 1054 apply as follows:
    (1) The requirements of this part related to exhaust emissions 
apply to new, spark-ignition engines with maximum engine power at or 
below 19 kW. This includes auxiliary marine spark-ignition engines.
    (2) The requirements of this part related to evaporative emissions 
apply as specified in 40 CFR part 1054.110 to fuel systems used with 
engines subject to exhaust emission standards in this part if the 
engines use a volatile liquid fuel (such as gasoline).
    (3) This part 1054 applies starting with the model years noted in 
the following table:

[[Page 28310]]



     Table 1 of Sec.   1054.1.--art 1054 Applicability by Model Year
------------------------------------------------------------------------
                                                                   Model
              Engine type                  Engine displacement     year
------------------------------------------------------------------------
Handheld..............................  all.....................    2010
Nonhandheld...........................  displacement < 225 cc...    2012
Nonhandheld...........................  displacement >= 225 cc..    2011
------------------------------------------------------------------------

    (4) This part 1054 applies for other spark-ignition engines as 
follows:
    (i) The provisions of paragraph (c) of this section apply for the 
applicable model years shown in Table 1 of this section.
    (ii) The provisions of Sec. Sec.  1054.620 and 1054.801 apply for 
engines used solely for competition beginning January 1, 2009.
    (iii) The provisions of Sec. Sec.  1054.660 and 1054.801 apply for 
engines used in emergency rescue equipment beginning January 1, 2010.
    (5) We specify provisions in Sec.  1054.145(e) and (f) and in Sec.  
1054.740 that allow for meeting the requirements of this part before 
the dates shown in Table 1 of this section. Engines, fuel-system 
components, or equipment certified to these standards are subject to 
all the requirements of this part as if these optional standards were 
mandatory.
    (b) Although the definition of nonroad engine in 40 CFR 1068.30 
excludes certain engines used in stationary applications, stationary 
engines are required under 40 CFR part 60 to comply with this part 
starting with the model years shown in Table 1 of this section.
    (c) See 40 CFR part 90 for requirements that apply to engines not 
yet subject to the requirements of this part 1054.
    (d) In certain cases, the regulations in this part 1054 apply to 
engines with maximum engine power above 19 kW that would otherwise be 
covered by 40 CFR part 1048 or 1051. See 40 CFR 1048.615 and 
1051.145(a)(3) for provisions related to these allowances.


Sec.  1054.2  Who is responsible for compliance?

    The requirements and prohibitions of this part apply to 
manufacturers of engines and fuel-system components as described in 
Sec.  1054.1. The requirements of this part are generally addressed to 
manufacturers subject to this part's requirements. The term ``you'' 
generally means the certifying manufacturer. For provisions related to 
exhaust emissions, this generally means the engine manufacturer, 
especially for issues related to certification (including production-
line testing, reporting, etc.). For provisions related to certification 
with respect to evaporative emissions, this generally means the 
equipment manufacturer or fuel-system component manufacturer. Equipment 
manufacturers must meet applicable requirements as described in Sec.  
1054.20.


Sec.  1054.5  Which nonroad engines are excluded from this part's 
requirements?

    This part does not apply to the following nonroad engines:
    (a) Engines that are certified to meet the requirements of 40 CFR 
part 1051 (for example, engines used in snowmobiles and all-terrain 
vehicles). Engines that are otherwise subject to 40 CFR part 1051 but 
not required to be certified (such as engines exempted under 40 CFR 
part 1051) are also excluded from this part 1054, unless the 
regulations in 40 CFR part 1051 specifically require them to comply 
with the requirements of this part 1054.
    (b) Engines that are certified to meet the requirements of 40 CFR 
part 1048, subject to the provisions of Sec.  1054.615.
    (c) Propulsion marine engines. See 40 CFR parts 91 and 1045. Note 
that the evaporative emission standards of this part also do not apply 
with respect to auxiliary marine engines as described in Sec.  
1054.110.
    (d) Engines used in reduced-scale models of vehicles that are not 
capable of transporting a person.


Sec.  1054.10  How is this part organized?

    This part 1054 is divided into the following subparts:
    (a) Subpart A of this part defines the applicability of this part 
1054 and gives an overview of regulatory requirements.
    (b) Subpart B of this part describes the emission standards and 
other requirements that must be met to certify engines under this part. 
Note that Sec.  1054.145 discusses certain interim requirements and 
compliance provisions that apply only for a limited time.
    (c) Subpart C of this part describes how to apply for a certificate 
of conformity.
    (d) Subpart D of this part describes general provisions for testing 
production-line engines.
    (e) Subpart E of this part describes general provisions for testing 
in-use engines.
    (f) Subpart F of this part describes how to test your engines 
(including references to other parts of the Code of Federal 
Regulations).
    (g) Subpart G of this part and 40 CFR part 1068 describe 
requirements, prohibitions, and other provisions that apply to engine 
manufacturers, equipment manufacturers, owners, operators, rebuilders, 
and all others.
    (h) Subpart H of this part describes how you may generate and use 
exhaust and evaporative emission credits to certify your engines and 
equipment.
    (i) Subpart I of this part contains definitions and other reference 
information.


Sec.  1054.15  Do any other regulation parts apply to me?

    (a) Part 1060 of this chapter describes standards and procedures 
that apply for evaporative emissions from engines fueled by gasoline or 
other volatile liquid fuels and the associated fuel systems. See Sec.  
1054.110 for information about how that part applies.
    (b) Part 1065 of this chapter describes procedures and equipment 
specifications for testing engines. Subpart F of this part 1054 
describes how to apply the provisions of part 1065 of this chapter to 
determine whether engines meet the emission standards in this part.
    (c) The requirements and prohibitions of part 1068 of this chapter 
apply to everyone, including anyone who manufactures, imports, 
installs, owns, operates, or rebuilds any of the engines subject to 
this part 1054, or equipment containing these engines. Part 1068 of 
this chapter describes general provisions, including these seven areas:
    (1) Prohibited acts and penalties for engine manufacturers, 
equipment manufacturers, and others.
    (2) Rebuilding and other aftermarket changes.
    (3) Exclusions and exemptions for certain engines.
    (4) Importing engines.
    (5) Selective enforcement audits of your production.
    (6) Defect reporting and recall.
    (7) Procedures for hearings.
    (d) Other parts of this chapter apply if referenced in this part.


Sec.  1054.20  What requirements apply to my equipment?

    (a) If you manufacture equipment using engines certified under this 
part, your equipment must meet all applicable emission standards with 
the engine and fuel system installed.
    (b) Except as specified in paragraph (f) of this section, all 
equipment subject to the exhaust standards of this part must meet the 
evaporative emission standards of 40 CFR part 1060, as described in 
Sec.  1054.110.
    (c) Except as specified in paragraph (f) of this section, identify 
and label equipment you produce under this section consistent with the 
requirements of Sec.  1054.135.

[[Page 28311]]

    (d) You may need to certify your equipment or fuel systems as 
described in 40 CFR 1060.1 and 1060.601.
    (e) You must follow all emission-related installation instructions 
from the certifying manufacturers as described in Sec.  1054.130, 40 
CFR 1060.130, and 40 CFR 1068.105. If you do not follow the 
installation instructions, we may consider your equipment to be not 
covered by the certificates of conformity. Introduction of such 
equipment into U.S. commerce violates 40 CFR 1068.101.
    (f) Motor vehicles and marine vessels may contain engines subject 
to the exhaust emission standards in this part 1054. Evaporative 
emission standards apply to these products as follows:
    (1) Marine vessels using spark-ignition engines are subject to the 
requirements of 40 CFR part 1045. The vessels are not required to 
comply with the evaporative emission standards and related requirements 
of this part 1054.
    (2) Motor vehicles are subject to the requirements of 40 CFR part 
86. They are not required to comply with the evaporative emission 
standards and related requirements of this part 1054.

Subpart B--Emission Standards and Related Requirements


Sec.  1054.101  What exhaust emission standards and requirements must 
my engines meet?

    (a) You must show that your engines meet the following exhaust 
emission standards, except as specified in paragraphs (b) through (d) 
of this section:
    (1) Handheld engines must meet the exhaust emission standards in 
Sec.  1054.103.
    (2) Nonhandheld engines must meet the exhaust emission standards in 
Sec.  1054.105.
    (3) All engines must meet the requirements in Sec.  1054.115.
    (b) Emission standards regulating HC and NOX exhaust 
emissions are optional for wintertime engines. However, if you certify 
an emission family to such standards, those engines are subject to all 
the requirements of this part as if these optional standards were 
mandatory.
    (c) Any engines certified to the nonhandheld emission standards in 
Sec.  1054.105 may be used in either handheld or nonhandheld equipment. 
Engines at or above 80 cc certified to the handheld emission standards 
in Sec.  1054.103 may not be used in nonhandheld equipment. For 
purposes of the requirements of this part, engines below 80 cc are 
considered handheld engines but may be installed in either handheld or 
nonhandheld equipment. See Sec.  1054.701(c) for special provisions 
related to emission credits for engine families with displacement below 
80 cc where those engines are installed in nonhandheld equipment.
    (d) Two-stroke snowthrower engines may meet exhaust emission 
standards that apply to handheld engines with the same engine 
displacement.
    (e) It is important that you read Sec.  1054.145 to determine if 
there are other interim requirements or interim compliance provisions 
that apply for a limited time.


Sec.  1054.103  What exhaust emission standards must my handheld 
engines meet?

    (a) Emission standards. Exhaust emissions from your handheld 
engines may not exceed the emission standards in Table 1 of this 
section. Measure emissions using the applicable steady-state test 
procedures described in subpart F of this part.

  Table 1 of Sec.   1054.103.--Phase 3 Emission Standards for Handheld
                            Engines (g/kW-hr)
------------------------------------------------------------------------
        Engine displacement class             HC+NOX            CO
------------------------------------------------------------------------
Class III...............................              50             805
Class IV................................              50             805
Class V.................................              72             603
------------------------------------------------------------------------

    (b) Averaging, banking, and trading. You may generate or use 
emission credits under the averaging, banking, and trading (ABT) 
program for HC+NOX emissions as described in subpart H of 
this part. To generate or use emission credits, you must specify a 
family emission limit for each engine family you include in the ABT 
program. These family emission limits serve as the emission standards 
for the engine family with respect to all required testing instead of 
the standards specified in this section. An engine family meets 
emission standards even if its family emission limit is higher than the 
standard, as long as you show that the whole averaging set of 
applicable engine families meets the emission standards using emission 
credits and the engines within the family meet the family emission 
limit. The following are the maximum values you may specify for family 
emission limits:
    (1) 336 g/kW-hr for Class III engines.
    (2) 275 g/kW-hr for Class IV engines.
    (3) 186 g/kW-hr for Class V engines.
    (c) Fuel types. The exhaust emission standards in this section 
apply for engines using the fuel type on which the engines in the 
emission family are designed to operate. You must meet the numerical 
emission standards for hydrocarbons in this section based on the 
following types of hydrocarbon emissions for engines powered by the 
following fuels:
    (1) Alcohol-fueled engines: THCE emissions.
    (2) Natural gas-fueled engines: NMHC emissions.
    (3) Other engines: THC emissions.
    (d) Useful life. Your engines must meet the exhaust emission 
standards in paragraph (a) of this section over their full useful life 
as described in Sec.  1054.107.
    (e) Applicability for testing. The emission standards in this 
subpart apply to all testing, including certification, production-line, 
and in-use testing.


Sec.  1054.105  What exhaust emission standards must my nonhandheld 
engines meet?

    (a) Emission standards. Exhaust emissions from your engines may not 
exceed the emission standards in this paragraph (a). Measure emissions 
using the applicable steady-state test procedures described in subpart 
F of this part.

            Table 1 of Sec.   1054.105--Phase 3 Emission Standards for Nonhandheld Engines (g/kW-hr)
----------------------------------------------------------------------------------------------------------------
                                                                                                    CO standard
                                                                                    Primary CO      for marine
                    Engine displacement class                         HC+NOX         standard        generator
                                                                                                      engines
----------------------------------------------------------------------------------------------------------------
Class I.........................................................            10.0             610             5.0
Class II........................................................             8.0             610             5.0
----------------------------------------------------------------------------------------------------------------


[[Page 28312]]

    (b) Averaging, banking, and trading. You may generate or use 
emission credits under the averaging, banking, and trading (ABT) 
program for HC+NOX emissions as described in subpart H of 
this part. To generate or use emission credits, you must specify a 
family emission limit for each engine family you include in the ABT 
program. These family emission limits serve as the emission standards 
for the engine family with respect to all required testing instead of 
the standards specified in this section. An engine family meets 
emission standards even if its family emission limit is higher than the 
standard, as long as you show that the whole averaging set of 
applicable engine families meets the emission standards using emission 
credits, and the engines within the family meet the family emission 
limit. You may not specify a family emission limit that exceeds the 
Phase 2 standards specified in 40 CFR 90.103 and summarized in Appendix 
I of this part.
    (c) Fuel types. The exhaust emission standards in this section 
apply for engines using the fuel type on which the engines in the 
emission family are designed to operate. You must meet the numerical 
emission standards for hydrocarbons in this section based on the 
following types of hydrocarbon emissions for engines powered by the 
following fuels:
    (1) Alcohol-fueled engines: THCE emissions.
    (2) Natural gas-fueled engines: NMHC emissions.
    (3) Other engines: THC emissions.
    (d) Useful life. Your engines must meet the exhaust emission 
standards in paragraph (a) of this section over their full useful life 
as described in Sec.  1054.107.
    (e) Applicability for testing. The emission standards in this 
subpart apply to all testing, including certification, production-line, 
and in-use testing.


Sec.  1054.107  What is the useful life period for meeting exhaust 
emission standards?

    This section describes an engine family's useful life, which is the 
period during which a new engine is required to comply with all 
applicable emission standards.
    (a) Determine the useful life period for exhaust requirements as 
follows:
    (1) Except as specified in paragraphs (a)(2) and (3) of this 
section, the useful life period for exhaust requirements is the number 
of engine operating hours from Table 1 of this section that most 
closely matches the expected median in-use life of your engines. The 
median in-use life of your engine is the shorter of the following 
values:
    (i) The median in-use life of equipment into which the engine is 
expected to be installed.
    (ii) The median in-use life of the engine without being scrapped or 
rebuilt.

        Table 1 to Sec.   1054.107.--Nominal Useful Life Periods
------------------------------------------------------------------------
             Class or category                 Useful life hour value
------------------------------------------------------------------------
Handheld..................................  50, 125, or 300.
Class I...................................  125, 250, or 500.
Class II..................................  250, 500, or 1,000.
------------------------------------------------------------------------

    (2) You may select a longer useful life for nonhandheld engines 
than that specified in paragraph (a)(1) of this section in 100-hour 
increments not to exceed 3,000 hours for Class I engines or 5,000 hours 
for Class II engines. For engine families generating emission credits, 
you may do this only with our approval.
    (3) The minimum useful life period for engines with maximum engine 
power above 19 kW is 1,000 hours (see Sec.  1054.1(d)).
    (4) Keep any available information to support your selection and 
make it available to us if we ask for it. We may require you to certify 
to a different useful life value from the table if we determine that 
the selected useful life value is not justified by the data. We may 
consider any relevant information, including your product warranty 
statements and marketing materials regarding engine life, in making 
this determination. We may void your certificate if we determine that 
you intentionally selected an incorrect value. Support your selection 
based on any of the following information:
    (i) Surveys of the life spans of the equipment in which the subject 
engines are installed.
    (ii) Engineering evaluations of field aged engines to ascertain 
when engine performance deteriorates to the point where usefulness and/
or reliability is impacted to a degree sufficient to necessitate 
overhaul or replacement.
    (iii) Failure reports from engine customers.
    (iv) Engineering evaluations of the durability, in hours, of 
specific engine technologies, engine materials, or engine designs.


Sec.  1054.110  What evaporative emission standards must my equipment 
meet?

    Except as specified in Sec.  1054.20, new equipment using engines 
that run on a volatile liquid fuel (such as gasoline) must meet the 
evaporative emission requirements of 40 CFR part 1060 over a useful 
life of five years. The requirements of 40 CFR part 1060 that apply are 
considered also to be requirements of this part 1054. These standards 
apply starting in the 2011 model year for equipment using Class II 
engines and in the 2012 model year for equipment using Class I engines. 
These standards apply for handheld equipment as specified in this 
section. Note that 40 CFR 1060.240 allows you to use design-based 
certification instead of generating new emission data. Marine vessels 
using auxiliary marine engines subject to this part must meet the 
evaporative emission requirements in 40 CFR 1045.107 instead of the 
requirements in this section.
    (a) Fuel line permeation. Nonmetal fuel lines must meet the 
permeation requirements for EPA NRFL or EPA CWFL fuel lines as 
specified in 40 CFR 1060.102. These requirements apply for handheld 
equipment starting in the 2012 model year, except that they apply 
starting in the 2013 model year for emission families involving cold-
weather equipment and all small-volume emission families. Handheld 
equipment manufacturers may generate or use emission credits to show 
compliance with the requirements of this paragraph (a) under the 
averaging, banking, and trading program described in subpart H of this 
part. Metal fuel lines are not subject to emission standards.
    (b) Tank permeation. Fuel tanks must meet the permeation 
requirements specified in 40 CFR 1060.103. These requirements apply for 
handheld equipment starting in the 2010 model year, except that they 
apply starting in the 2011 model year for structurally integrated nylon 
fuel tanks and in the 2013 model year for all small-volume emission 
families. (Note: 40 CFR 90.129 specifies emission standards for 2009 
model year handheld engines and equipment.) Equipment manufacturers may 
generate or use emission credits to show compliance with the 
requirements of this paragraph (b) under the averaging, banking, and 
trading program as described in subpart H of this part. Starting in the 
2014 model year for Class II equipment and in the 2015 model year for 
Class I and handheld equipment, the following caps on family emission 
limits apply:
    (1) Except as specified in paragraphs (b)(2) and (3) of this 
section, you may not specify a family emission limit that exceeds 5.0 
g/m\2\/day for testing at a nominal temperature of 28 [deg]C, or 8.3 g/
m\2\/day for testing at a nominal temperature of 40 [deg]C.
    (2) For structurally integrated nylon fuel tanks, you may not 
specify a family emission limit that exceeds 3.0 g/m\2\/

[[Page 28313]]

day for testing at a nominal temperature of 28 [deg]C, or 5.0 g/m\2\/
day for testing at a nominal temperature of 40 [deg]C.
    (3) For small-volume emission families, you may not specify a 
family emission limit that exceeds 8.0 g/m\2\/day for testing at a 
nominal temperature of 28 [deg]C, or 13.3 g/m\2\/day for testing at a 
nominal temperature of 40 [deg]C. This also applies to structurally 
integrated nylon fuel tanks used in small-volume emission families.
    (4) The cap on family emission limits does not apply to fuel caps 
that are certified separately to meet permeation standards.
    (c) Running loss. Nonhandheld equipment must meet the running loss 
requirements specified in 40 CFR 1060.104. This paragraph (c) does not 
apply with respect to engines below 80 cc.
    (d) Diffusion emissions. Nonhandheld equipment must meet the 
diffusion emission requirements specified in 40 CFR 1060.105. This 
paragraph (d) does not apply with respect to engines below 80 cc.
    (e) Other requirements. The requirements of 40 CFR 1060.101(e) and 
(f) apply to equipment manufacturers even if they do not obtain a 
certificate.


Sec.  1054.115  What other requirements apply?

    The following requirements apply with respect to engines that are 
required to meet the emission standards of this part:
    (a) Crankcase emissions. Crankcase emissions may not be discharged 
directly into the ambient atmosphere from any engine throughout its 
useful life, except as follows:
    (1) Snowthrower engines may discharge crankcase emissions to the 
ambient atmosphere if the emissions are added to the exhaust emissions 
(either physically or mathematically) during all emission testing. If 
you take advantage of this exception, you must do the following things:
    (i) Manufacture the engines so that all crankcase emissions can be 
routed into the applicable sampling systems specified in 40 CFR part 
1065.
    (ii) Account for deterioration in crankcase emissions when 
determining exhaust deterioration factors.
    (2) For purposes of this paragraph (a), crankcase emissions that 
are routed to the exhaust upstream of exhaust aftertreatment during all 
operation are not considered to be discharged directly into the ambient 
atmosphere.
    (b) Adjustable parameters. Engines that have adjustable parameters 
must meet all the requirements of this part for any adjustment in the 
physically adjustable range. An operating parameter is not considered 
adjustable if you permanently seal it or if it is not normally 
accessible using ordinary tools. We may require that you set adjustable 
parameters to any specification within the adjustable range during any 
testing, including certification testing, production-line testing, or 
in-use testing. You may ask us limit idle-speed or carburetor 
adjustments to a smaller range than the physically adjustable range if 
you show us that the engine will not be adjusted outside of this 
smaller range during in-use operation without significantly degrading 
engine performance.
    (c) Altitude adjustments. Engines must meet applicable emission 
standards for valid tests conducted under the ambient conditions 
specified in 40 CFR 1065.520. Except as specified in Sec.  1054.145(c), 
engines must meet applicable emission standards at barometric pressures 
ranging from 94.0 to 103.325 kPa in the standard configuration. This 
generally includes all altitudes up to about 2,000 feet above sea 
level. You may rely on an altitude kit that you specify in your 
application for certification to comply at lower pressures. You must 
identify the altitude range for which you expect proper engine 
performance and emission control with and without the altitude kit in 
the owners manual; you must also state that operating the engine with 
the wrong engine configuration at a given altitude may increase its 
emissions and decrease fuel efficiency and performance. See Sec.  
1054.145(c) for special provisions that apply for handheld engines.
    (d) Prohibited controls. You may not design your engines with 
emission-control devices, systems, or elements of design that cause or 
contribute to an unreasonable risk to public health, welfare, or safety 
while operating. For example, this would apply if the engine emits a 
noxious or toxic substance it would otherwise not emit that contributes 
to such an unreasonable risk.
    (e) Defeat devices. You may not equip your engines with a defeat 
device. A defeat device is an auxiliary emission control device that 
reduces the effectiveness of emission controls under conditions that 
the engine may reasonably be expected to encounter during normal 
operation and use. This does not apply for altitude kits installed or 
removed consistent with Sec.  1054.655. This also does not apply to 
auxiliary emission control devices you identify in your certification 
application if any of the following is true:
    (1) The conditions of concern were substantially included in the 
applicable duty-cycle test procedures described in subpart F of this 
part.
    (2) You show your design is necessary to prevent engine (or 
equipment) damage or accidents.
    (3) The reduced effectiveness applies only to starting the engine.


Sec.  1054.120  What emission-related warranty requirements apply to 
me?

    The requirements of this section apply to the certifying 
manufacturer(s). See 40 CFR part 1060 for the warranty requirements 
related to evaporative emissions.
    (a) General requirements. You must warrant to the ultimate 
purchaser and each subsequent purchaser that the new engine, including 
all parts of its emission control system, meets two conditions:
    (1) It is designed, built, and equipped so it conforms at the time 
of sale to the ultimate purchaser with the requirements of this part.
    (2) It is free from defects in materials and workmanship that may 
keep it from meeting these requirements.
    (b) Warranty period. Your emission-related warranty must be valid 
during the periods specified in this paragraph (b). You may offer an 
emission-related warranty more generous than we require. The emission-
related warranty for the engine may not be shorter than any published 
warranty you offer without charge for the engine. Similarly, the 
emission-related warranty for any component may not be shorter than any 
published warranty you offer without charge for that component. If an 
engine has no hour meter, we base the warranty periods in this 
paragraph (b) only on the engine's age (in years). The warranty period 
begins when the engine is placed into service. The minimum warranty 
periods are as follows:
    (1) The minimum warranty period is two years except as allowed 
under paragraph (b)(2) or (3) of this section.
    (2) We may establish a shorter warranty period for handheld engines 
subject to severe service in seasonal equipment if we determine that 
these engines are likely to operate for a number of hours greater than 
the applicable useful life within 24 months. You must request this 
shorter warranty period in your application for certification or in an 
earlier submission.
    (3) For engines equipped with hour meters, you may deny warranty 
claims for engines that have accumulated a number of hours greater than 
50 percent of the applicable useful life.
    (c) Components covered. The emission-related warranty covers all

[[Page 28314]]

components whose failure would increase an engine's emissions of any 
pollutant, including those listed in 40 CFR part 1068, Appendix I, and 
those from any other system you develop to control emissions. The 
emission-related warranty covers these components even if another 
company produces the component. Your emission-related warranty does not 
cover components whose failure would not increase an engine's emissions 
of any pollutant.
    (d) Limited applicability. You may deny warranty claims under this 
section if the operator caused the problem through improper maintenance 
or use, as described in 40 CFR 1068.115.
    (e) Owners manual. Describe in the owners manual the emission-
related warranty provisions from this section that apply to the engine. 
Include instructions for obtaining warranty service consistent with the 
requirements of paragraph (f) of this section.
    (f) Requirements related to warranty claims. You are required at a 
minimum to meet the following conditions to ensure that owners will be 
able to promptly obtain warranty repairs:
    (1) You must provide and monitor a toll-free telephone number and 
an e-mail address for owners to receive information about how to make a 
warranty claim, and how to make arrangements for authorized repairs.
    (2) You must provide a source of replacement parts within the 
United States. For parts that you import, this requires you to have at 
least one distributor within the United States.
    (3) This paragraph (f)(3) applies for all engines except as 
specified in paragraph (f)(4) of this section. You may limit warranty 
repairs to authorized service centers for owners located within 100 
miles of an authorized service center. For owners located more than 100 
miles from an authorized service center, you must state in your 
warranty that you will either pay for shipping costs to and from an 
authorized service center, provide for a service technician to come to 
the owner to make the warranty repair, or pay for the repair to be made 
at a local nonauthorized service center.
    (4) In remote locations, the provisions of paragraph (f)(3) of this 
section apply, except that the requirement to take extra measures to 
honor warranty claims may be based on a distance greater than 100 
miles. For example, in sparsely populated areas in Montana, it may be 
acceptable to take the extra steps to honor warranty claims only for 
owners located more than 200 miles from an authorized service center. 
However, you may not specify a this greater distance for servicing 
engines for more than 10 percent of owners.


Sec.  1054.125  What maintenance instructions must I give to buyers?

    Give the ultimate purchaser of each new engine written instructions 
for properly maintaining and using the engine, including the emission 
control system as described in this section. The maintenance 
instructions also apply to service accumulation on your emission-data 
engines as described in Sec.  1054.245 and in 40 CFR part 1065.
    (a) Critical emission-related maintenance. Critical emission-
related maintenance includes any adjustment, cleaning, repair, or 
replacement of critical emission-related components. This may also 
include additional emission-related maintenance that you determine is 
critical if we approve it in advance. You may schedule critical 
emission-related maintenance on these components if you meet the 
following conditions:
    (1) You demonstrate that the maintenance is reasonably likely to be 
done at the recommended intervals on in-use engines. We will accept 
scheduled maintenance as reasonably likely to occur if you satisfy any 
of the following conditions:
    (i) You present data showing that any lack of maintenance that 
increases emissions also unacceptably degrades the engine's 
performance.
    (ii) You present survey data showing that at least 80 percent of 
engines in the field get the maintenance you specify at the recommended 
intervals. If the survey data show that 60 to 80 percent of engines in 
the field get the maintenance you specify at the recommended intervals, 
you may ask us to consider additional factors such as the effect on 
performance and emissions. For example, we may allow you to schedule 
fuel-injector replacement as critical emission-related maintenance if 
you have survey data showing this is done at the recommended interval 
for 65 percent of engines and you demonstrate that performance 
degradation is roughly proportional to the degradation in emission 
control for engines that do not have their fuel injectors replaced.
    (iii) You provide the maintenance free of charge and clearly say so 
in maintenance instructions for the customer.
    (iv) You otherwise show us that the maintenance is reasonably 
likely to be done at the recommended intervals.
    (2) You may not schedule critical emission-related maintenance 
within the useful life period for aftertreatment devices, pulse-air 
valves, fuel injectors, oxygen sensors, electronic control units, 
superchargers, or turbochargers, except as specified in paragraph (b) 
or (c) of this section.
    (b) Recommended additional maintenance. You may recommend any 
additional amount of maintenance on the components listed in paragraph 
(a) of this section, as long as you state clearly that these 
maintenance steps are not necessary to keep the emission-related 
warranty valid. If operators do the maintenance specified in paragraph 
(a) of this section, but not the recommended additional maintenance, 
this does not allow you to disqualify those engines from in-use testing 
or deny a warranty claim. Do not take these maintenance steps during 
service accumulation on your emission-data engines.
    (c) Special maintenance. You may specify more frequent maintenance 
to address problems related to special situations, such as atypical 
engine operation. You must clearly state that this additional 
maintenance is associated with the special situation you are 
addressing.
    (d) Noncritical emission-related maintenance. Subject to the 
provisions of this paragraph (d), you may schedule any amount of 
emission-related inspection or maintenance that is not covered by 
paragraph (a) of this section (i.e., maintenance that is neither 
explicitly identified as critical emission-related maintenance, nor 
that we approve as critical emission-related maintenance). Noncritical 
emission-related maintenance generally includes changing spark plugs, 
changing air filters, re-seating valves, or any other emission-related 
maintenance on the components we specify in 40 CFR part 1068, Appendix 
I. You must state in the owners manual that these steps are not 
necessary to keep the emission-related warranty valid. If operators 
fail to do this maintenance, this does not allow you to disqualify 
those engines from in-use testing or deny a warranty claim. Do not take 
these inspection or maintenance steps during service accumulation on 
your emission-data engines.
    (e) Maintenance that is not emission-related. For maintenance 
unrelated to emission controls, you may schedule any amount of 
inspection or maintenance. You may also take these inspection or 
maintenance steps during service accumulation on your emission-data 
engines, as long as they are reasonable and technologically necessary. 
This might include adding engine oil, changing fuel or oil filters, 
servicing engine-cooling systems, and adjusting idle speed, governor, 
engine bolt torque, valve lash, or injector lash. You may perform this 
nonemission-

[[Page 28315]]

related maintenance on emission-data engines at the least frequent 
intervals that you recommend to the ultimate purchaser (but not the 
intervals recommended for severe service).
    (f) Source of parts and repairs. State clearly on the first page of 
your written maintenance instructions that a repair shop or person of 
the owner's choosing may maintain, replace, or repair emission control 
devices and systems. Your instructions may not require components or 
service identified by brand, trade, or corporate name. Also, do not 
directly or indirectly condition your warranty on a requirement that 
the engine be serviced by your franchised dealers or any other service 
establishments with which you have a commercial relationship. You may 
disregard the requirements in this paragraph (f) if you do one of two 
things:
    (1) Provide a component or service without charge under the 
purchase agreement.
    (2) Get us to waive this prohibition in the public's interest by 
convincing us the engine will work properly only with the identified 
component or service.
    (g) Payment for scheduled maintenance. Owners are responsible for 
properly maintaining their engines. This generally includes paying for 
scheduled maintenance. However, manufacturers must pay for scheduled 
maintenance during the useful life if it meets all the following 
criteria:
    (1) Each affected component was not in general use on similar 
engines before 1997.
    (2) The primary function of each affected component is to reduce 
emissions.
    (3) Failure to perform the maintenance would not cause clear 
problems that would significantly degrade the engine's performance.
    (h) Owners manual. Explain the owner's responsibility for proper 
maintenance in the owners manual.


Sec.  1054.130  What installation instructions must I give to equipment 
manufacturers?

    (a) If you sell an engine for someone else to install in a piece of 
equipment, give the engine installer instructions for installing it 
consistent with the requirements of this part. Include all information 
necessary to ensure that an engine will be installed in its certified 
configuration.
    (b) Make sure these instructions have the following information:
    (1) Include the heading: ``Emission-related installation 
instructions''.
    (2) State: ``Failing to follow these instructions when installing a 
certified engine in nonroad equipment violates federal law (40 CFR 
1068.105(b)), subject to fines or other penalties as described in the 
Clean Air Act.''.
    (3) Describe the instructions needed to properly install the 
exhaust system and any other components. Include instructions 
consistent with the requirements of Sec.  1054.655 related to altitude 
kits.
    (4) Describe the steps needed to control evaporative emissions in 
accordance with certificates of conformity that you hold. Include 
instructions for connecting fuel lines as needed to prevent running 
loss emissions, if applicable. Such instructions must include 
sufficient detail to ensure that running loss control will not cause 
the engine to exceed exhaust emission standards. For example, you may 
specify a maximum vapor flow rate under normal operating conditions. 
Also include notification that the installer must meet the requirements 
of Sec.  1054.110 and 40 CFR part 1060.
    (5) Describe any limits on the range of applications needed to 
ensure that the engine remains in its certified configuration after 
installation. For example, if you certify engines only for rated-speed 
applications tell equipment manufacturers that the engine must not be 
installed in equipment involving intermediate-speed operation. Also, if 
your wintertime engines are not certified to the otherwise applicable 
HC+NOX standards, tell equipment manufacturers that the 
engines must be installed in equipment that is used only in wintertime.
    (6) Describe any other instructions to make sure the installed 
engine will operate according to design specifications in your 
application for certification. For example, this may include specified 
limits for catalyst systems, such as exhaust backpressure, catalyst 
location, and temperature profiles during engine operation.
    (7) State: ``If you install the engine in a way that makes the 
engine's emission control information label hard to read during normal 
engine maintenance, you must place a duplicate label on the equipment, 
as described in 40 CFR 1068.105.''.
    (c) You do not need installation instructions for engines you 
install in your own equipment.
    (d) Provide instructions in writing or in an equivalent format. For 
example, you may post instructions on a publicly available website for 
downloading or printing. If you do not provide the instructions in 
writing, explain in your application for certification how you will 
ensure that each installer is informed of the installation 
requirements.


Sec.  1054.135  How must I label and identify the engines I produce?

    The provisions of this section apply to engine manufacturers.
    (a) Assign each engine a unique identification number and 
permanently affix, engrave, or stamp it on the engine in a legible way.
    (b) At the time of manufacture, affix a permanent and legible label 
identifying each engine. The label must be--
    (1) Attached so it is not removable without being destroyed or 
defaced.
    (2) Secured to a part of the engine needed for normal operation and 
not normally requiring replacement.
    (3) Durable and readable for the engine's entire life.
    (4) Written in English.
    (c) The label must--
    (1) Include the heading ``EMISSION CONTROL INFORMATION''.
    (2) Include your full corporate name and trademark. You may 
identify another company and use its trademark instead of yours if you 
comply with the provisions of Sec.  1054.640.
    (3) Include EPA's standardized designation for the emission family 
(and subfamily, where applicable).
    (4) State the following based on the useful life requirements in 
Sec.  1054.107: ``EMISSIONS COMPLIANCE PERIOD= [identify applicable 
useful life period] HOURS''.
    (5) State the engine's displacement (in cubic centimeters); 
however, you may omit this from the label if all the engines in the 
emission family have the same per-cylinder displacement and total 
displacement.
    (6) State the date of manufacture [MONTH and YEAR]; however, you 
may omit this from the label if you stamp or engrave it on the engine.
    (7) State the FEL to which the engine is certified (in g/kW-hr) if 
certification depends on the ABT provisions of subpart H of this part.
    (8) Identify the emission control system. Use terms and 
abbreviations consistent with SAE J1930 (incorporated by reference in 
Sec.  1054.810). You may omit this information from the label if there 
is not enough room for it and you put it in the owners manual instead.
    (9) List specifications and adjustments for engine tuneups; 
however, you may omit this information from the label if there is not 
enough room for it and you put it in the owners manual instead.
    (10) Identify the altitude at which an altitude kit should be 
installed if you specify an altitude kit under Sec.  1054.115(c). You 
may omit this

[[Page 28316]]

information from the label if there is not enough room for it and you 
put it in the owners manual instead.
    (11) Identify the fuel type and any requirements for fuel and 
lubricants; however, you may omit this information from the label if 
there is not enough room for it and you put it in the owners manual 
instead.
    (12) State: ``THIS ENGINE COMPLIES WITH U.S. EPA REGULATIONS FOR 
[MODEL YEAR] SPARK-IGNITION ENGINES.''.
    (13) If your nonhandheld engines are certified for use only at 
rated speed or only at intermediate speed, add the statement: 
``CERTIFIED FOR [rated-speed or intermediate-speed] APPLICATIONS ONLY'' 
or ``CERTIFIED FOR [identify nominal engine speed or range of speeds 
for testing] OPERATION ONLY''.
    (14) For wintertime engines state: ``FOR WINTERTIME USE ONLY''.
    (d) If others install your engine in their equipment in a way that 
obscures the engine label such that the label cannot be read during 
normal maintenance, we require them to add a duplicate label on the 
equipment (see 40 CFR 1068.105); in that case, give them the number of 
duplicate labels they request and keep the following records for at 
least five years:
    (1) Written documentation of the request from the equipment 
manufacturer.
    (2) The number of duplicate labels you send for each engine family 
and the date you sent them.
    (e) You may add information to the emission control information 
label as follows:
    (1) You may identify other emission standards that the engine meets 
or does not meet (such as California standards).
    (2) You may add other information to ensure that the engine will be 
properly maintained and used.
    (3) You may add appropriate features to prevent counterfeit labels. 
For example, you may include the engine's unique identification number 
on the label.
    (f) You may ask us to approve modified labeling requirements in 
this part 1054 if you show that it is necessary or appropriate. We will 
approve your request if your alternate label is consistent with the 
requirements of this part.
    (g) Integrated equipment manufacturers may meet the labeling 
requirements of this section by including all the specified information 
on the equipment label required by 40 CFR part 1060.


Sec.  1054.136  How must I permanently label the equipment I produce?

    The provisions of this section apply to equipment manufacturers.
    (a) You must comply with the equipment labeling requirements of 40 
CFR part 1060.
    (b) If you obscure the engine label while installing the engine in 
the equipment such that the label will be hard to read, you must place 
a duplicate label on the equipment consistent with the requirements of 
40 CFR 1068.105.
    (c) You may include the information required by Sec.  1054.135 on 
the equipment label required by 40 CFR part 1060.


Sec.  1054.140  What is my engine's maximum engine power and 
displacement?

    This section describes how to quantify your engine's maximum engine 
power and displacement for the purposes of this part.
    (a) An engine configuration's maximum engine power is the maximum 
brake power point on the nominal power curve for the engine 
configuration, as defined in this section. Round the power value to the 
nearest 0.1 kilowatts for nonhandheld engines and to the nearest 0.01 
kilowatts for handheld engines. The nominal power curve of an engine 
configuration is the relationship between maximum available engine 
brake power and engine speed for an engine, using the mapping 
procedures of 40 CFR part 1065, based on the manufacturer's design and 
production specifications for the engine. This information may also be 
expressed by a torque curve that relates maximum available engine 
torque with engine speed.
    (b) An engine configuration's displacement is the intended swept 
volume of all the engine's cylinders. The swept volume of the engine is 
the product of the internal cross-section area of the cylinders, the 
stroke length, and the number of cylinders. Calculate the engine's 
intended swept volume from the design specifications for the cylinders 
using enough significant figures to allow determination of the 
displacement to the nearest 0.1 cc. Determine the final value by 
rounding to the nearest cubic centimeter. For example, for a one-
cylinder engine with circular cylinders having an internal diameter of 
6.00 cm and a 6.25 cm stroke length, the rounded displacement would be: 
(1) x (6.00/2)2 x ([pi]) x (6.25) = 177 cc.
    (c) The nominal power curve and intended swept volume must be 
within the range of the actual power curves and swept volumes of 
production engines considering normal production variability. If after 
production begins it is determined that either your nominal power curve 
or your intended swept volume does not represent production engines, we 
may require you to amend your application for certification under Sec.  
1054.225.
    (d) Each engine produced under the provisions of Sec.  1054.1(d) 
must have a total displacement at or below 1000.0 cc after rounding to 
the nearest 0.1 cc.


Sec.  1054.145  Are there interim provisions that apply only for a 
limited time?

    The provisions in this section apply instead of other provisions in 
this part.
    (a) Delayed Phase 3 implementation for engine manufacturers. Small-
volume engine manufacturers may delay complying with otherwise 
applicable Phase 3 emission standards and requirements subject to the 
following conditions:
    (1) You may delay meeting the Phase 3 exhaust emission standards 
until 2013 for Class II engines and until 2014 for Class I engines.
    (2) You must certify your engines exempted under this section to 
the Phase 2 standards and requirements from specified in 40 CFR 90.103 
and summarized in Appendix I of this part. You must meet the labeling 
requirements in 40 CFR 90.114, but use the following compliance 
statement instead of the compliance statement in 40 CFR 90.114(c)(7): 
``THIS ENGINE COMPLIES WITH U.S. EPA REGULATIONS FOR [CURRENT MODEL 
YEAR] NONROAD ENGINES UNDER 40 CFR 1054.145(a).''.
    (3) After the delays indicated in paragraph (a)(1) of this section, 
you must comply with the same standards and requirements as all other 
manufacturers, except as noted elsewhere in this section.
    (4) The provisions of this paragraph (a) may not be used to 
circumvent the requirements of this part.
    (5) You may generate early credits during this two-year period as 
described under Sec.  1054.740 as if the emission standards applied 
starting in the 2013 model year for Class II engines and in the 2014 
model year for Class I engines.
    (b) Delayed Phase 3 implementation for equipment manufacturers. 
Special provisions apply to small-volume equipment manufacturers. The 
provisions of Sec.  1054.625 describe how manufacturers may produce 
certain numbers of equipment using Class II engines that meet Phase 2 
standards during the first four years that the Phase 3 standards apply.
    (c) Special provisions for handheld engines. The following 
provisions apply for handheld engines:

[[Page 28317]]

    (1) You may use the provisions in 40 CFR 90.104(g) to rely on 
assigned deterioration factors for small-volume equipment manufacturers 
and for small-volume equipment families.
    (2) You may use the test procedures in 40 CFR part 90 instead of 
those in subpart F of this part for the 2010 and 2011 model years. This 
applies for certification, production-line, and in-use testing. You may 
continue to use test data based on the test procedures in 40 CFR part 
90 for engine families in 2012 and later model years, provided that we 
allow you to use carryover emission data under 40 CFR 1054.235(d) for 
your emission family.
    (3) You may perform maintenance on emission-data engines during 
service accumulation as described in 40 CFR part 90.
    (4) Engines subject to Phase 3 emission standards must meet the 
standards at or above barometric pressures of 96.0 kPa in the standard 
configuration. This is intended to allow testing under most weather 
conditions at all altitudes up to 1,100 feet above sea level. In your 
application for certification, identify the altitude above which you 
rely on an altitude kit to meet emission standards and describe your 
plan for making information and parts available such that you would 
reasonably expect that altitude kits would be widely used at all such 
altitudes.
    (d) Alignment of model years for exhaust and evaporative standards. 
Evaporative emission standards generally apply based on the model year 
of the equipment, which is determined by the equipment's date of final 
assembly. However, in the first year of new emission standards, 
equipment manufacturers may apply evaporative emission standards based 
on the model year of the engine as shown on the engine's emission 
control information label. For example, for the fuel line permeation 
standards starting in 2012, equipment manufacturers may order a batch 
of 2011 model year engines for installation in 2012 model year 
equipment, subject to the anti-stockpiling provisions of 40 CFR 
1068.105(a). The equipment with the 2011 model year engines would not 
need to meet fuel line permeation standards, as long as the equipment 
is fully assembled by December 31, 2012.
    (e) Early compliance with evaporative emission standards--
nonhandheld equipment manufacturers. You may produce nonhandheld 
equipment that does not meet the otherwise applicable evaporative 
emission standards without violating the prohibition in 40 CFR 
1068.101(a)(1) if you earn evaporative allowances, as follows:
    (1) You may earn an evaporative allowance from each piece of 
equipment certified to California's evaporative emission standards by 
producing it before the requirements of this part start to apply and 
selling it outside of California. You may use an evaporative allowance 
by selling one piece of equipment that does not meet any EPA 
evaporative emission standards even though it is subject to the EPA 
standards.
    (2) You may earn an evaporative allowance with respect to fuel tank 
permeation from each piece of equipment certified to EPA's evaporative 
emission standards by selling it outside of California or in an 
application that is preempted from California's standards before EPA's 
fuel tank permeation standards start to apply. You may use an 
evaporative allowance by selling one piece of equipment with a fuel 
tank that does not meet the otherwise applicable EPA emission standards 
even though it is subject to the EPA standards. For example, you can 
earn an evaporative allowance by selling a low-permeation fuel tank for 
Class II equipment before the 2011 model year, in which case you could 
sell a piece of Class II equipment in 2011 with a high-permeation fuel 
tank. You may not generate allowances under this paragraph (e)(2) based 
on your sales of metal fuel tanks.
    (3) Evaporative allowances you earn under this paragraph (e) from 
equipment with Class I engines may be used only for other equipment 
with Class I engines. Similarly, evaporative allowances you earn under 
this paragraph (e) from equipment with Class II engines may be used 
only for other equipment with Class II engines.
    (4) You must label any equipment using allowances under this 
paragraph (e) with the following statement: ``EXEMPT FROM EMISSION 
STANDARDS UNDER 40 CFR 1054.145(e).''.
    (5) You may not use the allowances you generate under this 
paragraph (e) for 2014 and later model year equipment with Class II 
engines or for 2015 and later model year equipment with Class I 
engines.
    (f) Early banking for evaporative emission standards--handheld 
equipment manufacturers. You may earn emission credits for handheld 
equipment you produce before the evaporative emission standards of 
Sec.  1054.110 apply. To do this, your equipment must use fuel tanks 
with a family emission limit below 1.5 g/m2/day or fuel 
lines with a family emission limit below 15 g/m2/day. 
Calculate your credits as described in Sec.  1054.706 based on the 
difference between the family emission limit and the applicable 
emission rates specified in this paragraph (f).
    (g) Useful life for evaporative emission standards. A useful life 
period of two years applies for fuel tanks or fuel caps certified to 
meet the permeation emission standards in Sec.  1054.110(b) in 2013 and 
earlier model years. However, for fuel tanks with a family emission 
limit above or below the otherwise applicable standard, calculate 
emission credits under Sec.  1054.706 based on a useful life of five 
years.
    (h) Use of California data for handheld fuel tank permeation. If 
you certified handheld fuel tanks to the permeation standards in 40 CFR 
90.129 based on emission measurements for demonstrating compliance with 
emission standards for California, you may continue to use this data as 
the basis for demonstrating compliance with the requirements of Sec.  
1054.110(b) for the 2010 and 2011 model years, provided that we allow 
you to use carryover emission data under 40 CFR 1060.235(e) for your 
emission family.

Subpart C--Certifying Emission Families


Sec.  1054.201  What are the general requirements for obtaining a 
certificate of conformity?

    Engine manufacturers must certify their engines with respect to the 
exhaust emission standards in this part. Manufacturers of engines, 
equipment, or fuel-system components may need to certify their products 
with respect to evaporative emission standards as described in 40 CFR 
1060.1 and 1060.601. The following general requirements apply for 
obtaining a certificate of conformity:
    (a) You must send us a separate application for a certificate of 
conformity for each emission family. A certificate of conformity is 
valid starting with the indicated effective date, but it is not valid 
for any production after December 31 of the model year for which it is 
issued. No certificate will be issued after December 31 of the model 
year. If you certify with respect to both exhaust and evaporative 
emissions, you must submit separate applications.
    (b) The application must contain all the information required by 
this part and must not include false or incomplete statements or 
information (see Sec.  1054.255).
    (c) We may ask you to include less information than we specify in 
this

[[Page 28318]]

subpart, as long as you maintain all the information required by Sec.  
1054.250.
    (d) You must use good engineering judgment for all decisions 
related to your application (see 40 CFR 1068.5).
    (e) An authorized representative of your company must approve and 
sign the application.
    (f) See Sec.  1054.255 for provisions describing how we will 
process your application.
    (g) We may require you to deliver your test engines to a facility 
we designate for our testing (see Sec.  1054.235(c)).


Sec.  1054.205  What must I include in my application?

    This section specifies the information that must be in your 
application, unless we ask you to include less information under Sec.  
1054.202(c). We may require you to provide additional information to 
evaluate your application. The provisions of this section apply to 
integrated equipment manufacturers and engine manufacturers selling 
loose engines. Nonintegrated equipment manufacturers must follow the 
requirements of 40 CFR part 1060.
    (a) Describe the emission family's specifications and other basic 
parameters of the engine's design and emission controls. List the fuel 
type on which your engines are designed to operate (for example, all-
season gasoline). List each distinguishable engine configuration in the 
emission family. For each engine configuration in which the maximum 
modal power of the emission-data engine is at or above 15 kW, list the 
maximum engine power and the range of values for maximum engine power 
resulting from production tolerances, as described in Sec.  1054.140.
    (b) Explain how the emission control systems operate. Describe the 
evaporative emission controls and show how your design will prevent 
running loss emissions, if applicable. Also describe in detail all 
system components for controlling exhaust emissions, including all 
auxiliary emission control devices (AECDs) and all fuel-system 
components you will install on any production or test engine. Identify 
the part number of each component you describe (or the alphanumeric 
designation for catalysts described in Sec.  1054.610, if applicable). 
For this paragraph (b), treat as separate AECDs any devices that 
modulate or activate differently from each other. Include sufficient 
detail to allow us to evaluate whether the AECDs are consistent with 
the defeat device prohibition of Sec.  1054.115. For example, if your 
engines will routinely experience in-use operation that differs from 
the specified duty cycle for certification, describe how the fuel-
metering system responds to varying speeds and loads not represented by 
the duty cycle.
    (c) [Reserved]
    (d) Describe the engines, equipment, and fuel system components you 
selected for testing and the reasons for selecting them.
    (e) Describe the test equipment and procedures that you used, 
including any special or alternate test procedures you used. For 
handheld engines, describe how you selected the value for rated speed.
    (f) Describe how you operated the emission-data engine before 
testing, including the duty cycle and the number of engine operating 
hours used to stabilize emission levels. Explain why you selected the 
method of service accumulation. Describe any scheduled maintenance you 
did.
    (g) List the specifications of the test fuel to show that it falls 
within the required ranges we specify in 40 CFR part 1065.
    (h) Identify the emission family's useful life. Describe the basis 
for selecting useful life values with respect to exhaust emissions (see 
Sec.  1054.107).
    (i) Include the maintenance and warranty instructions you will give 
to the ultimate purchaser of each new engine (see Sec. Sec.  1054.120 
and 1054.125).
    (j) Include the emission-related installation instructions you will 
provide if someone else installs your engines in nonroad equipment (see 
Sec.  1054.130).
    (k) Describe your emission control information label (see Sec.  
1054.135).
    (l) Identify the emission standards or FELs for the emission 
family.
    (m) Identify the emission family's deterioration factors and 
describe how you developed them (see Sec.  1054.245). Present any 
emission test data you used for this.
    (n) State that you operated your emission-data engines as described 
in the application (including the test procedures, test parameters, and 
test fuels) to show you meet the requirements of this part.
    (o) Present emission data to show that you meet emission standards, 
as follows:
    (1) Present emission data for hydrocarbons (such as THC or THCE, as 
applicable), NOX, and CO on an emission-data engine to show 
your engines meet the applicable exhaust emission standards as 
specified in Sec.  1054.101. Show emission figures before and after 
applying deterioration factors for each engine. Include test data from 
each applicable duty cycle specified in Sec.  1054.505(b). If we 
specify more than one grade of any fuel type (for example, low-
temperature and all-season gasoline), you need to submit test data only 
for one grade, unless the regulations of this part specify otherwise 
for your engine.
    (2) Present evaporative test data for hydrocarbons to show your 
engine or equipment meets the evaporative emission standards we specify 
in subpart B of this part. If you did not perform the testing, identify 
the source of the test data.
    (3) Note that Sec. Sec.  1054.235 and 1054.245 allow you to submit 
an application in certain cases without new emission data.
    (p) Report all test results, including those from invalid tests, 
whether or not they were conducted according to the test procedures of 
subpart F of this part. If you measure CO2, report those 
emission levels. We may ask you to send other information to confirm 
that your tests were valid under the requirements of this part and 40 
CFR parts 1060 and 1065.
    (q) Describe all adjustable operating parameters (see Sec.  
1054.115(b)), including production tolerances. Include the following in 
your description of each parameter:
    (1) The nominal or recommended setting.
    (2) The intended physically adjustable range.
    (3) The limits or stops used to establish adjustable ranges.
    (4) Information showing why the limits, stops, or other means of 
inhibiting adjustment are effective in preventing adjustment of 
parameters on in-use engines to settings outside your intended 
physically adjustable ranges.
    (r) Describe how your engines comply with emission standards at 
varying atmospheric pressures. Include a description of altitude kits 
you design to comply with the requirements of Sec.  1054.115(c). 
Identify the part number of each component you describe. Identify the 
altitude range for which you expect proper engine performance and 
emission control with and without the altitude kit. State that your 
engines will comply with applicable emission standards throughout the 
useful life with the altitude kit installed according to your 
instructions. Describe any relevant testing, engineering analysis, or 
other information in sufficient detail to support your statement. In 
addition, describe your plan for making information and parts available 
such that you would reasonably expect that altitude kits would be 
widely used in the high-altitude counties specified in Appendix III of 
this part. For example,

[[Page 28319]]

engine owners should have ready access to information describing when 
an altitude kit is needed and how to obtain this service. Similarly, 
parts and service information should be available to qualified service 
facilities in addition to authorized service centers if that is needed 
for owners to have such altitude kits installed locally.
    (s) If your engines are subject to handheld emission standards on 
the basis of meeting weight limitations described in the definition of 
``handheld,'' describe your analysis showing that you meet the 
applicable weight-related restrictions.
    (t) State whether your certification is limited for certain 
engines. If this is the case, describe how you will prevent use of 
these engines in applications for which they are not certified. This 
applies for engines such as the following:
    (1) Wintertime engines not certified to the otherwise applicable 
HC+NOX standard.
    (2) Two-stroke snowthrower engines using the provisions of Sec.  
1054.101(d).
    (u) Unconditionally certify that all the engines in the emission 
family comply with the requirements of this part, other referenced 
parts of the CFR, and the Clean Air Act.
    (v) Include good-faith estimates of U.S.-directed production 
volumes. Include a justification for the estimated production volumes 
if they are substantially different than actual production volumes in 
earlier years for similar models.
    (w) Describe how you meet the requirements for posting bond as 
specified in Sec. Sec.  1054.685 and 1054.690, or describe why those 
requirements do not apply.
    (x) Include the information required by other subparts of this 
part. For example, include the information required by Sec.  1054.725 
if you participate in the ABT program.
    (y) Include other applicable information, such as information 
specified in this part or 40 CFR part 1068 related to requests for 
exemptions.
    (z) Name an agent for service located in the United States. Service 
on this agent constitutes service on you or any of your officers or 
employees for any action by EPA or otherwise by the United States 
related to the requirements of this part.
    (aa) For imported engines or equipment, identify the following:
    (1) The port(s) at which you will import your engines or equipment.
    (2) The names and addresses of the agents you have authorized to 
import your engines or equipment.
    (3) The location of test facilities in the United States where you 
can test your engines if we select them for testing under a selective 
enforcement audit, as specified in 40 CFR part 1068, subpart E.


Sec.  1054.210  May I get preliminary approval before I complete my 
application?

    If you send us information before you finish the application, we 
will review it and make any appropriate determinations, especially for 
questions related to emission family definitions, auxiliary emission 
control devices, deterioration factors, useful life, testing for 
service accumulation, maintenance, and delegated final assembly. 
Decisions made under this section are considered to be preliminary 
approval, subject to final review and approval. We will generally not 
reverse a decision where we have given you preliminary approval, unless 
we find new information supporting a different decision. If you request 
preliminary approval related to the upcoming model year or the model 
year after that, we will make best-efforts to make the appropriate 
determinations as soon as practicable. We will generally not provide 
preliminary approval related to a future model year more than two years 
ahead of time.


Sec.  1054.220  How do I amend the maintenance instructions in my 
application?

    You may amend your emission-related maintenance instructions after 
you submit your application for certification, as long as the amended 
instructions remain consistent with the provisions of Sec.  1054.125. 
You must send the Designated Compliance Officer a written request to 
amend your application for certification for an engine family if you 
want to change the emission-related maintenance instructions in a way 
that could affect emissions. In your request, describe the proposed 
changes to the maintenance instructions. We will disapprove your 
request if we determine that the amended instructions are inconsistent 
with maintenance you performed on emission-data engines. If operators 
follow the original maintenance instructions rather than the newly 
specified maintenance, this does not allow you to disqualify those 
engines from in-use testing or deny a warranty claim.
    (a) If you are changing the specified maintenance in a way that 
could affect emissions, you may distribute the new maintenance 
instructions to your customers only after we approve your request.
    (b) You need not request approval if you are making only minor 
corrections (such as correcting typographical mistakes), clarifying 
your maintenance instructions, or changing instructions for maintenance 
unrelated to emission control.


Sec.  1054.225  How do I amend my application for certification to 
include new or modified engines or fuel systems or change an FEL?

    Before we issue you a certificate of conformity, you may amend your 
application to include new or modified engine or fuel-system 
configurations, subject to the provisions of this section. After we 
have issued your certificate of conformity, you may send us an amended 
application requesting that we include new or modified configurations 
within the scope of the certificate, subject to the provisions of this 
section. You must amend your application if any changes occur with 
respect to any information included in your application.
    (a) You must amend your application before you take any of the 
following actions:
    (1) Add an engine or fuel-system configuration to an emission 
family. In this case, the configuration added must be consistent with 
other configurations in the emission family with respect to the 
criteria listed in Sec.  1054.230.
    (2) Change a configuration already included in an emission family 
in a way that may affect emissions, or change any of the components you 
described in your application for certification. This includes 
production and design changes that may affect emissions any time during 
the engine's lifetime.
    (3) Modify an FEL for an emission family with respect to exhaust 
emissions as described in paragraph (f) of this section.
    (b) To amend your application for certification, send the 
Designated Compliance Officer the following information:
    (1) Describe in detail the addition or change in the model or 
configuration you intend to make.
    (2) Include engineering evaluations or data showing that the 
amended emission family complies with all applicable requirements. You 
may do this by showing that the original emission-data engine or 
emission-data equipment is still appropriate for showing that the 
amended family complies with all applicable requirements.
    (3) If the original emission-data engine or emission-data equipment 
for the emission family is not appropriate to show compliance for the 
new or modified configuration, include new

[[Page 28320]]

test data showing that the new or modified configuration meets the 
requirements of this part.
    (c) We may ask for more test data or engineering evaluations. You 
must give us these within 30 days after we request them.
    (d) For emission families already covered by a certificate of 
conformity, we will determine whether the existing certificate of 
conformity covers your new or modified configuration. You may ask for a 
hearing if we deny your request (see Sec.  1054.820).
    (e) For emission families already covered by a certificate of 
conformity, you may start producing the new or modified configuration 
anytime after you send us your amended application and before we make a 
decision under paragraph (d) of this section. However, if we determine 
that the affected configurations do not meet applicable requirements, 
we will notify you to cease production of the configurations and may 
require you to recall the engine or equipment at no expense to the 
owner. Choosing to produce engine under this paragraph (e) is deemed to 
be consent to recall all engines or equipment that we determine do not 
meet applicable emission standards or other requirements and to remedy 
the nonconformity at no expense to the owner. If you do not provide 
information required under paragraph (c) of this section within 30 
days, you must stop producing the new or modified engine or equipment.
    (f) You may ask us to approve a change to your FEL with respect to 
exhaust emissions in certain cases after the start of production. The 
changed FEL may not apply to engines you have already introduced into 
U.S. commerce, except as described in this paragraph (f). If we approve 
a changed FEL after the start of production, you must include the new 
FEL on the emission control information label for all engines produced 
after the change. You may ask us to approve a change to your FEL in the 
following cases:
    (1) You may ask to raise your FEL for your emission family at any 
time. In your request, you must show that you will still be able to 
meet the emission standards as specified in subparts B and H of this 
part. If you amend your application by submitting new test data to 
include a newly added or modified engine, as described in paragraph 
(b)(3) of this section, use the appropriate FELs with corresponding 
production volumes to calculate your production-weighted average FEL 
for the model year, as described in subpart H of this part. If you 
amend your application without submitting new test data, you must use 
the higher FEL for the entire family to calculate your production-
weighted average FEL under subpart H of this part.
    (2) You may ask to lower the FEL for your emission family only if 
you have test data from production engines showing that emissions are 
below the proposed lower FEL. The lower FEL applies only to engines you 
produce after we approve the new FEL. Use the appropriate FELs with 
corresponding production volumes to calculate your production-weighted 
average FEL for the model year, as described in subpart H of this part.


Sec.  1054.230  How do I select emission families?

    (a) For purposes of certification, divide your product line into 
families of engines that are expected to have similar emission 
characteristics throughout the useful life as described in this 
section. You must have separate emission families for meeting exhaust 
and evaporative emissions. Your emission family is limited to a single 
model year.
    (b) Group engines in the same emission family for exhaust emissions 
if they are the same in all the following aspects:
    (1) The combustion cycle and fuel.
    (2) The cooling system (liquid-cooled vs. air-cooled).
    (3) Valve configuration (side-valve vs. overhead valve).
    (4) Method of air aspiration (for example, turbocharged vs. 
naturally aspirated).
    (5) The number, location, volume, and composition of catalytic 
converters.
    (6) The number, arrangement, and approximate bore diameter of 
cylinders.
    (7) Engine class, as defined in Sec.  1054.801.
    (8) Method of control for engine operation, other than governing 
(mechanical or electronic).
    (9) The numerical level of the emission standards that apply to the 
engine.
    (10) Useful life.
    (c) For evaporative emissions, group engines into emission families 
as described in 40 CFR 1060.230.
    (d) You may subdivide a group that is identical under paragraph (b) 
or (c) of this section into different emission families if you show the 
expected emission characteristics are different during the useful life.
    (e) You may group engines that are not identical with respect to 
the things listed in paragraph (b) or (c) of this section in the same 
emission family, as follows:
    (1) In unusual circumstances, you may group such engines in the 
same emission family if you show that their emission characteristics 
during the useful life will be similar.
    (2) If you are a small-volume engine manufacturer, you may group 
any nonhandheld engines with the same useful life that are subject to 
the same emission standards into a single emission family.
    (3) The provisions of this paragraph (e) do not exempt any engines 
from meeting all the applicable standards and requirements in subpart B 
of this part.
    (f) Select test engines from the emission family as described in 40 
CFR 1065.401. Select test components related to evaporative emission 
control systems that are most likely to exceed the applicable emission 
standards. For example, select a fuel tank with the smallest average 
wall thickness (or barrier thickness, as appropriate) of those tanks 
you include in the same family.
    (g) You may combine engines from different classes into a single 
emission family under paragraph (e)(1) of this section if you certify 
the emission family to the more stringent set of standards from the two 
classes in that model year.


Sec.  1054.235  What exhaust emission testing must I perform for my 
application for a certificate of conformity?

    This section describes the exhaust emission testing you must 
perform to show compliance with the emission standards in Sec. Sec.  
1054.103 and 1054.105. See Sec. Sec.  1054.240 and 1054.245 and 40 CFR 
part 1065, subpart E, regarding service accumulation before emission 
testing.
    (a) Select an emission-data engine from each engine family for 
testing as described in 40 CFR 1065.401. Select a configuration that is 
most likely to exceed the HC+NOX standard, using good 
engineering judgment. Consider the emission levels of all exhaust 
constituents over the full useful life of the engine when operated in 
nonroad equipment. Configurations must be tested as they will be 
produced, including installed governors, whether you or the equipment 
manufacturer installs the governor.
    (b) Test your emission-data engines using the procedures and 
equipment specified in subpart F of this part.
    (c) We may measure emissions from any of your test engines or other 
engines from the emission family, as follows:
    (1) We may decide to do the testing at your plant or any other 
facility. If we do this, you must deliver the test engine to a test 
facility we designate. The test engine you provide must include 
appropriate manifolds, aftertreatment

[[Page 28321]]

devices, electronic control units, and other emission-related 
components not normally attached directly to the engine block. If we do 
the testing at your plant, you must schedule it as soon as possible and 
make available the instruments, personnel, and equipment we need.
    (2) If we measure emissions on one of your test engines, the 
results of that testing become the official emission results for the 
engine.
    (3) We may set the adjustable parameters of your emission-data 
engine to any point within the physically adjustable ranges (see Sec.  
1054.115(b)).
    (4) We may calibrate your emission-data engine within normal 
production tolerances for anything we do not consider an adjustable 
parameter.
    (d) You may ask to use emission data from a previous model year 
instead of doing new tests, but only if all the following are true:
    (1) The emission family from the previous model year differs from 
the current emission family only with respect to model year or other 
characteristics unrelated to emissions. You may also ask to add a 
configuration subject to Sec.  1054.225.
    (2) The emission-data engine from the previous model year remains 
the appropriate emission-data engine under paragraph (b) of this 
section.
    (3) The data show that the emission-data engine would meet all the 
requirements that apply to the emission family covered by the 
application for certification. For engines originally tested under the 
provisions of 40 CFR part 90, you may consider those test procedures to 
be equivalent to the procedures we specify in subpart F of this part.
    (e) We may require you to test a second engine of the same or 
different configuration in addition to the engine tested under 
paragraph (b) of this section.
    (f) If you use an alternate test procedure under 40 CFR 1065.10 and 
later testing shows that such testing does not produce results that are 
equivalent to the procedures specified in subpart F of this part, we 
may reject data you generated using the alternate procedure.


Sec.  1054.240  How do I demonstrate that my emission family complies 
with exhaust emission standards?

    (a) For purposes of certification, your emission family is 
considered in compliance with the emission standards in Sec.  
1054.101(a) if all emission-data engines representing that family have 
test results showing deteriorated emission levels at or below these 
standards. Note that your FELs are considered to be the applicable 
emission standards with which you must comply if you participate in the 
ABT program in subpart H of this part.
    (b) Your emission family is deemed not to comply if any emission-
data engine representing that family has test results showing a 
deteriorated emission level above an applicable emission standard for 
any pollutant.
    (c) Determine a deterioration factor to compare emission levels 
from the emission-data engine with the applicable emission standards. 
Section 1054.245 specifies how to test engines to develop deterioration 
factors that represent the expected deterioration in emissions over 
your engines' full useful life. Calculate a multiplicative 
deterioration factor as described in Sec.  1054.245(b). If the 
deterioration factor is less than one, use one. Specify the 
deterioration factor to one more significant figure than the emission 
standard. You may use assigned deterioration factors that we establish 
for up to 10,000 nonhandheld engines from small-volume emission 
families in each model year, except that small-volume engine 
manufacturers may use assigned deterioration factors for all their 
engine families.
    (d) Adjust the official emission results for each tested engine at 
the selected test point by multiplying the measured emissions by the 
deterioration factor, then rounding the adjusted figure to the same 
number of decimal places as the emission standard. Compare the rounded 
emission levels to the emission standard for each emission-data engine. 
In the case of HC+NOX standards, add the emission results 
and apply the deterioration factor to the sum of the pollutants before 
rounding. However, if your deterioration factors are based on emission 
measurements that do not cover the engine's full useful life, apply 
deterioration factors to each pollutant and then add the results before 
rounding.
    (e) The provisions of this paragraph (e) apply only for engine 
families with a useful life at or below 300 hours. To apply the 
deterioration factor to engines other than the original emission-data 
engine, they must be operated for the same number of hours before 
starting emission measurements that you used for the original emission-
data engine, within one hour. For example, if the original emission-
data engine operated for 8 hours before the low-hour emission test, 
operate the other test engines for 7 to 9 hours before starting 
emission measurements.


Sec.  1054.245  How do I determine deterioration factors from exhaust 
durability testing?

    Establish deterioration factors to determine whether your engines 
will meet the exhaust emission standards for each pollutant throughout 
the useful life, as described in subpart B of this part and Sec.  
1054.240. This section describes how to determine deterioration 
factors, either with pre-existing test data or with new emission 
measurements.
    (a) You may ask us to approve deterioration factors for an emission 
family based on emission measurements from similar engines if you have 
already given us these data for certifying other engines in the same or 
earlier model years. Use good engineering judgment to decide whether 
the two engines are similar.
    (b) If you are unable to determine deterioration factors for an 
emission family under paragraph (a) of this section, select engines, 
subsystems, or components for testing. Determine deterioration factors 
based on service accumulation and related testing. Include 
consideration of wear and other causes of deterioration expected under 
typical consumer use. Determine deterioration factors as follows:
    (1) You must measure emissions from the emission-data engine at a 
low-hour test point and the end of the useful life, except as 
specifically allowed by this paragraph (b). You may also test at evenly 
spaced intermediate points. Collect emission data using measurements to 
one more decimal place than the emission standard.
    (2) Operate the engine over a representative duty cycle for a 
period at least as long as the useful life (in hours). You may operate 
the engine continuously. You may also use an engine installed in 
nonroad equipment to accumulate service hours instead of running the 
engine only in the laboratory.
    (3) You may perform maintenance on emission-data engines as 
described in Sec.  1054.125 and 40 CFR part 1065, subpart E.
    (4) Calculate your deterioration factor as follows:
    (i) If you measure emissions at only two points to calculate your 
deterioration factor by dividing measured exhaust emissions at the end 
of the useful life by measured exhaust emissions at the low-hour test 
point.
    (ii) If you measure emissions at three or more points, use a linear 
least-squares fit of your test data, but treat the low-hour test point 
as occurring at hour zero. Your deterioration factor is the ratio of 
the calculated emission level at

[[Page 28322]]

the point representing the full useful life to the calculated emission 
level at zero hours.
    (5) If you test more than one engine to establish deterioration 
factors, average the deterioration factors from all the engines before 
rounding.
    (6) If your durability engine fails between 80 percent and 100 
percent of useful life, you may use the last emission measurement as 
the test point representing the full useful life, provided it occurred 
after at least 80 percent of the useful life.
    (7) If your useful life is 1,000 hours or longer and your 
durability engine fails between 50 percent and 100 percent of useful 
life, you may extrapolate your emission results to determine the 
emission level representing the full useful life, provided emissions 
were measured at least once after 50 percent of the useful life.
    (8) Use good engineering judgment for all aspects of the effort to 
establish deterioration factors under this paragraph (b).
    (9) You may use other testing methods to determine deterioration 
factors, consistent with good engineering judgment, as long as we 
approve those methods in advance.
    (c) Include the following information in your application for 
certification:
    (1) If you use test data from a different emission family, explain 
why this is appropriate and include all the emission measurements on 
which you base the deterioration factor.
    (2) If you do testing to determine deterioration factors, describe 
the form and extent of service accumulation, including the method you 
use to accumulate hours.


Sec.  1054.250  What records must I keep and what reports must I send 
to EPA?

    (a) If you produce engines under any provisions of this part that 
are related to production volumes, send the Designated Compliance 
Officer a report within 30 days after the end of the model year 
describing the total number of engines you produced in each engine 
family. For example, if you use special provisions intended for small-
volume engine manufacturers, report your production volumes to show 
that you do not exceed the applicable limits.
    (b) Organize and maintain the following records:
    (1) A copy of all applications and any summary information you send 
us.
    (2) Any of the information we specify in Sec.  1054.205 that you 
were not required to include in your application.
    (3) A detailed history of all emission-data equipment. For each 
engine, describe all of the following:
    (i) The emission-data engine's construction, including its origin 
and buildup, steps you took to ensure that it represents production 
engines, any components you built specially for it, and all the 
components you include in your application for certification.
    (ii) How you accumulated engine operating hours (service 
accumulation), including the dates and the number of hours accumulated.
    (iii) All maintenance, including modifications, parts changes, and 
other service, and the dates and reasons for the maintenance.
    (iv) All your emission tests, including documentation on routine 
and standard tests, as specified in part 40 CFR part 1065, and the date 
and purpose of each test.
    (v) All tests to diagnose engine or emission control performance, 
giving the date and time of each and the reasons for the test.
    (vi) Any other significant events.
    (4) Production figures for each emission family divided by assembly 
plant.
    (5) Keep a list of engine identification numbers for all the 
engines you produce under each certificate of conformity.
    (c) Keep data from routine emission tests (such as test cell 
temperatures and relative humidity readings) for one year after we 
issue the associated certificate of conformity. Keep all other 
information specified in paragraph (a) of this section for eight years 
after we issue your certificate.
    (d) Store these records in any format and on any media, as long as 
you can promptly send us organized, written records in English if we 
ask for them. You must keep these records readily available. We may 
review them at any time.
    (e) Send us copies of any engine maintenance instructions or 
explanations if we ask for them.


Sec.  1054.255  What decisions may EPA make regarding my certificate of 
conformity?

    (a) If we determine your application is complete and shows that the 
emission family meets all the requirements of this part and the Act, we 
will issue a certificate of conformity for your emission family for 
that model year. We may make the approval subject to additional 
conditions.
    (b) We may deny your application for certification if we determine 
that your emission family fails to comply with emission standards or 
other requirements of this part or the Act. Our decision may be based 
on a review of all information available to us. If we deny your 
application, we will explain why in writing.
    (c) In addition, we may deny your application or suspend or revoke 
your certificate if you do any of the following:
    (1) Refuse to comply with any testing or reporting requirements.
    (2) Submit false or incomplete information (paragraph (e) of this 
section applies if this is fraudulent).
    (3) Render inaccurate any test data.
    (4) Deny us from completing authorized activities (see 40 CFR 
1068.20). This includes a failure to provide reasonable assistance.
    (5) Produce engines or equipment for importation into the United 
States at a location where local law prohibits us from carrying out 
authorized activities.
    (6) Fail to supply requested information or amend your application 
to include all engines or equipment being produced.
    (7) Take any action that otherwise circumvents the intent of the 
Act or this part.
    (d) We may void your certificate if you do not keep the records we 
require or do not give us information as required under this part or 
the Act.
    (e) We may void your certificate if we find that you intentionally 
submitted false or incomplete information.
    (f) If we deny your application or suspend, revoke, or void your 
certificate, you may ask for a hearing (see Sec.  1054.820).

Subpart D--Production-line Testing


Sec.  1054.300  Applicability.

    This subpart specifies requirements for engine manufacturers to 
test their production engines for exhaust emissions to ensure that the 
engines are being produced as described in the application for 
certification. The production-line verification described in 40 CFR 
part 1060, subpart D, applies for equipment and components for 
evaporative emissions.


Sec.  1054.301  When must I test my production-line engines?

    (a) If you produce engines that are subject to the requirements of 
this part, you must test them as described in this subpart, except as 
follows:
    (1) Small-volume engine manufacturers may omit testing under this 
subpart.
    (2) We may exempt small-volume emission families from routine 
testing under this subpart. Request this exemption in the application 
for certification and include your basis for projecting a production 
volume below 5,000 units. You must promptly notify us if your actual 
production exceeds 5,000 units during the model year. If

[[Page 28323]]

you exceed the production limit or if there is evidence of a 
nonconformity, we may require you to test production-line engines under 
this subpart, or under 40 CFR part 1068, subpart E, even if we have 
approved an exemption under this paragraph (a)(2).
    (b) We may suspend or revoke your certificate of conformity for 
certain engine families if your production-line engines do not meet the 
requirements of this part or you do not fulfill your obligations under 
this subpart (see Sec. Sec.  1054.32fs5 and 1054.340).
    (c) Other regulatory provisions authorize us to suspend, revoke, or 
void your certificate of conformity, or order recalls for engine 
families without regard to whether they have passed these production-
line testing requirements. The requirements of this subpart do not 
affect our ability to do selective enforcement audits, as described in 
40 CFR part 1068. Individual engines in families that pass these 
production-line testing requirements must also conform to all 
applicable regulations of this part and 40 CFR part 1068.
    (d) You may ask to use an alternate program for testing production-
line engines. In your request, you must show us that the alternate 
program gives equal assurance that your products meet the requirements 
of this part. We may waive some or all of this subpart's requirements 
if we approve your alternate program.
    (e) If you certify an engine family with carryover emission data, 
as described in Sec.  1054.235(c), and these equivalent engine families 
consistently pass the production-line testing requirements over the 
preceding two-year period, you may ask for a reduced testing rate for 
further production-line testing for that family. The minimum testing 
rate is one engine per engine family. If we reduce your testing rate, 
we may limit our approval to any number of model years. In determining 
whether to approve your request, we may consider the number of engines 
that have failed the emission tests.
    (f) We may ask you to make a reasonable number of production-line 
engines available for a reasonable time so we can test or inspect them 
for compliance with the requirements of this part. See 40 CFR 1068.27.


Sec.  1054.305  How must I prepare and test my production-line engines?

    This section describes how to prepare and test production-line 
engines. You must assemble the test engine in a way that represents the 
assembly procedures for other engines in the engine family. You must 
ask us to approve any deviations from your normal assembly procedures 
for other production engines in the engine family.
    (a) Test procedures. Test your production-line engines using the 
applicable testing procedures in subpart F of this part to show you 
meet the emission standards in subpart B of this part.
    (b) Modifying a test engine. Once an engine is selected for testing 
(see Sec.  1054.310), you may adjust, repair, prepare, or modify it or 
check its emissions only if one of the following is true:
    (1) You document the need for doing so in your procedures for 
assembling and inspecting all your production engines and make the 
action routine for all the engines in the engine family.
    (2) This subpart otherwise specifically allows your action.
    (3) We approve your action in advance.
    (c) Engine malfunction. If an engine malfunction prevents further 
emission testing, ask us to approve your decision to either repair the 
engine or delete it from the test sequence.
    (d) Setting adjustable parameters. Before any test, we may require 
you to adjust any adjustable parameter to any setting within its 
physically adjustable range.
    (1) We may require you to adjust idle speed outside the physically 
adjustable range as needed, but only until the engine has stabilized 
emission levels (see paragraph (e) of this section). We may ask you for 
information needed to establish an alternate minimum idle speed.
    (2) We may specify adjustments within the physically adjustable 
range by considering their effect on emission levels, as well as how 
likely it is someone will make such an adjustment with in-use 
equipment.
    (3) We may specify an air-fuel ratio within the adjustable range 
specified in Sec.  1054.115(b).
    (e) Stabilizing emission levels. Use good engineering judgment to 
operate your engines before testing such that deterioration factors can 
be applied appropriately. Determine the stabilization period as 
follows:
    (1) For engine families with a useful life at or below 300 hours, 
operate the engine for the same number of hours before starting 
emission measurements that you used for the emission-data engine, 
within one hour. For example, if the emission-data engine operated for 
8 hours before the low-hour emission test, operate the test engines for 
7 to 9 hours before starting emission measurements.
    (2) For engine families with a useful life above 300 hours, operate 
each engine for no more than the greater of two periods:
    (i) 12 hours.
    (ii) The number of hours you operated your emission-data engine for 
certifying the engine family (see 40 CFR part 1065, subpart E, or the 
applicable regulations governing how you should prepare your test 
engine).
    (f) Damage during shipment. If shipping an engine to a remote 
facility for production-line testing makes necessary an adjustment or 
repair, you must wait until after the initial emission test to do this 
work. We may waive this requirement if the test would be impossible or 
unsafe, or if it would permanently damage the engine. Report to us, in 
your written report under Sec.  1054.345, all adjustments or repairs 
you make on test engines before each test.
    (g) Retesting after invalid tests. You may retest an engine if you 
determine an emission test is invalid under subpart F of this part. 
Explain in your written report reasons for invalidating any test and 
the emission results from all tests. If you retest an engine, you may 
ask us to substitute results of the new tests for the original ones. 
You must ask us within ten days of testing. We will generally answer 
within ten days after we receive your information.


Sec.  1054.310  How must I select engines for production-line testing?

    (a) Test engines from each engine family as described in this 
section based on test periods, as follows:
    (1) For engine families with projected U.S.-directed production 
volume of at least 1,600, the test periods are consecutive quarters (3 
months). However, if your annual production period is less than 12 
months long, you may take the following alternative approach to define 
quarterly test periods:
    (i) If your annual production period is 120 days or less, the whole 
model year constitutes a single test period.
    (ii) If your annual production period is 121 to 210 days, divide 
the annual production period evenly into two test periods.
    (iii) If your annual production period is 211 to 300 days, divide 
the annual production period evenly into three test periods.
    (iv) If your annual production period is 301 days or longer, divide 
the annual production period evenly into four test periods.
    (2) For engine families with projected U.S.-directed production 
volume below

[[Page 28324]]

1,600, the whole model year constitutes a single test period.
    (b) Early in each test period, randomly select and test an engine 
from the end of the assembly line for each engine family.
    (1) In the first test period for newly certified engines, randomly 
select and test one more engine. Then, calculate the required sample 
size for the model year as described in paragraph (c) of this section.
    (2) In later test periods of the same model year, combine the new 
test result with all previous testing in the model year. Then, 
calculate the required sample size for the model year as described in 
paragraph (c) of this section.
    (3) In the first test period for engine families relying on 
previously submitted test data, combine the new test result with the 
last test result from the previous model year. Then, calculate the 
required sample size for the model year as described in paragraph (c) 
of this section. Use the last test result from the previous model year 
only for this first calculation. For all subsequent calculations, use 
only results from the current model year.
    (c) Calculate the required sample size for each engine family. 
Separately calculate this figure for HC+NOX and CO. The 
required sample size is the greater of these calculated values. Use the 
following equation:


N = [(t95 x [sigma])/(x - STD)]2 + 1

Where:

N = Required sample size for the model year.
t95 = 95% confidence coefficient, which depends on the 
number of tests completed, n, as specified in the table in paragraph 
(c)(1) of this section. It defines 95% confidence intervals for a 
one-tail distribution.
x = Mean of emission test results of the sample.
STD = Emission standard (or family emission limit, if applicable).
[sigma] = Test sample standard deviation (see paragraph (c)(2) of 
this section).

    (1) Determine the 95% confidence coefficient, t95, from 
the following table:

----------------------------------------------------------------------------------------------------------------
        n                 t95                 n                 t95                 n                 t95
----------------------------------------------------------------------------------------------------------------
              2           6.31                     12               1.80                 22               1.72
              3           2.92                     13               1.78                 23               1.72
              4           2.35                     14               1.77                 24               1.71
              5           2.13                     15               1.76                 25               1.71
              6           2.02                     16               1.75                 26               1.71
              7           1.94                     17               1.75                 27               1.71
              8           1.90                     18               1.74                 28               1.70
              9           1.86                     19               1.73                 29               1.70
             10           1.83                     20               1.73                30+               1.70
             11           1.81                     21               1.72    .................  .................
----------------------------------------------------------------------------------------------------------------

    (2) Calculate the standard deviation, [sigma], for the test sample 
using the following formula:

[sigma] = [[Sigma](Xi - x)2/(n - 1)]1/2

Where:

Xi = Emission test result for an individual engine.
n = The number of tests completed in an engine family.

    (d) Use final deteriorated test results to calculate the variables 
in the equations in paragraph (c) of this section (see Sec.  
1054.315(a)).
    (e) After each new test, recalculate the required sample size using 
the updated mean values, standard deviations, and the appropriate 95-
percent confidence coefficient.
    (f) Distribute the remaining engine tests evenly throughout the 
rest of the year. You may need to adjust your schedule for selecting 
engines if the required sample size changes. If your scheduled 
quarterly testing for the remainder of the model year is sufficient to 
meet the calculated sample size, you may wait until the next quarter to 
do additional testing. Continue to randomly select engines from each 
engine family.
    (g) Continue testing until one of the following things happens:
    (1) After completing the minimum number of tests required in 
paragraph (b) of this section, the number of tests completed in an 
engine family, n, is greater than the required sample size, N, and the 
sample mean, x, is less than or equal to the emission standard. For 
example, if N = 5.1 after the fifth test, the sample-size calculation 
does not allow you to stop testing.
    (2) The engine family does not comply according to Sec.  1054.315.
    (3) You test 30 engines from the engine family.
    (4) You test one percent of your projected annual U.S.-directed 
production volume for the engine family, rounded to the nearest whole 
number. Do not count an engine under this paragraph (g)(4) if it fails 
to meet an applicable emission standard.
    (5) You choose to declare that the engine family does not comply 
with the requirements of this subpart.
    (h) If the sample-size calculation allows you to stop testing for 
one pollutant but not another, you must continue measuring emission 
levels of all pollutants for any additional tests required under this 
section. However, you need not continue making the calculations 
specified in this section for the pollutant for which testing is not 
required. This paragraph (h) does not affect the number of tests 
required under this section or the remedial steps required under Sec.  
1054.320.
    (i) You may elect to test more randomly chosen engines than we 
require under this section. Include these engines in the sample-size 
calculations.


Sec.  1054.315  How do I know when my engine family fails the 
production-line testing requirements?

    This section describes the pass-fail criteria for the production-
line testing requirements. We apply these criteria on an emission-
family basis. See Sec.  1054.320 for the requirements that apply to 
individual engines that fail a production-line test.
    (a) Calculate your test results as follows:
    (1) Initial and final test results. Calculate and round the test 
results for each engine. If you do several tests on an engine, 
calculate the initial test results, then add them together and divide 
by the number of tests and round for the final test results on that 
engine.
    (2) Final deteriorated test results. Apply the deterioration factor 
for the engine family to the final test results (see Sec.  
1054.240(c)).
    (3) Round deteriorated test results. Round the results to the 
number of decimal places in the emission standard expressed to one more 
decimal place.
    (b) Construct the following CumSum Equation for each engine family 
for HC+NOX and CO emissions:

Ci = Max [0 or Ci-1 + Xi - (STD + 0.25 
x [sigma])]

Where:


[[Page 28325]]


Ci = The current CumSum statistic.
Ci-1 = The previous CumSum statistic. For the first test, 
the CumSum statistic is 0 (i.e. C1 = 0).
Xi = The current emission test result for an individual 
engine.
STD = Emission standard (or family emission limit, if applicable).

    (c) Use final deteriorated test results to calculate the variables 
in the equation in paragraph (b) of this section (see Sec.  
1054.315(a)).
    (d) After each new test, recalculate the CumSum statistic.
    (e) If you test more than the required number of engines, include 
the results from these additional tests in the CumSum Equation.
    (f) After each test, compare the current CumSum statistic, 
Ci, to the recalculated Action Limit, H, defined as H = 5.0 
x [sigma].
    (g) If the CumSum statistic exceeds the Action Limit in two 
consecutive tests, the engine family fails the production-line testing 
requirements of this subpart. Tell us within ten working days if this 
happens. You may request to amend the application for certification to 
raise the FEL of the entire engine family as described in Sec.  
1054.225(f).
    (h) If you amend the application for certification for an engine 
family under Sec.  1054.225, do not change any previous calculations of 
sample size or CumSum statistics for the model year.


Sec.  1054.320  What happens if one of my production-line engines fails 
to meet emission standards?

    (a) If you have a production-line engine with final deteriorated 
test results exceeding one or more emission standards (see Sec.  
1054.315(a)), the certificate of conformity is automatically suspended 
for that failing engine. You must take the following actions before 
your certificate of conformity can cover that engine:
    (1) Correct the problem and retest the engine to show it complies 
with all emission standards.
    (2) Include in your written report a description of the test 
results and the remedy for each engine (see Sec.  1054.345).
    (b) You may request to amend the application for certification to 
raise the FEL of the entire engine family at this point (see Sec.  
1054.225).


Sec.  1054.325  What happens if an engine family fails the production-
line testing requirements?

    (a) We may suspend your certificate of conformity for an engine 
family if it fails under Sec.  1054.315. The suspension may apply to 
all facilities producing engines from an engine family, even if you 
find noncompliant engines only at one facility.
    (b) We will tell you in writing if we suspend your certificate in 
whole or in part. We will not suspend a certificate until at least 15 
days after the engine family fails. The suspension is effective when 
you receive our notice.
    (c) Up to 15 days after we suspend the certificate for an engine 
family, you may ask for a hearing (see Sec.  1054.820). If we agree 
before a hearing occurs that we used erroneous information in deciding 
to suspend the certificate, we will reinstate the certificate.
    (d) Section 1054.335 specifies steps you must take to remedy the 
cause of the engine family's production-line failure. All the engines 
you have produced since the end of the last test period are presumed 
noncompliant and should be addressed in your proposed remedy. We may 
require you to apply the remedy to engines produced earlier if we 
determine that the cause of the failure is likely to have affected the 
earlier engines.
    (e) You may request to amend the application for certification to 
raise the FEL of the engine family before or after we suspend your 
certificate if you meet the requirements of Sec.  1054.225(f). We will 
approve your request if the failure is not caused by a defect and it is 
clear that you used good engineering judgment in establishing the 
original FEL.


Sec.  1054.330  May I sell engines from an engine family with a 
suspended certificate of conformity?

    You may sell engines that you produce after we suspend the engine 
family's certificate of conformity under Sec.  1054.315 only if one of 
the following occurs:
    (a) You test each engine you produce and show it complies with 
emission standards that apply.
    (b) We conditionally reinstate the certificate for the engine 
family. We may do so if you agree to recall all the affected engines 
and remedy any noncompliance at no expense to the owner if later 
testing shows that the engine family still does not comply.


Sec.  1054.335  How do I ask EPA to reinstate my suspended certificate?

    (a) Send us a written report asking us to reinstate your suspended 
certificate. In your report, identify the reason for noncompliance, 
propose a remedy for the engine family, and commit to a date for 
carrying it out. In your proposed remedy include any quality control 
measures you propose to keep the problem from happening again.
    (b) Give us data from production-line testing that shows the 
remedied engine family complies with all the emission standards that 
apply.


Sec.  1054.340  When may EPA revoke my certificate under this subpart 
and how may I sell these engines again?

    (a) We may revoke your certificate for an engine family in the 
following cases:
    (1) You do not meet the reporting requirements.
    (2) Your engine family fails to comply with the requirements of 
this subpart and your proposed remedy to address a suspended 
certificate under Sec.  1054.325 is inadequate to solve the problem or 
requires you to change the engine's design or emission control system.
    (b) To sell engines from an engine family with a revoked 
certificate of conformity, you must modify the engine family and then 
show it complies with the requirements of this part.
    (1) If we determine your proposed design change may not control 
emissions for the engine's full useful life, we will tell you within 
five working days after receiving your report. In this case we will 
decide whether production-line testing will be enough for us to 
evaluate the change or whether you need to do more testing.
    (2) Unless we require more testing, you may show compliance by 
testing production-line engines as described in this subpart.
    (3) We will issue a new or updated certificate of conformity when 
you have met these requirements.


Sec.  1054.345  What production-line testing records must I send to 
EPA?

    Do all the following things unless we ask you to send us less 
information:
    (a) Within 30 calendar days of the end of each test period, send us 
a report with the following information:
    (1) Describe any facility used to test production-line engines and 
state its location.
    (2) State the total U.S.-directed production volume and number of 
tests for each engine family.
    (3) Describe how you randomly selected engines.
    (4) Describe each test engine, including the engine family's 
identification and the engine's model year, build date, model number, 
identification number, and number of hours of operation before testing.
    (5) Identify how you accumulated hours of operation on the engines 
and describe the procedure and schedule you used.
    (6) Provide the test number; the date, time and duration of 
testing; test procedure; initial test results before and after 
rounding; final test results; and final deteriorated test results for 
all

[[Page 28326]]

tests. Provide the emission results for all measured pollutants. 
Include information for both valid and invalid tests and the reason for 
any invalidation.
    (7) Describe completely and justify any nonroutine adjustment, 
modification, repair, preparation, maintenance, or test for the test 
engine if you did not report it separately under this subpart. Include 
the results of any emission measurements, regardless of the procedure 
or type of engine.
    (8) Provide the CumSum analysis required in Sec.  1054.315 and the 
sample-size calculation required in Sec.  1054.310 for each engine 
family.
    (9) Report on each failed engine as described in Sec.  1054.320.
    (10) State the date the test period ended for each engine family.
    (b) We may ask you to add information to your written report so we 
can determine whether your new engines conform with the requirements of 
this subpart.
    (c) An authorized representative of your company must sign the 
following statement:
    We submit this report under sections 208 and 213 of the Clean Air 
Act. Our production-line testing conformed completely with the 
requirements of 40 CFR part 1054. We have not changed production 
processes or quality-control procedures for test engines in a way that 
might affect emission controls. All the information in this report is 
true and accurate to the best of my knowledge. I know of the penalties 
for violating the Clean Air Act and the regulations. (Authorized 
Company Representative)
    (d) Send electronic reports of production-line testing to the 
Designated Compliance Officer using an approved information format. If 
you want to use a different format, send us a written request with 
justification for a waiver.
    (e) We will send copies of your reports to anyone from the public 
who asks for them. Section 1054.815 describes how we treat information 
you consider confidential.


Sec.  1054.350  What records must I keep?

    (a) Organize and maintain your records as described in this 
section. We may review your records at any time.
    (b) Keep paper records of your production-line testing for eight 
years after you complete all the testing required for an engine family 
in a model year. You may use any additional storage formats or media if 
you like.
    (c) Keep a copy of the written reports described in Sec.  1054.345.
    (d) Keep the following additional records:
    (1) A description of all test equipment for each test cell that you 
can use to test production-line engines.
    (2) The names of supervisors involved in each test.
    (3) The name of anyone who authorizes adjusting, repairing, 
preparing, or modifying a test engine and the names of all supervisors 
who oversee this work.
    (4) If you shipped the engine for testing, the date you shipped it, 
the associated storage or port facility, and the date the engine 
arrived at the testing facility.
    (5) Any records related to your production-line tests that are not 
in the written report.
    (6) A brief description of any significant events during testing 
not otherwise described in the written report or in this section.
    (7) Any information specified in Sec.  1054.345 that you do not 
include in your written reports.
    (e) If we ask, you must give us a more detailed description of 
projected or actual production figures for an engine family. We may ask 
you to divide your production figures by maximum engine power, 
displacement, fuel type, or assembly plant (if you produce engines at 
more than one plant).
    (f) Keep a list of engine identification numbers for all the 
engines you produce under each certificate of conformity. Give us this 
list within 30 days if we ask for it.
    (g) We may ask you to keep or send other information necessary to 
implement this subpart.

Subpart E--In-use Testing


Sec.  1054.401  General provisions.

    We may perform in-use testing of any engine or equipment subject to 
the standards of this part.

Subpart F--Test Procedures


Sec.  1054.501  How do I run a valid emission test?

    (a) Applicability. This subpart is addressed to you as a 
manufacturer, but it applies equally to anyone who does testing for 
you, and to us when we perform testing to determine if your engines or 
equipment meet emission standards.
    (b) General requirements. Use the equipment and procedures for 
spark-ignition engines in 40 CFR part 1065 to determine whether engines 
meet the exhaust emission standards, as follows:
    (1) Measure the emissions of all regulated pollutants as specified 
in Sec.  1054.505 and 40 CFR part 1065. Note that this subpart F 
generally specifies test procedures for engines that are designed to 
operate without throttle control at a nominally constant speed (or a 
user-selectable speed); see 40 CFR 1065.10 for instructions for using 
alternate procedures if following the specified procedures would result 
in emission measurements that do not represent in-use emissions.
    (2) Use the fuels and lubricants specified in 40 CFR part 1065, 
subpart H, for all the testing we require in this part. For service 
accumulation, use the test fuel or any commercially available fuel that 
is representative of the fuel that in-use engines will use.
    (3) Perform testing under the ambient conditions specified in 40 
CFR 1065.520. Emissions may not be corrected for the effects of test 
temperature, pressure, or humidity.
    (4) 40 CFR 1065.405 describes how to prepare an engine for testing, 
including steps to ensure that emission levels are stabilized. For 
engine families with a useful life of 300 hours or less, the following 
provisions apply:
    (i) We will not approve a stabilization period longer than 12 hours 
even if you show that emissions are not yet stabilized.
    (ii) Identify the number of hours you use to stabilize engines for 
low-hour emission measurements. You may consider emissions stable at 
any point less than 12 hours. For example, you may choose a point at 
which emission levels reach a low value before the effects of 
deterioration are established.
    (5) Prepare your engines for testing by installing a governor that 
you normally use on production engines, consistent with Sec. Sec.  
1054.235(b) and 1054.505.
    (6) During testing, supply the engine with fuel in a manner 
consistent with how it will be supplied with fuel in use. If you sell 
engines with complete fuel systems and your production engines will be 
equipped with a vapor line that routes running loss vapors into the 
engine's intake system, you must measure exhaust emissions using a 
complete fuel system representing a production configuration that sends 
fuel vapors to the test engine's intake system in a way that represents 
the expected in-use operation.
    (c) Special and alternate procedures. If you are unable to run the 
test cycle specified in this part for your engine, use an alternate 
test cycle that will result in a cycle-weighted emission measurement 
equivalent to the expected average in-use emissions. This cycle must be 
approved under 40 CFR 1065.10. You may use other special or alternate 
procedures to the extent we allow them under 40 CFR 1065.10.
    (d) Wintertime engines. You may test wintertime engines at the 
ambient

[[Page 28327]]

temperatures specified in 40 CFR 1065.520, even though this does not 
represent in-use operation for these engines (40 CFR 1065.10(c)(1)).


Sec.  1054.505  How do I test engines?

    (a) This section describes how to test engines under steady-state 
conditions. For handheld engines you must perform tests with discrete-
mode sampling. For nonhandheld engines we allow you to perform tests 
with either discrete-mode or ramped-modal testing methods. You must use 
the same modal testing method for certification and all other testing 
you perform for an engine family. If we test your engines to confirm 
that they meet emission standards, we will use the modal testing method 
you select for your own testing. We may also perform other testing as 
allowed by the Clean Air Act. Conduct duty-cycle testing as follows:
    (1) For discrete-mode testing, sample emissions separately for each 
mode, then calculate an average emission level for the whole cycle 
using the weighting factors specified for each mode. In each mode, 
operate the engine for at least 5 minutes, then sample emissions for at 
least 1 minute. Calculate cycle statistics for each mode and compare 
with the specified values in 40 CFR 1065.514 to confirm that the test 
is valid.
    (2) For ramped-modal testing, start sampling at the beginning of 
the first mode and continue sampling until the end of the last mode. 
Calculate emissions and cycle statistics the same as for transient 
testing as specified in 40 CFR part 1065, subpart G.
    (b) Measure emissions by testing the engine on a dynamometer with 
the test procedures for constant-speed engines in 40 CFR part 1065 
while using one of the steady-state duty cycles listed in this 
paragraph (b) to determine whether it meets the exhaust emission 
standards specified in Sec.  1054.101(a). This requirement applies for 
all engines, including those not meeting the definition of ``constant-
speed engine'' in 40 CFR 1065.1001.
    (1) For handheld engines, use the two-mode duty cycle described in 
paragraph (a) of Appendix II of this part.
    (2) For nonhandheld engines, use the six-mode duty cycle or the 
corresponding ramped-modal cycle described in paragraph (b) of Appendix 
II of this part. Control engine speeds and torques during idle mode as 
specified in paragraph (c) of this section and during full-load 
operating modes as specified in paragraph (d) of this section. For all 
other modes, control torque as needed to meet the cycle-validation 
criteria in 40 CFR 1065.514; control the engine speed to within 5 
percent of the nominal speed specified in paragraph (d) of this section 
or let the installed governor (in the production configuration) control 
engine speed. The governor may be adjusted before emission sampling to 
target the nominal speed identified in paragraph (d) of this section, 
but the installed governor must control engine speed throughout the 
emission-sampling period whether the governor is adjusted or not. 
(Note: Ramped-modal testing involves continuous sampling, so governor 
adjustments may not occur during such a test.)
    (c) During idle mode for nonhandheld engines, operate the engine 
with the following parameters:
    (1) Allow the engine to operate at the idle speed determined by the 
installed governor. If any production engines from the engine family 
have a user-selectable idle speed, operate the engine with an installed 
governor that controls engine speed to the lowest speed setting from 
the engine family.
    (2) Keep engine torque under 5 percent of maximum test torque.
    (3) You must conduct testing at the idle mode even if the allowable 
torque values overlap with those for another specified mode.
    (d) Establish full-load operating parameters for nonhandheld 
engines as follows:
    (1) In normal circumstances, select a test speed of either 3060 rpm 
or 3600 rpm that is most appropriate for the engine family. If all the 
engines in the engine family are used in intermediate-speed equipment, 
select a test speed of 3060 rpm. The test associated with intermediate-
speed operation is referred to as the A Cycle. If all the engines in 
the engine family are used in rated-speed equipment, select a test 
speed of 3600 rpm. The test associated with rated-speed operation is 
referred to as the B Cycle. If an engine family includes engines used 
in both intermediate-speed equipment and rated-speed equipment, select 
the test speed for emission-data engines that will result in worst-case 
emissions. In unusual circumstances, you may ask to use a test speed 
different than that specified in this paragraph (d)(1) if it better 
represents in-use operation.
    (2) Operate the engine ungoverned at wide-open throttle at the test 
speed established in paragraph (d)(1) of this section until the engine 
reaches thermal stability as described in 40 CFR 1065.530(a)(2)(ii). 
Record the torque value after stabilization. Use this value for the 
full-load torque setting and for denormalizing the rest of the duty 
cycle.
    (3) The provisions of this paragraph (d) apply instead of the 
engine mapping procedures in 40 CFR 1065.510.
    (e) See 40 CFR part 1065 for detailed specifications of tolerances 
and calculations.


Sec.  1054.520  What testing must I perform to establish deterioration 
factors?

    Sections 1054.240 and 1054.245 describe the required methods for 
testing to establish deterioration factors for an emission family.

Subpart G--Special Compliance Provisions


Sec.  1054.601  What compliance provisions apply to these engines?

    Engine and equipment manufacturers, as well as owners, operators, 
and rebuilders of engines subject to the requirements of this part, and 
all other persons, must observe the provisions of this part, the 
requirements and prohibitions in 40 CFR part 1068, and the provisions 
of the Act.


Sec.  1054.610  What is the exemption for delegated final assembly?

    (a) The provisions of 40 CFR 1068.260 related to delegated final 
assembly do not apply for handheld engines certified under this part 
1054. The provisions of this section apply for nonhandheld engines 
instead of the provisions of 40 CFR 1068.260 related to delegated final 
assembly.
    (b) Shipping an engine separately from emission-related components 
that you have specified as part of its certified configuration will not 
be a violation of the prohibitions in 40 CFR 1068.101(a)(1) if you 
follow the provisions of paragraphs (c) through (e) of this section. 
These provisions apply without request; however, note that engines 
produced under this section may be subject to higher bond payments 
under Sec.  1054.690.
    (c) If you do not manufacture the equipment in which the engine 
will be installed, you must meet all the following conditions with 
respect to aftertreatment components:
    (1) Apply for and receive a certificate of conformity for the 
engine and its emission control system before shipment.
    (2) Provide installation instructions in enough detail to ensure 
that the engine will be in its certified configuration if someone 
follows these instructions. Provide the installation instructions in a 
timely manner, generally directly after you receive an order for 
shipping engines or earlier. If you apply temporary labels as described 
in paragraph (c)(7)(i) of this section, include an instruction for the

[[Page 28328]]

equipment manufacturer to remove the temporary label after installing 
the appropriate aftertreatment component.
    (3) Have a contractual agreement with each equipment manufacturer 
obligating the equipment manufacturer to complete the engine assembly 
so it is in its certified configuration when final assembly is 
complete. The contractual agreement must include a commitment that the 
equipment manufacturer will do the following things:
    (i) Purchase the aftertreatment components you have specified in 
your application for certification.
    (ii) Provide the affidavits required under paragraph (c)(4) of this 
section.
    (iii) Provide production records that demonstrate compliance with 
your instructions. This may involve records to document purchases of 
aftertreatment components.
    (iv) Perform or allow audits as described in paragraph (c)(10) of 
this section.
    (4) Take appropriate additional steps to ensure that all engines 
will be in their certified configuration when installed by the 
equipment manufacturer. At a minimum, you must obtain annual affidavits 
from every equipment manufacturer to whom you sell engines under this 
section. The affidavits must identify the part numbers of the 
aftertreatment devices (or the corresponding alphanumeric designation 
established under paragraph (c)(8) of this section) that the equipment 
manufacturer installs on each engine model they purchase from you under 
this section and include confirmation that the number of aftertreatment 
devices received were sufficient for the number of engines involved.
    (5) Describe in your application for certification how you plan to 
use the provisions of this section and any steps you plan to take under 
paragraph (c)(4) of this section.
    (6) Keep records to document how many engines you produce under 
this exemption. Also, keep records to document your contractual 
agreements under paragraph (c)(3) of this section. Keep all these 
records for five years after the end of the model year and make them 
available to us upon request.
    (7) Make sure the engine has the emission control information label 
we require under the standard-setting part. Include additional labeling 
using one of the following approaches:
    (i) Apply an additional temporary label or tag in a way that makes 
it unlikely that the engine will be installed in equipment other than 
in its certified configuration. The label or tag must identify the 
engine as incomplete and include a clear statement that failing to 
install the aftertreatment device, or otherwise bring the engine into 
its certified configuration, is a violation of federal law subject to 
civil penalty.
    (ii) Add the statement ``DELEGATED ASSEMBLY'' to the permanent 
emission control information label.
    (iii) Add an alphanumeric code that you identify in your 
application for certification to the permanent emission control 
information label and include additional label features such as 
coloring or shading to ensure that the equipment manufacturer will 
recognize that the engine needs an aftertreatment component to be in 
its certified configuration.
    (8) Engine manufacturers must establish an alphanumeric designation 
to identify each unique catalyst design (including size, washcoat, 
precious metal loading, supplier, and any other appropriate factors). 
Include this alphanumeric designation in the application for 
certification as described in Sec.  1054.205. Engine manufacturers must 
also give instructions as appropriate to ensure that the external 
surface of the exhaust system includes stamping or other means to 
permanently display this designation and that it will be readily 
visible as much as possible when the equipment is fully assembled, 
consistent with the objective of verifying the identity of the 
installed catalyst.
    (9) You must have written confirmation that the vehicle 
manufacturer has ordered the appropriate type of aftertreatment 
components for an initial shipment of engines under this section. For 
the purpose of this paragraph, initial shipment means the first 
shipment of engines in a model year to a given equipment manufacturer 
for a given engine model. You must receive the written confirmation 
within 30 days of shipment. If you do not receive written confirmation 
within 30 days, you may not ship any more engines from that engine 
family to that equipment manufacturer until you have the written 
confirmation. Note that it may be appropriate to obtain subsequent 
written confirmations to ensure compliance with this section, as 
described in paragraph (c)(4) of this section.
    (10) You must perform or arrange for audits of equipment 
manufacturers as follows:
    (i) If you sell engines to 48 or more equipment manufacturers under 
the provisions of this section, you must annually perform or arrange 
for audits of twelve equipment manufacturers to whom you sell engines 
under this section. To select individual equipment manufacturers, 
divide all the affected equipment manufacturers into quartiles based on 
the number of engines they buy from you; select equal numbers of 
equipment manufacturers from each quartile each model year as much as 
possible. Vary the equipment manufacturers selected for auditing from 
year to year, though audits may be repeated in later model years if you 
find or suspect that a particular equipment manufacturer is not 
properly installing aftertreatment devices.
    (ii) If you sell engines to fewer than 48 equipment manufacturers 
under the provisions of this section, set up a plan to perform or 
arrange for audits of each equipment manufacturer on average once every 
four model years.
    (iii) Starting with the 2019 model year, you may ask us to approve 
a reduced auditing rate if you sell engines to fewer than 120 equipment 
manufacturers under the provisions of this section. We may approve an 
alternate plan that involves performing or arranging for audits of each 
equipment manufacturer on average once every ten model years, as long 
as you show that you have met the auditing requirements in preceding 
years without finding noncompliance or improper procedures. You may 
also ask us to approve a reduced auditing rate after you have audited 
all affected equipment manufacturers at least once.
    (iv) To meet these audit requirements, you or your agent must at a 
minimum either review the equipment manufacturers production records 
and procedures, inspect the equipment manufacturer's production 
operations, or inspect the final assembled products. You or your agent 
must review the available information as needed to demonstrate that the 
equipment manufacturer is complying with your installation 
instructions. This must include confirmation that the number of 
aftertreatment devices shipped was sufficient for the number of engines 
involved. Inspection of final assembled products may occur at any point 
in the product distribution system after the exemption defined in this 
section expires. For example, you or your agent may inspect products at 
the equipment manufacturer's assembly or storage facilities, at 
regional distribution centers, or at retail locations.
    (v) You must keep records of these audits for five years after the 
end of the model year.
    (11) In your application for certification, give a detailed plan 
for performing audits as described in paragraph (c)(10) of this 
section.
    (12) If one of your engines produced under this section is selected 
for

[[Page 28329]]

production-line testing, you must arrange to get a randomly selected 
aftertreatment component that will be used with the engine; you may not 
use aftertreatment components from your own inventory. You may obtain 
such aftertreatment components from any point in the normal 
distribution from the aftertreatment component manufacturer to the 
equipment manufacturer. Keep records showing how you randomly selected 
these aftertreatment components, consistent with the requirements of 
Sec.  1054.305.
    (d) If you manufacture engines and install them in equipment you 
also produce, you must take steps to ensure that your facilities, 
procedures, and production records are set up to ensure that equipment 
and engines are assembled in their proper certified configurations. You 
may demonstrate compliance with this requirement by maintaining a 
database showing how you pair aftertreament components with the 
appropriate engines.
    (e) The following provisions apply if you ship engines without air 
filters or other portions of the air intake system such that the 
shipped engine is not in its certified configuration (for example, if 
you identify specific part numbers of air filters needed to ensure that 
the engine will meet emission standards but do not include those with 
the shipped engine):
    (1) If you are using the provisions of this section to ship an 
engine without aftertreatment, apply all the provisions of this section 
to ensure that each engine, including its intake system, is in its 
certified configuration before it reaches the ultimate purchaser.
    (2) If you are not using the provisions of this section to ship an 
engine without aftertreatment, shipping an engine without air-intake 
components that you have specified as part of its certified 
configuration will not be a violation of the prohibitions in 40 CFR 
1068.101(a) if you follow the provisions specified in paragraphs (c)(1) 
through (7) of this section. If we find there is a problem, we may 
require you to perform audits as specified in paragraph (c)(10) of this 
section.
    (f) Once the equipment manufacturer takes possession of an engine 
exempted under this section and the engine reaches the point of final 
equipment assembly, the exemption expires and the engine is subject to 
all the prohibitions in 40 CFR 1068.101(a)(1).
    (g) You may use the provisions of this section for engines you sell 
to a distributor, subject to the following provisions:
    (1) You may establish a contractual arrangement in which you 
designate the distributor to be your agent in all matters related to 
compliance with the requirements of this section.
    (2) Without the contractual arrangement specified in paragraph 
(g)(2) of this section, a participating distributor is considered to be 
the equipment manufacturer for all applicable requirements and 
prohibitions. Such distributors must bring engines into their final 
certified configuration. This may include shipping the engine with the 
appropriate catalyst and air filter, but without completing the 
assembly with all the components. The exemptions expire for such 
engines when the distributor no longer has control of them.
    (h) You must notify us within 15 days if you find from an audit or 
another source that engines produced under this section are not in 
their certified configuration at the point of final assembly. If this 
occurs, send us a report within 90 days of the audit describing the 
circumstances related to the noncompliance.
    (i) We may suspend, revoke, or void an exemption under this 
section, as follows:
    (1) We may suspend, revoke, or void your exemption for a specific 
equipment manufacturer if any of the engines are not in their certified 
configuration after installation in that manufacturer's equipment, or 
if we determine that the equipment manufacturer has otherwise failed to 
comply with the requirements of this section.
    (2) We may suspend, revoke, or void your exemption for the entire 
engine family if we determine that you have failed to comply with the 
requirements of this section. If we make an adverse decision with 
respect to the exemption for any of your engine families under this 
paragraph (i), this exemption will not apply for future certificates 
unless you demonstrate that the factors causing the noncompliance do 
not apply to the other engine families.
    (3) We may void your exemption for the entire engine family if you 
intentionally submit false or incomplete information or fail to keep 
and provide to EPA the records required by this section. Note that all 
records and reports required under this section (whether generated by 
the engine manufacturer, equipment manufacturer, or others) are subject 
to the prohibition in 40 CFR 1068.101(a)(2), which prohibits the 
submission of false or incomplete information. For example, the 
affidavits required by this section are considered a submission.
    (j) You are liable for the in-use compliance of any engine that is 
exempt under this section.
    (k) It is a violation of the Act for any person to introduce into 
U.S. commerce a previously exempted engine, including as part of 
equipment, without complying fully with the installation instructions.
    (l) [Reserved]
    (m) You may ask us to provide a temporary exemption to allow you to 
complete production of your engines at different facilities, as long as 
you maintain control of the engines until they are in their certified 
configuration. We may require you to take specific steps to ensure that 
such engines are in their certified configuration before reaching the 
ultimate purchaser. You may request an exemption under this paragraph 
(m) in your application for certification, or in a separate submission.


Sec.  1054.612  What special provisions apply for equipment 
manufacturers modifying certified engines?

    (a) General provisions. If you buy certified nonhandheld engines 
for installation in equipment you produce, but you install the engines 
such that they use intake or exhaust systems that are not part of the 
originally certified configuration, you become the engine manufacturer 
for those engines and must certify that they will meet emission 
standards. We will allow you to utilize the provisions for simplified 
certification specified in paragraph (b) of this section, as long as 
your design stays within the overall specifications from the original 
engine manufacturer (such as exhaust backpressure) and you use a 
catalyst as described in the original engine manufacturer's application 
for certification.
    (b) Simplified certification. You must perform testing with an 
emission-data engine to show that you meet exhaust emission standards; 
however, you may use the deterioration factor from the original engine 
manufacturer. The production-line testing requirements in subpart D of 
this part do not apply for engines certified under this section. You 
must meet all the other requirements that apply to engine manufacturers 
for engines subject to standards under this part. The engine's model 
year is determined by its date of final assembly. The engine family 
must have the same useful life value specified by the original engine 
manufacturer for that engine. In your application for certification 
describe any differences between the original engine manufacturer's 
design and yours and explain why the deterioration data

[[Page 28330]]

generated by the original engine manufacturer is appropriate for your 
configuration.
    (c) Engine exemption. As an engine manufacturer, you may produce 
nonconforming engines for equipment manufacturers as allowed under this 
section. You do not have to request this exemption for your engines, 
but you must have written assurance from equipment manufacturers that 
they need a certain number of exempted engines under this section. Add 
a label or tag to the engine with at least the following information:
    (1) The heading ``EMISSION CONTROL INFORMATION''.
    (2) Your corporate name and trademark.
    (3) Engine displacement (in cubic centimeters).
    (4) The following statement: ``THIS ENGINE IS TEMPORARILY EXEMPT 
FROM EMISSION STANDARDS AND RELATED REQUIREMENTS UNDER 40 CFR 
1054.612.''.


Sec.  1054.615  What is the exemption for engines certified to 
standards for Large SI engines?

    (a) An engine is exempt from the requirements of this part if it is 
in an emission family that has a valid certificate of conformity 
showing that it meets emission standards and other requirements under 
40 CFR part 1048 for the appropriate model year.
    (b) The only requirements or prohibitions from this part that apply 
to an engine that is exempt under this section are in this section. See 
paragraph (f) of this section to determine what evaporative 
requirements apply for equipment using these engines.
    (c) If your engines do not have the certificate required in 
paragraph (a) of this section, they will be subject to the provisions 
of this part. Introducing these engines into U.S. commerce without a 
valid exemption or certificate of conformity violates the prohibitions 
in 40 CFR 1068.101(a).
    (d) Engines exempted under this section are subject to all the 
requirements affecting engines under 40 CFR part 1048. The requirements 
and restrictions of 40 CFR part 1048 apply to anyone manufacturing 
these engines, anyone manufacturing equipment that uses these engines, 
and all other persons in the same manner as if these were nonroad 
spark-ignition engines above 19 kW.
    (e) Engines exempted under this section may not generate or use 
emission credits under this part 1054.


Sec.  1054.620  What are the provisions for exempting engines used 
solely for competition?

    The provisions of this section apply for new engines and equipment 
built on or after January 1, 2009.
    (a) We may grant you an exemption from the standards and 
requirements of this part for a new engine on the grounds that it is to 
be used solely for competition. The requirements of this part, other 
than those in this section, do not apply to engines that we exempt for 
use solely for competition.
    (b) We will exempt engines that we determine will be used solely 
for competition. The basis of our determination is described in 
paragraphs (c) and (d) of this section. Exemptions granted under this 
section are good for only one model year and you must request renewal 
for each subsequent model year. We will not approve your renewal 
request if we determine the engine will not be used solely for 
competition.
    (c) Engines meeting all the following criteria are considered to be 
used solely for competition:
    (1) Neither the engine nor any equipment containing the engine may 
be displayed for sale in any public dealership or otherwise offered for 
sale to the general public.
    (2) Sale of the equipment in which the engine is installed must be 
limited to professional competition teams, professional competitors, or 
other qualified competitors.
    (3) The engine and the equipment in which it is installed must have 
performance characteristics that are substantially superior to 
noncompetitive models.
    (4) The engines are intended for use only as specified in paragraph 
(e) of this section.
    (d) You may ask us to approve an exemption for engines not meeting 
the criteria listed in paragraph (c) of this section as long as you 
have clear and convincing evidence that the engines will be used solely 
for competition.
    (e) Engines are considered to be used solely for competition only 
if their use is limited to competition events sanctioned by a state or 
federal government agency or another widely recognized public 
organization with authorizing permits for participating competitors. 
Operation of such engines may include only competition events or trials 
to qualify for competition events. Authorized attempts to set 
performance records (and the associated official trials) are also 
considered competition events. Engines will not be considered to be 
used solely for competition if they are ever used for any recreational 
or other noncompetitive purpose. Any use of exempt engines in 
recreational events is a violation of 40 CFR 1068.101.
    (f) You must permanently label engines exempted under this section 
to clearly indicate that they are to be used only for competition. 
Failure to properly label an engine will void the exemption for that 
engine.
    (g) If we request it, you must provide us any information we need 
to determine whether the engines are used solely for competition. This 
would include documentation regarding the number of engines and the 
ultimate purchaser of each engine as well as any documentation showing 
an equipment manufacturer's request for an exempted engine. Keep these 
records for five years.


Sec.  1054.625  What requirements apply under the Transition Program 
for Equipment Manufacturers?

    The provisions of this section allow equipment manufacturers to 
produce equipment with Class II engines that are subject to less 
stringent exhaust emission standards after the Phase 3 emission 
standards begin to apply. To be eligible to use these provisions, you 
must follow all the instructions in this section. See Sec.  1054.626 
for requirements that apply specifically to companies that manufacture 
equipment outside the United States and to companies that import such 
equipment without manufacturing it. Engines and equipment you produce 
under this section are exempt from the prohibitions in 40 CFR 
1068.101(a)(1) with respect to exhaust emissions, subject to the 
provisions of this section. Equipment exempted under this section must 
meet all applicable requirements related to evaporative emissions, 
except as described in Sec.  1054.627.
    (a) General. If you are an equipment manufacturer, you may 
introduce into U.S. commerce limited numbers of nonroad equipment with 
Class II engines exempted under this section. You may use the 
exemptions in this section only if you have primary responsibility for 
designing and manufacturing equipment and your manufacturing procedures 
include installing some engines in this equipment. Consider all U.S.-
directed equipment production in showing that you meet the requirements 
of this section, including those from any parent or subsidiary 
companies and those from any other companies you license to produce 
equipment for you. If you produce a type of equipment that has more 
than one engine, count each engine separately. These provisions are 
available during the first four model

[[Page 28331]]

years that the Phase 3 exhaust emission standards apply.
    (b) Allowances. Calculate how many pieces of equipment with 
exempted engines you may produce under this section by determining your 
total U.S.-directed production volume of equipment with Class II 
engines from January 1, 2007 through December 31, 2009, calculating 
your annual average production, and multiplying this total by 0.3. The 
same calculation applies for small-volume equipment manufacturers, 
except that average annual production is multiplied by 2.0. For 
companies with no eligible production in a given year, calculate annual 
average production based only on those years in which you produce 
equipment with Class II engines for sale in the United States. Use 
these allowances for equipment using model year 2011 and later Class II 
engines. You may use these allowances for equipment you produce before 
December 31, 2014.
    (c) Access to exempted engines. You may use one of the following 
approaches to get exempted engines under this section:
    (1) Request a certain number of exempted Class II engines from the 
engine manufacturer as described in paragraph (j)(1) of this section.
    (2) You may make arrangements with the engine manufacturer to 
receive an engine without an exhaust system and install exhaust systems 
without aftertreatment that would otherwise be required to meet Phase 3 
standards, as described in paragraph (j)(2) of this section. You must 
follow the engine manufacturer's instructions for installing 
noncatalyzed mufflers. You must keep records to show which engines you 
modify as described in this paragraph (c)(2) and make them available to 
the engine manufacturer for any auditing under the provisions of Sec.  
1054.610. If you do not place the label we specify in paragraph (f) of 
this section adjacent to the engine manufacturer's emission control 
information label, you must place an additional permanent label as 
close as possible to the engine's emission control information label 
where it will be readily visible in the final installation with at 
least the following items:
    (i) Your corporate name and trademark.
    (ii) The following statement: ``THIS ENGINE MEETS PHASE 2 STANDARDS 
UNDER Sec.  1054.625(c)(2).''.
    (d) Inclusion of engines not subject to Phase 3 standards. The 
following provisions apply to engines that are not subject to Phase 3 
standards:
    (1) If you use the provisions of 40 CFR 1068.105(a) to use up your 
inventories of engines not certified to new emission standards, do not 
include these units in your count of equipment with exempted engines 
under paragraph (g)(2) of this section.
    (2) If you install engines that are exempted from the Phase 3 
standards for any reason, other than for equipment-manufacturer 
allowances under this section, do not include these units in your count 
of equipment with exempted engines under paragraph (g)(2) of this 
section. For example, if we grant a hardship exemption for the engine 
manufacturer, you may count these as compliant engines under this 
section. This paragraph (d)(2) applies only if the engine has a 
permanent label describing why it is exempted from the Phase 3 
standards.
    (e) Standards. If you produce equipment with exempted engines under 
this section, the engines must meet the Phase 2 emission standards 
specified in 40 CFR part 90.
    (f) Equipment labeling. You must add a permanent label, written 
legibly in English, to the engine or another readily visible part of 
each piece of equipment with exempted engines you produce under this 
section. This label, which supplements the engine manufacturer's 
emission control information label, must include at least the following 
items:
    (1) The label heading ``EMISSION CONTROL INFORMATION''.
    (2) Your corporate name and trademark.
    (3) The calendar year in which the equipment is manufactured.
    (4) The name, e-mail address, and phone number of a person to 
contact for further information.
    (5) The following statement: THIS EQUIPMENT [or identify the type 
of equipment] HAS AN ENGINE THAT MEETS U.S. EPA EMISSION STANDARDS 
UNDER 40 CFR 1054.625.
    (g) Notification and reporting. You must notify us of your intent 
to produce equipment under the provisions of this section and send us 
an annual report to verify that you are not exceeding the production 
limits for equipment with exempted engines, as follows:
    (1) Send the Designated Compliance Officer and the Designated 
Enforcement Officer a written notice of your intent by June 30, 2010 
including all the following:
    (i) Your company's name and address, and your parent company's name 
and address, if applicable. Also identify the names of any other 
companies operating under the same parent company.
    (ii) Whom to contact for more information.
    (iii) The calendar years in which you expect to use the exemption 
provisions of this section.
    (iv) The name and address of the company that produces the engines 
you will be using for the equipment exempted under this section.
    (v) How many pieces of equipment with exempted engines you may sell 
under this section, as described in paragraph (b) of this section. 
Include your production figures for the period from January 1, 2007 
through December 31, 2009, including figures broken down by equipment 
model and calendar year. You may send corrected figures with lower 
production volumes anytime after your initial notification. To make a 
correction for higher production volumes, send us the corrected figures 
by September 30, 2010. We may ask you to give us additional information 
to confirm your production figures.
    (2) For each year that you use the provisions of this section, send 
the Designated Compliance Officer and the Designated Enforcement 
Officer a written report by March 31 of the following year. Identify in 
your report how many pieces of equipment with exempted engines you sold 
in the preceding year, based on actual U.S.-directed production 
information. If you produce equipment in the 2010 calendar year with 
exempted engines from the 2011 model year, include these units in your 
March 31, 2012 report. Also identify cumulative figures describing how 
many pieces of equipment with exempted engines you have produced for 
all the years you used the provisions of this section.
    (3) If you send your initial notification under paragraph (g)(1) of 
this section after the specified deadline, we may approve your use of 
allowances under this section. In your request, describe why you were 
unable to meet the deadline.
    (h) Recordkeeping. Keep the following records of all equipment with 
exempted engines you produce under this section until at least December 
31, 2019:
    (1) The model number for each piece of equipment.
    (2) Detailed figures for determining how many pieces of equipment 
with exempted engines you may produce under this section, as described 
in paragraph (b) of this section.
    (3) The notifications and reports we require under paragraph (g) of 
this section.
    (i) Enforcement. Producing more exempted engines or equipment than 
we allow under this section or installing engines that do not meet the 
emission standards of paragraph (e) of this section violates the 
prohibitions in 40 CFR

[[Page 28332]]

1068.101(a)(1). You must give us the records we require under this 
section if we ask for them (see 40 CFR 1068.101(a)(2)).
    (j) Provisions for engine manufacturers. As an engine manufacturer, 
you may produce exempted engines without request under this section 
using one of the following approaches:
    (1) The provisions of this paragraph (j)(1) apply if you do not use 
the delegated-assembly provisions of Sec.  1054.610 for any of the 
engines in an engine family. You must have written assurance from 
equipment manufacturers or your authorized distributors that they need 
a certain number of exempted engines under this section. Keep these 
records for at least five years after you stop producing engines under 
this section. The engines must meet the emission standards in paragraph 
(e) of this section and you must meet all the requirements of 40 CFR 
1068.265. You must label the engines using one of the following 
approaches:
    (i) Meet the labeling requirements in 40 CFR 90.114, but add the 
following statement instead of the compliance statement in 40 CFR 
90.114(b)(7): THIS ENGINE MEETS U.S. EPA EMISSION STANDARDS UNDER 40 
CFR 1054.625 AND MUST BE USED ONLY UNDER THOSE FLEXIBILITY PROVISIONS.
    (ii) Meet the labeling requirements in Sec.  1054.135 for Phase 3 
engines and add the separate label described in paragraph (c)(2) of 
this section.
    (2) The following provisions apply if you notify us that you plan 
to use the delegated-assembly provisions of Sec.  1054.610 for one or 
more equipment manufacturers for an engine family:
    (i) Include test data in your application for certification showing 
that your engines will meet the standards specified in paragraph (e) of 
this section if they have a noncatalyzed muffler in place of the 
aftertreatment that is part of the certified configuration. This may be 
based on emission measurements from previous model years if the data is 
still appropriate for the current engine configuration.
    (ii) Produce all your engines with the emission control information 
label we specify in Sec.  1054.135. The engines must also have the 
label we specify in Sec.  1054.610(c)(7), with additional information 
summarizing the equipment manufacturers obligations under paragraph 
(c)(2) of this section.
    (iii) Include in the installation instructions required under Sec.  
1054.610 any appropriate instructions or limitations on installing 
noncatalyzed mufflers to ensure that the fully assembled engine will 
meet the emission standards specified in paragraph (e) of this section. 
You may identify an appropriate range of backpressures, but this may 
not involve any instructions related to changing the fuel system for 
different fueling rates.
    (iv) If your engine family generates exhaust emission credits under 
subpart H of this part, you must multiply the credits calculated under 
Sec.  1054.705 by 0.9. This is based on the expectation that equipment 
manufacturers will modify 10 percent of the engines to no longer meet 
Phase 3 standards.
    (k) Additional exemptions for mid-sized companies. If your average 
annual production of equipment with Class II engines as described in 
paragraph (b) of this section is between 5,000 and 50,000 units, you 
may request additional engine allowances under this section. To do 
this, notify us by January 31, 2010 if you believe the provisions of 
this section will not allow you to sell certain equipment models 
starting in the 2011 model year. In your notification, show us that you 
will be able to produce a number of Class II equipment models 
representing at least half your total U.S.-directed production volume 
in the 2011 model year that will be compliant with all Phase 3 exhaust 
and evaporative emission standards. Also describe why you need more 
allowances under this section to accommodate anticipated changes in 
engine designs resulting from engine manufacturers'' compliance with 
changing exhaust emission standards. Include a proposal for the number 
of additional allowances you would need, with supporting rationale. We 
may approve allowances up to a total of 100 percent of the average 
annual U.S.-directed production volume you report under paragraph (b) 
of this section (in place of the 30 percent that is otherwise allowed).


Sec.  1054.626  What special provisions apply to equipment imported 
under the Transition Program for Equipment Manufacturers?

    This section describes requirements that apply to equipment 
manufacturers using the provisions of Sec.  1054.625 for equipment 
produced outside the United States. Note that Sec.  1054.625 limits 
these provisions to equipment manufacturers that install some engines 
and have primary responsibility for designing and manufacturing 
equipment. Companies that import equipment into the United States 
without meeting these criteria are not eligible for allowances under 
Sec.  1054.625. Such importers may import equipment with exempted 
engines only as described in paragraph (b) of this section.
    (a) As a foreign equipment manufacturer, you or someone else may 
import equipment with exempted engines under this section if you comply 
with the provisions in Sec.  1054.625 and commit to the following:
    (1) Give any EPA inspector or auditor complete and immediate access 
to inspect and audit, as follows:
    (i) Inspections and audits may be announced or unannounced.
    (ii) Inspections and audits may be performed by EPA employees or 
EPA contractors.
    (iii) You must provide access to any location where--
    (A) Any nonroad engine, equipment, or vehicle is produced or 
stored.
    (B) Documents related to manufacturer operations are kept.
    (C) Equipment, engines, or vehicles are tested or stored for 
testing.
    (iv) You must provide any documents requested by an EPA inspector 
or auditor that are related to matters covered by the inspections or 
audit.
    (v) EPA inspections and audits may include review and copying of 
any documents related to demonstrating compliance with the exemptions 
in Sec.  1054.625.
    (vi) EPA inspections and audits may include inspection and 
evaluation of complete or incomplete equipment, engines, or vehicles, 
and interviewing employees.
    (vii) You must make any of your employees available for interview 
by the EPA inspector or auditor, on request, within a reasonable time 
period.
    (viii) You must provide English language translations of any 
documents to an EPA inspector or auditor, on request, within 10 working 
days.
    (ix) You must provide English-language interpreters to accompany 
EPA inspectors and auditors, on request.
    (2) Name an agent for service located in the United States. Service 
on this agent constitutes service on you or any of your officers or 
employees for any action by EPA or otherwise by the United States 
related to the requirements of this part.
    (3) The forum for any civil or criminal enforcement action related 
to the provisions of this section for violations of the Clean Air Act 
or regulations promulgated thereunder shall be governed by the Clean 
Air Act.
    (4) The substantive and procedural laws of the United States shall 
apply to any civil or criminal enforcement action against you or any of 
your officers or employees related to the provisions of this section.
    (5) Provide the notification required by Sec.  1054.625(g). Include 
in the notice of intent in Sec.  1054.625(g)(1) a

[[Page 28333]]

commitment to comply with the requirements and obligations of Sec.  
1054.625 and this section. This commitment must be signed by the owner 
or president.
    (6) You, your agents, officers, and employees must not seek to 
detain or to impose civil or criminal remedies against EPA inspectors 
or auditors, whether EPA employees or EPA contractors, for actions 
performed within the scope of EPA employment related to the provisions 
of this section.
    (7) By submitting notification of your intent to use the provisions 
of Sec.  1054.625, producing and exporting for resale to the United 
States nonroad equipment under this section, or taking other actions to 
comply with the requirements of this part, you, your agents, officers, 
and employees, without exception, become subject to the full operation 
of the administrative and judicial enforcement powers and provisions of 
the United States as described in 28 U.S.C. 1605(a)(2), without 
limitation based on sovereign immunity, for conduct that violates the 
requirements applicable to you under this part 1054--including such 
conduct that violates 18 U.S.C. 1001, 42 U.S.C. 7413(c)(2), or other 
applicable provisions of the Clean Air Act--with respect to actions 
instituted against you and your agents, officers, and employees in any 
court or other tribunal in the United States.
    (8) Any report or other document you submit to us must be in the 
English language, or include a complete translation in English.
    (9) You must post a bond to cover any potential enforcement actions 
under the Clean Air Act before you or anyone else imports your 
equipment with exempted engines under this section, as specified in 
Sec.  1054.690. Use the bond amount specified in Sec.  1054.690 without 
adjusting for inflation. Note that you may post a single bond to meet 
the requirements of this section and Sec.  1054.690 together.
    (b) The provisions of this paragraph (b) apply to importers that do 
not install engines into equipment and do not have primary 
responsibility for designing and manufacturing equipment. Such 
importers may import equipment with engines exempted under Sec.  
1054.625 only if each engine is exempted under an allowance provided to 
an equipment manufacturer meeting the requirements of Sec.  1054.625 
and this section. You must notify us of your intent to use the 
provisions of this section and send us an annual report, as follows:
    (1) Before January 1 of the first year you intend to use the 
provisions of this section, send the Designated Compliance Officer and 
the Designated Enforcement Officer a written notice of your intent, 
including:
    (i) Your company's name and address, and your parent company's name 
and address, if applicable.
    (ii) The name and address of the companies that produce the 
equipment and engines you will be importing under this section.
    (iii) Your best estimate of the number of units you will import 
under this section in the upcoming calendar year, broken down by 
equipment manufacturer.
    (2) For each year that you use the provisions of this section, send 
the Designated Compliance Officer and the Designated Enforcement 
Officer a written report by March 31 of the following year. Include in 
your report the total number of engines you imported under this section 
in the preceding calendar year, broken down by engine manufacturer and 
by equipment manufacturer.


Sec.  1054.627  How does the Transition Program for Equipment 
Manufacturers relate to evaporative emissions?

    The provisions of this section allow equipment manufacturers to 
produce equipment that does not comply with certain requirements 
related to evaporative emissions in conjunction with the Transition 
Program for Equipment Manufacturers in Sec.  1054.625.
    (a) You may use the provisions of this section only after you have 
used up any available allowances under Sec.  1054.145(e).
    (b) For any equipment using Class II engines that you produce under 
the flexibility provisions of Sec.  1054.625, the following special 
provisions apply with respect to evaporative emissions:
    (1) You may use rotation-molded fuel tanks that do not meet 
requirements related to the fuel tank permeation standards specified in 
Sec.  1054.110. You may not apply the provisions of this paragraph 
(b)(1) to fuel tanks that are not rotation-molded.
    (2) You may produce equipment that does not meet requirements 
related to the running loss standard specified in Sec.  1054.110.
    (3) If you use the provisions of this section, add the following 
statement to the label specified in Sec.  1054.625(f):
    THIS EQUIPMENT [or identify the type of equipment] IS EXEMPT FROM 
[fuel tank permeation or running loss standards, as applicable] UNDER 
40 CFR 1054.627.
    (c) You may not use the provisions of this section for equipment 
that you do not produce under the flexibility provisions of Sec.  
1054.625.


Sec.  1054.630  What provisions apply for importation of individual 
items for personal use?

    (a) Any individual may import previously used nonconforming engines 
for purposes other than resale, but no more than once in any five-year 
period. This may include up to three nonconforming engines imported at 
the same time. To import engines under this section, provide to the 
Customs official the following information:
    (1) Identify your name, address, and telephone number.
    (2) If you are importing engines under this section on behalf of 
another person, identify the ultimate engine owner's name, address, and 
telephone number.
    (3) Identify the total number of engines you are importing and 
specify the make, model, identification number, and original production 
year of each engine.
    (4) State: ``I am importing these previously used engines for 
personal use. I have not imported any engines under the provisions of 
40 CFR 1054.630 within the previous five years. I am not importing 
these engines for purpose of resale. I authorize EPA enforcement 
officers to inspect my engines and my facilities as permitted by the 
Clean Air Act.''.
    (b) We may require you to send us additional information, but you 
do not need written approval from us to import engines under this 
section. We will also not require a U.S. Customs Service bond for 
engines you import under this section.
    (c) The provisions of this section may not be used to circumvent 
emission standards that apply to new engines under this part. For 
example, you may not purchase new engines and use them in a trivial 
manner outside of the United States to qualify for importation under 
this section.
    (d) If you violate the provisions of this section, or submit false 
information to obtain this exemption, you will be subject to civil 
penalties as specified in 40 CFR 1068.101(a)(2) and (b)(5).


Sec.  1054.635  What special provisions apply for small-volume engine 
and equipment manufacturers?

    This section describes how we apply the special provisions in this 
part for small-volume engine and equipment manufacturers.
    (a) If you qualify under paragraph (1) or (2) of the definition of 
small-volume engine manufacturer or under paragraph (1) or (2) of the 
definition small-volume equipment manufacturer in Sec.  1054.801, the 
small-volume provisions apply as specified in this part.
    (b) If you are a small business (as defined by the Small Business

[[Page 28334]]

Administration at 13 CFR 121.201) that manufactures nonroad spark-
ignition engines or equipment, but you do not qualify under paragraph 
(1) or (2) of the definition of small-volume engine manufacturer or 
under paragraph (1) or (2) of the definition of small-volume equipment 
manufacturer in Sec.  1054.801, you may ask us to designate you to be a 
small-volume engine or equipment manufacturer. You may do this whether 
you began manufacturing engines before, during, or after 2007. We may 
set other reasonable conditions that are consistent with the intent of 
this section and the Act.
    (c) If you use any of the provisions of this part that apply 
specifically to small-volume manufacturers and we find that you exceed 
the production limits or otherwise do not qualify as a small-volume 
manufacturer, we may consider you to be in violation of the 
requirements that apply for companies that are not small-volume 
manufacturers for those engines produced in excess of the specified 
production limits.


Sec.  1054.640  What special provisions apply to branded engines?

    The following provisions apply if you identify the name and 
trademark of another company instead of your own on your emission 
control information label, as provided by Sec.  1054.135(c)(2):
    (a) You must have a contractual agreement with the other company 
that obligates that company to take the following steps:
    (1) Meet the emission warranty requirements that apply under Sec.  
1054.120. This may involve a separate agreement involving reimbursement 
of warranty-related expenses.
    (2) Report all warranty-related information to the certificate 
holder.
    (b) In your application for certification, identify the company 
whose trademark you will use and describe the arrangements you have 
made to meet your requirements under this section.
    (c) You remain responsible for meeting all the requirements of this 
chapter, including warranty and defect-reporting provisions.


Sec.  1054.645  What special provisions apply for converting an engine 
to use an alternate fuel?

    (a) Converting a certified new engine to run on a different fuel 
violates 40 CFR 1068.101(a)(1) if the modified engine is not covered by 
a certificate of conformity.
    (b) Converting a certified engine that is not new to run on a 
different fuel violates 40 CFR 1068.101(b)(1) if the modified engine is 
not covered by a certificate of conformity. We may specify alternate 
certification provisions consistent with the requirements of this part.
    (c) Engines may be certified as required in this section based on 
the certification procedures for new engines or on those for 
aftermarket parts specified in 40 CFR part 85, subpart V.


Sec.  1054.650  What special provisions apply for adding or changing 
governors?

    The special provisions in this section apply for engines that will 
not have constant-speed governors when installed in equipment. 
Paragraph (a) of this section also applies for any engines shipped 
without installed governors.
    (a) The representative-testing requirements of 40 CFR 1065.10(c)(1) 
related to in-use duty cycles do not apply to engines you produce and 
ship without constant-speed governors if you comply with all the 
following requirements:
    (1) You must have test data showing that the effectiveness of the 
engine's emission controls over the expected range of in-use operation 
will be similar to that measured over the specified duty cycle. 
Alternatively, if your emission controls depend on maintaining a 
consistent air-fuel ratio, you may demonstrate that the engine is 
calibrated to maintain a consistent air-fuel ratio over the expected 
range of in-use operation.
    (2) Describe in your application for certification the data and 
analysis that supports your conclusion.
    (b) As a distributor or equipment manufacturer, it is not a 
violation of the tampering provisions in 40 CFR 1068.101(b)(1) for you 
to remove a constant-speed governor that is covered by a certificate of 
conformity, as long as you meet all the following requirements:
    (1) You must have a reasonable technical basis for believing that 
the effectiveness of the modified engine's emission controls over the 
expected range of in-use operation will be similar to that measured 
over the specified duty cycle. This may require that you have test 
data. You are not required to apply for a new certificate of 
conformity.
    (2) You must notify the engine manufacturer before modifying the 
engine. You must follow any instructions from the engine manufacturer 
related to the emission control system.
    (3) You may not make any other changes to the engine that would 
remove it from its certified configuration.
    (4) You must keep record of the number of engines you modify in 
each model year, a description of your procedures for modifying engines 
(including part numbers of the parts you install), and a description of 
the reasonable technical basis described in paragraph (b)(1) of this 
section. Keep these records for five years after you modify the 
engines. Store these records in any format and on any media, as long as 
you can promptly send us organized, written records in English if we 
ask for them. You must keep these records readily available. We may 
review them at any time.


Sec.  1054.655  What special provisions apply to installing and 
removing altitude kits?

    (a) An action for the purpose of installing or removing altitude 
kits and performing other changes to compensate for changing altitude 
is not considered a prohibited act under 40 CFR 1068.101(b), as long as 
it is done consistent with the provisions of this section.
    (b) You may install or remove an altitude kit as long as you are 
using replacement parts that are specified in the engine manufacturer's 
application for certification.


Sec.  1054.660  What are the provisions for exempting emergency rescue 
equipment?

    The provisions of this section apply for new equipment built on or 
after January 1, 2009.
    (a) Equipment manufacturers may introduce into U.S. commerce 
equipment that is not certified to current emission standards under the 
following conditions if the equipment will be used solely in emergency 
rescue situations:
    (1) You must determine annually that no engines certified to 
current emission standards are available to power the equipment safely 
and practically. We may review your records supporting this 
determination at any time.
    (2) You may not use exempted engines to power generators, 
alternators, compressors, or pumps.
    (3) If engines that meet less stringent emission standards are 
capable of powering your equipment safely and practically, you must use 
them as a condition of this exemption. You must use available engines 
meeting the most stringent standards feasible.
    (4) You must send the engine manufacturer a written request for 
each exempted equipment model.
    (5) You must notify the Designated Compliance Officer of your 
intent to use the provisions of this section. We may require you to 
notify us annually or to send us annual reports describing how you meet 
the conditions of this section.
    (b) For the purposes of this section, ``emergency rescue 
situations'' means

[[Page 28335]]

firefighting or other situations in which a person is retrieved from 
imminent danger.
    (c) As an engine manufacturer, you may produce exempt engines under 
this section without our prior approval if you have a written request 
for an exempted engine for use in emergency rescue equipment from the 
equipment manufacturer. You must permanently label engines exempted 
under this section to clearly indicate that they are to be used solely 
for emergency rescue equipment. Failure to properly label an engine 
will void the exemption.
    (d) We may discontinue an exemption under this section if we find 
that engines are not used solely for emergency rescue equipment or if 
we find that a certified engine is available to power the equipment 
safely and practically.


Sec.  1054.685  What are my recall responsibilities?

    (a) You are responsible to meet all applicable recall requirements 
in 40 CFR 1068, subpart F. You must also meet the additional 
requirements of this section.
    (b) You must demonstrate at the time of certification that you will 
be able to meet these requirements. Except as allowed in paragraph (c) 
of this section, your demonstration must include at least one of the 
following:
    (1) You have assembly facilities in the United States that are 
available for processing recall repairs.
    (2) You have a repair network in the United States capable of 
processing recall repairs. To qualify under this paragraph (b)(2), you 
must have at least 100 authorized repair facilities in the United 
States or at least one such facility for each 5000 engines you sell in 
the United States, whichever is less.
    (c) If you do not have the assembly or repair facilities required 
under paragraph (b) of this section, you may instead rely on 
independent contractors that you name in your application for 
certification to perform recalls, but you must provide assurance that 
you can fulfill recall obligations, such as posting bond.


Sec.  1054.690  What are the bond requirements for importing certified 
engines and equipment?

    As specified in this section, we are considering whether to require 
you to post a bond if you introduce into U.S. commerce engines that are 
subject to the standards of this part. See paragraph (f) of this 
section for the requirements related to selling or importing engines 
that have been certified by someone else.
    (a) Prior to introducing 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 that you will meet any 
compliance-or enforcement-related obligations. For example, it would be 
a sufficient demonstration if you show that you have manufactured or 
imported engines for the U.S. market for a significant period of time 
without failing a test conducted by EPA officials or having been found 
by the EPA not to be in compliance with applicable regulations.
    (b) The value of the bond is based on the per-engine bond values 
shown in Table 1 of this section and on the U.S.-directed production 
volume from each displacement grouping for the calendar year. For 
example, if you have projected U.S.-directed production volumes of 
10,000 engines with 180 cc displacement and 5,000 engines with 400 cc 
displacement in 2013, the appropriate bond amount is $500,000. Adjust 
the value of the bond as follows:
    (1) If your estimated or actual U.S.-directed production volume in 
any later calendar 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) The per-engine bond values listed 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 to the nearest 
dollar.
    (3) If you sell engines without aftertreatment components under the 
provisions of Sec.  1054.610, you must increase the per-engine bond 
values for the current year by 20 percent. Round calculated values to 
the nearest dollar.

           Table 1 to Sec.   1054.690--Per-Engine Bond Values
------------------------------------------------------------------------
                                                          The per-engine
 For engines with displacement falling in the following    bond value is
                       ranges. . .                             . . .
------------------------------------------------------------------------
Disp. < 225 cc..........................................             $25
225 <= Disp. < 740 cc...................................              50
740 <= Disp. <= 1,000 cc................................             100
Disp. > 1,000 cc........................................             200
------------------------------------------------------------------------

    (c) 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 5 years.
    (d) 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.
    (e) You will forfeit the proceeds of the bond posted under this 
section if you need to satisfy any United States administrative final 
order or judicial judgment against you arising from your conduct in 
violation of this chapter, including such conduct that violates 18 
U.S.C. 1001, 42 U.S.C. 7413(c)(2), or other applicable provisions of 
the Clean Air Act.
    (f) This paragraph (f) applies if you sell, or import for resale, 
engines that 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 the standard-setting part.
    (2) You do not need to post bond if the certificate holder complies 
with the bond requirements of this section.


Sec.  1054.695  What restrictions apply to assigning a model year to 
imported engines and equipment?

    This section includes limitations on assigning a model year to 
engines and equipment that are imported in a year later than the model 
year in which they were manufactured, except as specified in paragraph 
(e) of this section.
    (a) The term ``model year'' is defined in each of the standard-
setting parts. These definitions may vary slightly to address the 
different categories of engines and equipment. Except as specified in 
paragraphs (b) and (c) of this section, the emission standards and 
other emission-related requirements that apply for an imported engine 
or piece of equipment are determined by the model year as defined in 
the applicable standard-setting part and the provisions of 40 CFR 
1068.105(a).
    (b) This paragraph (b) applies for the importation of new engines 
and new equipment in any calendar year that is more than one year after 
the named model year of the engine or equipment where emission 
requirements applying to current engines are different than for engines 
or equipment in the named model year. Regardless of what other 
provisions of this subchapter U specify

[[Page 28336]]

for the model year of the engine or equipment, such engines and 
equipment are deemed to have an applicable model year no more than one 
year earlier than the calendar year in which they are being imported. 
For example, a new engine identified as a 2007 model-year product that 
is imported on January 31, 2010 will be treated as a 2009 model-year 
engine; the same engine will be treated as a 2010 model-year engine if 
it is imported any time in calendar year 2011.
    (c) If you claim that an engine or piece of equipment is not 
subject to standards--or is subject to standards less stringent than 
those currently in place--based on its original manufacture date 
because it has already been placed into service, you must provide clear 
and convincing evidence that it has already been placed into service. 
Such evidence must generally include, but not be limited to, 
documentary evidence of purchase and maintenance history and visible 
wear that is consistent with the reported manufacture date. Importing 
products for resale or importing more than one engine or piece of 
equipment at a time would generally require a greater degree of 
evidence under this paragraph (c). If you do not satisfactorily 
demonstrate that the engine has already been placed into service, the 
provisions of paragraph (b) of this section apply.
    (d) Nothing in this section should be interpreted to allow 
circumvention of the requirements of this part by misstating or 
mislabeling the model year of engines or equipment. For example, this 
section does not permit engines imported in the same year as 
manufactured to be treated as an engine manufactured in the previous 
year. To verify compliance with the provisions of this section, we may 
require you to verify the original manufacture date of the engine or 
equipment based on manufacturing records, title-transfer documents, 
service records, or other documentation.
    (e) If all the current emission requirements are the same as in the 
named model year, the provisions of this section do not apply.

Subpart H--Averaging, Banking, and Trading for Certification


Sec.  1054.701  General provisions.

    (a) You may average, bank, and trade (ABT) emission credits for 
purposes of certification as described in this subpart to show 
compliance with the standards of this part. Participation in this 
program is voluntary.
    (b) The definitions of subpart I of this part apply to this 
subpart. The following definitions also apply:
    (1) Actual emission credits means emission credits you have 
generated that we have verified by reviewing your final report.
    (2) Averaging set means a set of engines (or equipment) in which 
emission credits may be exchanged only with other engines (or 
equipment) in the same averaging set.
    (3) Broker means any entity that facilitates a trade of emission 
credits between a buyer and seller.
    (4) Buyer means the entity that receives emission credits as a 
result of a trade.
    (5) Family means engine family for exhaust credits or emission 
family for evaporative credits.
    (6) Reserved emission credits means emission credits you have 
generated that we have not yet verified by reviewing your final report.
    (7) Seller means the entity that provides emission credits during a 
trade.
    (8) Standard means the emission standard that applies under subpart 
B of this part for engines or fuel-system components not participating 
in the ABT program of this subpart.
    (9) Trade means to exchange emission credits, either as a buyer or 
seller.
    (c) The use of emission credits is limited to averaging sets, as 
follows:
    (1) You may not average or exchange exhaust credits with 
evaporative credits, or vice versa.
    (2) Handheld engines and nonhandheld engines are in separate 
averaging sets with respect to exhaust emissions except as specified in 
Sec.  1054.740(e). You may use emission credits generated under 40 CFR 
part 90 for handheld engines subject to the standards in Sec.  1054.103 
only if you can demonstrate that those credits were generated by 
handheld engines, except as specified in Sec.  1054.740(e). You may use 
emission credits generated under 40 CFR part 90 for nonhandheld engines 
only if you can demonstrate that those credits were generated by 
nonhandheld engines, subject to the provisions of Sec.  1054.740.
    (3) Equipment using handheld engines, Class I engines, and Class II 
engines are in separate averaging sets with respect to evaporative 
emissions. You may not average or exchange evaporative credits between 
any of these averaging sets.
    (4) You may combine evaporative emission credits for fuel tanks and 
fuel lines for handheld equipment.
    (5) For purposes of calculating emission credits under this 
subpart, engines with displacement below 80 cc are presumed to be 
handheld engines. You may treat these as nonhandheld engines for 
calculating exhaust or evaporative emission credits only for those 
engines you can demonstrate will be installed in nonhandheld equipment. 
For example, if 50 percent of engines in an emission family will be 
used in nonhandheld equipment, you may calculate the emission credits 
for 50 percent of the engines to be nonhandheld credits using the 
appropriate calculation methods.
    (d) You may not generate evaporative credits based on permeation 
measurements from metal fuel tanks.
    (e) You may not use emission credits generated under this subpart 
to offset any emissions that exceed an FEL or standard. This applies 
for all testing, including certification testing, in-use testing, 
selective enforcement audits, and other production-line testing. 
However, if exhaust emissions from an engine exceed an exhaust FEL or 
standard (for example, during a selective enforcement audit), you may 
use emission credits to recertify the family with a higher FEL that 
applies only to future production.
    (f) Emission credits may be used in the model year they are 
generated (averaging) and in future model years (banking). Emission 
credits may not be used for past model years.
    (g) You may increase or decrease an exhaust FEL during the model 
year by amending your application for certification under Sec.  
1054.225.


Sec.  1054.705  How do I generate and calculate exhaust emission 
credits?

    The provisions of this section apply for calculating exhaust 
emission credits. You may generate exhaust emission credits only if you 
are a certifying engine manufacturer.
    (a) For each participating family, calculate positive or negative 
emission credits relative to the otherwise applicable emission 
standard. Calculate positive emission credits for a family that has an 
FEL below the standard. Calculate negative emission credits for a 
family that has an FEL above the standard. Sum your positive and 
negative credits for the model year before rounding. Round calculated 
emission credits to the nearest kilogram (kg), using consistent units 
throughout the following equation:

Emission credits (kg) = (Std-FEL) x (Volume) x (Power) x (UL) x (LF) x 
(10-3)

Where:

Std = the emission standard, in g/kW-hr.
FEL = the family emission limit for the family, in g/kW-hr.

[[Page 28337]]

Volume = the number of engines eligible to participate in the 
averaging, banking, and trading program within the given family 
during the model year, as described in paragraph (c) of this 
section.
Power = the maximum modal power of the emission-data engine as 
calculated from the applicable test procedure described in subpart F 
of this part, in kilowatts.
UL = the useful life for the given family, in hours.
LF = load factor. Use 0.47 for nonhandheld engines and 0.85 for 
handheld engines. We may specify a different load factor if we 
approve the use of special test procedures for an engine family 
under 40 CFR 1065.10(c)(2), consistent with good engineering 
judgment.

    (b) [Reserved]
    (c) In your application for certification, base your showing of 
compliance on projected production volumes for engines intended for 
sale in the United States. As described in Sec.  1054.730, compliance 
with the requirements of this subpart is determined at the end of the 
model year based on actual production volumes for engines intended for 
sale in the United States.
    Do not include any of the following engines or equipment to 
calculate emission credits:
    (1) Engines exempted under subpart G of this part or under 40 CFR 
part 1068.
    (2) Engines intended for export, unless there is reason to believe 
that the engines will be later imported into the United States after 
installation in equipment.
    (3) Engines that are subject to state emission standards for that 
model year. However, this restriction does not apply if we determine 
that the state standards and requirements are equivalent to those of 
this part and that engines sold in such a state will not generate 
credits under the state program. For example, you may not include 
engines certified for California if it has more stringent emission 
standards for these engines or those engines generate or use emission 
credits under the California program.
    (4) Engines not subject to the requirements of this part, such as 
those excluded under Sec.  1054.5.
    (5) Any other engines, where we indicate elsewhere in this part 
1054 that they are not to be included in the calculations of this 
subpart.


Sec.  1054.706  How do I generate and calculate evaporative emission 
credits?

    The provisions of this section apply for calculating evaporative 
emission credits. This applies for fuel line permeation for handheld 
equipment and for fuel tank permeation from all equipment. You may 
generate credits only if you are a certifying equipment manufacturer.
    (a) For each participating family, calculate positive or negative 
emission credits relative to the otherwise applicable emission 
standard. Calculate positive emission credits for a family that has an 
FEL below the standard. Calculate negative emission credits for a 
family that has an FEL above the standard. Sum your positive and 
negative credits for the model year before rounding. Round calculated 
emission credits to the nearest kilogram (kg), using consistent units 
throughout the following equation:

Emission credits (kg) = (Std-FEL) x (Total Area) x (UL) x (AF) x (365) 
x (10-3)

Where:

Std = the emission standard, in g/m\2\/day.
FEL = the family emission limit for the family, in g/m\2\/day, as 
described in paragraph (b) of this section.
Total Area = The combined internal surface area of all fuel tanks or 
fuel lines in the family, in m\2\.
UL = the useful life for the given family, in years.
AF = adjustment factor. Use 0.60 for fuel tank permeation testing 
performed at 40 [deg]C; use 1.0 for all other testing.

    (b) For calculating credits under paragraph (a) of this section, 
determine the FEL for fuel lines based on measured emission levels. 
Determine the FEL for fuel tanks using any of the following values:
    (1) The FEL to which the fuel tank is certified, as long as the FEL 
is at or below 3.0 g/m\2\/day.
    (2) 10.4 g/m\2\/day. However, if you use this value to establish 
the FEL for any of your fuel tanks, you must use this value to 
establish the FEL for every tank not covered by paragraph (b)(1) of 
this section.
    (3) The measured permeation rate of the fuel tank or the measured 
permeation rate of a thinner-walled tank of the same material. However, 
if you use this approach to establish the FEL for any of your fuel 
tanks, you must establish an FEL based on emission measurements for 
every tank not covered by paragraph (b)(1) of this section.
    (c) To qualify for generating emission credits with structurally 
integrated nylon fuel tanks used with handheld equipment, the FEL must 
be at or below 1.5 g/m\2\/day for testing at a nominal temperature of 
28 [deg]C, or 2.5 g/m\2\/day for testing at a nominal temperature of 40 
[deg]C. Calculate positive emission credits under this section relative 
to an emission standard of 1.5 g/m\2\/day. Calculate negative emission 
credits under this section relative to an emission standard of 2.5 g/
m\2\/day.
    (d) To qualify for generating emission credits with fuel lines for 
cold-weather equipment, the FEL must be at or below 15 g/m\2\/day. 
Calculate positive emission credits under this section relative to an 
emission standard of 15 g/m\2\/day. Calculate negative emission credits 
under this section relative to an emission standard of 175 g/m\2\/day.
    (e) In your application for certification, base your showing of 
compliance on projected production volumes for engines intended for 
sale in the United States. As described in Sec.  1054.730, compliance 
with the requirements of this subpart is determined at the end of the 
model year based on actual production volumes for engines intended for 
sale in the United States. Do not include any of the following 
equipment to calculate emission credits:
    (1) Equipment exempted under subpart G of this part or under 40 CFR 
part 1068.
    (2) Equipment intended for export.
    (3) Equipment that is subject to state emission standards for that 
model year. However, this restriction does not apply if we determine 
that the state standards and requirements are equivalent to those of 
this part and that equipment sold in such a state will not generate 
credits under the state program. For example, you may not include 
equipment certified for California if it has more stringent emission 
standards for these equipment or that equipment generates or uses 
emission credits under the California program.
    (4) Equipment not subject to the requirements of this part, such as 
those excluded under Sec.  1054.5.
    (5) Any other equipment, where we indicate elsewhere in this part 
1054 that they are not to be included in the calculations of this 
subpart.


Sec.  1054.710  How do I average emission credits?

    (a) Averaging is the exchange of emission credits among your 
families. You may average emission credits only within the same 
averaging set.
    (b) You may certify one or more families to an FEL above the 
emission standard, subject to the FEL caps and other provisions in 
subpart B of this part, if you show in your application for 
certification that your projected balance of all emission-credit 
transactions in that model year is greater than or equal to zero.
    (c) If you certify a family to an FEL that exceeds the otherwise 
applicable standard, you must obtain enough emission credits to offset 
the family's deficit by the due date for the final report required in 
Sec.  1054.730. The

[[Page 28338]]

emission credits used to address the deficit may come from your other 
families that generate emission credits in the same model year, from 
emission credits you have banked, or from emission credits you obtain 
through trading.


Sec.  1054.715  How do I bank emission credits?

    (a) Banking is the retention of emission credits by the 
manufacturer generating the emission credits for use in averaging or 
trading in future model years. You may use banked emission credits only 
within the averaging set in which they were generated, except as 
described in this subpart.
    (b) In your application for certification, designate any emission 
credits you intend to bank. These emission credits will be considered 
reserved credits. During the model year and before the due date for the 
final report, you may redesignate these emission credits for averaging 
or trading.
    (c) You may use banked emission credits from the previous model 
year for averaging or trading before we verify them, but we may revoke 
these emission credits if we are unable to verify them after reviewing 
your reports or auditing your records.
    (d) Reserved credits become actual emission credits only when we 
verify them in reviewing your final report.


Sec.  1054.720  How do I trade emission credits?

    (a) Trading is the exchange of emission credits between 
manufacturers. You may use traded emission credits for averaging, 
banking, or further trading transactions. Traded emission credits may 
be used only within the averaging set in which they were generated, 
except as described in this subpart.
    (b) You may trade actual emission credits as described in this 
subpart. You may also trade reserved emission credits, but we may 
revoke these emission credits based on our review of your records or 
reports or those of the company with which you traded emission credits. 
You may trade banked credits to any certifying engine or equipment 
manufacturer.
    (c) If a negative emission credit balance results from a 
transaction, both the buyer and seller are liable, except in cases we 
deem to involve fraud. See Sec.  1054.255(e) for cases involving fraud. 
We may void the certificates of all families participating in a trade 
that results in a manufacturer having a negative balance of emission 
credits. See Sec.  1054.745.


Sec.  1054.725  What must I include in my application for 
certification?

    (a) You must declare in your application for certification your 
intent to use the provisions of this subpart for each family that will 
be certified using the ABT program. You must also declare the FELs you 
select for the family for each pollutant for which you are using the 
ABT program. Your FELs must comply with the specifications of subpart B 
of this part, including the FEL caps. FELs must be expressed to the 
same number of decimal places as the emission standard.
    (b) Include the following in your application for certification:
    (1) A statement that, to the best of your belief, you will not have 
a negative balance of emission credits for any averaging set when all 
emission credits are calculated at the end of the year.
    (2) Detailed calculations of projected emission credits (positive 
or negative) based on projected production volumes. If your family will 
generate positive emission credits, state specifically where the 
emission credits will be applied (for example, to which family they 
will be applied in averaging, whether they will be traded, or whether 
they will be reserved for banking). If you have projected negative 
emission credits for a family, state the source of positive emission 
credits to offset the negative emission credits. Describe whether the 
emission credits are actual or reserved and whether they will come from 
averaging, banking, trading, or a combination of these. Identify from 
which of your families or from which manufacturer the emission credits 
will come.


Sec.  1054.730  What ABT reports must I send to EPA?

    (a) If any of your families are certified using the ABT provisions 
of this subpart, you must send an end-of-year report within 90 days 
after the end of the model year and a final report within 270 days 
after the end of the model year. We may waive the requirement to send 
the end-of year report, as long as you send the final report on time.
    (b) Your end-of-year and final reports must include the following 
information for each family participating in the ABT program:
    (1) Family designation.
    (2) The emission standards that would otherwise apply to the 
family.
    (3) The FEL for each pollutant. If you changed an FEL during the 
model year, identify each FEL you used and calculate the positive or 
negative emission credits under each FEL. Also, describe how the FEL 
can be identified for each engine you produced. For example, you might 
keep a list of engine or equipment identification numbers that 
correspond with certain FEL values.
    (4) The projected and actual production volumes for the model year 
with a point of retail sale in the United States, as described in 
Sec. Sec.  1054.705(c) and 1054.706(c). For fuel tanks and fuel lines, 
state the production volume in terms of total surface area. If you 
changed an engine's FEL during the model year, identify the actual 
production volume associated with each FEL.
    (5) The maximum modal power of the emission-data engine or the 
appropriate internal surface area of the fuel tank or fuel line.
    (6) Useful life.
    (7) Calculated positive or negative emission credits for the whole 
family. Identify any emission credits that you traded, as described in 
paragraph (d)(1) of this section.
    (c) Your end-of-year and final reports must include the following 
additional information:
    (1) Show that your net balance of emission credits from all your 
participating families in each averaging set in the applicable model 
year is not negative.
    (2) State whether you will reserve any emission credits for 
banking.
    (3) State that the report's contents are accurate.
    (d) If you trade emission credits, you must send us a report within 
90 days after the transaction, as follows:
    (1) As the seller, you must include the following information in 
your report:
    (i) The corporate names of the buyer and any brokers.
    (ii) A copy of any contracts related to the trade.
    (iii) The families that generated emission credits for the trade, 
including the number of emission credits from each family.
    (2) As the buyer, you must include the following information in 
your report:
    (i) The corporate names of the seller and any brokers.
    (ii) A copy of any contracts related to the trade.
    (iii) How you intend to use the emission credits, including the 
number of emission credits you intend to apply to each family (if 
known).
    (e) Send your reports electronically to the Designated Compliance 
Officer using an approved information format. If you want to use a 
different format, send us a written request with justification for a 
waiver.
    (f) Correct errors in your end-of-year report or final report as 
follows:
    (1) You may correct any errors in your end-of-year report when you 
prepare the

[[Page 28339]]

final report, as long as you send us the final report by the time it is 
due.
    (2) If you or we determine within 270 days after the end of the 
model year that errors mistakenly decrease your balance of emission 
credits, you may correct the errors and recalculate the balance of 
emission credits. You may not make these corrections for errors that 
are determined more than 270 days after the end of the model year. If 
you report a negative balance of emission credits, we may disallow 
corrections under this paragraph (f)(2).
    (3) If you or we determine anytime that errors mistakenly increase 
your balance of emission credits, you must correct the errors and 
recalculate the balance of emission credits.


Sec.  1054.735  What records must I keep?

    (a) You must organize and maintain your records as described in 
this section. We may review your records at any time.
    (b) Keep the records required by this section for at least eight 
years after the due date for the end-of-year report. You may not use 
emission credits for any engines or equipment if you do not keep all 
the records required under this section. You must therefore keep these 
records to continue to bank valid credits. Store these records in any 
format and on any media, as long as you can promptly send us organized, 
written records in English if we ask for them. You must keep these 
records readily available. We may review them at any time.
    (c) Keep a copy of the reports we require in Sec. Sec.  1054.725 
and 1054.730.
    (d) Keep the following additional records for each engine or piece 
of equipment you produce that generates or uses emission credits under 
the ABT program:
    (1) Family designation.
    (2) Engine or equipment identification number.
    (3) FEL and useful life.
    (4) Build date and assembly plant.
    (e) We may require you to keep additional records or to send us 
relevant information not required by this section.


Sec.  1054.740  What special provisions apply for generating and using 
emission credits?

    (a) You may generate Phase 3 emission credits from 2008 through 
2011 model year Class I engines if you voluntarily meet the Phase 3 
exhaust emission standards specified in Sec.  1054.105. Divide these 
into transitional and enduring emission credits as follows:
    (1) Transitional credits are based on reducing emissions from Phase 
2 levels down to Phase 3 levels. Calculate the value of transitional 
emission credits as described in Sec.  1054.705, based on setting STD 
equal to 15.0 g/kW-hr and FEL equal to 10.0 g/kW-hr. You may use these 
transitional credits only for Class I engines in 2012 through 2014 
model years. You may not use these transitional credits for Class II 
engines.
    (2) Enduring credits are based on reducing emissions below Phase 3 
levels. Calculate the value of enduring credits as described in Sec.  
1054.705, based on setting STD equal to 10.0 g/kW-hr and FEL to the 
value of the family emission limit you select for the engine family. 
You may use these enduring credits for any nonhandheld engines 
certified to the Phase 3 standards under this part, except as specified 
in paragraph (d) of this section.
    (b) You may generate Phase 3 emission credits from 2008 through 
2010 model year Class II engines if you voluntarily meet the Phase 3 
exhaust emission standards specified in Sec.  1054.105. Divide these 
into transitional and enduring emission credits as follows:
    (1) Transitional credits are based on reducing emissions from Phase 
2 levels down to Phase 3 levels. Calculate the value of transitional 
emission credits as described in Sec.  1054.705, based on setting STD 
equal to 11.0 g/kW-hr and FEL equal to 8.0 g/kW-hr. You may use these 
transitional credits only for Class II engines in 2011 through 2013 
model years. You may not use these transitional credits for Class I 
engines.
    (2) Enduring credits are based on reducing emissions below Phase 3 
levels. Calculate the value of enduring credits as described in Sec.  
1054.705, based on setting STD equal to 8.0 g/kW-hr and FEL to the 
value of the family emission limit you select for the engine family. 
You may use these enduring credits for any nonhandheld engines 
certified to the Phase 3 standards under this part, except as specified 
in paragraph (d) of this section
    (c) You may use emission credits generated by nonhandheld engines 
subject to Phase 2 emission standards under 40 CFR part 90 to 
demonstrate compliance with the Phase 3 exhaust emission standards, but 
only after you have exhausted all credits from engines meeting Phase 3 
standards, subject to the conditions of paragraph (d) of this section. 
You may use these Phase 2 emission credits only in the 2012 and 2013 
model years for Class I engines and only in the 2011 through 2013 model 
years for Class II engines. Determine a maximum number of Phase 2 
emission credits for demonstrating compliance with the Phase 3 
standards for a given engine class (Class I or Class II) as follows:
    (1) Calculate a Phase 2 credit allowance for each engine class 
based on production information for model years 2007, 2008, and 2009 
using the following equation:

    Credit allowance (kg) = (Emissions Delta) x (Volume) x (Avg. Power) 
x (Avg. UL) x (LF) x (10-3)

Where:

Emissions Delta = 1.6 g/kW-hr for Class I and 2.1 g/kW-hr for Class 
II.
Volume = the number of engines eligible to participate in the 
averaging, banking, and trading program, as described in Sec.  
1054.705(c), based on actual U.S.-directed production volumes.
Avg. Power = the production-weighted average value of the maximum 
modal power for all engine families in the engine class, as 
described in Sec.  1054.705(a), in kilowatts.
Avg. UL = the production-weighted average value of the useful life 
for all engine families in the engine class, in hours.
LF = load factor. Use 0.47.

    (2) Do not include wintertime engines in the calculation of credit 
allowances unless they are certified to meet the otherwise applicable 
HC+NOX emission standard.
    (3) Calculate the average annual Phase 2 credit allowance for each 
engine class over three model years as specified in paragraph (c)(1) of 
this section. The resulting value is the maximum number of Phase 2 
emission credits you may use under this paragraph (c) for each engine 
class.
    (4) For 2013 and earlier model years, include in the reports 
described in Sec.  1054.730 the total allowable number of Phase 2 
emission credits and your cumulative totals of Phase 2 credits you have 
used to comply with the requirements of this part.
    (d) If you generate enduring emission credits from Class I engines 
under paragraph (a) of this section, you may not use these for Class II 
engines in the 2011 or 2012 model year. Similarly, If you generate 
enduring emission credits from Class II engines under paragraph (b) of 
this section, you may not use these for Class I engines in the 2012 
model year. These restrictions also apply for emission credits you 
generate for engines subject to the standards of this part in the 2011 
or 2012 model year.
    (e) You may use Phase 2 or Phase 3 emission credits from 
nonhandheld engines to demonstrate compliance with the Phase 3 
standards for handheld engines subject to the following restrictions:
    (1) The handheld engine family must be certified in 2008 and all 
later model years using carryover of emission data

[[Page 28340]]

from an engine family that was most recently certified with new 
emission data in 2007 or an earlier model year.
    (2) The handheld engine family's FEL may not increase above the 
level selected for the 2007 model year in later years, unless such an 
increase is based on emission data from production engines.


Sec.  1054.745  What can happen if I do not comply with the provisions 
of this subpart?

    (a) For each family participating in the ABT program, the 
certificate of conformity is conditional upon full compliance with the 
provisions of this subpart during and after the model year. You are 
responsible to establish to our satisfaction that you fully comply with 
applicable requirements. We may void the certificate of conformity for 
a family if you fail to comply with any provisions of this subpart.
    (b) You may certify your family to an FEL above an emission 
standard based on a projection that you will have enough emission 
credits to offset the deficit for the family. However, we may void the 
certificate of conformity if you cannot show in your final report that 
you have enough actual emission credits to offset a deficit for any 
pollutant in a family.
    (c) We may void the certificate of conformity for a family if you 
fail to keep records, send reports, or give us information we request.
    (d) You may ask for a hearing if we void your certificate under 
this section (see Sec.  1054.820).

Subpart I--Definitions and Other Reference Information


Sec.  1054.801  What definitions apply to this part?

    The following definitions apply to this part. The definitions apply 
to all subparts unless we note otherwise. All undefined terms have the 
meaning the Act gives to them. The definitions follow:
    Act means the Clean Air Act, as amended, 42 U.S.C. 7401-7671q.
    Adjustable parameter means any device, system, or element of design 
that someone can adjust (including those which are difficult to access) 
and that, if adjusted, may affect emissions or engine performance 
during emission testing or normal in-use operation. This includes, but 
is not limited to, parameters related to injection timing and fueling 
rate. You may ask us to exclude a parameter that is difficult to access 
if it cannot be adjusted to affect emissions without significantly 
degrading engine performance, or if you otherwise show us that it will 
not be adjusted in a way that affects emissions during in-use 
operation.
    Aftertreatment means relating to a catalytic converter, particulate 
filter, thermal reactor, or any other system, component, or technology 
mounted downstream of the exhaust valve (or exhaust port) whose design 
function is to decrease emissions in the engine exhaust before it is 
exhausted to the environment. Exhaust-gas recirculation (EGR) and 
turbochargers are not aftertreatment.
    Amphibious vehicle means a vehicle with wheels or tracks that is 
designed primarily for operation on land and secondarily for operation 
in water.
    Applicable emission standard or applicable standard means an 
emission standard to which an engine is subject; or, where an engine 
has been or is being certified another standard or FEL, applicable 
emission standards means the FEL and other standards to which the 
engine has been or is being certified. This definition does not apply 
to subpart H of this part.
    Auxiliary emission control device means any element of design that 
senses temperature, motive speed, engine RPM, transmission gear, or any 
other parameter for the purpose of activating, modulating, delaying, or 
deactivating the operation of any part of the emission control system.
    Brake power means the usable power output of the engine, not 
including power required to fuel, lubricate, or heat the engine, 
circulate coolant to the engine, or to operate aftertreatment devices.
    Calibration means the set of specifications and tolerances specific 
to a particular design, version, or application of a component or 
assembly capable of functionally describing its operation over its 
working range.
    Certification means relating to the process of obtaining a 
certificate of conformity for an emission family that complies with the 
emission standards and requirements in this part.
    Certified emission level means the highest deteriorated emission 
level in an emission family for a given pollutant from either transient 
or steady-state testing.
    Class I means relating to nonhandheld engines with total 
displacement below 225 cc. See Sec.  1054.101 for special provisions 
that apply for engines with total displacement below 80 cc.
    Class II means relating to nonhandheld engines with total 
displacement at or above 225 cc.
    Class III means relating to handheld engines with total 
displacement below 20 cc.
    Class IV means relating to handheld engines with total displacement 
at or above 20 cc but below 50 cc.
    Class V means relating to handheld engines with total displacement 
at or above 50 cc.
    Cold-weather equipment includes the following types of handheld 
equipment: Chainsaws, cut-off saws, clearing saws, brush cutters with 
engines at or above 40cc, commercial earth and wood drills, and ice 
augers. This includes earth augers if they are also marketed as ice 
augers.
    Crankcase emissions means airborne substances emitted to the 
atmosphere from any part of the engine crankcase's ventilation or 
lubrication systems. The crankcase is the housing for the crankshaft 
and other related internal parts.
    Critical emission-related component means any of the following 
components:
    (1) Electronic control units, aftertreatment devices, fuel-metering 
components, EGR-system components, crankcase-ventilation valves, all 
components related to charge-air compression and cooling, and all 
sensors and actuators associated with any of these components.
    (2) Any other component whose primary purpose is to reduce 
emissions.
    Designated Compliance Officer means the Manager, Heavy-Duty and 
Nonroad Engine Group (6405-J), U.S. Environmental Protection Agency, 
1200 Pennsylvania Ave., NW., Washington, DC 20460.
    Designated Enforcement Officer means the Director, Air Enforcement 
Division (2242A), U.S. Environmental Protection Agency, 1200 
Pennsylvania Ave., NW.,Washington, DC 20460.
    Deteriorated emission level means the emission level that results 
from applying the appropriate deterioration factor to the official 
emission result of the emission-data engine.
    Deterioration factor means the relationship between emissions at 
the end of useful life and emissions at the low-hour test point. See 
Sec. Sec.  1054.240 and 1054.245.
    Discrete-mode means relating to the discrete-mode type of steady-
state test described in Sec.  1054.505.
    Displacement has the meaning given in Sec.  1054.140.
    Dry weight means the weight of the equipment as sold, without fuel, 
oil, or engine coolant.
    Emission control system means any device, system, or element of 
design that controls or reduces the emissions of regulated pollutants 
from an engine.
    Emission-data engine means an engine that is tested for 
certification.

[[Page 28341]]

This includes engines tested to establish deterioration factors.
    Emission-data equipment means an engine, piece of equipment, or 
fuel system component that is tested for certification. This includes 
units tested to establish deterioration factors.
    Emission-related maintenance means maintenance that substantially 
affects emissions or is likely to substantially affect emission 
deterioration.
    Engine has the meaning given in 40 CFR 1068.30. This includes 
complete and partially complete engines.
    Engine configuration means a unique combination of engine hardware 
and calibration within an emission family. Engines within a single 
engine configuration differ only with respect to normal production 
variability.
    Emission family has the meaning given in Sec.  1054.230. We may 
refer to emission families as ``engine families'' where provisions 
relate only to exhaust emissions from engines.
    Engine manufacturer means the manufacturer of the engine. See the 
definition of ``manufacturer'' in this section.
    Equipment includes engines and fuel system components installed in 
equipment.
    Equipment manufacturer means a manufacturer that assembles nonroad 
equipment. All nonroad equipment manufacturing entities under the 
control of the same person are considered to be a single nonroad 
equipment manufacturer.
    Evaporative means relating to fuel emissions controlled by 40 CFR 
part 1060. This generally includes emissions that result from 
permeation of fuel through the fuel-system materials, from ventilation 
of the fuel system.
    Excluded means relating to an engine that either:
    (1) Has been determined not to be a nonroad engine, as specified in 
40 CFR 1068.30; or
    (2) Is a nonroad engine that, according to Sec.  1054.5, is not 
subject to this part 1054.
    Exempted has the meaning given in 40 CFR 1068.30.
    Exhaust-gas recirculation means a technology that reduces emissions 
by routing exhaust gases that had been exhausted from the combustion 
chamber(s) back into the engine to be mixed with incoming air before or 
during combustion. The use of valve timing to increase the amount of 
residual exhaust gas in the combustion chamber(s) that is mixed with 
incoming air before or during combustion is not considered exhaust-gas 
recirculation for the purposes of this part.
    Family emission limit (FEL) means an emission level declared by the 
manufacturer to serve in place of an otherwise applicable emission 
standard under the ABT program in subpart H of this part. The family 
emission limit must be expressed to the same number of decimal places 
as the emission standard it replaces. The family emission limit serves 
as the emission standard for the emission family with respect to all 
required testing.
    Fuel line means hose or tubing designed to contain liquid fuel. 
This does not include any of the following:
    (1) Fuel tank vent lines.
    (2) Segments of hose or tubing whose external surface is normally 
exposed to liquid fuel inside the fuel tank.
    (3) Hose or tubing designed to return unused fuel from the 
carburetor to the fuel tank for handheld engines.
    (4) Primer bulbs that contain liquid fuel only for priming the 
engine before starting.
    Fuel system means all components involved in transporting, 
metering, and mixing the fuel from the fuel tank to the combustion 
chamber(s), including the fuel tank, fuel tank cap, fuel pump, fuel 
filters, fuel lines, carburetor or fuel-injection components, and all 
fuel-system vents.
    Fuel type means a general category of fuels such as gasoline or 
natural gas. There can be multiple grades within a single fuel type, 
such as low-temperature or all-season gasoline.
    Generator-set engine means an engine used primarily to operate an 
electrical generator or alternator to produce electric power for other 
applications.
    Good engineering judgment has the meaning given in 40 CFR 1068.30. 
See 40 CFR 1068.5 for the administrative process we use to evaluate 
good engineering judgment.
    Handheld means relating to equipment that meets any of the 
following criteria:
    (1) It is carried by the operator throughout the performance of its 
intended function.
    (2) It is designed to operate multipositionally, such as upside 
down or sideways, to complete its intended function.
    (3) It has a combined engine and equipment dry weight under 15.0 
kilograms, has no more than two wheels, and at least one of the 
following attributes is also present:
    (i) The operator provides support or carries the equipment 
throughout the performance of its intended function. Carry means to 
completely bear the weight of the equipment, including the engine. 
Support means to hold a piece of equipment in position to prevent it 
from falling, slipping, or sinking, without carrying it.
    (ii) The operator provides support or attitudinal control for the 
equipment throughout the performance of its intended function. 
Attitudinal control involves regulating the horizontal or vertical 
position of the equipment.
    (iii) The engine powers a pump or is a generator-set engine.
    (4) It is a one-person auger, with a combined engine and equipment 
dry weight under 21.0 kilograms.
    (5) It is used in a recreational application with a combined total 
vehicle dry weight under 20.0 kilograms. Note that snowmobiles, offroad 
motorcycles, and all terrain vehicles are regulated under 40 CFR part 
1051 and marine vessels are regulated under 40 CFR part 1045.
    Hydrocarbon (HC) means the hydrocarbon group on which the emission 
standards are based for each fuel type, as described in subpart B of 
this part.
    Identification number means a unique specification (for example, a 
model number/serial number combination) that allows someone to 
distinguish a particular engine from other similar engines.
    Integrated equipment manufacturer means an equipment manufacturer 
that also manufactures the engines for its equipment. Equipment 
manufacturers that manufacture the engines for some but not all of 
their equipment are considered to be integrated manufacturers for that 
equipment using the manufacturer's own engines.
    Intermediate-speed equipment means nonroad equipment in which the 
installed engine is intended for operation at speeds substantially 
below 3600 rpm.
    Low-hour means relating to an engine that is considered to have 
stabilized emissions and represents the undeteriorated emission level. 
A low-hour engine typically operates no more than a few hours beyond 
the minimum stabilization period. However, a low-hour engine could have 
more hours, as long as emissions remain stable. In the absence of other 
information, a low-hour engine with a useful life of 300 hours or less 
would generally have operated 12 to 15 hours and a low-hour engine with 
a longer useful would generally have operated no more than 24 hours.
    Manufacture means the physical and engineering process of 
designing, constructing, and assembling an engine or piece of 
equipment.
    Manufacturer has the meaning given in section 216(1) of the Act. In 
general, this term includes any person who

[[Page 28342]]

manufactures an engine, vehicle, vessel, or piece of equipment for sale 
in the United States or otherwise introduces a new nonroad engine or 
piece of equipment into U.S. commerce. This includes importers who 
import engines, equipment, or vehicles for resale, but not dealers. All 
manufacturing entities under the control of the same person are 
considered to be a single manufacturer.
    Marine engine means a nonroad engine that is installed or intended 
to be installed on a vessel. This includes a portable auxiliary marine 
engine only if its fueling, cooling, or exhaust system is an integral 
part of the vessel. There are two kinds of marine engines:
    (1) Propulsion marine engine means a marine engine that moves a 
vessel through the water or directs the vessel's movement.
    (2) Auxiliary marine engine means a marine engine not used for 
propulsion.
    Marine generator engine means an auxiliary marine engine used 
primarily to operate an electrical generator or alternator to produce 
electric power.
    Marine vessel has the meaning given in 1 U.S.C. 3, except that it 
does not include amphibious vehicles. The definition in 1 U.S.C. 3 very 
broadly includes every craft capable of being used as a means of 
transportation on water.
    Maximum engine power has the meaning given in Sec.  1054.140.
    Maximum test speed has the meaning given in 40 CFR 1065.1001.
    Maximum test torque has the meaning given in 40 CFR 1065.1001.
    Model year has the meaning given in 40 CFR part 1060 for equipment 
and means one of the following things for engines:
    (1) For freshly manufactured engines (see definition of ``new 
nonroad engine,'' paragraph (1)), model year means your annual new 
model production period. This must include January 1 of the calendar 
year for which the model year is named. It may not begin before January 
2 of the previous calendar year and it must end by December 31 of the 
named calendar year. For seasonal production periods not including 
January 1, model year means the calendar year in which the production 
occurs, unless you choose to certify the applicable emission family 
with the following model year. For example, if your production period 
is June 1, 2010 through November 30, 2010, your model year would be 
2010 unless you choose to certify the emission family for model year 
2011.
    (2) For an engine that is converted to a nonroad engine after being 
placed into service as a motor-vehicle engine or a stationary engine, 
model year means the calendar year in which the engine was originally 
produced (see definition of ``new nonroad engine,'' paragraph (2)).
    (3) For a nonroad engine excluded under Sec.  1054.5 that is later 
converted to operate in an application that is not excluded, model year 
means the calendar year in which the engine was originally produced 
(see definition of ``new nonroad engine,'' paragraph (3)).
    (4) For engines that are not freshly manufactured but are installed 
in new nonroad equipment, model year means the calendar year in which 
the engine is installed in the new nonroad equipment (see definition of 
``new nonroad engine,'' paragraph (4)).
    (5) For imported engines:
    (i) For imported engines described in paragraph (5)(i) of the 
definition of ``new nonroad engine,'' model year has the meaning given 
in paragraphs (1) through (4) of this definition.
    (ii) For imported engines described in paragraph (5)(ii) of the 
definition of ``new nonroad engine,'' model year means the calendar 
year in which the engine is assembled in its final certified 
configuration.
    (iii) For imported engines described in paragraph (5)(iii) of the 
definition of ``new nonroad engine,'' model year means the calendar 
year in which the importation occurs.
    Motor vehicle has the meaning given in 40 CFR 85.1703(a).
    New nonroad engine means any of the following things:
    (1) A freshly manufactured nonroad engine for which the ultimate 
purchaser has never received the equitable or legal title. This kind of 
engine might commonly be thought of as ``brand new.'' In the case of 
this paragraph (1), the engine is new from the time it is produced 
until the ultimate purchaser receives the title or the product is 
placed into service, whichever comes first.
    (2) An engine originally manufactured as a motor-vehicle engine or 
an uncertified stationary engine that is later installed or intended to 
be installed in a piece of nonroad equipment. In this case, the engine 
is no longer a motor-vehicle or stationary engine and becomes a ``new 
nonroad engine.'' The engine is no longer new when it is placed into 
nonroad service.
    (3) A nonroad engine that has been previously placed into service 
in an application we exclude under Sec.  1054.5, where that engine is 
installed in a piece of equipment that is covered by this part 1054. 
The engine is no longer new when it is placed into nonroad service 
covered by this part 1054. For example, this would apply to a marine-
propulsion engine that is no longer used in a marine vessel.
    (4) An engine not covered by paragraphs (1) through (3) of this 
definition that is intended to be installed in new nonroad equipment. 
The engine is no longer new when the ultimate purchaser receives a 
title for the equipment or the product is placed into service, 
whichever comes first. This generally includes installation of used 
engines in new equipment.
    (5) An imported nonroad engine, subject to the following 
provisions:
    (i) An imported nonroad engine covered by a certificate of 
conformity issued under this part that meets the criteria of one or 
more of paragraphs (1) through (4) of this definition, where the 
original engine manufacturer holds the certificate, is new as defined 
by those applicable paragraphs.
    (ii) An imported nonroad engine covered by a certificate of 
conformity issued under this part, where someone other than the 
original engine manufacturer holds the certificate (such as when the 
engine is modified after its initial assembly), becomes new when it is 
imported. It is no longer new when the ultimate purchaser receives a 
title for the engine or it is placed into service, whichever comes 
first.
    (iii) An imported nonroad engine that is not covered by a 
certificate of conformity issued under this part at the time of 
importation is new, but only if it was produced during or after the 
1997 model year. This addresses uncertified engines and equipment 
initially placed into service that someone seeks to import into the 
United States. Importation of this kind of engine (or equipment 
containing such an engine) is generally prohibited by 40 CFR part 1068.
    New nonroad equipment means either of the following things:
    (1) A nonroad piece of equipment for which the ultimate purchaser 
has never received the equitable or legal title. The product is no 
longer new when the ultimate purchaser receives this title or the 
product is placed into service, whichever comes first.
    (2) A nonroad piece of equipment with an engine that becomes new 
while installed in the equipment. For example a complete piece of 
equipment that was imported without being covered by a certificate of 
conformity would be new nonroad equipment because the engine would be 
considered to be new at the time of importation.
    Noncompliant engine or noncompliant equipment means an engine or 
equipment that was originally covered by a certificate of conformity 
but is not in the certified configuration

[[Page 28343]]

or otherwise does not comply with the conditions of the certificate.
    Nonconforming engine or nonconforming equipment means an engine or 
equipment not covered by a certificate of conformity that would 
otherwise be subject to emission standards.
    Nonhandheld means relating to an engine subject to the standards of 
this part that is not a handheld engine.
    Nonintegrated equipment manufacturer means an equipment 
manufacturer that is not an integrated equipment manufacturer. 
Equipment manufacturers that manufacture the engines for some but not 
all of their equipment are considered to be nonintegrated manufacturers 
for that equipment using a different engine manufacturer's engines.
    Nonmethane hydrocarbon has the meaning given in 40 CFR 1065.1001. 
This generally means the difference between the emitted mass of total 
hydrocarbons and the emitted mass of methane.
    Nonroad means relating to nonroad engines or equipment that 
includes nonroad engines.
    Nonroad engine has the meaning given in 40 CFR 1068.30. In general 
this means all internal-combustion engines except motor vehicle 
engines, stationary engines, engines used solely for competition, or 
engines used in aircraft.
    Official emission result means the measured emission rate for an 
emission-data engine on a given duty cycle before the application of 
any deterioration factor.
    Overhead valve means relating to a four-stroke spark-ignition 
engine in which the intake and exhaust valves are located above the 
combustion chamber within the cylinder head. Such engines are sometimes 
referred to as ``valve-in-head'' engines.
    Owners manual means a document or collection of documents prepared 
by the engine manufacturer for the owner or operator to describe 
appropriate engine maintenance, applicable warranties, and any other 
information related to operating or keeping the engine. The owners 
manual is typically provided to the ultimate purchaser at the time of 
sale.
    Oxides of nitrogen has the meaning given in 40 CFR part 1065.1001
    Percent has the meaning given in 40 CFR 1065.1001.
    Permeation emissions means fuel that escapes from the fuel system 
by diffusing through the walls of fuel-system components.
    Phase 1 means relating to the Phase 1 emission standards described 
in 40 CFR 90.103.
    Phase 2 means relating to the Phase 2 emission standards described 
in 40 CFR 90.103.
    Phase 3 means relating to the Phase 3 exhaust emission standards 
described in Sec.  1054.105.
    Placed into service means put into initial use for its intended 
purpose.
    Pressurized oil system means a system designed to deliver 
lubricating oil to internal engine components, including a step to 
circulate oil through a filter.
    Ramped-modal means relating to the ramped-modal type of steady-
state test described in Sec.  1054.505.
    Rated speed means one of the following:
    (1) For ungoverned handheld engines, rated speed means the most 
common engine speed for full-load operation with in-use engines from a 
given engine family.
    (2) For governed handheld engines, rated speed means maximum test 
speed, as defined in 40 CFR 1065.1001.
    (3) For nonhandheld engines, rated speed has the meaning given in 
Sec.  1054.505(d).
    Rated-speed equipment means nonroad equipment in which the 
installed engine is intended for operation at a rated speed that is 
nominally 3600 rpm or higher.
    Recreational application means an application in which a vehicle is 
ridden primarily for pleasure. Note that engines used in reduced-scale 
model vehicles that cannot be ridden (such as model airplanes) are 
excluded from this part under Sec.  1054.5.
    Revoke has the meaning given in 40 CFR 1068.30. In general this 
means to terminate the certificate or an exemption for an engine 
family.
    Round has the meaning given in 40 CFR 1065.1001.
    Running loss emissions has the meaning given in 40 CFR 1060.801.
    Scheduled maintenance means adjusting, repairing, removing, 
disassembling, cleaning, or replacing components or systems 
periodically to keep a part or system from failing, malfunctioning, or 
wearing prematurely. It also may mean actions you expect are necessary 
to correct an overt indication of failure or malfunction for which 
periodic maintenance is not appropriate.
    Side valve means relating to a four-stroke spark-ignition engine in 
which the intake and exhaust valves are located to the side of the 
cylinder, not within the cylinder head. Such engines are sometimes 
referred to as ``L-head'' engines.
    Small-volume emission family means any emission family whose U.S.-
directed production volume in a given model year is projected at the 
time of certification to be no more than 5,000 engines.
    Small-volume engine manufacturer means one of the following:
    (1) For handheld engines, an engine manufacturer that had U.S.-
directed production volume of handheld engines of no more than 25,000 
handheld engines in any calendar year. For manufacturers owned by a 
parent company, this production limit applies to the production of the 
parent company and all its subsidiaries.
    (2) For nonhandheld engines, an engine manufacturer that had U.S.-
directed production volume of no more than 10,000 nonhandheld engines 
in any calendar year. For manufacturers owned by a parent company, this 
production limit applies to the production of the parent company and 
all its subsidiaries.
    (3) An engine manufacturer that we designate to be a small-volume 
engine manufacturer under Sec.  1054.635.
    Small-volume equipment manufacturer means one of the following:
    (1) For handheld equipment, an equipment manufacturer that had a 
U.S.-directed production volume of no more than 25,000 pieces of 
handheld equipment in any calendar year. For manufacturers owned by a 
parent company, this production limit applies to the production of the 
parent company and all its subsidiaries.
    (2) For nonhandheld equipment, an equipment manufacturer with 
annual average U.S.-directed production volumes of no more than 5,000 
pieces of nonhandheld equipment in 2007 through 2009. For manufacturers 
owned by a parent company, this production limit applies to the 
production of the parent company and all its subsidiaries.
    (3) An equipment manufacturer that we designate to be a small-
volume equipment manufacturer under Sec.  1054.635.
    Snowthrower engine means an engine used exclusively to power 
snowthrowers.
    Spark-ignition means relating to a gasoline-fueled engine or any 
other type of engine with a spark plug (or other sparking device) and 
with operating characteristics significantly similar to the theoretical 
Otto combustion cycle. Spark-ignition engines usually use a throttle to 
regulate intake air flow to control power during normal operation.
    Steady-state means relating to emission tests in which engine speed 
and load are held at a finite set of essentially constant values. 
Steady-state tests are either discrete-mode tests or ramped-modal 
tests.

[[Page 28344]]

    Structurally integrated nylon fuel tank has the meaning given in 40 
CFR 1060.801.
    Subchapter U means the portion of the Code of Federal Regulations 
including 40 CFR parts 1000 through 1299.
    Suspend has the meaning given in 40 CFR 1068.30. In general this 
means to temporarily discontinue the certificate or an exemption for an 
engine family.
    Test engine means an engine in a test sample.
    Test sample means the collection of engines selected from the 
population of an emission family for emission testing. This may include 
testing for certification, production-line testing, or in-use testing.
    Tethered gas cap means a gas cap that is loosely but permanently 
connected to the fuel tank.
    Thermal reactor means a hot surface in the engine exhaust system 
that has the effect of significantly lowering emissions of one or more 
regulated pollutants. Hot surfaces that have an inconsequential effect 
on emissions are not thermal reactors.
    Total hydrocarbon has the meaning given in 40 CFR 1065.1001. This 
generally means the combined mass of organic compounds measured by the 
specified procedure for measuring total hydrocarbon, expressed as a 
hydrocarbon with a hydrogen-to-carbon mass ratio of 1.85:1.
    Total hydrocarbon equivalent has the meaning given in 40 CFR 
1065.1001. This generally means the sum of the carbon mass 
contributions of non-oxygenated hydrocarbons, alcohols and aldehydes, 
or other organic compounds that are measured separately as contained in 
a gas sample, expressed as exhaust hydrocarbon from petroleum-fueled 
locomotives. The hydrogen-to-carbon ratio of the equivalent hydrocarbon 
is 1.85:1.
    Ultimate purchaser means, with respect to any new nonroad equipment 
or new nonroad engine, the first person who in good faith purchases 
such new nonroad equipment or new nonroad engine for purposes other 
than resale.
    United States has the meaning given in 40 CFR 1068.30.
    Upcoming model year means for an emission family the model year 
after the one currently in production.
    U.S.-directed production volume means the number of engine units, 
subject to the requirements of this part, produced by a manufacturer 
for which the manufacturer has a reasonable assurance that sale was or 
will be made to ultimate purchasers in the United States.
    Useful life means the period during which the engine and equipment 
are designed to properly function in terms of power output and intended 
function without being remanufactured, specified as a number of hours 
of operation. It is the period during which a new nonroad engine is 
required to comply with all applicable emission standards. See 
Sec. Sec.  1054.107 and 1054.110. If an engine has no hour meter, the 
specified number of hours does not limit the period during which an in-
use engine is required to comply with emission standards, unless the 
degree of service accumulation can be verified separately.
    Variable-speed engine means an engine that is not a constant-speed 
engine.
    Vessel means marine vessel.
    Void has the meaning given in 40 CFR 1068.30. In general this means 
to invalidate a certificate or an exemption both retroactively and 
prospectively.
    Volatile liquid fuel means any fuel other than diesel or biodiesel 
that is a liquid at atmospheric pressure and has a Reid Vapor Pressure 
higher than 2.0 pounds per square inch.
    We (us, our) means the Administrator of the Environmental 
Protection Agency and any authorized representatives.
    Wide-open throttle means maximum throttle opening.
    Wintertime engine means an engine used exclusively to power 
equipment that is used only in wintertime, such as snowthrowers and ice 
augers.


Sec.  1054.805  What symbols, acronyms, and abbreviations does this 
part use?

    The following symbols, acronyms, and abbreviations apply to this 
part:

ABT Averaging, banking, and trading.
cc cubic centimeters.
CFR Code of Federal Regulations.
CO carbon monoxide.
CO2 carbon dioxide.
EPA Environmental Protection Agency.
FEL Family Emission Limit.
g gram.
HC hydrocarbon.
hr hour.
kPa kilopascals.
kW kilowatts.
NARA National Archives and Records Administration.
NIST National Institute of Standards and Technology.
NMHC nonmethane hydrocarbons.
NOX oxides of nitrogen (NO and NO2).
psig pounds per square inch of gauge pressure.
RPM revolutions per minute.
SAE Society of Automotive Engineers.
THC total hydrocarbon.
THCE total hydrocarbon equivalent.
U.S.C. United States Code.


Sec.  1054.810  What materials does this part reference?

    Documents listed in this section have been incorporated by 
reference into this part. The Director of the Federal Register approved 
the incorporation by reference as prescribed in 5 U.S.C. 552(a) and 1 
CFR part 51. Anyone may inspect copies at the U.S. EPA, Air and 
Radiation Docket and Information Center, 1301 Constitution Ave., NW., 
Room B102, EPA West Building, Washington, DC 20460 or at the National 
Archives and Records Administration (NARA). For information on the 
availability of this material at NARA, call 202-741-6030, or go to: 
http://www.archives.gov/federal_register/code_of_federal_regulations/ibr_locations.html.
    (a) SAE material. Table 1 of this section lists material from the 
Society of Automotive Engineers that we have incorporated by reference. 
The first column lists the number and name of the material. The second 
column lists the sections of this part where we reference it. Anyone 
may purchase copies of these materials from the Society of Automotive 
Engineers, 400 Commonwealth Drive, Warrendale, PA 15096 or www.sae.org. 
Table 1 follows:

               Table 1 to Sec.   1054.810.--SAE Materials
------------------------------------------------------------------------
                                                             Part 1054
                Document number and name                     reference
------------------------------------------------------------------------
SAE J30, Fuel and Oil Hoses, June 1998..................       1054.245,
                                                                1054.501
SAE J1930, Electrical/Electronic Systems Diagnostic             1054.135
 Terms, Definitions, Abbreviations, and Acronyms,
 revised May 1998.......................................
SAE J2260, Nonmetallic Fuel System Tubing with One or           1054.245
 More Layers, November 1996.............................
------------------------------------------------------------------------


[[Page 28345]]

    (b) ASTM material. Table 2 of this section lists material from the 
American Society for Testing and Materials that we have incorporated by 
reference. The first column lists the number and name of the material. 
The second column lists the sections of this part where we reference 
it. Anyone may purchase copies of these materials from the American 
Society for Testing and Materials, 100 Barr Harbor Dr., P.O. Box C700, 
West Conshohocken, PA 19428 or www.astm.org. Table 2 follows:

               Table 2 to Sec.   1054.810--ASTM Materials
------------------------------------------------------------------------
                                                             Part 1054
                Document number and name                     reference
------------------------------------------------------------------------
ASTM D471-98, Standard Test Method for Rubber Property--        1054.501
 ffect of Liquids.......................................
ASTM D814-95 (reapproved 2000), Standard Test Method for        1054.245
 Rubber Property--Vapor Transmission of Volatile Liquids
------------------------------------------------------------------------

Sec.  1054.815  What provisions apply to confidential information?

    (a) Clearly show what you consider confidential by marking, 
circling, bracketing, stamping, or some other method.
    (b) We will store your confidential information as described in 40 
CFR part 2. Also, we will disclose it only as specified in 40 CFR part 
2. This applies both to any information you send us and to any 
information we collect from inspections, audits, or other site visits.
    (c) If you send us a second copy without the confidential 
information, we will assume it contains nothing confidential whenever 
we need to release information from it.
    (d) If you send us information without claiming it is confidential, 
we may make it available to the public without further notice to you, 
as described in 40 CFR 2.204.


Sec.  1054.820  How do I request a hearing?

    (a) You may request a hearing under certain circumstances, as 
described elsewhere in this part. To do this, you must file a written 
request, including a description of your objection and any supporting 
data, within 30 days after we make a decision.
    (b) For a hearing you request under the provisions of this part, we 
will approve your request if we find that your request raises a 
substantial factual issue.
    (c) If we agree to hold a hearing, we will use the procedures 
specified in 40 CFR part 1068, subpart G.


Sec.  1054.825  What reporting and recordkeeping requirements apply 
under this part?

    Under the Paperwork Reduction Act (44 U.S.C. 3501 et seq), the 
Office of Management and Budget approves the reporting and 
recordkeeping specified in the applicable regulations. The following 
items illustrate the kind of reporting and recordkeeping we require for 
engines and equipment regulated under this part:
    (a) We specify the following requirements related to engine 
certification in this part 1054:
    (1) In Sec.  1054.20 we require equipment manufacturers to label 
their vessels if they are relying on component certification.
    (2) In Sec.  1054.135 we require engine manufacturers to keep 
certain records related to duplicate labels sent to equipment 
manufacturers.
    (3) In Sec.  1054.145 we include various reporting and 
recordkeeping requirements related to interim provisions.
    (4) In subpart C of this part we identify a wide range of 
information required to certify engines.
    (5) In Sec. Sec.  1054.345 and 1054.350 we specify certain records 
related to production-line testing.
    (6) [Reserved]
    (7) In subpart G of this part we identify several reporting and 
recordkeeping items for making demonstrations and getting approval 
related to various special compliance provisions.
    (8) In Sec. Sec.  1054.725, 1054.730, and 1054.735 we specify 
certain records related to averaging, banking, and trading.
    (b) We specify the following requirements related to equipment and 
component certification in 40 CFR part 1060:
    (1) In 40 CFR 1060.20 we give an overview of principles for 
reporting information.
    (2) In 40 CFR part 1060, subpart C, we identify a wide range of 
information required to certify products.
    (3) In 40 CFR 1060.301 we require manufacturers to make engines or 
equipment available for our testing if we make such a request.
    (4) In 40 CFR 1060.505 we specify information needs for 
establishing various changes to published test procedures.
    (c) We specify the following requirements related to testing in 40 
CFR part 1065:
    (1) In 40 CFR 1065.2 we give an overview of principles for 
reporting information.
    (2) In 40 CFR 1065.10 and 1065.12 we specify information needs for 
establishing various changes to published test procedures.
    (3) In 40 CFR 1065.25 we establish basic guidelines for storing 
test information.
    (4) In 40 CFR 1065.695 we identify data that may be appropriate for 
collecting during testing of in-use engines using portable analyzers.
    (d) We specify the following requirements related to the general 
compliance provisions in 40 CFR part 1068:
    (1) In 40 CFR 1068.5 we establish a process for evaluating good 
engineering judgment related to testing and certification.
    (2) In 40 CFR 1068.25 we describe general provisions related to 
sending and keeping information.
    (3) In 40 CFR 1068.27 we require manufacturers to make engines 
available for our testing or inspection if we make such a request.
    (4) In 40 CFR 1068.105 we require equipment manufacturers to keep 
certain records related to duplicate labels from engine manufacturers.
    (5) In 40 CFR 1068.120 we specify recordkeeping related to 
rebuilding engines.
    (6) In 40 CFR part 1068, subpart C, we identify several reporting 
and recordkeeping items for making demonstrations and getting approval 
related to various exemptions.
    (7) In 40 CFR part 1068, subpart D, we identify several reporting 
and recordkeeping items for making demonstrations and getting approval 
related to importing engines.
    (8) In 40 CFR 1068.450 and 1068.455 we specify certain records 
related to testing production-line engines in a selective enforcement 
audit.
    (9) In 40 CFR 1068.501 we specify certain records related to 
investigating and reporting emission-related defects.

[[Page 28346]]

    (10) In 40 CFR 1068.525 and 1068.530 we specify certain records 
related to recalling nonconforming engines.

Appendix I to Part 1054--Summary of Previous Emission Standards

    The following standards apply to nonroad spark-ignition engines 
produced before the model years specified in Sec.  1054.1:
    (a) Handheld engines. Phase 1 and Phase 2 standards apply for 
handheld engines as specified in 40 CFR 90.103 and summarized in the 
following tables:

              Table 1 to Appendix I.--Phase 1 Emission Standards for Handheld Engines (g/kW-hr) \a\
----------------------------------------------------------------------------------------------------------------
                    Engine displacement class                           HC              NOX             CO
----------------------------------------------------------------------------------------------------------------
Class III.......................................................             295            5.36             805
Class IV........................................................             241            5.36             805
Class V.........................................................             161            5.36            603
----------------------------------------------------------------------------------------------------------------
\a\ Phase 1 standards are based on testing with new engines only.


 Table 2 to Appendix I.--Phase 2 Emission Standards for Handheld Engines
                              (g/kW-hr) \a\
------------------------------------------------------------------------
        Engine displacement class             HC+NOX            CO
------------------------------------------------------------------------
Class III...............................              50             805
Class IV................................              50             805
Class V.................................              72             603
------------------------------------------------------------------------
\a\ The standards shown are the fully phased-in standards. See 40 CFR
  90.103 for standards that applied during the phase-in period.

    (b) Nonhandheld engines. Phase 1 and Phase 2 standards apply for 
nonhandheld engines as specified in 40 CFR 90.103 and summarized in 
the following tables:

   Table 3 to Appendix I.--Phase 1 Emission Standards for Nonhandheld
                          Engines (g/kW-hr) \a\
------------------------------------------------------------------------
        Engine displacement class             HC+NOX            CO
------------------------------------------------------------------------
Class I.................................            16.1             519
Class II................................            13.4            519
------------------------------------------------------------------------
\a\ Phase 1 standards are based on testing with new engines only.


              Table 4 to Appendix I.--Phase 2 Emission Standards for Nonhandheld Engines (g/kW-hr)
----------------------------------------------------------------------------------------------------------------
                   Engine displacement class                         HC+NOX          NMHC+NOX           CO
----------------------------------------------------------------------------------------------------------------
Class I-A.....................................................             50    ...............             610
Class I-B.....................................................             40               37               610
Class I.......................................................             16.1             14.8             610
Class II \a\..................................................             12.1             11.3            610
----------------------------------------------------------------------------------------------------------------
\a\ The Class II standards shown are the fully phased-in standards. See 40 CFR 90.103 for standards that applied
  during the phase-in period.

Appendix II to Part 1054--Duty Cycles for Laboratory Testing

    (a) Test handheld engines with the following steady-state duty 
cycle:

------------------------------------------------------------------------
                                                      Torque
         G3 mode number           Engine speed \a\  (percent)  Weighting
                                                       \b\      factors
------------------------------------------------------------------------
1..............................  Rated speed......        100       0.85
2..............................  Idle speed.......          0      0.15
------------------------------------------------------------------------
\a\ ``Rated speed'' is defined in Sec.   1054.801; ``Idle speed'' is
  defined in 40 CFR part 1065.1001.
\b\ The percent torque is relative to maximum test torque.

    (b) Test nonhandheld engines with one of the following steady-
state duty cycles:
    (1) The following duty cycle applies for discrete-mode testing:

------------------------------------------------------------------------
                                                     Torque
                G2 mode number \a\                 (percent)   Weighting
                                                      \b\       factors
------------------------------------------------------------------------
1................................................        100        0.09
2................................................         75        0.2
3................................................         50        0.29
4................................................         25        0.3
5................................................         10        0.07
6................................................          0        0.05 
------------------------------------------------------------------------
\a\ Control engine speed as described in Sec.   1054.505. Control engine
  speed for Mode 6 as described in Sec.   1054.505(c) for idle
  operation.
\b\ The percent torque is relative to the value established for full-
  load torque, as described in Sec.   1054.505.

    (2) The following duty cycle applies for ramped-modal testing:

 
------------------------------------------------------------------------
                                       Time in
            RMC mode \a\                 mode     Torque  (percent) b, c
                                      (seconds)
------------------------------------------------------------------------
1a Steady-state.....................         41  0
1b Transition.......................         20  Linear Transition
2a Steady-state.....................        135  100
2b Transition.......................         20  Linear Transition
3a Steady-state.....................        112  10
3b Transition.......................         20  Linear Transition
4a Steady-state.....................        337  75
4b Transition.......................         20  Linear Transition
5a Steady-state.....................        518  25
5b Transition.......................         20  Linear Transition
6a Steady-state.....................        494  50
6b Transition.......................         20  Linear Transition

[[Page 28347]]

 
7 Steady-state......................         43  0
------------------------------------------------------------------------
\a\ Control engine speed as described in Sec.   1054.505. Control engine
  speed for Mode 6 as described in Sec.   1054.505(c) for idle
  operation.
\b\ Advance from one mode to the next within a 20-second transition
  phase. During the transition phase, command a linear progression from
  the torque setting of the current mode to the torque setting of the
  next mode.
\c\ The percent torque is relative to the value established for full-
  load torque, as described in Sec.   1054.505.

Appendix III to Part 1054--High-Altitude Counties

    The following counties have areas above 4,000 feet above sea 
level and are therefore considered to be high-altitude counties:

State of Arizona

Apache
Cochise
Coconino
Navajo
Yavapai

State of Colorado

Adams
Alamosa
Arapahoe
Archuleta
Boulder
Chaffee
Cheyenne
Clear Creek
Conejos
Costilla
Crowley
Custer
Delta
Denver
Dolores
Douglas
Eagle
Elbert
El Paso
Fremont
Garfield
Gilpin
Grand
Gunnison
Hinsdale
Huerfano
Jackson
Jefferson
Kit Carson
Lake
La Plata
Larimer
Las Animas
Lincoln
Mesa
Mineral
Moffat
Montezuma
Montrose
Morgan
Otero
Ouray
Park
Pitkin
Pueblo
Rio Blanco
Rio Grande
Routt
Saguache
San Juan
San Miguel
Summit
Teller
Washington
Weld

State of Idaho

Bannock
Bear Lake
Bingham
Blaine
Bonneville
Butte
Camas
Caribou
Cassia
Clark
Custer
Franklin
Fremont
Jefferson
Lemhi
Madison
Minidoka
Oneida
Power
Teton
Valley

State of Montana

Beaverhead
Deer Lodge
Gallatin
Jefferson
Judith Basin
Powell
Madison
Meagher
Park
Silver Bow
Wheatland

State of Nebraska

Banner
Cheyenne
Kimball
Sioux

State of Nevada

Carson City
Douglas
Elko
Esmeralda
Eureka
Humboldt
Lander
Lincoln
Lyon
Mineral
Nye
Pershing
Storey
Washoe
White Pine

State of New Mexico

Bernalillo
Catron
Colfax
Curry
De Baca
Grant
Guadalupe
Harding
Hidalgo
Lincoln
Los Alamos
Luna
McKinley
Mora
Otero
Rio Arriba
Roosevelt
Sandoval
San Juan
San Miguel
Santa Fe
Sierra
Socorro
Taos
Torrance
Union
Valencia

State of Oregon

Harney
Lake
Klamath

State of Texas

Jeff Davis
Judspeth
Parmer

State of Utah

Beaver
Box Elder
Cache
Carbon
Daggett
Davis
Duchesne
Emery
Garfield
Grand
Iron
Juab
Kane
Millard
Morgan
Piute
Rich
Salt Lake
San Juan
Sanpete
Sevier
Summit
Tooele
Uintah
Utah
Wasatch
Wayne
Weber

State of Wyoming

Albany
Campbell
Carbon
Converse
Fremont
Goshen
Hot Springs
Johnson
Laramie
Lincoln
Natrona
Niobrara

[[Page 28348]]

Park
Platte
Sublette
Sweetwater
Teton
Uinta
Washakie
Weston
    133. A new part 1060 is added to subchapter U of chapter I to read 
as follows:

PART 1060--CONTROL OF EVAPORATIVE EMISSIONS FROM NEW AND IN-USE 
NONROAD AND STATIONARY EQUIPMENT

Subpart A--Overview and Applicability

Sec.
1060.1 Which products are subject to this part's requirements?
1060.5 Do the requirements of this part apply to me?
1060.10 How is this part organized?
1060.15 Do any other regulation parts apply to me?
1060.20 Submission of information.

Subpart B--Emission Standards and Related Requirements

1060.101 What evaporative emission requirements apply under this 
part?
1060.102 What permeation emission control requirements apply for 
fuel lines?
1060.103 What permeation emission control requirements apply for 
fuel tanks?
1060.104 What running loss emission control requirements apply?
1060.105 What diurnal and diffusion requirements apply for 
equipment?
1060.120 What emission-related warranty requirements apply?
1060.125 What maintenance instructions must I give to buyers?
1060.130 What installation instructions must I give to equipment 
manufacturers?
1060.135 How must I label and identify the engines and equipment I 
produce?
1060.136 How must I label and identify the fuel lines I produce?
1060.137 How must I label and identify the fuel tanks I produce?
1060.138 How must I label and identify other emission-related 
components I produce?

Subpart C--Certifying Emission Families

1060.201 What are the general requirements for obtaining a 
certificate of conformity?
1060.202 What are the certification requirements related to the 
general standards in Sec.  1060.101?
1060.205 What must I include in my application?
1060.210 What records should equipment manufacturers keep if they do 
not apply for certification?
1060.225 How do I amend my application for certification?
1060.230 How do I select emission families?
1060.235 What emission testing must I perform for my application for 
a certificate of conformity?
1060.240 How do I demonstrate that my emission family complies with 
evaporative emission standards?
1060.250 What records must I keep and what reports must I send to 
EPA?
1060.255 What decisions may EPA make regarding my certificate of 
conformity?

Subpart D--Production Verification Testing

1060.301 Manufacturer testing.
1060.310 Supplying products to EPA for testing.

Subpart E--In-Use Testing

1060.401 General Provisions.

Subpart F--Test Procedures

1060.501 General testing provisions.
1060.505 Other procedures.
1060.510 How do I test EPA Low Emission Fuel Lines for permeation 
emissions?
1060.515 How do I test EPA Nonroad Fuel Lines for permeation 
emissions?
1060.520 How do I test fuel tanks for permeation emissions?
1060.521 How do I test fuel caps for permeation emissions?
1060.525 How do I test fuel systems for diurnal emissions?
1060.530 How do I test fuel systems for diffusion emissions?
1060.535 How do I measure fuel temperatures to comply with running 
loss requirements?

Subpart G--Special Compliance Provisions

1060.601 How do the prohibitions of 40 CFR 1068.101 apply with 
respect to the requirements of this part?
1060.605 Exemptions from evaporative emission standards.
1060.640 What special provisions apply to branded equipment?

Subpart H--Averaging, Banking, and Trading Provisions

1060.701 Applicability.
1060.705 How do I certify components to an emission level other than 
the standard under this part or use such components in my equipment?

Subpart I--Definitions and Other Reference Information

1060.801 What definitions apply to this part?
1060.805 What symbols, acronyms, and abbreviations does this part 
use?
1060.810 What materials does this part reference?
1060.815 What provisions apply to confidential information?
1060.820 How do I request a hearing?
1060.825 What reporting and recordkeeping requirements apply under 
this part?

    Authority: 42 U.S.C. 7401-7671q.

Subpart A--Overview and Applicability


Sec.  1060.1  Which products are subject to this part's requirements?

    (a) The standards and other requirements in this part 1060 apply to 
fuel lines, fuel tanks, couplings and fittings, and fuel caps used or 
intended to be used in the following categories of new engines and 
equipment that are fueled with a volatile liquid fuel (such as gasoline 
or ethanol, but not including diesel fuel), and the equipment in which 
these components are installed, starting with the model years shown in 
Table 1 of this section:
    (1) Compression-ignition engines we regulate under 40 CFR part 
1039. This includes stationary compression-ignition engines we regulate 
under the provisions of 40 CFR part 1039, as indicated under 40 CFR 
part 60, subpart IIII. See the evaporative emission standards specified 
in 40 CFR 1048.105. These engines are considered to be Large SI engines 
for purposes of this part 1060.
    (2) Marine compression-ignition engines we regulate under 40 CFR 
part 1042. See the evaporative emission standards specified in 40 CFR 
1045.107. These engines are considered to be Marine SI engines for 
purposes of this part 1060.
    (3) Marine SI engines we regulate under 40 CFR part 1045. See the 
evaporative emission standards specified in 40 CFR 1045.107.
    (4) Large SI engines we regulate under 40 CFR part 1048. This 
includes stationary spark-ignition engines subject to standards under 
40 CFR parts 1048 or 1054 as indicated in 40 CFR part 60, subpart JJJJ. 
See the evaporative emission standards specified in 40 CFR 1048.105.
    (5) Recreational vehicles and engines we regulate under 40 CFR part 
1051 (such as snowmobiles and off-highway motorcycles). This includes 
highway motorcycles subject to standards under 40 CFR part 1051 as 
indicated in 40 CFR part 86, subpart E since these motorcycles are 
considered to be recreational vehicles for purposes of this part 1060. 
See the evaporative emission standards specified in 40 CFR 1051.110.
    (6) Small SI engines we regulate under 40 CFR part 1054. See the 
evaporative emission standards specified in 40 CFR 1054.110.
    (7) Portable marine fuel tanks and fuel lines associated with such 
fuel tanks must meet evaporative emission standards specified in 40 CFR 
1045.107. Portable nonroad fuel tanks and fuel lines associated with 
such fuel tanks must also meet evaporative emission standards specified 
in 40 CFR 1045.107,

[[Page 28349]]

whether or not they are used with marine vessels. Portable nonroad fuel 
tanks are considered to be portable marine fuel tanks for purposes of 
this part 1060.
    (b) The regulations in this part 1060 apply for new replacement 
components used with any of the engines or equipment specified in 
paragraph (a) of this section as described in Sec.  1060.601.
    (c) Fuel caps are subject to evaporative emission standards at the 
point of installation on a fuel tank. If a fuel cap is certified for 
use with Marine SI engines or Small SI engines under the optional 
standards of Sec.  1060.103, it is subject to all the requirements of 
this part 1060 as if these optional standards were mandatory.
    (d) This part 1060 does not apply to any diesel-fueled engine or 
any other engine that does not use a volatile liquid fuel. In addition, 
this part does not apply to any engines or equipment in the following 
categories even if they use a volatile liquid fuel:
    (1) Light-duty motor vehicles (see 40 CFR part 86).
    (2) Heavy-duty motor vehicles and heavy-duty motor vehicle engines 
(see 40 CFR part 86).
    (3) Aircraft engines (see 40 CFR part 87).
    (4) Locomotives (see 40 CFR part 92).
    (5) Land-based nonroad diesel engines we regulate under 40 CFR part 
89.
    (6) Marine diesel engines we regulate under 40 CFR part 89 or 94.
    (7) Marine spark-ignition engines we regulate under 40 CFR part 91.
    (e) This part 1060 does not apply for fuel lines made wholly of 
metal.

                         Table 1 to Sec.   1060.1--Part 1060 Applicability by Model Year
----------------------------------------------------------------------------------------------------------------
                                      Fuel line                              Diurnal or          Running loss
Equipment category or subcategory    permeation      Tank permeation    diffusion emissions       emissions
----------------------------------------------------------------------------------------------------------------
Marine SI--portable fuel tanks...            2009  2011...............  2009...............  Not applicable.
Marine SI--personal watercraft...            2009  2011...............  2009...............  Not applicable.
Marine SI--other installed fuel              2009  2012...............  2010...............  Not applicable.
 tanks.
Large SI.........................            2007  Not applicable.....  2007 (includes tank  2007
                                                                         permeation).
Recreational vehicles............            2008  2008...............  Not applicable.....  Not applicable.
Small SI--handheld engines.......        \a\ 2012  2010 \b\...........  Not applicable.....  Not applicable.
Small SI--Class I nonhandheld                2008  2012...............  2012...............  2012
 engines.
Small SI--Class II nonhandheld               2008  2011...............  2011...............  2011
 engines.
----------------------------------------------------------------------------------------------------------------
\a\ 2013 for small-volume emission families.
\b\ 2011 for structurally integrated nylon fuel tanks and 2013 for all small-volume emission families.

Sec.  1060.5  Do the requirements of this part apply to me?

    The requirements of this part are generally addressed to 
manufacturers that are subject to this part's requirements, as 
described in paragraph (a) of this section. The term ``you'' generally 
means the manufacturer or manufacturers that are subject to these 
requirements. Paragraphs (b) through (e) of this section describe which 
manufacturers may or must certify their products. (Note: Sec.  1060.601 
allows the certification responsibility to be delegated in certain 
circumstances.)
    (a) Overall responsibilities. Manufacturers of engines, equipment, 
and fuel-system components described in Sec.  1060.1 are subject to the 
standards and other requirements of this part 1060 except as otherwise 
noted. Multiple manufacturers may be subject to these standards and 
other requirements. For example, when a Small SI equipment manufacturer 
buys fuel lines manufactured by another person and installs them in its 
equipment, both the equipment manufacturer and the fuel line 
manufacturer are subject to the standards and other requirements of 
this part. The following provisions apply in such cases:
    (1) Each person meeting the definition of manufacturer that is 
subject to the standards and other requirements of this part must 
comply with such requirements. However, if one person complies with a 
specific requirement for a given product, then all manufacturers are 
deemed to have complied with that specific requirement. For example, if 
a Small SI equipment manufacturer uses fuel lines manufactured and 
certified by another company, the equipment manufacturer is not 
required to obtain a certificate with respect to the fuel line emission 
standards. The Small SI equipment manufacturer remains subject to the 
standards and other requirements of this part. However, where a 
provision requires a specific manufacturer to comply with certain 
provisions, this paragraph (a) does not change or modify such a 
requirement. For example, where this section specifies that a certain 
manufacturer must certify its product, this paragraph (a) does not 
modify or change that manufacturer's obligation to comply with the 
certification requirements.
    (2) The requirements of subparts C and D of this part apply to the 
manufacturer that obtains the certificate of conformity. Other 
manufacturers are required to comply with the requirements of subparts 
C and D of this part only when we send notification. In our 
notification, we will specify a reasonable period for complying with 
the requirements identified in the notice. See Sec.  1060.601 for the 
applicability of 40 CFR part 1068 to these other manufacturers.
    (3) Certificate holders are responsible for meeting all applicable 
requirements even if other manufacturers are also subject to those 
requirements.
    (b) Marine SI. Vessels, engines, and fuel-system components may be 
certified as follows:
    (1) Component manufacturers must certify their fuel lines and fuel 
tanks intended for installation with Marine SI engines and vessels 
under this part 1060, except as allowed by Sec.  1060.601.
    (2) Vessel manufacturers are subject to all the requirements of 
this part 1060 that apply to Marine SI engines and fuel systems. 
However, they must certify their vessels to the emission standards 
specified in Sec. Sec.  1060.102 through 1060.105 only if one or more 
of the following conditions apply:
    (i) Vessel manufacturers install certified components that are not 
certified to meet all applicable evaporative emission standards. This 
would include vessel manufacturers

[[Page 28350]]

that make their own fuel tanks. Vessel manufacturers would certify 
under this part 1060.
    (ii) Vessel manufacturers intend to generate or use emission 
credits, even if they use only certified components to meet all 
applicable evaporative emission standards. Vessel manufacturers would 
certify under part 40 CFR part 1045 using the emission-credit 
provisions in subpart H of that part to demonstrate compliance with the 
emission standard.
    (3) For purposes of this part 1060, manufacturers of outboard 
engines must meet all the requirements that apply to vessel 
manufacturers.
    (c) Large SI. Engine manufacturers must certify their engines and 
fuel systems under 40 CFR part 1048.
    (d) Recreational vehicles. Vehicles, engines and fuel-system 
components may be certified as follows:
    (1) Vehicle and engine manufacturers must certify their vehicles 
and engines under 40 CFR part 1051.
    (2) Component manufacturers may certify fuel lines and fuel tanks 
intended for recreational vehicles under this part 1060.
    (e) Small SI. Engines, equipment, and fuel-system components may be 
certified as follows:
    (1) Component manufacturers must certify their fuel lines and fuel 
tanks intended for Small SI engines and equipment under this part 1060, 
except as allowed by Sec.  1060.601.
    (2) Engine and equipment manufacturers are subject to all the 
requirements of this part 1060 that apply to handheld Small SI engines 
and fuel systems. However, they must certify their engines or equipment 
to the emission standards specified in Sec. Sec.  1060.102 through 
1060.105 only if one or more of the following conditions apply:
    (i) Engine or equipment manufacturers install certified components 
that are not certified to meet all applicable evaporative emission 
standards. This would include engine or equipment manufacturers that 
make their own fuel tanks. Engine or equipment manufacturers would 
certify under this part 1060.
    (ii) Engine or equipment manufacturers intend to generate or use 
emission credits, even if they use only certified components to meet 
all applicable evaporative emission standards. Engine or equipment 
manufacturers would certify under part 40 CFR part 1054 using the 
emission-credit provisions in subpart H of that part to demonstrate 
compliance with the emission standard.
    (3) Engine manufacturers that produce nonhandheld Small SI engines 
with complete fuel systems must certify their engines and fuel systems 
under 40 CFR part 1054.
    (4) Equipment manufacturers are subject to all the requirements of 
this part 1060 that apply to nonhandheld Small SI engines and fuel 
systems. However, they must certify their equipment to the emission 
standards specified in Sec. Sec.  1060.102 through 1060.105 only if one 
or more of the following conditions apply:
    (i) The engine manufacturer's certification does not cover running 
loss emission standards. Equipment manufacturers would certify under 
this part 1060.
    (ii) Equipment manufacturers install components that are not 
certified to meet all applicable evaporative emission standards. This 
would include equipment manufacturers that make their own fuel tanks. 
Equipment manufacturers would certify under this part 1060.
    (iii) Equipment manufacturers intend to generate or use emission 
credits, even if they use only certified components to meet all 
applicable evaporative emission standards. Equipment manufacturers 
would certify under part 40 CFR part 1054 using the emission-credit 
provisions in subpart H of that part to demonstrate compliance with the 
emission standard.
    (f) Summary of certification responsibilities. Tables 1 through 3 
of this section summarize the certification responsibilities for 
different kinds of manufacturers as described in paragraphs (b) through 
(e) of this section. The term ``No'' as used in the tables means that a 
manufacturer is not required to obtain a certificate of conformity 
under paragraphs (b) through (e) of this section. In situations where 
multiple manufacturers are subject to the standards and other 
requirements of this part, such a manufacturer must nevertheless 
certify if the manufacturer who is required to certify under paragraphs 
(b) through (e) of this section fails to obtain a certificate of 
conformity.

 Table 1 to Sec.   1060.5--Summary of Engine Manufacturer Certification
                            Responsibilities
------------------------------------------------------------------------
                                     Is the engine       Code of Federal
                                 manufacturer required  Regulations cite
        Equipment type              to certify fuel            for
                                     systems? \a\         certification
------------------------------------------------------------------------
Marine SI.....................  No, but manufacturers   ................
                                 of outboard engines
                                 are treated as
                                 equipment
                                 manufacturers in this
                                 part.
Large SI......................  Yes...................  40 CFR part
                                                         1048.
Recreational vehicles.........  No.
Small SI......................  Handheld: No, unless    40 CFR part
                                 engine manufacturers    1054.
                                 install uncertified
                                 components or intend
                                 to generate or use
                                 emission credits.
                                Nonhandheld: No,        ................
                                 unless engines are
                                 sold with complete
                                 fuel systems.
------------------------------------------------------------------------
\a\ Fuel lines and fuel tanks that are attached to or sold with engines
  must be covered by a certificate of conformity.


      Table 2 to Sec.   1060.5.--Summary of Equipment Manufacturer
                     Certification Responsibilities
------------------------------------------------------------------------
                                   Is the equipment      Code of Federal
                                 manufacturer required  Regulations cite
        Equipment type              to certify fuel            for
                                       systems?           certification
------------------------------------------------------------------------
Marine SI.....................  Yes, but only if        40 CFR part
                                 vessel manufacturers    1060, or 40 CFR
                                 install uncertified     part 1045 if
                                 fuel lines or fuel      certifying only
                                 tanks or intend to      for emission
                                 generate or use         credits.
                                 emission credits.
Large SI......................  No.                     ................
Recreational vehicles.........  Yes, even if vehicle    40 CFR part
                                 manufacturers install   1051.
                                 certified components..

[[Page 28351]]

 
Small SI......................  Handheld: No, unless    40 CFR part
                                 equipment               1060, or 40 CFR
                                 manufacturers install   part 1054 if
                                 uncertified             certifying only
                                 components or intend    for emission
                                 to generate or use      credits.
                                 emission credits.
                                Nonhandheld: No,        ................
                                 unless equipment
                                 manufacturers (1) use
                                 an engine that has
                                 not already been
                                 certified for control
                                 of running loss
                                 emissions; (2)
                                 install uncertified
                                 components; or (3)
                                 intend to generate or
                                 use emission credits.
------------------------------------------------------------------------


      Table 3 to Sec.   1060.5.--Summary of Component Manufacturer
                     Certification Responsibilities
------------------------------------------------------------------------
                                   Is the component      Code of Federal
                                 manufacturer required  Regulations cite
        Equipment type           to certify fuel lines         for
                                    and fuel tanks?       certification
------------------------------------------------------------------------
Marine SI.....................  Yes, including          40 CFR part
                                 portable marine fuel    1060.
                                 tanks and associated
                                 fuel lines.\a\.
Large SI......................  No.                     ................
Recreational vehicles.........  Allowed but not         40 CFR part
                                 required.               1060.
Small SI......................  Yes \a\...............  40 CFR part
                                                         1060.
------------------------------------------------------------------------
\a\ See Sec.   1060.601 for an allowance to make contractual
  arrangements with engine or equipment manufacturers instead of
  certifying.

Sec.  1060.10  How is this part organized?

    This part 1060 is divided into the following subparts:
    (a) Subpart A of this part defines the applicability of part 1060 
and gives an overview of regulatory requirements.
    (b) Subpart B of this part describes the emission standards and 
other requirements that must be met to certify equipment or components 
under this part. Note that Sec.  1060.110 discusses certain interim 
requirements and compliance provisions that apply only for a limited 
time.
    (c) Subpart C of this part describes how to apply for a certificate 
of conformity.
    (d) Subpart D of this part describes the requirements related to 
verifying that products are being produced as described in an approved 
application for certification.
    (e) Subpart E of this part describes the requirements related to 
verifying that products are meeting the standards in use.
    (f) Subpart F of this part describes how to measure evaporative 
emissions.
    (g) Subpart G of this part and 40 CFR part 1068 describe 
requirements, prohibitions, and other provisions that apply to 
manufacturers, owners, operators, and all others.
    (h) Subpart H of this part describes how to certify your equipment 
or components for inclusion in an emission averaging program allowed by 
an exhaust standard-setting part.
    (i) Subpart I of this part contains definitions and other reference 
information.


Sec.  1060.15  Do any other regulation parts apply to me?

    (a) There is a separate part of the CFR that includes exhaust 
emission requirements for each particular application. These are 
referred to as the exhaust standard-setting parts. In cases where the 
exhaust standard-setting part includes evaporative requirements, apply 
this part 1060 as specified in the exhaust standard-setting part, as 
follows:
    (1) The requirements in the exhaust standard-setting part may 
differ from the requirements in this part. In cases where it is not 
possible to comply with both the exhaust standard-setting part and this 
part, you must comply with the requirements in the exhaust standard-
setting part. The exhaust standard-setting part may also allow you to 
deviate from the procedures of this part for other reasons.
    (2) The exhaust standard-setting parts may reference some sections 
of this part 1060 or may allow or require certification under this part 
1060. See the exhaust standard-setting parts, to determine what 
provisions of this part 1060 apply for these equipment types.
    (b) The requirements and prohibitions of part 1068 of this chapter 
apply to everyone, including anyone who manufactures, imports, owns, 
operates, or services any of the fuel systems subject to this part 
1060. Part 1068 of this chapter describes general provisions, including 
the following areas:
    (1) Prohibited acts and penalties for engine manufacturers, 
equipment manufacturers, and others.
    (2) Exclusions and exemptions for certain products.
    (3) Importing products.
    (4) Defect reporting and recall.
    (5) Procedures for hearings.
    (c) Other parts of this chapter apply if referenced in this part.


Sec.  1060.20  Submission of information.

    (a) This part includes various requirements to record data or other 
information. Refer to Sec.  1060.825, 40 CFR 1068.25, and the exhaust 
standard-setting part regarding recordkeeping requirements. If 
recordkeeping requirements are not specified, store these records in 
any format and on any media and keep them readily available for one 
year after you send an associated application for certification, or one 
year after you generate the data if they do not support an application 
for certification. You must promptly send us organized, written records 
in English if we ask for them. We may review them at any time.
    (b) The regulations in Sec.  1060.255 and 40 CFR 1068.101 describe 
your obligation to report truthful and complete information and the 
consequences of failing to meet this obligation. This includes 
information not related to certification.

Subpart B--Emission Standards and Related Requirements


Sec.  1060.101  What evaporative emission requirements apply under this 
part?

    Products subject to this part must meet emission standards and 
related requirements as follows:

[[Page 28352]]

    (a) Section 1060.102 describes permeation emission control 
requirements for fuel lines.
    (b) Section 1060.103 describes permeation emission control 
requirements for fuel tanks.
    (c) Section 1060.104 describes running loss emission control 
requirements for fuel systems.
    (d) Section 1060.105 describes diurnal and diffusion emission 
control requirements for fuel tanks.
    (e) The following general requirements apply for components and 
equipment subject to the emission standards in Sec. Sec.  1060.102 
through 1060.105:
    (1) Adjustable parameters. Components or equipment with adjustable 
parameters must meet all the requirements of this part for any 
adjustment in the physically adjustable range.
    (2) Prohibited controls. The following controls are prohibited:
    (i) For anyone to design, manufacture, or install emission control 
systems so they cause or contribute to an unreasonable risk to public 
health, welfare, or safety while operating.
    (ii) For anyone to design, manufacture, or install emission control 
systems with features that disable, deactivate, or bypass the emission 
controls, either actively or passively. For example, you may not 
include a manual vent that the operator can open to bypass emission 
controls. You may ask us to allow such features if needed for safety 
reasons or if the features are fully functional during emission tests 
described in subpart F of this part.
    (3) Emission credits. Equipment manufacturers are allowed to comply 
with the emission standards in this part using emission credits only if 
the exhaust standard-setting part explicitly allows it for evaporative 
emissions. See the exhaust standard-setting part and subpart H of this 
part for information about complying with emission credits. For 
equipment manufacturers to generate or use emission credits, components 
must be certified to a family emission limit (FEL), which serves as the 
standard for those components.
    (f) This paragraph (f) specifies requirements that apply to 
equipment manufacturers subject to requirements under this part, 
whether or not they are subject to and certify to any of the emission 
standards in Sec. Sec.  1060.102 through 1060.105. Equipment 
manufacturers meeting these requirements will be deemed to be certified 
as in conformity with the requirements of this paragraph (f) without 
submitting an application for certification, as follows:
    (1) Fuel caps, vents, and carbon canisters. You are responsible for 
ensuring that proper caps and vents are installed on each new piece of 
equipment that is subject to emission standards under this part. The 
following particular requirements apply to equipment that is subject to 
running loss, diurnal, or diffusion emission standards:
    (i) All equipment must have a tethered gas cap. Fuel caps for 
equipment subject to diurnal requirements must include a visual or 
audible indication when it is properly sealed.
    (ii) You may not add vents unless they are allowed by the 
applicable certificates of conformity.
    (iii) If the emission controls rely on carbon canisters, they must 
be installed such that they will not be exposed to water or liquid 
fuel.
    (2) Fuel-line fittings. The following requirements apply for fuel-
line fittings that will be used with fuel lines that must meet 
permeation emission standards:
    (i) Use good engineering judgment to ensure that all fuel-line 
fittings will remain securely connected to prevent fuel leakage 
throughout the useful life of the equipment.
    (ii) Fuel lines that are intended to be detachable (such as those 
for portable marine fuel tanks) must be self-sealing when detached from 
the fuel tank or engine.
    (3) Refueling. For any equipment using fuel tanks that are subject 
to diurnal or permeation emission standards under this part, you must 
design and build your equipment such that operators can reasonably be 
expected to fill the fuel tank without spitback or spillage during the 
refueling event. The following examples illustrate designs that meet 
this requirement:
    (i) Equipment that is commonly refueled using a portable gasoline 
container should have a fuel inlet that is larger than a typical 
dispensing spout. The fuel inlet should be located so the operator can 
place the nozzle directly in the fuel inlet and see the fuel level 
while pouring the fuel (either through the tank wall or the fuel 
inlet).
    (ii) Marine SI vessels with a filler neck extending to the side of 
the boat should be designed for automatic fuel shutoff. Alternatively, 
the filler neck should be designed such that the orientation of the 
filler neck allows dispensed fuel that collects in the filler neck to 
flow back into the fuel tank. A filler neck that ends with a horizontal 
or nearly horizontal segment at the opening where fuel is dispensed 
would not be an acceptable design.
    (4) Opt-in by component manufacturers. Component manufacturers may 
at their option become subject to the requirements specified in 
paragraph (f) of this section. If a component manufacturer is certified 
to these standards, all the applicable requirements and these standards 
are considered mandatory.
    (g) Equipment must meet the standards specified in this part 
throughout the useful life of the equipment, where the useful life of 
the equipment is either:
    (1) The useful life in years specified for the equipment in the 
exhaust standard-setting part.
    (2) The useful life in years specified for the engine in the 
exhaust standard-setting part if the exhaust standards are specified 
for the engine rather than the equipment and there is no useful life 
given for the equipment.
    (3) Five years if no useful life is specified in years for the 
equipment or engine in the exhaust standard-setting part.


Sec.  1060.102  What permeation emission control requirements apply for 
fuel lines?

    (a) Nonmetal fuel lines must meet permeation requirements as 
follows:
    (1) Marine SI fuel lines, including fuel lines associated with 
outboard engines or portable marine fuel tanks, must meet the 
permeation requirements in this section.
    (2) Large SI fuel lines must meet the permeation requirements 
specified in 40 CFR 1048.105.
    (3) Fuel lines for recreational vehicles must meet the permeation 
requirements specified in 40 CFR 1051.110 or in this section.
    (4) Small SI fuel lines must meet the permeation requirements in 
this section.
    (b) Different categories of nonroad equipment are subject to 
different requirements with respect to fuel line permeation. Fuel lines 
are classified based on measured emissions over the test procedure 
specified for the class. (Note: The test procedure for EPA LEFL lines 
is performed at a higher temperature than the test procedures for other 
classes, such that emissions measured using the EPA LEFL procedure will 
be substantially higher than emissions from the same fuel line measured 
with the EPA NRFL test procedure.)
    (c) The regulations in 40 CFR part 1048 require that fuel lines 
used with Large SI engines must meet the standards for EPA LEFL fuel 
lines. The regulations in 40 CFR part 1054 require that fuel lines used 
with handheld

[[Page 28353]]

Small SI engines used in cold-weather equipment must meet the standards 
for EPA CWFL fuel lines. Unless specified otherwise in this subchapter 
U, fuel lines used with all other engines and equipment subject to the 
provisions of this part 1060, including fuel lines associated with 
outboard engines or portable marine fuel tanks, must meet the standards 
for EPA NRFL fuel lines.
    (d) The following standards apply for each fuel line 
classification:
    (1) EPA LEFL fuel lines must have permeation emissions at or below 
25 g/m\2\/day when measured according to the test procedure described 
in Sec.  1060.510.
    (2) EPA NRFL fuel lines must have permeation emissions at or below 
15 g/m\2\/day when measured according to the test procedure described 
in Sec.  1060.515.
    (3) EPA CWFL fuel lines must have permeation emissions at or below 
175 g/m\2\/day when measured according to the test procedure described 
in Sec.  1060.515.
    (e) You may certify fuel lines for use as sections of any length. 
Also, you may certify fuel line assemblies as aggregated systems that 
include multiple sections of fuel line with connectors, and fittings. 
For example, you may certify fuel lines for portable marine fuel tanks 
as assemblies of fuel hose, primer bulbs, and self-sealing end 
connections. The standard applies with respect to the total permeation 
emissions divided by the wetted internal surface area of the assembly. 
Where it is not practical to determine the actual internal surface area 
of the assembly, you may assume that the internal surface area per unit 
length of the assembly is equal to the ratio of internal surface area 
per unit length of the hose section of the assembly.
    (f) The exhaust standard-setting part may allow for certification 
of fuel lines to a family emission limit for calculating emission 
credits as described in subpart H of this part instead of meeting the 
emission standards in this section.


Sec.  1060.103  What permeation emission control requirements apply for 
fuel tanks?

    (a) Fuel tanks must meet permeation requirements as follows:
    (1) Marine SI fuel tanks, including portable marine fuel tanks, 
must meet the permeation requirements in this section.
    (2) Large SI fuel tanks must meet diurnal emission standards as 
specified in Sec.  1060.105, which includes measurement of permeation 
emissions. No separate permeation standard applies.
    (3) Fuel tanks for recreational vehicles must meet the permeation 
requirements specified in 40 CFR 1051.110 or in this section.
    (4) Small SI fuel tanks must meet the permeation requirements in 
this section.
    (b) Permeation emissions from fuel tanks may not exceed 1.5 g/m\2\/
day when measured at a nominal temperature of 28 [deg]C with the test 
procedures for tank permeation in Sec.  1060.520, except as allowed by 
paragraph (e) of this section. You may also choose to meet the 
following alternate standards:
    (1) If you perform testing at a nominal temperature of 40 [deg]C 
under Sec.  1060.520(d), permeation emissions from fuel tanks may not 
exceed 2.5 g/m\2\/day.
    (2) For structurally integrated nylon fuel tanks used with handheld 
Small SI equipment, permeation emissions from fuel tanks may not exceed 
2.5 g/m\2\/day for testing at a nominal temperature of 28 [deg]C and 
may not exceed 4.0 g/m\2\/day for testing at a nominal temperature of 
40 [deg]C.
    (c) The exhaust standard-setting part may allow for certification 
of fuel tanks to family emission limit for calculating emission credits 
as described in subpart H of this part instead of meeting the emission 
standards in this section.
    (d) For purposes of this section, fuel tanks include fuel caps, 
gaskets, and other fittings that are directly mounted to the fuel tank. 
Fuel tanks do not include fuel lines that are subject to Sec.  1060.102 
or petcocks designed for draining fuel.
    (e) Fuel caps may be certified separately to the permeation 
emission standard in paragraph (b) of this section using the test 
procedures specified in Sec.  1060.521.


Sec.  1060.104  What running loss emission control requirements apply?

    (a) Engines and equipment must meet running loss requirements as 
follows:
    (1) Marine SI engines are not subject to running loss emission 
standards, except as noted in paragraph (c) of this section.
    (2) Large SI engines must prevent fuel boiling during operation as 
specified in 40 CFR 1048.105.
    (3) Recreational vehicles are not subject to running loss emission 
standards.
    (4) Nonhandheld Small SI engines must meet running loss 
requirements described in this section. Handheld Small SI fuel tanks 
are not subject to running loss emission standards.
    (b) You must demonstrate control of running loss emissions in one 
of the following ways if your engines or equipment are subject to the 
requirements of this section:
    (1) Get an approved Executive Order from the California Air 
Resources Board showing that your system meets applicable running loss 
standards in California.
    (2) Route running loss emissions into the engine intake system so 
fuel vapors vented from the tank during engine operation are combusted 
in the engine. If you produce engines with complete fuel systems, you 
must test your engines with an installed vapor line for controlling 
running loss emissions. If another company has certified the engine 
with respect to exhaust emissions, describe in your application for 
certification why you believe the modified engines continue to meet 
exhaust emission standards.
    (3) Design the equipment so fuel temperature does not rise more 
than 8.0 [deg]C during normal operation when measured using the 
procedure in Sec.  1060.535. Such a design may use insulation or active 
cooling to prevent fuel heating.
    (4) Use a bladder or other means to minimize fuel vapor volume in a 
sealed fuel tank.
    (5) Show that the equipment meets the definition of wintertime 
equipment in Sec.  1060.801.
    (c) Engines and equipment that are subject to diurnal emission 
standards must meet the requirements related to running loss emissions 
specified in Sec.  1060.105.


Sec.  1060.105  What diurnal and diffusion requirements apply for 
equipment?

    (a) Fuel tanks must meet diurnal and diffusion emission 
requirements as follows:
    (1) Marine SI fuel tanks must meet the requirements related to 
diurnal emissions specified in this section, including portable marine 
fuel tanks. Marine SI fuel tanks are not subject to diffusion emission 
standards.
    (2) Large SI fuel tanks must meet the requirements related to 
diurnal emissions specified in 40 CFR 1048.105. Large SI fuel tanks are 
not subject to diffusion emission standards.
    (3) Recreational vehicles are not subject to diurnal or diffusion 
emission standards.
    (4) Nonhandheld Small SI fuel tanks must meet the requirements 
related to diffusion emissions specified in this section. Nonhandheld 
Small SI fuel tanks are not subject to diurnal emission standards. 
Handheld Small SI fuel tanks are not subject to diurnal or diffusion 
emission standards.
    (b) Diurnal emissions from Marine SI fuel tanks may not exceed 0.40 
g/gal/day when measured using the test procedures specified in Sec.  
1060.525 for general fuel temperatures. An alternative standard of 0.16 
g/gal/day

[[Page 28354]]

applies for fuel tanks installed in nontrailerable boats when measured 
using the corresponding fuel temperature profile in Sec.  1060.525. 
Portable marine fuel tanks must comply with the requirements of 
paragraph (d) of this section.
    (c) Portable marine fuel tanks and associated fuel-system 
components must meet the following requirements:
    (1) They must be self-sealing (without any manual vents) when not 
attached to the engines. The tanks may not vent to the atmosphere when 
attached to an engine.
    (2) They must remain sealed up to a positive pressure of 34.5 kPa 
(5.0 psig); however, they may contain air inlets that open when there 
is a vacuum pressure inside the tank.
    (d) Detachable fuel lines that are intended for use with portable 
marine fuel tanks must be self-sealing (without any manual vents) when 
not attached to the engine or fuel tank.
    (e) The following standards related to diffusion emissions apply 
for nonhandheld Small SI fuel tanks:
    (1) Diffusion emissions from fuel systems not meeting the design 
standard of paragraph (e)(2) of this section may not exceed a 
performance standard of 0.80 g/day when measured using the test 
procedures specified in Sec.  1060.530.
    (i) Fuel tanks with fuel caps may be certified as a system to this 
diffusion emission standard. Fuel tanks certified this way that are not 
sold with the appropriate fuel cap must include specifications for 
appropriate fuel caps.
    (ii) Fuel caps may be certified separately to this diffusion 
emission standard. Such fuel caps must include specifications for 
appropriate threading to mate with fuel tanks.
    (2) If your fuel system meets any of the following design 
standards, you are not subject to the performance standard specified in 
paragraph (e)(1) of this section:
    (i) A fuel tank must be sealed except for a single vent line that 
is at least 180 mm long with a ratio of length to the square of the 
diameter of at least 5.0 mm-1 (127 in-1). For 
example, a vent line with 7 mm inside diameter would have to be at 
least 245 mm long to comply under this paragraph (e)(2)(i).
    (ii) A fuel cap must vent only through the cap such that a vent 
path goes through the gasket and then around the threads where the fuel 
cap screws onto the fuel tank. The ratio of average path length to 
total cross-sectional area of the vent path through the gasket must be 
at least 1.0 mm-1 (25 in-1), with the vent path 
going through at least 360[deg] of threads. For example, if a gasket 
has two vent paths, each with a cross-sectional area of 2 mm\2\ and a 
path length of 6 mm, the length-to-area ratio is 1.5 mm-1.
    (iii) A fuel tank must be sealed except for a vent through a carbon 
canister designed for controlling diurnal or running loss emissions.
    (iv) A fuel tank must be designed to remain sealed up to a positive 
pressure of 3.5 kPa (0.5 psig).
    (f) The following general provisions apply for controlling diurnal 
emissions:
    (1) Diurnal emission controls must continue to function during 
engine operation to control running loss emissions. For example, you 
may not use a fuel tank vent line during engine operation if it is not 
connected to the diurnal emission controls.
    (2) You may not use diurnal emission controls that increase the 
occurrence of fuel spitback or spillage during in-use refueling. Also, 
if you use a carbon canister, you must incorporate design features that 
prevent liquid gasoline from reaching the canister during refueling or 
as a result of fuel sloshing.


Sec.  1060.120  What emission-related warranty requirements apply?

    (a) General requirements. Certificate holders must warrant to the 
ultimate purchaser and each subsequent purchaser that the new nonroad 
equipment, including all parts of its evaporative emission control 
system, meets two conditions:
    (1) It is designed, built, and equipped so it conforms at the time 
of sale to the ultimate purchaser with the requirements of this part.
    (2) It is free from defects in materials and workmanship that may 
keep it from meeting these requirements.
    (b) Warranty period. Your emission-related warranty must be valid 
for at least two years from the point of first retail sale.


Sec.  1060.125  What maintenance instructions must I give to buyers?

    Give ultimate purchasers written instructions for properly 
maintaining and using the emission control system.


Sec.  1060.130  What installation instructions must I give to equipment 
manufacturers?

    (a) If you sell a certified fuel-system component for someone else 
to install in equipment, give the installer instructions for installing 
it consistent with the requirements of this part.
    (b) Make sure these instructions have the following information:
    (1) Include the heading: ``Emission-related installation 
instructions''.
    (2) State: ``Failing to follow these instructions when installing 
[IDENTIFY COMPONENT(S)] in a piece of nonroad equipment violates 
federal law (40 CFR 1068.105(b)), subject to fines or other penalties 
as described in the Clean Air Act.''.
    (3) Describe any limits on the range of applications needed to 
ensure that the component operates consistently with your application 
for certification. For example:
    (i) For fuel tanks sold without fuel caps, you must specify the 
requirements for the fuel cap, such as the allowable materials, thread 
pattern, how it must seal, etc. You must also include instructions to 
tether the fuel cap as described in Sec.  1060.101(f)(1) if you do not 
sell your fuel tanks with tethered fuel caps.
    (ii) If your fuel lines do not meet permeation standards specified 
in Sec.  1060.102 for LEFL fuel lines, tell equipment manufacturers not 
to install the fuel lines with Large SI engines that operate on 
gasoline or another volatile liquid fuel.
    (4) Describe instructions for installing components so they will 
operate according to design specifications in your application for 
certification. Specify sufficient detail to ensure that the equipment 
will meet the applicable standards when your component is installed.
    (5) If you certify a component with family emission limit above the 
emission standard, be sure to indicate that the equipment manufacturer 
must have a source of credits to offset the higher emissions and must 
label the equipment as specified in Sec.  1060.135. Also indicate the 
applications for which the regulations allow for compliance using 
emission credits.
    (6) Instruct the equipment manufacturers that they must comply with 
the requirements of Sec.  1060.202.
    (c) You do not need installation instructions for components you 
install in your own equipment.
    (d) Provide instructions in writing or in an equivalent format. For 
example, you may post instructions on a publicly available website for 
downloading or printing. If you do not provide the instructions in 
writing, explain in your application for certification how you will 
ensure that each installer is informed of the installation 
requirements.


Sec.  1060.135  How must I label and identify the engines and equipment 
I produce?

    The labeling requirements of this section apply for engine and 
equipment manufacturers. See Sec. Sec.  1060.136 through 1060.138 for 
the labeling requirements that apply for fuel lines, fuel tanks, and 
other fuel-system components.
    (a) If you hold a certificate for your engine or equipment with 
respect to

[[Page 28355]]

evaporative emissions, you must affix a permanent and legible label 
identifying each engine or piece of equipment before introducing it 
into U.S. commerce. The label must be--
    (1) Attached so it is not removable without being destroyed or 
defaced.
    (2) Secured to a part of the engine or equipment needed for normal 
operation and not normally requiring replacement.
    (3) Durable and readable for the equipment's entire life.
    (4) Readily visible in the final installation. It may be under a 
hinged door or other readily opened cover. It may not be hidden by any 
cover attached with screws or any similar designs.
    (5) Written in English.
    (b) The engine or equipment label must include all the applicable 
information specified in Sec. Sec.  1060.136 through 1060.138 if you 
are using components that are not already certified by another company. 
You may combine all required label information in a single label. This 
may include information related to exhaust emissions if you also 
certify the engine with respect to exhaust emissions.
    (1) If you are certifying with respect to the running loss 
standard, include the following information:
    (i) Include your corporate name or trademark.
    (ii) Describe your method for meeting the running loss standard.
    (iii) State the date of manufacture [MONTH and YEAR] of the 
equipment; however, you may omit this from the label if you stamp or 
engrave it on the equipment.
    (iv) State: ``THIS EQUIPMENT COMPLIES WITH U.S. EPA RUNNING LOSS 
STANDARDS.''.
    (2) If you are certifying your equipment with respect to emission 
credits, include the following information:
    (i) Include your corporate name or trademark.
    (ii) Identify the engine family name of the fuel-system components 
for which you are generating or using emission credits.
    (iii) State the date of manufacture [MONTH and YEAR] of the 
equipment; however, you may omit this from the label if you stamp or 
engrave it on the equipment.
    (iv) State: ``THIS EQUIPMENT COMPLIES WITH PERMEATION STANDARDS 
BASED ON EMISSION CREDITS.''.
    (c) You may add information to the emission control information 
label to identify other emission standards that the equipment meets or 
does not meet (such as California standards). You may also add other 
information to ensure that the equipment will be properly maintained 
and used.
    (d) Anyone subject to the labeling requirements in this part 1060 
may ask us to approve modified labeling requirements if it is necessary 
or appropriate. We will approve the request if the alternate label is 
consistent with the requirements of this part.


Sec.  1060.136  How must I label and identify the fuel lines I produce?

    The requirements of this section apply for fuel line manufacturers:
    (a) Label your fuel line at the time of manufacture as follows:
    (1) Label the fuel line in a permanent and legible manner.
    (2) Include your corporate name or trademark.
    (3) Include EPA's standardized designation for emission family.
    (4) Identify the fuel line's FEL, if applicable.
    (5) The labeling information must be continuous, with no more than 
12 inches before repeating. You may add a continuous stripe or other 
pattern to help identify the particular type or grade of fuel line.
    (b) You may ask us to approve modified labeling requirements in 
this section as described in Sec.  1060.135(e). You may label short 
preformed fuel lines (less than 12 inches long) under Sec.  1060.138 
instead of complying with the requirements of this section.


Sec.  1060.137  How must I label and identify the fuel tanks I produce?

    The requirements of this section apply for fuel tank manufacturers:
    (a) Add a permanent label at the time of manufacture to each fuel 
tank. For molded tanks, you may mold the label into the tank. The label 
must be--
    (1) Attached so it is not removable without being destroyed or 
defaced.
    (2) Durable and readable for the equipment's entire life.
    (3) Written in English.
    (b) The label must--
    (1) Include your full corporate name and trademark.
    (2) Include EPA's standardized designation for emission family.
    (3) Identify the fuel tank's FEL, if applicable.
    (4) Identify the emission control system. For equipment subject to 
diurnal, diffusion, or running loss requirements, list applicable part 
numbers of emission control components consistent with the requirements 
of Sec.  1060.138.
    (5) State: ``THIS FUEL TANK COMPLIES WITH U.S. EPA EMISSION 
REGULATIONS.''.
    (c) You may add information to the emission control information 
label to identify other emission standards that the equipment meets or 
does not meet (such as California standards).
    (d) You may ask to include the label information required by this 
section on the equipment label required by Sec.  1060.135 instead of 
labeling the tank separately.
    (e) You may ask us to approve modified labeling requirements in 
this section as described in Sec.  1060.135(e).


Sec.  1060.138  How must I label and identify other emission-related 
components I produce?

    The requirements of this section apply for manufacturers of fuel-
system components.
    (a) The requirements of this section apply for the following fuel-
system components:
    (1) Fuel caps that are certified under Sec.  1060.102.
    (2) Fuel caps for equipment subject to diurnal or diffusion 
requirements.
    (3) Carbon canisters.
    (4) Other components that are part of a system for controlling 
evaporative emissions.
    (b) Add a permanent and legible label at the time of manufacture to 
each fuel-system component as follows:
    (1) Identify your corporate name or trademark; however, you may 
omit this if there is not enough space.
    (2) If you certify the component, include EPA's standardized 
designation for emission family.
    (3) If the component is part of a system for controlling emissions 
from a fuel tank as described in Sec.  1060.137(b)(5), identify the 
part number of each component or subassembly.
    (c) You may ask us to approve modified labeling requirements in 
this section as described in Sec.  1060.135(e).

Subpart C--Certifying Emission Families


Sec.  1060.201  What are the general requirements for obtaining a 
certificate of conformity?

    Manufacturers of engines, equipment, or fuel-system components may 
need to certify their products with respect to evaporative emission 
standards as described in Sec. Sec.  1060.1 and 1060.601. See Sec.  
1060.202 for requirements related to certifying with respect to the 
requirements specified in Sec.  1060.101(f). The following general 
requirements apply for obtaining a certificate of conformity:
    (a) You must send us a separate application for a certificate of 
conformity for each emission family. A

[[Page 28356]]

certificate of conformity for equipment is valid starting with the 
indicated effective date, but it is not valid for any production after 
December 31 of the model year for which it is issued. No certificate 
will be issued after December 31 of the model year. A certificate of 
conformity for a component is valid starting with the indicated 
effective date, but it is not valid for any production after the end of 
the production period for which it is issued.
    (b) The application must contain all the information required by 
this part and must not include false or incomplete statements or 
information (see Sec.  1060.255).
    (c) We may ask you to include less information than we specify in 
this subpart, but you must still maintain all the information required 
by Sec.  1060.250.
    (d) You must use good engineering judgment for all decisions 
related to your application (see 40 CFR 1068.5).
    (e) An authorized representative of your company must approve and 
sign the application.
    (f) See Sec.  1060.255 for provisions describing how we will 
process your application.


Sec.  1060.202  What are the certification requirements related to the 
general standards in Sec.  1060.101?

    Equipment manufacturers must ensure that their equipment is 
certified with respect to the general standards specified in Sec.  
1060.101(f) as follows:
    (a) If Sec.  1060.1 requires you to certify your equipment to any 
of the emission standards specified in through 1060.105, describe in 
your application for certification how you will meet the general 
standards specified in Sec.  1060.101(f).
    (b) If Sec.  1060.1 does not require you to certify your equipment 
to any of the emission standards specified in through 1060.105, your 
equipment is deemed to be certified with respect to the general 
standards specified in Sec.  1060.101(f) if you design and produce your 
equipment to meet those standards.
    (1) You must keep records as described in Sec.  1060.210. The other 
provisions of this part for certificate holders apply only as specified 
in Sec.  1060.5.
    (2) Your equipment is deemed to be certified only to the extent 
that it meets the general standards in Sec.  1060.101(f). Thus, it is a 
violation of 40 CFR 1068.101(a)(1) to introduce into U.S. commerce such 
equipment that does not meet applicable requirements under Sec.  
1060.101(f).
    (c) Instead of relying on paragraph (b) of this section, you may 
submit an application for certification and obtain a certificate from 
us. The provisions of this part apply in the same manner for 
certificates issued under this paragraph (c) as for any other 
certificate issued under this part.


Sec.  1060.205  What must I include in my application?

    This section specifies the information that must be in your 
application, unless we ask you to include less information under Sec.  
1060.202(c). We may require you to provide additional information to 
evaluate your application.
    (a) Describe the emission family's specifications and other basic 
parameters of the emission controls. Describe how you meet the running 
loss emission control requirements in Sec.  1060.104, if applicable. 
Describe how you meet any applicable equipment-based requirements of 
Sec.  1060.101(e) and (f). State whether you are requesting 
certification for gasoline or some other fuel type. List each 
distinguishable configuration in the emission family.
    (b) Describe the products you selected for testing and the reasons 
for selecting them.
    (c) Describe the test equipment and procedures that you used, 
including any special or alternate test procedures you used (see Sec.  
1060.501).
    (d) List the specifications of the test fuel to show that it falls 
within the required ranges specified in subpart F of this part.
    (e) State the equipment applications to which your certification is 
limited. For example, if your fuel system meets the emission 
requirements of this part applicable only to handheld Small SI 
equipment, state that the requested certificate would apply only for 
handheld Small SI equipment.
    (f) Identify the emission family's useful life.
    (g) Include the maintenance instructions you will give to the 
ultimate purchaser of each new nonroad engine (see Sec.  1060.125).
    (h) Include the emission-related installation instructions you will 
provide if someone else will install your component in a piece of 
nonroad equipment (see Sec.  1060.130).
    (i) Describe your emission control information label (see 
Sec. Sec.  1060.135 through 1060.138).
    (j) Identify the emission standards or FELs to which you are 
certifying the emission family.
    (k) Present emission data to show your products meet the applicable 
emission standards. Note that Sec. Sec.  1060.235 and 1060.240 allow 
you to submit an application in certain cases without new emission 
data.
    (l) State that your product was tested as described in the 
application (including the test procedures, test parameters, and test 
fuels) to show you meet the requirements of this part. If you did not 
do the testing, identify the source of the data.
    (m) Report all test results, including those from invalid tests, 
whether or not they were conducted according to the test procedures of 
subpart F of this part. We may ask you to send other information to 
confirm that your tests were valid under the requirements of this part.
    (n) Unconditionally certify that all the products in the emission 
family comply with the requirements of this part, other referenced 
parts of the CFR, and the Clean Air Act.
    (o) Include good-faith estimates of U.S.-directed production 
volumes. Include a justification for the estimated production volumes 
if they are substantially different than actual production volumes in 
earlier years for similar models.
    (p) Include other applicable information, such as information 
required by other subparts of this part.
    (q) Name an agent for service located in the United States. Service 
on this agent constitutes service on you or any of your officers or 
employees for any action by EPA or otherwise by the United States 
related to the requirements of this part.


Sec.  1060.210  What records should equipment manufacturers keep if 
they do not apply for certification?

    If you are an equipment manufacturer that does not need to obtain a 
certificate of conformity for your equipment as described in Sec.  
1060.1, you must keep the following records to document compliance with 
applicable requirements, which we may review at any time:
    (a) Identify your equipment models and the annual U.S.-directed 
production volumes for each model.
    (b) Identify the emission family names of the certificates that 
will cover your equipment and the names of the companies that hold the 
certificates.
    (c) Describe how you comply with any emission-related installation 
instructions, labeling requirements, and the general standards in Sec.  
1060.101(e) and (f).


Sec.  1060.225  How do I amend my application for certification?

    Before we issue a certificate of conformity, you may amend your 
application to include new or modified configurations, subject to the 
provisions of this section. After we have issued your certificate of 
conformity, you may send us an amended application

[[Page 28357]]

requesting that we include new or modified configurations within the 
scope of the certificate, subject to the provisions of this section. 
You must amend your application if any changes occur with respect to 
any information included in your application. If you would like to 
modify a family emission limit for your product, you must submit a 
separate application for a new emission family.
    (a) You must amend your application before you take either of the 
following actions:
    (1) Add a configuration to an emission family. In this case, the 
configuration added must be consistent with other configurations in the 
emission family with respect to the criteria listed in Sec.  1060.230.
    (2) Change a configuration already included in an emission family 
in a way that may affect emissions, or change any of the components you 
described in your application for certification. This includes 
production and design changes that may affect emissions any time during 
the equipment's lifetime.
    (b) To amend your application for certification, send the 
Designated Compliance Officer the following information:
    (1) Describe in detail the addition or change in the configuration 
you intend to make.
    (2) Include engineering evaluations or data showing that the 
amended emission family complies with all applicable requirements. You 
may do this by showing that the original emission data are still 
appropriate for showing that the amended family complies with all 
applicable requirements.
    (3) If the original emission data for the emission family are not 
appropriate to show compliance for the new or modified configuration, 
include new test data showing that the new or modified configuration 
meets the requirements of this part.
    (c) We may ask for more test data or engineering evaluations. You 
must give us these within 30 days after we request them.
    (d) For emission families already covered by a certificate of 
conformity, we will determine whether the existing certificate of 
conformity covers your new or modified configuration. You may ask for a 
hearing if we deny your request (see Sec.  1060.820).
    (e) For emission families already covered by a certificate of 
conformity, you may start producing the new or modified configuration 
anytime after you send us your amended application and before we make a 
decision under paragraph (d) of this section. However, if we determine 
that the affected configurations do not meet applicable requirements, 
we will notify you to cease production of the configurations and may 
require you to recall the equipment at no expense to the owner. 
Choosing to produce equipment under this paragraph (e) is deemed to be 
consent to recall all equipment that we determine do not meet 
applicable emission standards or other requirements and to remedy the 
nonconformity at no expense to the owner. If you do not provide 
information required under paragraph (c) of this section within 30 
days, you must stop producing the new or modified equipment.


Sec.  1060.230  How do I select emission families?

    (a) Divide your product line into families of equipment (or 
components) that are expected to have similar emission characteristics 
throughout the useful life.
    (b) Group fuel lines in the same emission family if they are the 
same in all the following aspects:
    (1) Type of material including barrier layer.
    (2) Production method.
    (3) Types of connectors and fittings (material, approximate wall 
thickness, etc.) for fuel line assemblies certified together.
    (4) Family emission limit, if applicable.
    (c) Group fuel tanks (or fuel systems including fuel tanks) in the 
same emission family if they are the same in all the following aspects:
    (1) Type of material, including any pigments, plasticizers, UV 
inhibitors, or other additives that may affect control of emissions.
    (2) Production method.
    (3) Relevant characteristics of fuel cap design for fuel systems 
subject to diurnal or diffusion emission requirements.
    (4) Gasket material and design.
    (5) Emission control strategy.
    (6) Family emission limit, if applicable.
    (d) Group other fuel-system components and equipment in the same 
emission family if they are the same in all the following aspects:
    (1) Emission control strategy and design.
    (2) Type of material (such as type of charcoal used in a carbon 
canister). This criteria does not apply for materials that are 
unrelated to emission control performance.
    (3) The fuel systems meet the running loss emission standard based 
on the same type of compliance demonstration specified in Sec.  
1060.104(b), if applicable.
    (e) You may subdivide a group of equipment or components that are 
identical under paragraphs (b) through (d) of this section into 
different emission families if you show the expected emission 
characteristics are different during the useful life.
    (f) In unusual circumstances, you may group equipment or components 
that are not identical with respect to the things listed in paragraph 
(b) through (d) of this section in the same emission family if you show 
that their emission characteristics during the useful life will be 
similar. The provisions of this paragraph (f) do not exempt any engines 
from meeting all the applicable standards and requirements in subpart B 
of this part.
    (g) Select test components that are most likely to exceed the 
applicable emission standards. For example, select a fuel tank with the 
smallest average wall thickness (or barrier thickness, as appropriate) 
of those fuel tanks you include in the same family.


Sec.  1060.235  What emission testing must I perform for my application 
for a certificate of conformity?

    This section describes the emission testing you must perform to 
show compliance with the emission standards in subpart B of this part.
    (a) Test your products using the procedures and equipment specified 
in subpart F of this part.
    (b) Select an emission-data unit from each emission family for 
testing. In general, you must test a preproduction product that will 
represent actual production. However, for fuel tank permeation, you may 
test a tank with standardized geometry, provided that it is made of the 
same material(s) and appropriate wall thickness. Select the 
configuration that is most likely to exceed (or have emissions nearer 
to) an applicable emission standard. For example, for a family of 
multilayer fuel tanks, test the tank with the thinnest barrier layer. 
In general, the test procedures specify that components or systems be 
tested rather than complete equipment. For example, to certify your 
family of Small SI equipment, you would need to test a sample of fuel 
line for permeation emissions, a fuel tank for permeation emissions, 
and a fuel system for diffusion emissions. Note that paragraph (e) of 
this section and Sec.  1060.240 allow you in certain circumstances to 
certify without testing an emission-data unit from the emission family.
    (c) You may not do maintenance on emission-data units.

[[Page 28358]]

    (d) We may measure emissions from any of your products from the 
emission family, as follows:
    (1) You must supply your products to us if we choose to perform 
confirmatory testing.
    (2) If we measure emissions on one of your products, the results of 
that testing become the official emission results for the emission 
family. Unless we later invalidate these data, we may decide not to 
consider your data in determining if your emission family meets 
applicable requirements.
    (e) You may ask to use emission data from a previous production 
period (carryover) instead of doing new tests, but only if all the 
following are true:
    (1) The emission family from the previous production period differs 
from the current emission family only with respect to production period 
or other characteristics unrelated to emissions. You may also ask to 
add a configuration subject to Sec.  1060.225.
    (2) The emission-data unit from the previous production period 
remains the appropriate emission-data unit under paragraph (b) of this 
section. For example, you may not carryover emission data for your 
family of nylon fuel tanks if you have added a thinner-walled fuel tank 
than was tested previously.
    (3) The data show that the emission-data unit would meet all the 
requirements that apply to the emission family covered by the 
application for certification.
    (f) We may require you to test a second unit of the same or 
different configuration in addition to the unit tested under paragraph 
(b) of this section.
    (g) If you use an alternate test procedure under Sec.  1060.505, 
and later testing shows that such testing does not produce results that 
are equivalent to the procedures specified in this part, we may reject 
data you generated using the alternate procedure.


Sec.  1060.240  How do I demonstrate that my emission family complies 
with evaporative emission standards?

    (a) For purposes of certification, your emission family is 
considered in compliance with an evaporative emission standard in 
subpart B of this part if you do either of the following:
    (1) You have test results showing measured emission levels from the 
fuel tank or fuel line (as applicable) in the family are at or below 
the applicable standard.
    (2) You comply with the design specifications in paragraph (d) of 
this section.
    (b) Your emission family is deemed not to comply if any fuel tank 
or fuel line representing that family has test results showing an 
official emission level above the standard.
    (c) Round the measured emission level to the same number of decimal 
places as the emission standard. Compare the rounded emission levels to 
the emission standard for each emission-data unit.
    (d) You may demonstrate for certification that your emission family 
complies with the evaporative emission standards by demonstrating that 
you use the following control technologies:
    (1) [Reserved]
    (2) For certification to the fuel tank permeation standards 
specified in Sec.  1060.103 with the following control technologies:
    (i) A metal fuel tank with no nonmetal gaskets or with gaskets made 
from a low-permeability material.
    (ii) A metal fuel tank with nonmetal gaskets with an exposed gasket 
surface area of 1,000 mm2 or less.
    (iii) A coextruded high-density polyethylene fuel tank with a 
continuous ethylene vinyl alcohol barrier layer making up at least 2 
percent of the fuel tank's overall wall thickness, with no nonmetal 
gaskets or with gaskets made from a low-permeability material.
    (iv) A coextruded high-density polyethylene fuel tank with a 
continuous ethylene vinyl alcohol barrier layer making up at least 2 
percent of the fuel tank's overall wall thickness, with nonmetal 
gaskets or with an exposed gasket surface area of 1,000 mm2 
or less.
    (3) For certification to the diurnal standards specified in Sec.  
1060.105 with the following control technologies:
    (i) A Marine SI fuel tank sealed up to a positive pressure of 7.0 
kPa (1.0 psig); however, they may contain air inlets that open when 
there is a vacuum pressure inside the tank.
    (ii) A Marine SI fuel tank equipped with a passively purged carbon 
canister with a minimum carbon volume of 0.040 liters per gallon of 
fuel tank capacity (or 0.016 liters per gallon for fuel tanks used in 
nontrailerable boats). The carbon canister must have a minimum 
effective length-to-diameter ratio of 3.5 and the vapor flow must be 
directed with the intent of using the whole carbon bed. The carbon must 
have a minimum butane working capacity of 90 g/L based on the test 
procedures specified in ASTM D5228-92 (incorporated by reference in 
Sec.  1060.810). The carbon must adsorb no more than 0.5 grams of water 
per gram of carbon at 90% relative humidity and a temperature of 25 
 5 [deg]C. The carbon must also pass a dust attrition test 
based on ASTM D3802-79 (incorporated by reference in Sec.  1060.810), 
except that hardness is defined as the ratio of mean particle diameter 
before and after the test and the procedure must involve twenty \1/2\-
inch steel balls and ten \3/4\-inch steel balls. Good engineering 
judgment must be used in the structural design of the carbon canister. 
The canister must have a volume compensator or some other device to 
prevent the carbon pellets from moving within the canister as a result 
of vibration or changing temperature.
    (4) We may establish additional design certification options where 
we find that new test data demonstrate that the use of a different 
technology design will ensure compliance with the applicable emission 
standards.
    (e) You may not establish a family emission limit below the 
emission standard for components certified based on design 
specifications under this section, even if actual emission rates are 
much lower.


Sec.  1060.250  What records must I keep and what reports must I send 
to EPA?

    (a) Organize and maintain the following records:
    (1) A copy of all applications and any summary information you send 
us.
    (2) Any of the information we specify in Sec.  1060.205 that you 
were not required to include in your application.
    (3) A detailed history of each emission-data unit. For each 
emission data unit, include all of the following:
    (i) The emission-data unit's construction, including its origin and 
buildup, steps you took to ensure that it represents production 
equipment, any components you built specially for it, and all the 
components you include in your application for certification.
    (ii) All your emission tests, including documentation on routine 
and standard tests, and the date and purpose of each test.
    (iii) All tests to diagnose emission control performance, giving 
the date and time of each and the reasons for the test.
    (iv) Any other significant events.
    (4) Production figures for each emission family divided by assembly 
plant.
    (5) Keep a list of equipment identification numbers for all the 
equipment you produce under each certificate of conformity.
    (b) Keep data from routine emission tests (such as test cell 
temperatures and relative humidity readings) for one year after we 
issue the associated certificate of conformity. Keep all other 
information specified in paragraph (a) of this section for eight years 
after we issue your certificate.

[[Page 28359]]

    (c) Store these records in any format and on any media, as long as 
you can promptly send us organized, written records in English if we 
ask for them. You must keep these records readily available. We may 
review them at any time.
    (d) Send us copies of any maintenance instructions or explanations 
if we ask for them.


Sec.  1060.255  What decisions may EPA make regarding my certificate of 
conformity?

    (a) If we determine your application is complete and shows that the 
emission family meets all the requirements of this part and the Act, we 
will issue a certificate of conformity for your emission family for 
that production period. We may make the approval subject to additional 
conditions.
    (b) We may deny your application for certification if we determine 
that your emission family fails to comply with emission standards or 
other requirements of this part or the Act. Our decision may be based 
on a review of all information available to us. If we deny your 
application, we will explain why in writing.
    (c) In addition, we may deny your application or suspend or revoke 
your certificate if you do any of the following:
    (1) Refuse to comply with any testing or reporting requirements.
    (2) Submit false or incomplete information (paragraph (e) of this 
section applies if this is fraudulent).
    (3) Render inaccurate any test data.
    (4) Deny us from completing authorized activities despite our 
presenting a warrant or court order (see 40 CFR 1068.20). This includes 
a failure to provide reasonable assistance.
    (5) Produce equipment for importation into the United States at a 
location where local law prohibits us from carrying out authorized 
activities.
    (6) Fail to supply requested information or amend your application 
to include all equipment being produced.
    (7) Take any action that otherwise circumvents the intent of the 
Act or this part.
    (d) We may void your certificate if you do not keep the records we 
require or do not give us information when we ask for it.
    (e) We may void your certificate if we find that you intentionally 
submitted false or incomplete information.
    (f) If we deny your application or suspend, revoke, or void your 
certificate, you may ask for a hearing (see Sec.  1060.820).

Subpart D--Production Verification Testing


Sec.  1060.301  Manufacturer testing.

    (a) You must test production samples or otherwise verify that 
equipment or components you produce are as specified in the certificate 
of conformity.
    (b) You must provide records of such verification to us upon 
request.


Sec.  1060.310  Supplying products to EPA for testing.

    Upon our request, you must supply a reasonable number of production 
samples to us for verification testing.

Subpart E--In-Use Testing


Sec.  1060.401  General Provisions.

    We may perform in-use testing of any equipment or fuel-system 
component subject to the standards of this part.

Subpart F--Test Procedures


Sec.  1060.501  General testing provisions.

    (a) This subpart is addressed to you as a certifying manufacturer, 
but it applies equally to anyone who does testing for you.
    (b) Unless we specify otherwise, the terms ``procedures'' and 
``test procedures'' in this part include all aspects of testing, 
including the equipment specifications, calibrations, calculations, and 
other protocols and procedural specifications needed to measure 
emissions.
    (c) The specification for gasoline to be used for testing is given 
in 40 CFR 1065.710. Use the grade of gasoline specified for general 
testing. For testing specified in this part that requires a blend of 
gasoline and ethanol, blend this grade of gasoline with reagent-grade 
ethanol. You may use less pure ethanol if you can demonstrate that it 
will not affect your ability to demonstrate compliance with the 
applicable emission standards.
    (d) Accuracy and precision of all temperature measurements must be 
 1.0 [deg]C or better. If you use multiple sensors to 
measure differences in temperature, calibrate the sensors so they will 
be within 0.5 [deg]C of each other when they are in thermal equilibrium 
at a point within the range of test temperatures (use the starting 
temperature in Table 1 of Sec.  1060.525, unless this is not feasible).
    (e) Accuracy and precision of mass balances must be sufficient to 
ensure accuracy and precision of two percent or better for emission 
measurements for products at the maximum level allowed by the standard. 
The readability of the display may not be coarser than half of the 
required accuracy and precision. Examples are shown in the following 
table:

----------------------------------------------------------------------------------------------------------------
                                          Example 1       Example 2       Example 3
----------------------------------------------------------------------------------------------------------------
Applicable standard..................  1.5 g/m2/day...........  1.5 g/m2/day...........  15 g/m2/day
Internal surface area................  1.15 m2................  0.47 m2................  0.070 m2
Length of test.......................  14 days................  14 days................  28 days
Maximum allowable mass change........  24.15 g................  9.87 g.................  1.96 g
Required accuracy and precision......   0.483 g or   0.197 g or   0.0392 g
                                        better.                  better.                  or better
Required readability.................  0.1 g or better........  0.1 g or better........  0.01 g or better
----------------------------------------------------------------------------------------------------------------

Sec.  1060.505  Other procedures.

    (a) Your testing. The procedures in this part apply for all testing 
you do to show compliance with emission standards, with certain 
exceptions listed in this section.
    (b) Our testing. These procedures generally apply for testing that 
we do to determine if your equipment complies with applicable emission 
standards. We may perform other testing as allowed by the Act.
    (c) Exceptions. We may allow or require you to use procedures other 
than those specified in this part in the following cases:
    (1) You may request to use special procedures if your equipment 
cannot be tested using the specified procedures. We will approve your 
request if we determine that it would produce emission measurements 
that represent in-use operation and we determine that it can be used to 
show compliance with the requirements of the standard-setting part.
    (2) You may ask to use emission data collected using other 
procedures, such as those of the California Air Resources Board or the 
International Organization

[[Page 28360]]

for Standardization. We will approve this only if you show us that 
using these other procedures does not affect your ability to show 
compliance with the applicable emission standards. This generally 
requires emission levels to be far enough below the applicable emission 
standards so any test differences do not affect your ability to state 
unconditionally that your equipment will meet all applicable emission 
standards when tested using the specified test procedures.
    (3) You may request to use alternate procedures that are equivalent 
to allowed procedures or are more accurate or more precise than allowed 
procedures. See 40 CFR 1065.12 for a description of the information 
that is generally required to show that an alternate test procedure is 
equivalent.
    (4) The test procedures are specified for gasoline-fueled 
equipment. If your equipment will use another volatile liquid fuel 
instead of gasoline, use a test fuel that is representative of the fuel 
that will be used with the equipment in use. You may ask us to approve 
other changes to the test procedures to reflect the effects of using a 
fuel other than gasoline.
    (d) Approval. If we require you to request approval to use other 
procedures under paragraph (c) of this section, you may not use them 
until we approve your request.


Sec.  1060.510  How do I test EPA Low Emission Fuel Lines for 
permeation emissions?

    For low-emission fuel lines (EPA LEFL), measure emissions according 
to SAE standard procedure number J2260, which is incorporated by 
reference in Sec.  1054.810.


Sec.  1060.515  How do I test EPA Nonroad Fuel Lines and EPA Cold 
Weather Fuel Lines for permeation emissions?

    Measure emission as follows for EPA NRFL and EPA CWFL fuel lines:
    (a) Prior to permeation testing, precondition the fuel line by 
filling it with the fuel specified in paragraph (c) of this section, 
sealing the openings, and soaking it for 4 to 8 weeks at 23  5 [deg]C. Use Fuel CE10, which is Fuel C as specified in ASTM D 
471-06 (incorporated by reference in Sec.  1054.810) blended with 10 
percent ethanol by volume.
    (b) Drain the fuel line and refill it immediately with the fuel 
specified in paragraph (a) of this section. Be careful not to spill any 
fuel.
    (c) Measure fuel line permeation emissions using the equipment and 
procedures for weight-loss testing specified in SAE J30 or SAE J1527 
(incorporated by reference in Sec.  1054.810). Start the measurement 
procedure within 8 hours after draining and refilling the fuel line.


Sec.  1060.520  How do I test fuel tanks for permeation emissions?

    Measure permeation emissions by weighing a sealed fuel tank before 
and after a temperature-controlled soak.
    (a) Preconditioning durability testing. Take the following steps 
before an emission test, in any order, unless we determine that 
omission of one or more of these durability tests will not affect the 
emissions from your fuel tank:
    (1) Pressure cycling. Perform a pressure test by sealing the tank 
and cycling it between +13.8 and -1.7 kPa (+2.0 and -0.5 psig) for 
10,000 cycles at a rate of 60 seconds per cycle. The purpose of this 
test is to represent environmental wall stresses caused by pressure 
changes and other factors (such as vibration or thermal expansion). If 
your tank cannot be tested using the pressure cycles specified by this 
paragraph (a)(1), you may ask to use special test procedures under 
Sec.  1060.505.
    (2) UV exposure. Perform a sunlight-exposure test by exposing the 
tank to an ultraviolet light of at least 24 W/m\2\ (0.40 W-hr/m\2\/min) 
on the tank surface for at least 450 hours. Alternatively, the fuel 
tank may be exposed to direct natural sunlight for an equivalent period 
of time, as long as you ensure that the tank is exposed to at least 450 
daylight hours.
    (3) Slosh testing. Perform a slosh test by filling the tank to 40 
percent of its capacity with the fuel specified in paragraph (e) of 
this section and rocking it at a rate of 15 cycles per minute until you 
reach one million total cycles. Use an angle deviation of +15[deg] to -
15[deg] from level.
    (b) Preconditioning fuel soak. Take the following steps before an 
emission test:
    (1) Fill the tank with the fuel specified in paragraph (e) of this 
section, seal it, and allow it to soak at 28  5 [deg]C for 
at least 20 weeks. Alternatively, the tank may be soaked for at least 
10 weeks at 43  5 [deg]C. You may count the time of the 
preconditioning steps in paragraph (a) of this section as part of the 
preconditioning fuel soak, as long as the ambient temperature remains 
within the specified temperature range and the fuel tank is at least 40 
percent full; you may add or replace fuel as needed to conduct the 
specified durability procedures.
    (2) Determine the fuel tank's internal surface area in square-
meters, accurate to at least three significant figures. You may use 
less accurate estimates of the surface area if you make sure not to 
overestimate the surface area.
    (3) Empty the fuel tank and immediately refill it with the 
specified test fuel to its nominal capacity. Be careful not to spill 
any fuel.
    (4) Allow the tank and its contents to equilibrate to the 
temperatures specified in paragraph (d)(6) of this section.
    (5) Seal the fuel tank within eight hours after refueling as 
follows:
    (i) You may seal the fuel inlet with a nonpermeable covering if the 
fuel tank is designed to have a separate filler neck between the fuel 
cap and the tank, and the filler neck is at least 12 inches long and 
has an opening at least 6 inches above the top of the fuel tank.
    (ii) For filler necks not meeting the specifications described in 
paragraph (b)(5)(i) of this section, take one of the following 
approaches:
    (A) Use a production fuel cap expected to have permeation emissions 
at least as high as the highest-emitting fuel cap that you expect to be 
used with fuel tanks from the emission family. It would generally be 
appropriate to consider an HDPE fuel cap with a nitrile rubber seal to 
be worst-case.
    (B) You may seal the fuel inlet with a nonpermeable covering if you 
separately measure the permeation from a worst-case fuel cap as 
described in Sec.  1060.521.
    (iii) Openings that are not normally sealed on the fuel tank (such 
as hose-connection fittings and vents in fuel caps) may be sealed using 
nonpermeable fittings such as metal or fluoropolymer plugs.
    (iv) Openings for petcocks that are designed for draining fuel may 
be sealed using nonpermeable fittings such as metal or fluoropolymer 
plugs.
    (c) Reference tank. A reference tank is required to correct for 
buoyancy effects that may occur during testing. Prepare the reference 
tank as follows:
    (1) Obtain a second tank that is identical to the test tank. You 
may not use a tank that has previously contained fuel or any other 
contents that might affect its mass stability.
    (2) Fill the reference tank with enough dry sand (or other inert 
material) so the mass of the reference tank is approximately the same 
as the test tank when filled with fuel. Use good engineering judgment 
to determine how similar the mass of the reference tank needs to be to 
the mass of the test tank, considering the performance characteristics 
of your balance.
    (3) Ensure that the sand (or other inert material) is dry. This may 
require heating the tank or applying a vacuum to it.

[[Page 28361]]

    (4) Seal the tank.
    (d) Permeation test run. To run the test, take the following steps 
after preconditioning:
    (1) Weigh the sealed test tank and record the weight. Place the 
reference tank on the balance and tare it so it reads zero. Place the 
sealed test tank on the balance and record the difference between the 
test tank and the reference tank. This value is Minitial. 
Take this measurement within 8 hours of filling the test tank with fuel 
as specified in paragraph (b)(3) of this section.
    (2) Carefully place the tank within a ventilated, temperature-
controlled room or enclosure. Do not spill or add any fuel.
    (3) Close the room or enclosure and record the time.
    (4) Ensure that the measured temperature in the room or enclosure 
stays within the temperatures specified in paragraph (d)(6) of this 
section.
    (5) Leave the tank in the room or enclosure for 14 days.
    (6) Hold the temperature of the room or enclosure at 28  2 [deg]C; measure and record the temperature at least daily. You 
may alternatively hold the temperature of the room or enclosure at 40 
 2 [deg]C to demonstrate compliance with the alternative 
standards specified in Sec.  1060.103(b).
    (7) At the end of the soak period, retare the balance using the 
reference tank and weigh the sealed test tank. Record the difference in 
mass between the reference tank and the test tank. This value is 
Mfinal.
    (8) Subtract Mfinal from Minitial; divide the 
difference by the internal surface area of the fuel tank. Divide this 
g/m\2\ value by the number of test days (using at least three 
significant figures) to calculate the emission rate in g/m\2\/day. 
Example: If a tank with an internal surface area of 0.720 m\2\ weighed 
1.31 grams less than the reference tank at the beginning of the test 
and weighed 9.86 grams less than the reference tank after soaking for 
14.03 days, the emission rate would be--

((-1.31 g) - (-9.82 g)) / 0.72 m\2\ / 14.03 days = 0.842 g/m\2\/day.

    (9) Round your result to the same number of decimal places as the 
emission standard.
    (10) In cases where consideration of permeation rates, using good 
engineering judgment, leads you to conclude that soaking for 14 days is 
not long enough to measure weight change with enough significant 
figures, you may soak for 14 days longer. In this case, repeat the 
steps in paragraphs (b)(8) and (9) of this section to determine the 
weight change for the full 28 days.
    (e) Fuel specifications. Use gasoline blended with 10 percent 
ethanol by volume as specified in Sec.  1060.501. As an alternative, 
you may use Fuel CE10, which is Fuel C as specified in ASTM D 471-06 
(incorporated by reference in Sec.  1060.810) blended with 10 percent 
ethanol by volume.


Sec.  1060.521  How do I test fuel caps for permeation emissions?

    If you measure a fuel tank's permeation emissions with a 
nonpermeable covering in place of the fuel cap as described in Sec.  
1060.520(b)(5)(ii), you must separately measure permeation emissions 
from a fuel cap. You may show that your fuel tank and fuel cap meet 
emission standards by certifying them separately or by combining the 
separate measurements into a single emission rate based on the relative 
areas of the fuel tank and fuel cap. Measure fuel cap's permeation 
emissions as follows:
    (a) Select a fuel cap expected to have permeation emissions at 
least as high as the highest-emitting fuel cap that you expect to be 
used with fuel tanks from the emission family. Include a gasket that 
represents production models. If the fuel cap includes vent paths, seal 
these vents as follows:
    (1) If the vent path is through grooves in the gasket, you may use 
another gasket with no vent grooves if it is otherwise the same as a 
production gasket.
    (2) If the vent path is through the cap, seal any vents for 
testing.
    (b) Attach the fuel cap to a fuel tank with a capacity of at least 
one liter made of metal or some other impermeable material.
    (c) Use the procedures specified in Sec.  1060.520 to measure 
permeation emissions. Calculate emission rates using the smallest 
inside cross sectional area of the opening on which the cap is mounted 
as the fuel cap's surface area.


Sec.  1060.525  How do I test fuel systems for diurnal emissions?

    Use the procedures of this section to determine whether your fuel 
tanks meet the diurnal emission standards in Sec.  1060.105.
    (a) Except as specified in paragraph (c) of this section, use the 
following procedure to measure diurnal emissions:
    (1) Diurnal measurements are based on a representative temperature 
cycle. For marine fuel tanks, the temperature cycle specifies fuel 
temperatures rather than ambient temperatures. The applicable 
temperature cycle is indicated in the following table:

                     Table 1 to Sec.   1060.525--Diurnal Temperature Profiles for Fuel Tanks
----------------------------------------------------------------------------------------------------------------
                                                                                                       Fuel
                                                                                   General fuel     temperature
                                                                      Ambient       temperature     profile for
                                                                    temperature     profile for     marine fuel
                          Time  (hours)                             profile for      installed         tanks
                                                                    land-based     marine  fuel    installed in
                                                                    fuel tanks         tanks      nontrailerable
                                                                     ([deg]C)        ([deg]C)          boats
                                                                                                     ([deg]C)
----------------------------------------------------------------------------------------------------------------
0...............................................................            22.2            25.6            27.6
1...............................................................            22.5            25.7            27.6
2...............................................................            24.2            26.5            27.9
3...............................................................            26.8            27.9            28.5
4...............................................................            29.6            29.2            29.0
5...............................................................            31.9            30.4            29.5
6...............................................................            33.9            31.4            29.9
7...............................................................            35.1            32.0            30.1
8...............................................................            35.4            32.2            30.2
9...............................................................            35.6            32.2            30.2
10..............................................................            35.3            32.1            30.2
11..............................................................            34.5            31.7            30.0
12..............................................................            33.2            31.0            29.7
13..............................................................            31.4            30.2            29.4

[[Page 28362]]

 
14..............................................................            29.7            29.3            29.1
15..............................................................            28.2            28.6            28.8
16..............................................................            27.2            28.0            28.5
17..............................................................            26.1            27.5            28.3
18..............................................................            25.1            27.0            28.1
19..............................................................            24.3            26.6            28.0
20..............................................................            23.7            26.3            27.9
21..............................................................            23.3            26.1            27.8
22..............................................................            22.9            25.9            27.7
23..............................................................            22.6            25.7            27.6
24..............................................................            22.2            25.6            27.6
----------------------------------------------------------------------------------------------------------------

    (2) Fill the fuel tank to 40 percent of nominal capacity with the 
gasoline specified in 40 CFR 1065.710 for general testing.
    (3) Install a vapor line from any vent ports that would not be 
sealed in the final in-use configuration. Use a length of vapor line 
representing the shortest length that would be expected with the range 
of in-use installations for the emission family.
    (4) Stabilize the fuel tank at the starting temperature of the 
applicable temperature profile from paragraph (a)(1) of this section.
    (5) If the fuel tank is equipped with a carbon canister, load the 
canister with butane or gasoline vapors to its carbon working capacity 
and attach it to the fuel tank in a way that represents a typical in-
use configuration.
    (6) Place the fuel tank with the carbon canister and vent line in a 
SHED meeting the specifications of 40 CFR 86.107-96(a)(1). Follow the 
applicable temperature trace from paragraph (a)(1) of this section for 
one 24-hour period. You need not measure emissions during this 
stabilization step.
    (7) As soon as possible after the stabilization in paragraph (a)(6) 
of this section, purge the SHED and follow the applicable temperature 
trace from paragraph (a)(1) of this section for three consecutive 24-
hour periods. Start measuring emissions when you start the temperature 
profile. The end of the first, second, and third emission sampling 
periods must occur 1440  6, 2880  6, and 4320 
 6 minutes, respectively, after starting the measurement 
procedure. Use the highest of the three emission levels to determine 
whether your fuel tank meets the diurnal emission standard.
    (b) You may subtract your fuel tank's permeation emissions from the 
measured diurnal emissions if the fuel tank is preconditioned with 
diurnal test fuel as described in Sec.  1060.520(b) or if you use good 
engineering judgment to otherwise establish that the fuel tank has 
stabilized permeation emissions. Measure permeation emissions for 
subtraction as specified in Sec.  1060.520(c) and (d) before measuring 
diurnal emissions, except that the permeation measurement must be done 
with diurnal test fuel. Use appropriate units and corrections to 
subtract the permeation emissions from the fuel tank during the diurnal 
emission test. You may not subtract a greater mass of emissions under 
this paragraph (b) than the fuel tank would emit based on meeting the 
applicable emission standard for permeation.
    (c) For emission control technologies that do not use carbon 
canisters or other emission-sorbing materials, you must follow the 
procedures specified in paragraph (a) of this section, but you may omit 
the stabilization step in paragraph (a)(6) of this section and the last 
two 24-hour periods of emission measurements in paragraph (a)(7) of 
this section.


Sec.  1060.530  How do I test fuel systems for diffusion emissions?

    Use the procedures of this section to determine whether your fuel 
tanks meet the diffusion emission standards in Sec.  1060.105.
    (a) Use the following procedure to measure diffusion emissions:
    (1) Diffusion measurements are based on a 6-hour soak under 
nominally isothermal conditions.
    (2) Fill the fuel tank to 90 percent of nominal capacity with the 
gasoline specified for general testing in 40 CFR 1065.710.
    (3) Install fuel caps, vent ports, and vent lines representing in-
use configurations.
    (4) Stabilize the fuel tank at 28  2 [deg]C. You need 
not measure emissions during this stabilization step.
    (5) If the fuel system is equipped with a carbon canister, load the 
canister with butane or gasoline vapors to its carbon working capacity 
and attach it to the fuel tank in a way that represents a typical in-
use configuration.
    (6) Place the fuel tank with the carbon canister and vent line in a 
sealed enclosure such as a SHED meeting the specifications of 40 CFR 
86.107-96(a)(1). (Note: Make sure the enclosure is large enough that 
the mixture of fuel vapor and air within the enclosure will remain 
safely below the applicable lower flammability limit.)
    (7) Hold the temperature of the enclosure at 28  2 
[deg]C throughout the measurement procedure.
    (8) Immediately following the stabilization period, purge the SHED. 
Reseal the SHED and start measuring emissions. Collect emission 
measurements for 6 hours. Use the measured results to calculate an 
emission rate over a 24-hour period.
    (b) You may subtract your fuel tank's permeation emissions from the 
measured diffusion emissions if the fuel tank is preconditioned with 
diffusion test fuel as described in Sec.  1060.520(b) or if you use 
good engineering judgment to otherwise establish that the fuel tank has 
stabilized permeation emissions. Measure permeation emissions for 
subtraction as specified in Sec.  1060.520(c) and (d) before measuring 
diffusion emissions, except that the permeation measurement must be 
done with diffusion test fuel. Use appropriate units and corrections to 
subtract the permeation emissions from the fuel tank

[[Page 28363]]

during the diffusion emission test. You may not subtract a greater mass 
of emissions under this paragraph (b) than the fuel tank would emit 
based on meeting the applicable emission standard for permeation.
    (c) You may use the procedures of this section to certify fuel caps 
to diffusion emission standards. To do this, install the fuel cap on a 
fuel tank that has no other vent path.


Sec.  1060.535  How do I measure fuel temperatures to comply with 
running loss requirements?

    Measure fuel temperature on representative equipment models as 
needed to show that all affected equipment models will not exceed the 
temperature rise specified in Sec.  1060.104(b)(3).
    (a) Measure fuel temperatures as follows:
    (1) Select a piece of equipment representing the equipment 
configuration to be produced.
    (2) Position a thermocouple in the fuel tank so it remains wetted 
when the fuel tank is 20 percent full, without touching the inside 
walls or bottom of the fuel tank.
    (3) Except as specified in paragraph (b) of this section, you must 
conduct this testing outdoors without shelter under the following 
conditions:
    (i) Ambient temperature must start between 20 and 30 [deg]C and be 
steady or increasing during the test. Measure shaded ambient 
temperatures near the test site.
    (ii) Average wind speed must be below 15 miles per hour.
    (iii) No precipitation.
    (iv) Maximum cloud cover of 25 percent as reported by the nearest 
local airport making hourly meteorological observations.
    (4) Fill the fuel tank with a commercially available fuel. Testing 
may start when fuel temperatures in the tank are within 2 [deg]C of the 
ambient temperature without exceeding the ambient temperature.
    (5) Operate the equipment for one hour or until it uses 80 percent 
of the total fuel tank capacity, whichever occurs first, over a normal 
in-use duty cycle.
    (6) Show that the difference between the maximum and minimum 
measured fuel temperature during the operation specified in paragraph 
(a)(5) of this section does not exceed 8 [deg]C at any time during the 
operation.
    (b) You may ask us to approve a plan to measure fuel temperatures 
indoors. Your plan must establish a measurement procedure that would 
simulate outdoor conditions and consider engine operation, solar load, 
temperature, and wind speed such that the measured values would be 
expected to be the same as if they were measured using the procedures 
in paragraph (a) of this section.
    (c) If a piece of equipment has more than one fuel tank, you may 
measure fuel temperatures in each fuel tank at the same time, but each 
fuel tank must control temperatures as specified in Sec.  
1060.104(b)(3).
    (d) Keep records of all the measurements you make under this 
section. Also keep records describing the engine and equipment 
operation used for the measurements, including information related to 
factors that would affect engine load. For example, if the operation 
involves cutting grass, document the grass height and density and the 
mower's cutting height. Keep these records for at least eight years 
after the end of the last model year for which the test results apply.

Subpart G--Special Compliance Provisions


Sec.  1060.601  How do the prohibitions of 40 CFR 1068.101 apply with 
respect to the requirements of this part?

    (a) As described in Sec.  1060.1, certain fuel tanks and fuel lines 
that are used with or intended to be used with new nonroad engines are 
subject to evaporative emission standards under this part 1060. This 
includes portable marine fuel tanks and fuel lines and other fuel-
system components associated with portable marine fuel tanks. Except as 
specified in paragraph (f) of this section, these fuel-system 
components must therefore be covered by a valid certificate of 
conformity before being introduced into U.S. commerce to avoid 
violating the prohibition of 40 CFR 1068.101(a). To the extent we allow 
it under the exhaust standard-setting part, fuel-system components may 
be certified with a family emission limit higher than the emission 
standard. The provisions of this paragraph (a) do not apply to fuel 
caps.
    (b) New replacement fuel tanks and fuel lines are subject to 
evaporative emission standards under this part 1060 if they are 
intended to be used with nonroad engines that are regulated by this 
part 1060, as follows:
    (1) Applicability of standards between January 1, 2012 and December 
31, 2019. Manufacturers, distributors, retailers, and importers are 
obligated to clearly state on the packaging for all replacement 
components that could reasonably be used with nonroad engines how such 
components may be used consistent with the prohibition in paragraph (a) 
of this section. It is presumed that such components are intended for 
use with nonroad engines, unless the components, or the packaging for 
such components, clearly identify appropriate restrictions. This 
requirement does not apply for components that are clearly not intended 
for use with fuels.
    (2) Applicability of standards after January 1, 2020. Starting 
January 1, 2020 it is presumed that replacement components will be used 
with nonroad engines subject to the standards of this part if they can 
reasonably be used with such engines. Manufacturers, distributors, 
retailers, and importers are therefore obligated to take all reasonable 
steps possible to ensure that any uncertified components are not used 
to replace certified components. This would require labeling the 
components and may also require restricting the sales and requiring the 
ultimate purchaser to agree to not use the components inappropriately. 
This requirement does not apply for components that are clearly not 
intended for use with fuels.
    (3) Applicability of the tampering prohibition. If a fuel tank or 
fuel line needing replacement was certified to meet the emission 
standards in this part with a family emission limit below the otherwise 
applicable standard, the new replacement fuel tank or fuel line must be 
certified with the same or lower family emission limit to avoid 
violating the tampering prohibition in 40 CFR 1068.101(b)(1). Equipment 
owners may request an exemption from this requirement by demonstrating 
that no such fuel tanks or fuel lines are available. We may issue 
guidance to address such exemptions more broadly if appropriate.
    (c) Small SI engines must have a valid certificate of conformity 
with respect to running loss emission standards before being introduced 
into U.S. commerce to avoid violating the prohibition of 40 CFR 
1068.101(a). The running loss emission standard cannot be met by 
component manufacturers. The emission standard and the responsibility 
for certification applies to engine manufacturers or equipment 
manufacturers as follows:
    (1) Engines with complete fuel systems are subject to the running 
loss emission standard.
    (2) If Small SI engines are sold without complete fuel systems, the 
associated equipment is subject to the running loss emission standard.
    (d) Manufacturers that generate or use emission credits related to 
Marine SI engines in 40 CFR part 1045 or Small SI

[[Page 28364]]

engines in 40 CFR part 1054 are subject to the emission standards for 
which they are generating or using emission credits. These engines or 
equipment must therefore be covered by a valid certificate of 
conformity showing compliance with emission-credit provisions before 
being introduced into U.S. commerce to avoid violating the prohibition 
of 40 CFR 1068.101(a).
    (e) Where there is no valid certificate of conformity for any given 
evaporative emission standard for new equipment, the manufacturers of 
the engine, equipment and fuel-system components are each liable for 
violations of the prohibited acts.
    (f) If you manufacture fuel lines or fuel tanks that are subject to 
the requirements of this part as described in paragraph (a) of this 
section, the prohibition in 40 CFR 1068.101(a) does not apply to your 
products if you ship them directly to an equipment manufacturer or 
another manufacturer with which you have a contractual agreement that 
obligates the other manufacturer to certify those fuel lines or fuel 
tanks.


Sec.  1060.605  Exemptions from evaporative emission standards.

    (a) Except as specified in the exhaust standard-setting part and 
paragraph (b) of this section, equipment using an engine that is exempt 
from emission standards under the provisions in 40 CFR part 1068, 
subpart C or D, is also exempt from the requirements of this part 1060. 
For example, engines or equipment exempted from exhaust emission 
standards for purposes of national security do not need to meet 
evaporative emission standards. Also, any engine that is exempt from 
emission standards because it will be used solely for competition does 
not need to meet evaporative emission standards.
    (b) Engines produced under the replacement-engine exemption in 40 
CFR 1068.240 must use fuel-system components that meet the evaporative 
emission standards based on the model year of the engine being replaced 
subject to the provisions of 40 CFR 1068.265. If no evaporative 
emission standards applied at that time, no requirements related to 
evaporative emissions apply to the new engine. Installing a replacement 
engine does not change the applicability of requirements for the 
equipment into which the replacement engine is installed.
    (c) Engines or equipment that are temporarily exempt from EPA 
exhaust emission standards are also exempt from the requirements of 
this part 1060 for the same period as the exhaust exemption.
    (d) For equipment powered by more than one engine, all the engines 
installed in the equipment must be exempt from all applicable EPA 
exhaust emission standards for the equipment to also be exempt under 
paragraph (a) or (b) of this section.
    (e) In unusual circumstances, we may exempt equipment from the 
requirements of this part 1060 even if the equipment is powered by one 
or more engines that are subject to EPA exhaust emission standards. See 
40 CFR part 1068. Such exemptions will be limited to:
    (1) Testing. See 40 CFR 1068.210.
    (2) National security. See 40 CFR 1068.225.
    (3) Economic hardship. See 40 CFR 1068.245 and 1068.250.
    (f) Evaporative emission standards generally apply based on the 
model year of the equipment, which is determined by the equipment's 
date of final assembly. However, in the first year of new emission 
standards, equipment manufacturers may apply evaporative emission 
standards based on the model year of the engine as shown on the 
engine's emission control information label. For example, for fuel line 
permeation standards starting in 2012, equipment manufacturers may 
order a batch of 2011 model year engines for installation in 2012 model 
year equipment, subject to the anti-stockpiling provisions of 40 CFR 
1068.105(a). The equipment with the 2011 model year engines would not 
need to meet fuel line permeation standards, as long as the equipment 
is fully assembled by December 31, 2012.


Sec.  1060.640  What special provisions apply to branded equipment?

    The following provisions apply if you identify the name and 
trademark of another company instead of your own on your emission 
control information label for equipment, as provided by Sec.  1060.135:
    (a) You must have a contractual agreement with the other company 
that obligates that company to take the following steps:
    (1) Meet the emission warranty requirements that apply under Sec.  
1060.120. This may involve a separate agreement involving reimbursement 
of warranty-related expenses.
    (2) Report all warranty-related information to the certificate 
holder.
    (b) In your application for certification, identify the company 
whose trademark you will use and describe the arrangements you have 
made to meet your requirements under this section.
    (c) You remain responsible for meeting all the requirements of this 
chapter, including warranty and defect-reporting provisions.

Subpart H--Averaging, Banking, and Trading Provisions


Sec.  1060.701  Applicability.

    (a) You are allowed to comply with the emission standards in this 
part with emission credits only if the exhaust standard-setting part 
explicitly allows it for evaporative emissions.
    (b) The following CFR parts allow some use of emission credits:
    (1) 40 CFR part 1045 for marine vessels.
    (2) 40 CFR part 1051 for recreational vehicles.
    (3) 40 CFR part 1054 for Small SI equipment.
    (c) As specified in 40 CFR part 1048, there is no calculation of 
emission credits for Large SI equipment.


Sec.  1060.705  How do I certify components to an emission level other 
than the standard under this part or use such components in my 
equipment?

    As specified in this section, a component or system may be 
certified to a family emission limit (FEL) instead of the otherwise 
applicable emission standard.
    (a) Requirements for certifying component manufacturers. See 
subpart C of this part for instructions regarding the general 
requirements for certifying components.
    (1) When you submit your application for certification, indicate 
the FEL to which your components will be certified. This FEL will serve 
as the applicable standard for your component and the equipment that 
uses the component. For example, when the regulations of this part use 
the phrase ``demonstrate compliance with the applicable emission 
standard'' it will mean ``demonstrate compliance with the FEL'' for 
your component.
    (2) You may not change the FEL for an engine family. To specify a 
different FEL for your components, you must send a new application for 
certification for a new emission family.
    (3) Unless your FEL is below all emission standards that could 
potentially apply, you must ensure that all equipment manufacturers 
that will use your component are aware of the limitations regarding the 
conditions under which they may use your component.
    (4) It is your responsibility to read the relevant instructions in 
the standard-setting parts identified in Sec.  1060.15.
    (b) Requirements for equipment manufacturers. See subpart C of this

[[Page 28365]]

part for instructions regarding your ability to rely on the component 
manufacturer's certificate.
    (1) The FEL of the component will serve as the applicable standard 
for your equipment.
    (2) If the FEL is above the emission standard you must ensure that 
the exhaust standard-setting part allows you to use emission credits to 
comply with emission standards and that you will have an adequate 
source of emission credits. You must certify your equipment as 
specified in Sec.  1060.201 and the rest of subpart C of this part.

Subpart I--Definitions and Other Reference Information


Sec.  1060.801  What definitions apply to this part?

    The following definitions apply to this part. The definitions apply 
to all subparts unless we note otherwise. All undefined terms have the 
meaning the Act gives to them. The definitions follow:
    Accuracy and precision means the sum of accuracy and repeatability, 
as defined in 40 CFR 1065.1001. For example, if a measurement device is 
determined to have an accuracy of  1% and a repeatability 
of  2%, then its accuracy and precision would be  3%.
    Act means the Clean Air Act, as amended, 42 U.S.C. 7401-7671q.
    Adjustable parameter means any device, system, or element of design 
that someone can adjust and that, if adjusted, may affect emissions. 
You may ask us to exclude a parameter if you show us that it will not 
be adjusted in use in a way that affects emissions.
    Applicable emission standard or applicable standard means an 
emission standard to which a fuel-system component; or, where a fuel-
system component has been or is being certified another standard or 
FEL, applicable emission standards means the FEL and other standards to 
which the fuel-system component has been or is being certified. This 
definition does not apply to subpart H of this part.
    Butane working capacity means the measured amount of hydrocarbon 
vapor that can be stored on a canister when tested according to ASTM 
D5228-92 (incorporated by reference in Sec.  1060.810). You may 
determine carbon capacity for a given system by multiplying the mass of 
carbon in the system by weight-specific carbon working capacity of a 
specific type of carbon.
    Certification means relating to the process of obtaining a 
certificate of conformity for an emission family that complies with the 
emission standards and requirements in this part.
    Certified emission level means the highest official emission level 
in an emission family.
    Cold-weather equipment includes the following types of handheld 
equipment: chainsaws, cut-off saws, clearing saws, brush cutters with 
engines at or above 40cc, commercial earth and wood drills, and ice 
augers. This includes earth augers if they are also marketed as ice 
augers.
    Configuration means a unique combination of hardware (material, 
geometry, and size) and calibration within an emission family. Units 
within a single configuration differ only with respect to normal 
production variability.
    Designated Compliance Officer means the Manager, Heavy-Duty and 
Nonroad Engine Group (6405-J), U.S. Environmental Protection Agency, 
1200 Pennsylvania Ave., NW., Washington, DC 20460.
    Designated Enforcement Officer means the Director, Air Enforcement 
Division (2242A), U.S. Environmental Protection Agency, 1200 
Pennsylvania Ave., NW., Washington, DC 20460.
    Detachable fuel line means a fuel line or fuel line assembly 
intended to be used with a portable nonroad fuel tank and which is 
connected by special fittings to the fuel tank and/or engine for easy 
disassembly. Fuel lines that require a wrench or other tools to 
disconnect are not considered detachable fuel lines.
    Diffusion emissions means evaporative emissions caused by the 
venting of fuel tank vapors as a result of molecular motion rather than 
fuel heating.
    Diurnal emissions means evaporative emissions that occur as a 
result of venting fuel tank vapors during daily temperature changes 
while the engine is not operating. Diurnal emissions include diffusion 
emissions.
    Effective length-to-diameter ratio means the mean vapor path length 
of a carbon canister divided by the effective diameter of that vapor 
path. The effective diameter is the diameter of a circle with the same 
cross-sectional area as the average cross-sectional area of the carbon 
canister's vapor path.
    Emission control system means any device, system, or element of 
design that controls or reduces the regulated evaporative emissions 
from a piece of nonroad equipment.
    Emission-data unit means a fuel line, fuel tank, fuel system, or 
fuel-system component that is tested for certification. This includes 
components tested by EPA.
    Emission-related maintenance means maintenance that substantially 
affects emissions or is likely to substantially affect emission 
deterioration.
    Emission family has the meaning given in Sec.  1060.230.
    Equipment means vehicles, marine vessels, and other types of 
nonroad equipment that are subject to this part's requirements.
    Evaporative means relating to fuel emissions that result from 
permeation of fuel through the fuel-system materials and from 
ventilation of the fuel system.
    Exhaust standard-setting part means the part in the Code of Federal 
Regulations that contains exhaust emission standards for a particular 
piece of equipment (or the engine in that piece of equipment). For 
example, the exhaust standard-setting part for off-highway motorcycles 
is 40 CFR part 1051. Exhaust standard-setting parts may include 
evaporative emission requirements or describe how the requirements of 
this part 1060 apply.
    Exposed gasket surface area means the surface area of the gasket 
inside the fuel tank that is exposed to fuel or fuel vapor. For the 
purposes of calculating exposed surface area of a gasket, the thickness 
of the gasket and the outside dimension of the opening being sealed are 
used. Gasket overhang into the fuel tank should be ignored for the 
purpose of this calculation.
    Family emission limit (FEL) means an emission level declared by the 
manufacturer to serve in place of an otherwise applicable emission 
standard under an ABT program specified by the exhaust standard-setting 
part. The family emission limit must be expressed to the same number of 
decimal places as the emission standard it replaces. The family 
emission limit serves as the emission standard for the emission family 
with respect to all required testing.
    Fuel line means hoses or tubing designed to contain liquid fuel. 
The exhaust standard-setting part may further specify which types of 
hoses and tubing are subject to the standards of this part.
    Fuel system means all components involved in transporting, 
metering, and mixing the fuel from the fuel tank to the combustion 
chamber(s), including the fuel tank, fuel tank cap, fuel pump, fuel 
filters, fuel lines, carburetor or fuel-injection components, and all 
fuel-system vents. In the case where the fuel tank cap or other 
components (excluding fuel lines) are directly mounted on the fuel 
tank, they are considered to be a part of the fuel tank.
    Fuel CE10 has the meaning given in Sec.  1060.515(a).
    Fuel type means a general category of fuels such as gasoline or 
natural gas. There can be multiple grades within a single fuel type, 
such as premium

[[Page 28366]]

gasoline, regular gasoline, or gasoline with 10 percent ethanol.
    Gasoline means one of the following:
    (1) For in-use fuels, gasoline means fuel that is commonly and 
commercially know as gasoline, including ethanol blends.
    (2) For testing, gasoline has the meaning given in subpart F of 
this part.
    Good engineering judgment means judgments made consistent with 
generally accepted scientific and engineering principles and all 
available relevant information. See 40 CFR 1068.5 for the 
administrative process we use to evaluate good engineering judgment.
    Installed marine fuel tank means any fuel tank designed for 
delivering fuel to a Marine SI engine, excluding portable nonroad fuel 
tanks.
    Large SI means relating to engines that are subject to evaporative 
emission standards in 40 CFR part 1048.
    Low-permeability material means a material with permeation emission 
rates at or below 10 (g-mm)/(m\2\-day) when measured according to SAE 
J2659 (incorporated by reference in Sec.  1060.810), where the test 
temperature is 23 [deg]C, the test fuel is Fuel CE10, and testing 
immediately follows a four-week preconditioning soak with the test 
fuel.
    Manufacture means the physical and engineering process of 
designing, constructing, and assembling an engine, piece of nonroad 
equipment, or fuel-system components subject to the requirements of 
this part.
    Manufacturer has the meaning given in section 216(1) of the Act. In 
general, this term includes:
    (1) Any person who manufactures an engine or piece of nonroad 
equipment for sale in the United States or otherwise introduces a new 
nonroad engine or a piece of new nonroad equipment into U.S. commerce.
    (2) Any person who manufactures a fuel-system component for an 
engine subject to the requirements of this part as described in Sec.  
1060.1(a).
    (3) Importers who import such products into the United States.
    Marine SI means relating to vessels subject to evaporative emission 
standards in 40 CFR part 1045.
    Marine vessel has the meaning given in 40 CFR Sec.  1045.801, which 
generally includes all nonroad equipment used as a means of 
transportation on water.
    Model year means one of the following things:
    (1) For equipment defined as ``new nonroad equipment'' under 
paragraph (1) of the definition of ``new nonroad engine,'' model year 
means one of the following:
    (i) Calendar year.
    (ii) Your annual new model production period if it is different 
than the calendar year. This must include January 1 of the calendar 
year for which the model year is named. It may not begin before January 
2 of the previous calendar year and it must end by December 31 of the 
named calendar year.
    (2) For other equipment defined as ``new nonroad equipment'' under 
paragraph (2) of the definition of ``new nonroad engine,'' model year 
has the meaning given in the exhaust standard-setting part.
    (3) For other equipment defined as ``new nonroad equipment'' under 
paragraph (3) or paragraph (4) of the definition of ``new nonroad 
engine,'' model year means the model year of the engine as defined in 
the exhaust standard-setting part.
    New nonroad equipment means equipment meeting one or more of the 
following criteria:
    (1) Nonroad equipment for which the ultimate purchaser has never 
received the equitable or legal title. The equipment is no longer new 
when the ultimate purchaser receives this title or the product is 
placed into service, whichever comes first.
    (2) Nonroad equipment that is defined as new under the exhaust 
standard-setting part. (Note: equipment that is not defined as new 
under the exhaust standard-setting part may be defined as new under 
this definition of ``new nonroad equipment.'')
    (3) Nonroad equipment with an engine that becomes new (as defined 
in the exhaust standard-setting part) while installed in the equipment. 
The equipment is no longer new when it is subsequently placed into 
service. This paragraph (3) does not apply if the engine becomes new 
before being installed in the equipment.
    (4) Nonroad equipment not covered by a certificate of conformity 
issued under this part at the time of importation and manufactured 
after the requirements of this part start to apply (see Sec.  1060.1). 
The equipment is no longer new when it is subsequently placed into 
service. Importation of this kind of new nonroad equipment is generally 
prohibited by 40 CFR part 1068.
    Nominal capacity means the a fuel tank's volume as specified by the 
fuel tank manufacturer, using at least two significant figures, based 
on the maximum volume of fuel the tank can hold with standard refueling 
techniques.
    Nonroad engine has the meaning we give in 40 CFR 1068.30. In 
general this means all internal-combustion engines except motor vehicle 
engines, stationary engines, engines used solely for competition, or 
engines used in aircraft. This part does not apply to all nonroad 
engines (see Sec.  1060.1).
    Nonroad equipment means a piece of equipment that is powered by or 
intended to be powered by one or more nonroad engines. Note that Sec.  
1060.601 describes how we treat outboard engines, portable marine fuel 
tanks, and associated fuel-system components as nonroad equipment under 
this part 1060.
    Nontrailerable boat means a vessel 26 feet or more in length.
    Official emission result means the measured emission rate for an 
emission-data unit.
    Placed into service means put into initial use for its intended 
purpose.
    Portable marine fuel tank means a portable nonroad fuel tank that 
is used or intended to be used with a marine vessel.
    Portable nonroad fuel tank means a fuel tank that meets each of the 
following criteria:
    (1) It has design features indicative of use in portable 
applications, such as a carrying handle and fuel line fitting that can 
be readily attached to and detached from a nonroad engine.
    (2) It has a nominal fuel capacity of 12 gallons or less.
    (3) It is designed to supply fuel to an engine while the engine is 
operating.
    Production period means the period in which a certified component 
will be produced under a certificate of conformity.
    Recreational vehicle means vehicles that are subject to evaporative 
emission standards in 40 CFR part 1051. This generally includes engines 
that will be installed in recreational vehicles if the engines are 
certified separately under 40 CFR 1051.20.
    Revoke has the meaning given in 40 CFR 1068.30. If we revoke a 
certificate or an exemption, you must apply for a new certificate or 
exemption before continuing to introduce the affected equipment into 
U.S. commerce.
    Round means to round numbers according to standard procedures as 
specified in 40 CFR 1065.1001.
    Running loss emissions means unburned fuel vapor that escapes from 
the fuel system to the ambient atmosphere while the engine is 
operating, excluding permeation emissions and diurnal emissions. 
Running loss emissions generally result from fuel-temperature increases 
caused by heat released from in-tank fuel pumps, fuel recirculation, or 
proximity to heat sources such as the engine or exhaust components.
    Sealed means lacking openings to the atmosphere that would allow 
liquid or

[[Page 28367]]

vapor to leak out under normal operating pressures or other pressures 
specified in this part. Sealed fuel systems may have openings for 
emission controls or fuel lines needed to route fuel to the engine.
    Small SI means relating to engines that are subject to emission 
standards in 40 CFR part 90 or 1054.
    Structurally integrated nylon fuel tank means a fuel tank having 
all the following characteristics:
    (1) The fuel tank is made of a polyamide material that does not 
contain more than 50 percent by weight of a reinforcing glass fiber or 
mineral filler and does not contain more than 10 percent by weight of 
impact modified polyamides that use rubberized agents such as EPDM 
rubber.
    (2) The fuel tank must be used in a cut-off saw or chainsaw or be 
integrated into a major structural member where, as a single component, 
the fuel tank material is a primary structural/stress member for other 
major components such as the engine, transmission, or cutting 
attachment.
    Subchapter U means 40 CFR parts 1000 through 1299.
    Suspend has the meaning given in 40 CFR 1068.30. If we suspend a 
certificate, you may not introduce into U.S. commerce equipment from 
that emission family unless we reinstate the certificate or approve a 
new one. If we suspend an exemption, you may not introduce into U.S. 
commerce equipment that was previously covered by the exemption unless 
we reinstate the exemption.
    Tare means to use a container or other reference mass to zero a 
balance before weighing a sample. Generally, this means placing the 
container or reference mass on the balance, allowing it to stabilize, 
then zeroing the balance without removing the container or reference 
mass. This allows you to use the balance to determine the difference in 
mass between the sample and the container or reference mass.
    Test unit means a piece of fuel line, a fuel tank, or a fuel system 
in a test sample.
    Test sample means the collection of fuel lines, fuel tanks, or fuel 
systems selected from the population of an emission family for emission 
testing. This may include testing for certification, production-line 
testing, or in-use testing.
    Ultimate purchaser means, with respect to any new nonroad 
equipment, the first person who in good faith purchases such new 
nonroad equipment for purposes other than resale.
    Ultraviolet light means electromagnetic radiation with a wavelength 
between 300 and 400 nanometers.
    United States has the meaning given in 40 CFR 1068.30.
    U.S.-directed production volume means the amount of equipment, 
subject to the requirements of this part, produced by a manufacturer 
for which the manufacturer has a reasonable assurance that sale was or 
will be made to ultimate purchasers in the United States.
    Useful life means the period during which new nonroad equipment is 
required to comply with all applicable emission standards. See Sec.  
1060.101.
    Void has the meaning given in 40 CFR 1068.30. If we void a 
certificate, each piece of equipment introduced into U.S. commerce 
under that emission family for that production period is considered 
noncompliant, and you are liable for each piece of equipment introduced 
into U.S. commerce under the certificate and may face civil or criminal 
penalties or both. This applies equally to each piece of equipment in 
the emission family, including equipment introduced into U.S. commerce 
before we voided the certificate. If we void an exemption, each piece 
of equipment introduced into U.S. commerce under that exemption is 
considered uncertified (or nonconforming), and you are liable for each 
piece of equipment introduced into U.S. commerce under the exemption 
and may face civil or criminal penalties or both. You may not introduce 
into U.S. commerce any additional equipment using the voided exemption.
    Volatile liquid fuel means any fuel other than diesel or biodiesel 
that is a liquid at atmospheric pressure and has a Reid Vapor Pressure 
higher than 2.0 pounds per square inch.
    We (us, our) means the Administrator of the Environmental 
Protection Agency and any authorized representatives.
    Wintertime equipment means equipment using a wintertime engine, as 
defined in 40 CFR 1054.801. Note this definition applies only for Small 
SI equipment.


Sec.  1060.805  What symbols, acronyms, and abbreviations does this 
part use?

    The following symbols, acronyms, and abbreviations apply to this 
part:

[deg] degree.
ASTM American Society for Testing and Materials.
C Celsius.
CFR Code of Federal Regulations.
CWFL Cold-weather fuel line (see Sec.  1060.102).
EPA Environmental Protection Agency.
FEL family emission limit.
g gram.
gal gallon.
hr hour.
in inch.
kPa kilopascal.
kW kilowatt.
L liter.
LEFL Low-emission fuel line (see Sec.  1060.102).
m meter.
min minute.
mm millimeter.
NRFL Nonroad fuel line (see Sec.  1060.102).
psig pounds per square inch of gauge pressure.
SAE Society of Automotive Engineers.
SHED Sealed Housing for Evaporative Determination.
U.S. United States.
U.S.C. United States Code.
W watt.


Sec.  1060.810  What materials does this part reference?

    Documents listed in this section have been incorporated by 
reference into this part. The Director of the Federal Register approved 
the incorporation by reference as prescribed in 5 U.S.C. 552(a) and 1 
CFR part 51. Anyone may inspect copies at the U.S. EPA, Air and 
Radiation Docket and Information Center, 1301 Constitution Ave., NW., 
Room B102, EPA West Building, Washington, DC 20460 or at the National 
Archives and Records Administration (NARA). For information on the 
availability of this material at NARA, call 202-741-6030, or go to: 
http://www.archives.gov/federal_register/code_of_federal_regulations/ibr_locations.html.
    (a) ASTM material. Table 1 of this section lists material from the 
American Society for Testing and Materials that we have incorporated by 
reference. The first column lists the number and name of the material. 
The second column lists the sections of this part where we reference 
it. Anyone may purchase copies of these materials from the American 
Society for Testing and Materials, 100 Barr Harbor Dr., P.O. Box C700, 
West Conshohocken, PA 19428 or www.astm.com. Table 1 follows:

[[Page 28368]]



               Table 1 to Sec.   1060.810.--ASTM Materials
------------------------------------------------------------------------
                                                            Part 1060
               Document number and name                     reference
------------------------------------------------------------------------
ASTM D 471-06, Standard Test Method for Rubber                  1060.515
 Property-Effect of Liquids...........................
ASTM D3802-79 (Reapproved 2005), Standard Test Method           1060.240
 for Ball-Pan Hardness of Activated Carbon............
ASTM D5228-92 (Reapproved 2005), Standard Test Method           1060.240
 for Determination of Butane Working Capacity of
 Activated Carbon.....................................
------------------------------------------------------------------------

    (b) SAE material. Table 2 of this section lists material from the 
Society of Automotive Engineers that we have incorporated by reference. 
The first column lists the number and name of the material. The second 
column lists the sections of this part where we reference it. Anyone 
may purchase copies of these materials from the Society of Automotive 
Engineers, 400 Commonwealth Drive, Warrendale, PA 15096 or www.sae.org. 
Table 2 follows:

               Table 2 to Sec.   1060.810.--SAE Materials
------------------------------------------------------------------------
                                                            Part 1060
               Document number and name                     reference
------------------------------------------------------------------------
SAE J30, Fuel and Oil Hoses, June 1998................          1060.515
SAE J1527, Marine Fuel Hoses, February 1993...........          1060.515
SAE J2260, Nonmetallic Fuel System Tubing with One or           1060.510
 More Layers, November 1996...........................
SAE J2659, Test Method to Measure Fluid Permeation of           1060.801
 Polymeric Materials by Speciation, December 2003.....
------------------------------------------------------------------------

Sec.  1060.815  What provisions apply to confidential information?

    (a) Clearly show what you consider confidential by marking, 
circling, bracketing, stamping, or some other method.
    (b) We will store your confidential information as described in 40 
CFR part 2. Also, we will disclose it only as specified in 40 CFR part 
2. This applies both to any information you send us and to any 
information we collect from inspections, audits, or other site visits.
    (c) If you send us a second copy without the confidential 
information, we will assume it contains nothing confidential whenever 
we need to release information from it.
    (d) If you send us information without claiming it is confidential, 
we may make it available to the public without further notice to you, 
as described in 40 CFR 2.204.


Sec.  1060.820  How do I request a hearing?

    (a) You may request a hearing under certain circumstances, as 
described elsewhere in this part. To do this, you must file a written 
request, including a description of your objection and any supporting 
data, within 30 days after we make a decision.
    (b) For a hearing you request under the provisions of this part, we 
will approve your request if we find that your request raises a 
substantial factual issue.
    (c) If we agree to hold a hearing, we will use the procedures 
specified in 40 CFR part 1068, subpart G.


Sec.  1060.825  What reporting and recordkeeping requirements apply 
under this part?

    Under the Paperwork Reduction Act (44 U.S.C. 3501 et seq.), the 
Office of Management and Budget approves the reporting and 
recordkeeping specified in the applicable regulations. The following 
items illustrate the kind of reporting and recordkeeping we require for 
products regulated under this part:
    (a) We specify the following requirements related to equipment 
certification in this part 1060:
    (1) In 40 CFR 1060.20 we give an overview of principles for 
reporting information.
    (2) In 40 CFR part 1060, subpart C, we identify a wide range of 
information required to certify engines.
    (3) In 40 CFR 1060.301 we require manufacturers to make engines or 
equipment available for our testing if we make such a request.
    (4) In 40 CFR 1060.505 we specify information needs for 
establishing various changes to published test procedures.
    (b) We specify the following requirements related to the general 
compliance provisions in 40 CFR part 1068:
    (1) In 40 CFR 1068.5 we establish a process for evaluating good 
engineering judgment related to testing and certification.
    (2) In 40 CFR 1068.25 we describe general provisions related to 
sending and keeping information.
    (3) In 40 CFR 1068.27 we require manufacturers to make equipment 
available for our testing or inspection if we make such a request.
    (4) In 40 CFR 1068.105 we require equipment manufacturers to keep 
certain records related to duplicate labels from engine manufacturers.
    (5) [Reserved]
    (6) In 40 CFR part 1068, subpart C, we identify several reporting 
and recordkeeping items for making demonstrations and getting approval 
related to various exemptions.
    (7) In 40 CFR part 1068, subpart D, we identify several reporting 
and recordkeeping items for making demonstrations and getting approval 
related to importing equipment.
    (8) In 40 CFR 1068.450 and 1068.455 we specify certain records 
related to testing production-line products in a selective enforcement 
audit.
    (9) In 40 CFR 1068.501 we specify certain records related to 
investigating and reporting emission-related defects.
    (10) In 40 CFR 1068.525 and 1068.530 we specify certain records 
related to recalling nonconforming equipment.

PART 1065--ENGINE-TESTING PROCEDURES

    134. The authority citation for part 1065 continues to read as 
follows:

    Authority: 42 U.S.C. 7401-7671q.

Subpart A--[Amended]

    135. Section 1065.1 is amended by revising paragraph (a) to read as 
follows:


Sec.  1065.1  Applicability.

    (a) This part describes the procedures that apply to testing we 
require for the following engines or for vehicles using the following 
engines:
    (1) [Reserved]

[[Page 28369]]

    (2) Model year 2010 and later heavy-duty highway engines we 
regulate under 40 CFR part 86. For earlier model years, manufacturers 
may use the test procedures in this part or those specified in 40 CFR 
part 86, subpart N, according to Sec.  1065.10.
    (3) Nonroad diesel engines we regulate under 40 CFR part 1039 and 
stationary diesel engines that are certified to the standards in 40 CFR 
part 1039 as specified in 40 CFR part 60, subpart IIII. For earlier 
model years, manufacturers may use the test procedures in this part or 
those specified in 40 CFR part 89 according to Sec.  1065.10.
    (4) [Reserved]
    (5) Marine spark-ignition engines we regulate under 40 CFR part 
1045. For earlier model years, manufacturers may use the test 
procedures in this part or those specified in 40 CFR part 91 according 
to Sec.  1065.10.
    (6) Large nonroad spark-ignition engines we regulate under 40 CFR 
part 1048, and stationary engines that are certified to the standards 
in 40 CFR part 1048 as specified in 40 CFR part 60, subpart JJJJ.
    (7) Vehicles we regulate under 40 CFR part 1051 (such as 
snowmobiles and off-highway motorcycles) based on engine testing. See 
40 CFR part 1051, subpart F, for standards and procedures that are 
based on vehicle testing.
    (8) Small nonroad spark-ignition engines we regulate under 40 CFR 
part 1054 and stationary engines that are certified to the standards in 
40 CFR part 1054 as specified in 40 CFR part 60, subpart JJJJ. For 
earlier model years, manufacturers may use the test procedures in this 
part or those specified in 40 CFR part 90 according to Sec.  1065.10.
* * * * *

PART 1068--GENERAL COMPLIANCE PROVISIONS FOR NONROAD PROGRAMS

    136. The authority citation for part 1068 continues to read as 
follows:

    Authority: 42 U.S.C. 7401-7671q.

Subpart A--[Amended]

    137. Section 1068.1 is revised to read as follows:


Sec.  1068.1  Does this part apply to me?

    (a) The provisions of this part apply to everyone with respect to 
the following engines and to equipment using the following engines 
(including owners, operators, parts manufacturers, and persons 
performing maintenance).
    (1) Locomotives we regulate under 40 CFR part 1039.
    (2) Land-based nonroad compression-ignition engines we regulate 
under 40 CFR part 1039.
    (3) Stationary compression-ignition engines certified to the 
provisions of 40 CFR part 1039, as indicated under 40 CFR part 60, 
subpart IIII.
    (4) Marine diesel engines we regulate under 40 CFR part 1042.
    (5) Marine spark-ignition engines we regulate under 40 CFR part 
1045.
    (6) Large nonroad spark-ignition engines we regulate under 40 CFR 
part 1048.
    (7) Stationary spark-ignition engines certified to the provisions 
of 40 CFR parts 1048 or 1054, as indicated under 40 CFR part 60, 
subpart JJJJ.
    (8) Recreational engines and vehicles we regulate under 40 CFR part 
1051 (such as snowmobiles and off-highway motorcycles).
    (9) Small nonroad spark-ignition engines we regulate under 40 CFR 
part 1054.
    (b) This part does not apply to any of the following engine or 
vehicle categories:
    (1) Light-duty motor vehicles (see 40 CFR part 86).
    (2) Heavy-duty motor vehicles and motor vehicle engines (see 40 CFR 
part 86).
    (3) Aircraft engines (see 40 CFR part 87).
    (4) Land-based nonroad diesel engines we regulate under 40 CFR part 
89.
    (5) Small nonroad spark-ignition engines we regulate under 40 CFR 
part 90.
    (6) Marine spark-ignition engines we regulate under 40 CFR part 91.
    (7) Locomotive engines (see 40 CFR part 92).
    (8) Marine diesel engines (see 40 CFR parts 89 and 94).
    (c) Paragraph (a)(1) of this section identifies the parts of the 
CFR that define emission standards and other requirements for 
particular types of engines and equipment. This part 1068 refers to 
each of these other parts generically as the ``standard-setting part.'' 
For example, 40 CFR part 1051 is always the standard-setting part for 
snowmobiles. Follow the provisions of the standard-setting part if they 
are different than any of the provisions in this part.
    (d)(1) The provisions of Sec. Sec.  1068.30, 1068.310, and 1068.320 
apply for stationary spark-ignition engines built on or after January 
1, 2004, and for stationary compression-ignition engines built on or 
after January 1, 2006.
    (2) The provisions of Sec. Sec.  1068.30 and 1068.235 apply for the 
types of engines/equipment listed in paragraph (a) of this section 
beginning January 1, 2004, if they are used solely for competition.
    138. A new Sec.  1068.2 is added to read as follows:


Sec.  1068.2  How does this part apply for engines and how does it 
apply for equipment?

    (a) See the standard-setting part to determine if engine-based and/
or equipment-based standards apply. (Note: Some equipment is subject to 
engine-based standards for exhaust emission and equipment-based 
standards for evaporative emissions.)
    (b) The provisions of this part apply differently depending on 
whether the engine or equipment is required to be certified.
    (1) This subpart A and subpart B of this part apply to engines and 
equipment, without regard to which is subject to certification 
requirements in the standard-setting part.
    (2) Subparts C, D, and E of this part apply to the engines or to 
the equipment, whichever is subject to certification requirements in 
the standard-setting part.
    (3) Subpart F of this part generally applies to the engines or to 
the equipment, whichever is subject to standards under the standard-
setting part. However, since subpart F of this part addresses in-use 
engines and equipment (in which the engine is installed in the 
equipment), the requirements do not always distinguish between engines 
and equipment.
    (c) For issues related to testing, read the term ``engines/
equipment'' to mean engines for engines subject to engine-based testing 
and equipment for equipment subject to equipment-based testing; 
otherwise, read the term ``engines/equipment'' to mean engines for 
sources subject to engine-based standards and equipment for sources 
subject to equipment-based standards.
    (d) Where we use the term engines (rather than engines/equipment), 
read it to mean engines without regard to whether the source is subject 
to engine-based standards or testing. Where we use the term equipment 
(rather than engines/equipment), read it to mean equipment without 
regard to whether the source is subject to equipment-based standards or 
testing. (Note: The definition of ``equipment'' in Sec.  1068.30 
includes the engine.)
    (e) The terminology convention described in this section is not 
intended to limit our authority or your obligations under the Clean Air 
Act.
    139. Section 1068.5 is amended by revising paragraph (a) to read as 
follows:


Sec.  1068.5  How must manufacturers apply good engineering judgment?

    (a) You must use good engineering judgment for decisions related to 
any

[[Page 28370]]

requirements under this chapter. This includes your applications for 
certification, any testing you do to show that your certification, 
production-line, and in-use engines/equipment comply with requirements 
that apply to them, and how you select, categorize, determine, and 
apply these requirements.
* * * * *
    140. Section 1068.20 is amended by revising paragraphs (a) and (d) 
to read as follows:


Sec.  1068.20  May EPA enter my facilities for inspections?

    (a) We may inspect your testing, manufacturing processes, storage 
facilities (including port facilities for imported engines and 
equipment or other relevant facilities), or records, as authorized by 
the Act, to enforce the provisions of this chapter. Inspectors will 
have authorizing credentials and will limit inspections to reasonable 
times--usually, normal operating hours.
* * * * *
    (d) We may select any facility to do any of the following:
    (1) Inspect and monitor any aspect of engine or equipment 
manufacturing, assembly, storage, or other procedures, and any 
facilities where you do them.
    (2) Inspect and monitor any aspect of engine or equipment test 
procedures or test-related activities, including test engine/equipment 
selection, preparation, service accumulation, emission duty cycles, and 
maintenance and verification of your test equipment's calibration.
    (3) Inspect and copy records or documents related to assembling, 
storing, selecting, and testing an engine or piece of equipment.
    (4) Inspect and photograph any part or aspect of engines or 
equipment and components you use for assembly.
* * * * *
    141. Section 1068.25 is revised to read as follows:


Sec.  1068.25  What information must I give to EPA?

    If you are subject to the requirements of this part, we may require 
you to give us information to evaluate your compliance with any 
regulations that apply, as authorized by the Act. This includes the 
following things:
    (a) You must provide the information we require in this chapter. We 
may require an authorized representative of your company to approve and 
sign any submission of information to us, and to certify that the 
information is accurate and complete.
    (b) You must establish and maintain records, perform tests, make 
reports and provide additional information that we may reasonably 
require under section 208 of the Act (42 U.S.C. 7542). This also 
applies to engines/equipment we exempt from emission standards or 
prohibited acts.
    142. Section 1068.27 is revised to read as follows:


Sec.  1068.27  May EPA conduct testing with my production engines/
equipment?

    If we request it, you must make a reasonable number of production-
line engines or pieces of production-line equipment available for a 
reasonable time so we can test or inspect them for compliance with the 
requirements of this chapter.
    143. Section 1068.30 is revised to read as follows:


Sec.  1068.30  What definitions apply to this part?

    The following definitions apply to this part. The definitions apply 
to all subparts unless we note otherwise. All undefined terms have the 
meaning the Act gives to them. The definitions follow:
    Act means the Clean Air Act, as amended, 42 U.S.C. 7401-7671q. the 
Clean Air Act, as amended, 42 U.S.C. 7401 et seq.
    Aftertreatment means relating to a catalytic converter, particulate 
filter, or any other system, component, or technology mounted 
downstream of the exhaust valve (or exhaust port) whose design function 
is to reduce emissions in the engine exhaust before it is exhausted to 
the environment. Exhaust-gas recirculation (EGR) is not aftertreatment.
    Aircraft means any vehicle capable of sustained air travel above 
treetop heights.
    Certificate holder means a manufacturer (including importers) with 
a currently valid certificate of conformity for at least one family in 
a given model year.
    Date of manufacture means--
    (1) For engines, the later of the following dates:
    (i) The date on which an engine is assembled to the point of being 
able to run. This does not require installation of a cooling system, 
fuel tank, or aftertreament devices.
    (ii) The date on which a partially complete engine that was 
introduced into U.S. commerce with an exemption under Sec.  1068.262 is 
assembled in its final certified configuration.
    (2) For equipment, the date on which assembly of the equipment is 
completed.
    Days means calendar days, including weekends and holidays.
    Defeat device has the meaning given in the standard-setting part.
    Designated Officer means the Manager of the Heavy-Duty and Nonroad 
Engine Group (6405-J), U.S. Environmental Protection Agency, 1200 
Pennsylvania Ave., Washington, DC 20460.
    Engine means a complete or partially complete internal combustion 
engine. The term engine broadly includes any assembly of an engine 
block and at least one other attached component. The term engine does 
not include engine blocks with no attached components, nor does it 
include any assembly of engine components that does not include the 
engine block. This includes complete and partially complete engines as 
follows:
    (1) A complete engine is a fully assembled engine in its final 
configuration.
    (2) A partially complete engine is an engine that is not fully 
assembled or is not in its final configuration. Except where we specify 
otherwise in this part or the standard-setting part, partially complete 
engines are subject to the same standards and requirements as complete 
engines. The following would be considered examples of partially 
complete engines:
    (i) An engine that is missing only an aftertreatment component.
    (ii) An engine that was originally assembled as a motor-vehicle 
engine that will be recalibrated for use as a nonroad engine.
    (iii) An engine that was originally assembled as a land-based 
engine that will be modified for use as a marine propulsion engine.
    (iv) A short block consisting of engine components connected to the 
engine block, but missing the head assembly.
    (v) A loose engine that will be installed in an off-highway 
motorcycle that will be subject to vehicle-based standards.
    Engine-based standard means an emission standard expressed in units 
of grams of pollutant per kilowatt-hour, and which applies to the 
engine. Emission standards are either engine-based or equipment-based.
    Engine-based test means an emission test intended to measure 
emissions in units of grams of pollutant per kilowatt-hour, without 
regard to whether the standard applies to the engine or equipment.
    Engine/equipment and engines/equipment mean either engine(s) or 
equipment. Specifically these terms mean the following:
    (1) Engine(s) when only engine-based standards apply.
    (2) Engine(s) for testing issues when engine-based testing applies.

[[Page 28371]]

    (3) Engine(s) and equipment when both engine-based and equipment-
based standards apply.
    (4) Equipment when only equipment-based standards apply.
    (5) Equipment for testing issues when equipment-based testing 
applies.
    Equipment means one of the following things:
    (1) Any vehicle, vessel, or other type of equipment that is subject 
to the requirements of this part, or that uses an engine that is 
subject to the requirements of this part. An installed engine is part 
of the equipment.
    (2) Fuel-system components that are subject to an equipment-based 
standard under this chapter. Installed fuel-system components are part 
of the engine.
    Equipment-based standard means an emission standard that applies to 
the equipment in which an engine is used or to fuel-system components 
associated with an engine, without regard to how the emissions are 
measured. Where equipment-based standards apply, we require that the 
equipment or fuel-system components be certified, rather than just the 
engine. Emission standards are either engine-based or equipment-based. 
For example, recreational vehicles we regulate under 40 CFR part 1051 
are subject to equipment-based standards, even if emission measurements 
are based on engine operation alone.
    Exempted means relating to engines/equipment that are not required 
to meet otherwise applicable standards. Exempted engines/equipment must 
conform to regulatory conditions specified for an exemption in this 
part 1068 or in the standard-setting part. Exempted engines/equipment 
are deemed to be ``subject to'' the standards of the standard-setting 
part, even though they are not required to comply with the otherwise 
applicable requirements. Engines/equipment exempted with respect to a 
certain tier of standards may be required to comply with an earlier 
tier of standards as a condition of the exemption; for example, engines 
exempted with respect to Tier 3 standards may be required to comply 
with Tier 1 or Tier 2 standards.
    Family means engine family or emission family, as applicable under 
the standard-setting part.
    Final deteriorated test result has the meaning given in the 
standard-setting part. If it is not defined in the standard-setting 
part, it means the emission level that results from applying all 
appropriate adjustments (such as deterioration factors) to the measured 
emission result of the emission-data engine.
    Good engineering judgment means judgments made consistent with 
generally accepted scientific and engineering principles and all 
available relevant information.
    Incomplete engine assembly means an assembly of engine components 
that includes at least the engine block and one other component, but 
lacks certain parts essential for engine operation. An engine block 
with no other assembled components is not an incomplete engine assembly 
under this section. An assembly of engine parts that does not include 
the engine block is also not an incomplete engine assembly.
    Manufacturer has the meaning given in section 216(1) of the Act (42 
U.S.C. 7550(1)). In general, this term includes any person who 
manufactures an engine or piece of equipment for sale in the United 
States or otherwise introduces a new engine or piece of equipment into 
U.S. commerce. This includes importers that import new engines or new 
equipment into the United States for resale. It also includes secondary 
engine manufacturers.
    Model year has the meaning given in the standard-setting part. 
Unless the standard-setting part specifies otherwise, model year for 
individual engines/equipment is based on the date of manufacture or a 
later date determined by the manufacturer. The model year of a new 
engine that is neither certified nor exempt is deemed to be the 
calendar year in which it is sold, offered for sale, imported, or 
delivered or otherwise introduced into commerce in the United States.
    Motor vehicle has the meaning given in 40 CFR 85.1703(a).
    New has the meaning we give it in the standard-setting part.
    Nonroad engine means:
    (1) Except as discussed in paragraph (2) of this definition, a 
nonroad engine is an internal combustion engine that meets any of the 
following criteria:
    (i) It is (or will be) used in or on a piece of equipment that is 
self-propelled or serves a dual purpose by both propelling itself and 
performing another function (such as garden tractors, off-highway 
mobile cranes and bulldozers).
    (ii) It is (or will be) used in or on a piece of equipment that is 
intended to be propelled while performing its function (such as 
lawnmowers and string trimmers).
    (iii) By itself or in or on a piece of equipment, it is portable or 
transportable, meaning designed to be and capable of being carried or 
moved from one location to another. Indicia of transportability 
include, but are not limited to, wheels, skids, carrying handles, 
dolly, trailer, or platform.
    (2) An internal combustion engine is not a nonroad engine if it 
meets any of the following criteria:
    (i) The engine is used to propel a motor vehicle, an aircraft, or 
equipment used solely for competition.
    (ii) The engine is regulated under 40 CFR part 60, (or otherwise 
regulated by a federal New Source Performance Standard promulgated 
under section 111 of the Act (42 U.S.C. 7411)).
    (iii) The engine otherwise included in paragraph (1)(iii) of this 
definition remains or will remain at a location for more than 12 
consecutive months or a shorter period of time for an engine located at 
a seasonal source. A location is any single site at a building, 
structure, facility, or installation. Any engine (or engines) that 
replaces an engine at a location and that is intended to perform the 
same or similar function as the engine replaced will be included in 
calculating the consecutive time period. An engine located at a 
seasonal source is an engine that remains at a seasonal source during 
the full annual operating period of the seasonal source. A seasonal 
source is a stationary source that remains in a single location on a 
permanent basis (i.e., at least two years) and that operates at that 
single location approximately three months (or more) each year. See 
Sec.  1068.31 for provisions that apply if the engine is removed from 
the location.
    Operating hours means:
    (1) For engine and equipment storage areas or facilities, times 
during which people other than custodians and security personnel are at 
work near, and can access, a storage area or facility.
    (2) For other areas or facilities, times during which an assembly 
line operates or any of the following activities occurs:
    (i) Testing, maintenance, or service accumulation.
    (ii) Production or compilation of records.
    (iii) Certification testing.
    (iv) Translation of designs from the test stage to the production 
stage.
    (v) Engine or equipment manufacture or assembly.
    Piece of equipment means any vehicle, vessel, locomotive, aircraft, 
or other type of equipment using engines to which this part applies.
    Placed into service means used for its intended purpose.
    Reasonable technical basis means information that would lead a 
person familiar with engine design and function to reasonably believe a 
conclusion, related to compliance with the requirements of this part. 
For example, it would be reasonable to believe that parts performing 
the same function as the original parts (and to the

[[Page 28372]]

same degree) would control emissions to the same degree as the original 
parts.
    Revoke means to terminate the certificate or an exemption for a 
family. If we revoke a certificate or exemption, you must apply for a 
new certificate or exemption before continuing to introduce the 
affected engines/equipment into U.S. commerce. This does not apply to 
engines/equipment you no longer possess.
    Secondary engine manufacturer means anyone who produces a new 
engine by modifying a complete or partially complete engine that was 
made by a different company. For the purpose of this definition, 
``modifying'' does not include making changes that do not remove an 
engine from its original certified configuration. Secondary engine 
manufacturing includes, for example, converting automotive engines for 
use in industrial applications, or land-based engines for use in marine 
applications. This applies whether it involves a complete or partially 
complete engine and whether the engine was previously certified to 
emission standards or not. Manufacturers controlled by the manufacturer 
of the base engine (or by an entity that also controls the manufacturer 
of the base engine) are not secondary engine manufacturers; rather, 
both entities are considered to be one manufacturer for purposes of 
this part. Equipment manufacturers that substantially modify engines 
are secondary engine manufacturers. Also, equipment manufacturers that 
certify to equipment-based standards using engines produced by another 
company are deemed to be secondary engine manufacturers.
    Small business means either of the following:
    (1) A company that qualifies under the standard-setting part for 
special provisions for small businesses or small-volume manufacturers.
    (2) A company that qualifies as a small business under the 
regulations adopted by the Small Business Administration at 13 CFR 
121.201.
    Standard-setting part means a part in the Code of Federal 
Regulations that defines emission standards for a particular engine 
and/or piece of equipment (see Sec.  1068.1(a)). For example, the 
standard-setting part for marine spark-ignition engines is 40 CFR part 
1045. For provisions related to evaporative emissions, the standard-
setting part may be 40 CFR part 1060, as specified in 40 CFR 1060.1.
    Suspend means to temporarily discontinue the certificate or an 
exemption for a family. If we suspend a certificate, you may not 
introduce into U.S. commerce engines/equipment from that family unless 
we reinstate the certificate or approve a new one. If we suspend an 
exemption, you may not introduce into U.S. commerce engines/equipment 
that were previously covered by the exemption unless we reinstate the 
exemption.
    Ultimate purchaser means the first person who in good faith 
purchases a new nonroad engine or new piece of equipment for purposes 
other than resale.
    United States means the States, the District of Columbia, the 
Commonwealth of Puerto Rico, the Commonwealth of the Northern Mariana 
Islands, Guam, American Samoa, and the U.S. Virgin Islands.
    U.S.-directed production volume means the number of engine/
equipment units, subject to the requirements of this part, produced by 
a manufacturer for which the manufacturer has a reasonable assurance 
that sale was or will be made to ultimate purchasers in the United 
States.
    Void means to invalidate a certificate or an exemption ab initio. 
If we void a certificate, all the engines/equipment introduced into 
U.S. commerce under that family for that model year are considered 
noncompliant, and you are liable for all engines/equipment introduced 
into U.S. commerce under the certificate and may face civil or criminal 
penalties or both. This applies equally to all engines/equipment in the 
family, including engines/equipment introduced into U.S. commerce 
before we voided the certificate. If we void an exemption, all the 
engines/equipment introduced into U.S. commerce under that exemption 
are considered uncertified (or nonconforming), and you are liable for 
engines/equipment introduced into U.S. commerce under the exemption and 
may face civil or criminal penalties or both. You may not introduce 
into U.S. commerce any additional engines/equipment using the voided 
exemption.
    Voluntary emission recall means a repair, adjustment, or 
modification program voluntarily initiated and conducted by a 
manufacturer to remedy any emission-related defect for which engine 
owners have been notified.
    We (us, our) means the Administrator of the Environmental 
Protection Agency and any authorized representatives.
    144. A new Sec.  1068.31 is added to read as follows:


Sec.  1068.31  What provisions apply to nonroad or stationary engines 
that change their status?

    This section specifies the provisions that apply when an engine 
previously used in a nonroad application is subsequently used in an 
application other than a nonroad application, or when an engine 
previous used in a stationary application (i.e., an engine that was not 
used as a nonroad engine and that was not used to propel a motor 
vehicle, an aircraft, or equipment used solely for competition) is 
moved.
    (a) Changing the status of a stationary engine to be a new nonroad 
engine as described in paragraph (b) of this section is a violation of 
Sec.  1068.101(a)(1) unless the engine has been certified to be 
compliant with all requirements of this chapter that apply to new 
nonroad engines of the same type (for example, a compression-ignition 
engine rated at 40 kW) and model year, and is in its certified 
configuration.
    (b) A stationary engine becomes a new nonroad engine if--
    (1) It is used in an application that meets the criteria specified 
in paragraphs (1)(i) or (ii) in the definition of ``nonroad engine'' in 
Sec.  1068.30.
    (2) It meets the criteria specified in paragraph (1)(iii) of the 
definition of ``nonroad engine'' in Sec.  1068.30 and is moved so that 
it fails to meet (or no longer meets) the criteria specified in 
paragraph (2)(iii) in the definition of ``nonroad engine'' in Sec.  
1068.30.
    (c) A stationary engine does not become a new nonroad engine if it 
is moved but continues to meet the criteria specified in paragraph 
(2)(iii) in the definition of ``nonroad engine'' in Sec.  1068.30 in 
its new location. For example, a transportable engine that is used in a 
single specific location for 18 months and is later moved to a second 
specific location where it will remain for at least 12 months is 
considered to be a stationary engine in both locations.
    (d) Changing the status of a nonroad engine to be a new stationary 
engine as described in paragraph (e) of this section is a violation of 
Sec.  1068.101(a)(1) unless the engine complies with all the 
requirements of this chapter for new stationary engines of the same 
type (for example, a compression-ignition engine rated at 40 kW) and 
model year. For a new stationary engine that is required to be 
certified under 40 CFR part 60, the engine must have been certified to 
be compliant with all the requirements that apply to new stationary 
engines of the same type and model year, and must be in its certified 
configuration.
    (e) A nonroad engine ceases to be a nonroad engine and becomes a 
new stationary engine if--
    (1) At any time, it meets the criteria specified in paragraph 
(2)(iii) in the definition of ``nonroad engine'' in Sec.  1068.30. For 
example, a portable generator engine ceases to be a nonroad engine if 
it is used or will be used in

[[Page 28373]]

a single specific location for 12 months or longer. If we determine 
that an engine will be or has been used in a single specific location 
for 12 months or longer, it ceased to be a nonroad engine when it was 
placed in that location.
    (2) It is otherwise regulated by a federal New Source Performance 
Standard promulgated under section 111 of the Act (42 U.S.C. 7411).
    (f) A nonroad engine ceases to be a nonroad engine if it is used to 
propel a motor vehicle, an aircraft, or equipment used solely for 
competition. See 40 CFR part 86 for requirements applicable to motor 
vehicles and motor vehicle engines. See 40 CFR part 87 for requirements 
applicable to aircraft and aircraft engines. See Sec.  1068.235 for 
requirements applicable to equipment used solely for competition.

Subpart B--[Amended]

    145. Section 1068.101 is revised to read as follows:


Sec.  1068.101  What general actions does this regulation prohibit?

    This section specifies actions that are prohibited and the maximum 
civil penalties that we can assess for each violation. The maximum 
penalty values listed in paragraphs (a) and (b) of this section are 
shown for calendar year 2004. As described in paragraph (e) of this 
section, maximum penalty limits for later years are set forth in 40 CFR 
part 19.
    (a) The following prohibitions and requirements apply to 
manufacturers of new engines, manufacturers of equipment containing 
these engines, and manufacturers of new equipment, except as described 
in subparts C and D of this part:
    (1) Introduction into commerce. You may not sell, offer for sale, 
or introduce or deliver into commerce in the United States or import 
into the United States any new engine/equipment after emission 
standards take effect for the engine/equipment, unless it is covered by 
a valid certificate of conformity for its model year and has the 
required label or tag. You also may not take any of the actions listed 
in the previous sentence with respect to any equipment containing an 
engine subject to this part's provisions, unless the engine is covered 
by a valid and appropriate certificate of conformity and has the 
required engine label or tag. We may assess a civil penalty up to 
$32,500 for each engine or piece of equipment in violation.
    (i) For purposes of this paragraph (a)(1), an appropriate 
certificate of conformity is one that applies for the same model year 
as the model year of the equipment (except as allowed by Sec.  
1068.105(a)), covers the appropriate category of engines/equipment 
(such as locomotive or Marine SI), and conforms to all requirements 
specified for equipment in the standard-setting part. Engines/equipment 
are considered not covered by a certificate unless they are in a 
configuration described in the application for certification.
    (ii) The requirements of this paragraph (a)(1) also cover new 
engines you produce to replace an older engine in a piece of equipment, 
unless the engine qualifies for the replacement-engine exemption in 
Sec.  1068.240.
    (iii) For engines used in equipment subject to equipment-based 
standards, you may not sell, offer for sale, or introduce or deliver 
into commerce in the United States or import into the United States any 
new engine, unless it is covered by a valid certificate of conformity 
for its model year and has the required label or tag. See the standard-
setting part for more information about how this prohibition applies.
    (2) Reporting and recordkeeping. This chapter requires you to 
record certain types of information to show that you meet our 
standards. You must comply with these requirements to make and maintain 
required records (including those described in Sec.  1068.501). You may 
not deny us access to your records or the ability to copy your records 
if we have the authority to see or copy them. Also, you must give us 
complete and accurate reports and information without delay, as 
required under this chapter. Failure to comply with the requirements of 
this paragraph is prohibited. We may assess a civil penalty up to 
$32,500 for each day you are in violation. In addition, knowingly 
submitting false information is a violation of 18 U.S.C. 1001, which 
may involve criminal penalties and up to five years imprisonment.
    (3) Testing and access to facilities. You may not keep us from 
entering your facility to test engines/equipment or inspect if we are 
authorized to do so. Also, you must perform the tests we require (or 
have the tests done for you). Failure to perform this testing is 
prohibited. We may assess a civil penalty up to $32,500 for each day 
you are in violation.
    (b) The following prohibitions apply to everyone with respect to 
the engines and equipment to which this part applies:
    (1) Tampering. You may not remove, disable, or render inoperative a 
device or element of design that may affect an engine's or piece of 
equipment's emission levels. This includes, for example, operating an 
engine without a supply of appropriate quality urea if the emissions 
control system relies on urea to reduce NOX emissions or the 
use of incorrect fuel or engine oil that renders the emissions control 
system inoperative. This restriction applies before and after the 
engine or equipment is placed in service. Section 1068.120 describes 
how this applies to rebuilding engines. See the standard-setting part, 
which may include additional provisions regarding actions prohibited by 
this requirement. For a manufacturer or dealer, we may assess a civil 
penalty up to $32,500 for each engine or piece of equipment in 
violation. For anyone else, we may assess a civil penalty up to $2,750 
for each day an engine or piece of equipment is operated in violation. 
This prohibition does not apply in any of the following situations:
    (i) You need to repair the engine/equipment and you restore it to 
proper functioning when the repair is complete.
    (ii) You need to modify the engine/equipment to respond to a 
temporary emergency and you restore it to proper functioning as soon as 
possible.
    (iii) You modify new engines/equipment that another manufacturer 
has already certified to meet emission standards and recertify them 
under your own family. In this case you must tell the original 
manufacturer not to include the modified engines/equipment in the 
original family.
    (2) Defeat devices. You may not knowingly manufacture, sell, offer 
to sell, or install, any part that bypasses, impairs, defeats, or 
disables the control the emissions of any pollutant. See the standard-
setting part, which may include additional provisions regarding actions 
prohibited by this requirement. We may assess a civil penalty up to 
$2,750 for each part in violation.
    (3) Stationary engines. For an engine that is excluded from any 
requirements of this chapter because it is a stationary engine, you may 
not move it or install it in any mobile equipment, except as allowed by 
the provisions of this chapter. You may not circumvent or attempt to 
circumvent the residence-time requirements of paragraph (2)(iii) of the 
nonroad engine definition in Sec.  1068.30. We may assess a civil 
penalty up to $32,500 for each day you are in violation.
    (4) Competition engines/equipment. For uncertified engines/
equipment that are excluded or exempted from any requirements of this 
chapter because they are to be used solely for competition, you may not 
use any of them in a manner that is inconsistent with use solely for 
competition. We may

[[Page 28374]]

assess a civil penalty up to $32,500 for each day you are in violation.
    (5) Importation. You may not import an uncertified engine or piece 
of equipment if it is defined to be new in the standard-setting part 
and it is built after emission standards start to apply in the United 
States. We may assess a civil penalty up to $32,500 for each day you 
are in violation. Note the following:
    (i) The definition of new is broad for imported engines/equipment; 
uncertified engines and equipment (including used engines and 
equipment) are generally considered to be new when imported.
    (ii) Engines/equipment that were originally manufactured before 
applicable EPA standards were in effect are generally not subject to 
emission standards.
    (6) Warranty and recall. You must meet your obligation to honor 
your emission-related warranty under Sec.  1068.115, including any 
commitments you identify in your application for certification. You 
must also fulfill all applicable requirements under subpart F of this 
part related to emission-related defects and recalls. Failure to meet 
these obligations is prohibited. Also, except as specifically provided 
by regulation, you are prohibited from directly or indirectly 
communicating to the ultimate purchaser or a later purchaser that the 
emission-related warranty is valid only if the owner has service 
performed at authorized facilities, or only if the owner uses 
authorized parts, components, or systems. We may assess a civil penalty 
up to $32,500 for each engine or piece of equipment in violation.
    (c) [Reserved]
    (d) Exemptions from these prohibitions are described in subparts C 
and D of this part and in the standard-setting part.
    (e) The standard-setting parts describe more requirements and 
prohibitions that apply to manufacturers (including importers) and 
others under this chapter.
    (f) [Reserved]
    (g) The maximum penalty values listed in paragraphs (a) and (b) of 
this section are shown for calendar year 2004. Maximum penalty limits 
for later years may be adjusted based on the Consumer Price Index. The 
specific regulatory provisions for changing the maximum penalties, 
published in 40 CFR part 19, reference the applicable U.S. Code 
citation on which the prohibited action is based. The following table 
is shown here for informational purposes:

  Table 1 to Sec.   1068.101.--Legal Citation for Specific Prohibitions for Determining Maximum Penalty Amounts
----------------------------------------------------------------------------------------------------------------
   Part 1068 regulatory citation of        General description of        U.S. Code citation for clean air act
          prohibited action                     prohibition                            authority
----------------------------------------------------------------------------------------------------------------
Sec.   1068.101(a)(1)................  Introduction into U.S.         42 U.S.C. 7522(a)(1).
                                        commerce of an uncertified
                                        source.
Sec.   1068.101(a)(2)................  Failure to provide             42 U.S.C. 7522(a)(2).
                                        information.
Sec.   1068.101(a)(3)................  Denying access to facilities.  42 U.S.C. 7522(a)(2).
Sec.   1068.101(b)(1)................  Tampering with emission        42 U.S.C. 7522(a)(3).
                                        controls by a manufacturer
                                        or dealer.
                                       Tampering with emission        ..........................................
                                        controls by someone other
                                        than a manufacturer or
                                        dealer.
Sec.   1068.101(b)(2)................  Sale or use of a defeat        42 U.S.C. 7522(a)(3).
                                        device.
Sec.   1068.101(b)(3)................  Mobile use of a stationary     42 U.S.C. 7522(a)(1).
                                        engine.
Sec.   1068.101(b)(4)................  Noncompetitive use of          42 U.S.C. 7522(a)(1).
                                        uncertified engines/
                                        equipment that is exempted
                                        for competition.
Sec.   1068.101(b)(5)................  Importation of an uncertified  42 U.S.C. 7522(a)(1).
                                        source.
----------------------------------------------------------------------------------------------------------------

    146. Section 1068.105 is revised to read as follows:


Sec.  1068.105  What other provisions apply to me specifically if I 
manufacture equipment needing certified engines?

    This section describes general provisions that apply to equipment 
manufacturers for sources subject to engine-based standards. See the 
standard-setting part for any requirements that apply for certain 
applications.
    (a) Transitioning to new engine-based standards. If new engine-
based emission standards apply in a given model year, your equipment in 
that model year must have engines that are certified to the new 
standards, except that you may continue to use up your normal inventory 
of earlier engines that were built before the date of the new or 
changed standards. For example, if your normal inventory practice is to 
keep on hand a one-month supply of engines based on your upcoming 
production schedules, and a new tier of standard starts to apply for 
the 2015 model year, you may order engines based on your normal 
inventory requirements late in the engine manufacturer's 2014 model 
year and install those engines in your equipment, regardless of the 
date of installation. Also, if your model year starts before the end of 
the calendar year preceding new standards, you may use engines from the 
previous model year for those units you produce before January 1 of the 
year that new standards apply. If emission standards for the engine do 
not change in a given model year, you may continue to install engines 
from the previous model year without restriction. You may not 
circumvent the provisions of Sec.  1068.101(a)(1) by stockpiling 
engines that were built before new or changed standards take effect. 
Note that this allowance does not apply for equipment subject to 
equipment-based standards.
    (b) Installing engines or certified components. You must follow the 
engine manufacturer's emission-related installation instructions. For 
example, you may need to constrain where you place an exhaust 
aftertreatment device or integrate into your equipment models a device 
for sending visual or audible signals to the operator. Similarly, you 
must follow the emission-related installation instructions from the 
manufacturer of a component that has been certified for controlling 
evaporative emissions under 40 CFR part 1060. Not meeting the 
manufacturer's emission-related installation instructions is a 
violation of Sec.  1068.101(b)(1).
    (c) Attaching a duplicate label. If you obscure the engine's label, 
you must do four things to avoid violating Sec.  1068.101(a)(1):
    (1) Send a request for duplicate labels in writing with your 
company's letterhead to the engine manufacturer. Include the following 
information in your request:
    (i) Identify the type of equipment and the specific engine and 
equipment models needing duplicate labels.
    (ii) Identify the family (from the original engine label).

[[Page 28375]]

    (iii) State the reason that you need a duplicate label for each 
equipment model.
    (iv) Identify the number of duplicate labels you will need.
    (2) Permanently attach the duplicate label to your equipment by 
securing it to a part needed for normal operation and not normally 
requiring replacement. Make sure an average person can easily read it.
    (3) Destroy any unused duplicate labels if you find that you will 
not need them.
    (4) Keep the following records for at least eight years after the 
end of the model year identified on the engine label:
    (i) Keep a copy of your written request.
    (ii) Keep drawings or descriptions that show how you apply the 
duplicate labels to your equipment.
    (iii) Maintain a count of those duplicate labels you use and those 
you destroy.
    147. Section 1068.110 is revised to read as follows:


Sec.  1068.110  What other provisions apply to engines/equipment in 
service?

    (a) Aftermarket parts and service. As the certifying manufacturer, 
you may not require anyone to use your parts or service to maintain or 
repair an engine or piece of equipment, unless we approve this in your 
application for certification. It is a violation of the Act for anyone 
to manufacture any part if one of its main effects is to reduce the 
effectiveness of the emission controls. See Sec.  1068.101(b)(2).
    (b) Certifying aftermarket parts. As the manufacturer or rebuilder 
of an aftermarket engine or equipment part, you may--but are not 
required to--certify according to 40 CFR part 85, subpart V, that using 
the part will not cause engines/equipment to fail to meet emission 
standards. Whether you certify or not, you must keep any information 
showing how your parts or service affect emissions.
    (c) Compliance with standards. We may test engines and equipment to 
investigate compliance with emission standards and other requirements. 
We may also require the manufacturer to do this testing.
    (d) Defeat devices. We may test engines and equipment to 
investigate potential defeat devices. We may also require the 
manufacturer to do this testing. If we choose to investigate one of 
your designs, we may require you to show us that it does not have a 
defeat device. To do this, you may have to share with us information 
regarding test programs, engineering evaluations, design 
specifications, calibrations, on-board computer algorithms, and design 
strategies. It is a violation of the Act for anyone to make, install or 
use defeat devices. See Sec.  1068.101(b)(2) and the standard-setting 
part.
    (e) Warranty and maintenance. Owners are responsible for properly 
maintaining their engines/equipment; however, owners may make warranty 
claims against the manufacturer for all expenses related to diagnosing 
and repairing or replacing emission-related parts, as described in 
Sec.  1068.115. The warranty period begins when the equipment is first 
placed into service. See the standard-setting part for specific 
requirements. It is a violation of the Act for anyone to disable 
emission controls; see Sec.  1068.101(b)(1) and the standard-setting 
part.
    148. Section 1068.115 is revised to read as follows:


Sec.  1068.115  When must manufacturers honor emission-related warranty 
claims?

    Section 207(a) of the Clean Air Act (42 U.S.C. 7541(a)) requires 
certifying manufacturers to warrant to purchasers that their engines/
equipment are designed, built, and equipped to conform at the time of 
sale to the applicable regulations for their full useful life, 
including a warranty that the engines/equipment are free from defects 
in materials and workmanship that would cause any engine/equipment to 
fail to conform to the applicable regulations during the specified 
warranty period. This section codifies the warranty requirements of 
section 207(a) without intending to limit these requirements.
    (a) As a certifying manufacturer, you may deny warranty claims only 
for failures that have been caused by the owner's or operator's 
improper maintenance or use, by accidents for which you have no 
responsibility, or by acts of God. For example, you would not need to 
honor warranty claims for failures that have been directly caused by 
the operator's abuse of the engine/equipment or the operator's use of 
the engine/equipment in a manner for which it was not designed, and are 
not attributable to you in any way.
    (b) As a certifying manufacturer, you may not deny emission-related 
warranty claims based on any of the following:
    (1) Maintenance or other service you or your authorized facilities 
performed.
    (2) Engine/equipment repair work that an operator performed to 
correct an unsafe, emergency condition attributable to you, as long as 
the operator tries to restore the engine/equipment to its proper 
configuration as soon as possible.
    (3) Any action or inaction by the operator unrelated to the 
warranty claim.
    (4) Maintenance that was performed more frequently than you 
specify.
    (5) Anything that is your fault or responsibility.
    (6) The use of any fuel that is commonly available where the 
equipment operates, unless your written maintenance instructions state 
that this fuel would harm the equipment's emission control system and 
operators can readily find the proper fuel.
    149. Section 1068.120 is revised to read as follows:


Sec.  1068.120  What requirements must I follow to rebuild engines?

    (a) This section describes the steps to take when rebuilding 
engines to avoid violating the tampering prohibition in Sec.  
1068.101(b)(1). These requirements apply to anyone rebuilding an engine 
subject to this part, but the recordkeeping requirements in paragraphs 
(j) and (k) of this section apply only to businesses. For maintenance 
or service that is not rebuilding, including any maintenance related to 
evaporative emission controls, you may not make changes that might 
increase emissions of any pollutant, but you do not need to keep any 
records.
    (b) The term ``rebuilding'' refers to a rebuild of an engine or 
engine system, including a major overhaul in which you replace the 
engine's pistons or power assemblies or make other changes that 
significantly increase the service life of the engine. It also includes 
replacing or rebuilding an engine's turbocharger or aftercooler or the 
engine's systems for fuel metering or electronic control so that it 
significantly increases the service life of the engine. For these 
provisions, rebuilding may or may not involve removing the engine from 
the equipment. Rebuilding does not normally include the following:
    (1) Scheduled emission-related maintenance that the standard-
setting part allows during the useful life period (such as replacing 
fuel injectors).
    (2) Unscheduled maintenance that occurs commonly within the useful 
life period. For example, replacing a water pump is not rebuilding an 
engine.
    (c) [Reserved]
    (d) If you rebuild an engine or engine system, you must have a 
reasonable technical basis for knowing that the rebuilt engine's 
emission control system performs as well as, or better than, it 
performs in its certified configuration. Identify the model year of the 
resulting engine configuration. You have a reasonable basis if you meet 
two main conditions:

[[Page 28376]]

    (1) Install parts--new, used, or rebuilt--so a person familiar with 
engine design and function would reasonably believe that the engine 
with those parts will control emissions of all pollutants at least to 
the same degree as with the original parts. For example, it would be 
reasonable to believe that parts performing the same function as the 
original parts (and to the same degree) would control emissions to the 
same degree as the original parts.
    (2) Adjust parameters or change design elements only according to 
the original engine manufacturer's instructions. Or, if you differ from 
these instructions, you must have data or some other technical basis to 
show you should not expect in-use emissions to increase.
    (e) If the rebuilt engine remains installed or is reinstalled in 
the same piece of equipment, you must rebuild it to the original 
configuration or another certified configuration of the same or later 
model year.
    (f) If the rebuilt engine replaces another certified engine in a 
piece of equipment, you must rebuild it to a certified configuration of 
the same model year as, or a later model year than, the engine you are 
replacing.
    (g) Do not erase or reset emission-related codes or signals from 
onboard monitoring systems without diagnosing and responding 
appropriately to any diagnostic codes. This requirement applies 
regardless of the manufacturer's reason for installing the monitoring 
system and regardless of its form or interface. Clear any codes from 
diagnostic systems when you return the rebuilt engine to service. Do 
not disable a diagnostic signal without addressing its cause.
    (h) When you rebuild an engine, check, clean, adjust, repair, or 
replace all emission-related components (listed in Appendix I of this 
part) as needed according to the original manufacturer's recommended 
practice. In particular, replace oxygen sensors, replace the catalyst 
if there is evidence of malfunction, clean gaseous fuel-system 
components, and replace fuel injectors (if applicable), unless you have 
a reasonable technical basis for believing any of these components do 
not need replacement.
    (i) If you are installing an engine that someone else has rebuilt, 
check all emission-related components listed in Appendix I of this part 
as needed according to the original manufacturer's recommended 
practice.
    (j) Keep at least the following records:
    (1) Identify the hours of operation (or mileage, as appropriate) at 
time of rebuild.
    (2) Identify the work done on the engine or any emission-related 
control components, including a listing of parts and components you 
used.
    (3) Describe any engine parameter adjustments.
    (4) Identify any emission-related codes or signals you responded to 
and reset.
    (k) You must show us or send us your records if we ask for them. 
Keep records for at least two years after rebuilding an engine. Keep 
them in any format that allows us to readily review them.
    (1) You do not need to keep information that is not reasonably 
available through normal business practices. We do not expect you to 
have information that you cannot reasonably access.
    (2) You do not need to keep records of what other companies do.
    (3) You may keep records based on families rather than individual 
engines if that is the way you normally do business.

Subpart C--[Amended]

    150. Section 1068.201 is revised to read as follows:


Sec.  1068.201  Does EPA exempt or exclude any engines/equipment from 
the prohibited acts?

    We may exempt new engines/equipment from some or all of the 
prohibited acts or requirements of this part under provisions described 
in this subpart. We may exempt engines/equipment already placed in 
service in the United States from the prohibition in Sec.  
1068.101(b)(1) if the exemption for engines/equipment used solely for 
competition applies (see Sec.  1068.235). In addition, see Sec.  1068.1 
and the standard-setting parts to determine if other engines/equipment 
are excluded from some or all of the regulations in this chapter.
    (a) This subpart identifies which engines/equipment qualify for 
exemptions and what information we need. We may ask for more 
information.
    (b) If you violate any of the terms, conditions, instructions, or 
requirements to qualify for an exemption, we may void, revoke, or 
suspend the exemption.
    (c) If you use an exemption under this subpart, we may require you 
to add a permanent label to your exempted engines/equipment. You may 
ask us to modify these labeling requirements if it is appropriate for 
your engine/equipment.
    (d) If you produce engines/equipment we exempt under this subpart, 
we may require you to make and keep records, perform tests, make 
reports and provide information as needed to reasonably evaluate the 
validity of the exemption.
    (e) If you own or operate engines/equipment we exempt under this 
subpart, we may require you to provide information as needed to 
reasonably evaluate the validity of the exemption.
    (f) Subpart D of this part describes how we apply these exemptions 
to engines/equipment you import (or intend to import).
    (g) If you want to ask for an exemption or need more information, 
write to the Designated Officer.
    (h) You may ask us to modify the administrative requirements for 
the exemptions described in this subpart. We may approve your request 
if we determine that such approval is consistent with the intent of 
this part. For example, waivable administrative requirements might 
include some reporting requirements, but would not include any 
eligibility requirements or use restrictions.
    (i) If you want to take an action with respect to an exempted or 
excluded engine/equipment that is prohibited by the exemption or 
exclusion, such as selling it, you need to certify the engine/
equipment. We will issue a certificate of conformity if you send us an 
application for certification showing that you meet all the applicable 
requirements from the standard-setting part and pay the appropriate 
fee. Also, in some cases, we may allow manufacturers to modify the 
engines/equipment as needed to make it identical to engines/equipment 
already covered by a certificate. We would base such an approval on our 
review of any appropriate documentation. These engines/equipment must 
have emission control information labels that accurately describe their 
status.
    151. Section 1068.210 is revised to read as follows:


Sec.  1068.210  What are the provisions for exempting test engines/
equipment?

    (a) We may exempt engines/equipment that are not exempted under 
other sections of this part that you will use for research, 
investigations, studies, demonstrations, or training.
    (b) Anyone may ask for a testing exemption.
    (c) If you are a certificate holder, you may request an exemption 
for engines/equipment you intend to include in test programs over a 
two-year period.
    (1) In your request, tell us the maximum number of engines/
equipment involved and describe how you will make sure exempted 
engines/equipment are used only for this testing.
    (2) Give us the information described in paragraph (d) of this 
section if we ask for it.

[[Page 28377]]

    (d) If you are not a certificate holder do all of the following:
    (1) Show that the proposed test program has a valid purpose under 
paragraph (a) of this section.
    (2) Show you need an exemption to achieve the purpose of the test 
program (time constraints may be a basis for needing an exemption, but 
the cost of certification alone is not).
    (3) Estimate the duration of the proposed test program and the 
number of engines/equipment involved.
    (4) Allow us to monitor the testing.
    (5) Describe how you will ensure that you stay within this 
exemption's purposes. Address at least the following things:
    (i) The technical nature of the test.
    (ii) The test site.
    (iii) The duration and accumulated engine/equipment operation 
associated with the test.
    (iv) Ownership and control of the engines/equipment involved in the 
test.
    (v) The intended final disposition of the engines/equipment.
    (vi) How you will identify, record, and make available the engine/
equipment identification numbers.
    (vii) The means or procedure for recording test results.
    (e) If we approve your request for a testing exemption, we will 
send you a letter or a memorandum for your signature describing the 
basis and scope of the exemption. The exemption does not take effect 
until we receive the signed letter or memorandum from you. It will also 
include any necessary terms and conditions, which normally require you 
to do the following:
    (1) Stay within the scope of the exemption.
    (2) Create and maintain adequate records that we may inspect.
    (3) Add a permanent, legible label, written in English, to a 
readily visible part of all exempted engines/equipment. This label must 
include at least the following items:
    (i) The label heading ``EMISSION CONTROL INFORMATION''.
    (ii) Your corporate name and trademark.
    (iii) Engine displacement, family identification, and model year of 
the engine/equipment (as applicable); or whom to contact for further 
information.
    (iv) One of these statements (as applicable)
    (A) ``THIS ENGINE IS EXEMPT UNDER 40 CFR 1068.210 OR 1068.215 FROM 
EMISSION STANDARDS AND RELATED REQUIREMENTS.''.
    (B) ``THIS EQUIPMENT IS EXEMPT UNDER 40 CFR 1068.210 OR 1068.215 
FROM EMISSION STANDARDS AND RELATED REQUIREMENTS.''.
    (4) Tell us when the test program is finished.
    (5) Tell us the final disposition of the engines/equipment.
    (6) Send us a written confirmation that you meet the terms and 
conditions of this exemption.
    152. Section 1068.215 is revised to read as follows:


Sec.  1068.215  What are the provisions for exempting manufacturer-
owned engines/equipment?

    (a) You are eligible for the exemption for manufacturer-owned 
engines/equipment only if you are a certificate holder.
    (b) Engines/equipment may be exempt without a request if they are 
nonconforming engines/equipment under your ownership and control and 
you operate them to develop products, assess production methods, or 
promote your engines/equipment in the marketplace. You may not loan, 
lease, sell, or use the engine/equipment to generate revenue, either by 
itself or for an engine installed in a piece of equipment.
    (c) To use this exemption, you must do three things:
    (1) Establish, maintain, and keep adequately organized and indexed 
information on all exempted engines/equipment, including the engine/
equipment identification number, the use of the engine/equipment on 
exempt status, and the final disposition of any engine/equipment 
removed from exempt status.
    (2) Let us access these records, as described in Sec.  1068.20.
    (3) Add a permanent, legible label, written in English, to a 
readily visible part of all exempted engines/equipment. This label must 
include at least the following items:
    (i) The label heading ``EMISSION CONTROL INFORMATION''.
    (ii) Your corporate name and trademark.
    (iii) Engine displacement, family identification, and model year of 
the engine/equipment (as applicable); or whom to contact for further 
information.
    (iv) One of these statements (as applicable)
    (A) ``THIS ENGINE IS EXEMPT UNDER 40 CFR 1068.210 OR 1068.215 FROM 
EMISSION STANDARDS AND RELATED REQUIREMENTS.''.
    (B) ``THIS EQUIPMENT IS EXEMPT UNDER 40 CFR 1068.210 OR 1068.215 
FROM EMISSION STANDARDS AND RELATED REQUIREMENTS.''.
    153. Section 1068.220 is revised to read as follows:


Sec.  1068.220  What are the provisions for exempting display engines/
equipment?

    (a) Anyone may request an exemption for display engines/equipment.
    (b) Nonconforming display engines/equipment will be exempted if 
they are used only for displays in the interest of a business or the 
general public. This exemption does not apply to engines/equipment 
displayed for private use, private collections, or any other purpose we 
determine is inappropriate for a display exemption.
    (c) You may operate the exempted engine/equipment, but only if we 
approve specific operation that is part of the display.
    (d) You may sell or lease the exempted engine/equipment only with 
our advance approval; you may not use it to generate revenue.
    (e) To use this exemption, you must add a permanent, legible label, 
written in English, to a readily visible part of all exempted engines/
equipment. This label must include at least the following items:
    (1) The label heading ``EMISSION CONTROL INFORMATION''.
    (2) Your corporate name and trademark.
    (3) Engine displacement, family identification, and model year of 
the engine/equipment, (as applicable) or whom to contact for further 
information.
    (4) One of these statements (as applicable):
    (i) ``THIS ENGINE IS EXEMPT UNDER 40 CFR 1068.220 FROM EMISSION 
STANDARDS AND RELATED REQUIREMENTS.''.
    (ii) ``THIS EQUIPMENT IS EXEMPT UNDER 40 CFR 1068.220 FROM EMISSION 
STANDARDS AND RELATED REQUIREMENTS.''.
    (f) We may set other conditions for approval of this exemption.
    154. Section 1068.225 is revised to read as follows:


Sec.  1068.225  What are the provisions for exempting engines/equipment 
for national security?

    (a) You are eligible for the exemption for national security only 
if you are a manufacturer.
    (b) Your engine/equipment is exempt without a request if it will be 
used or owned by an agency of the federal government responsible for 
national defense, where the equipment has armor, permanently attached 
weaponry, or other substantial features typical of military combat.
    (c) You may request a national security exemption for engines/
equipment not meeting the conditions of paragraph (b) of this section, 
as long as your request is endorsed by an

[[Page 28378]]

agency of the federal government responsible for national defense. In 
your request, explain why you need the exemption.
    (d) Add a legible label, written in English, to all engines/
equipment exempted under this section. The label must be permanently 
secured to a readily visible part of the engine/equipment needed for 
normal operation and not normally requiring replacement, such as the 
engine block. This label must include at least the following items:
    (1) The label heading ``EMISSION CONTROL INFORMATION''.
    (2) Your corporate name and trademark.
    (3) Engine displacement, family identification, and model year of 
the engine/equipment, (as applicable), or whom to contact for further 
information.
    (4) One of these statements (as applicable):
    (i) ``THIS ENGINE HAS AN EXEMPTION FOR NATIONAL SECURITY UNDER 40 
CFR 1068.225.''.
    (ii) ``THIS EQUIPMENT HAS AN EXEMPTION FOR NATIONAL SECURITY UNDER 
40 CFR 1068.225.''.
    155. Section 1068.230 is revised to read as follows:


Sec.  1068.230  What are the provisions for exempting engines/equipment 
for export?

    (a) If you export a new engine or new piece of equipment to a 
country with emission standards identical to ours, we will not exempt 
it. These engines/equipment must comply with our certification 
requirements.
    (b) If you export engines/equipment to a country with different 
emission standards or no emission standards, they are exempt from the 
prohibited acts in this part without a request. If you produce exempt 
engines/equipment for export and any are sold or offered for sale to 
someone in the United States (except for export), we will void the 
exemption.
    (c) Label all exempted engines/equipment and shipping containers 
with a label or tag showing the engines/equipment are not certified for 
sale or use in the United States. These labels need not be permanently 
attached to the engines/equipment. The label must include at least one 
of these statements (as applicable):
    (1) ``THIS ENGINE IS SOLELY FOR EXPORT AND IS THEREFORE EXEMPT 
UNDER 40 CFR 1068.230 FROM U.S. EMISSION STANDARDS AND RELATED 
REQUIREMENTS.''.
    (2) ``THIS EQUIPMENT IS SOLELY FOR EXPORT AND IS THEREFORE EXEMPT 
UNDER 40 CFR 1068.230 FROM U.S. EMISSION STANDARDS AND RELATED 
REQUIREMENTS.''.
    156. Section 1068.235 is revised to read as follows:


Sec.  1068.235  What are the provisions for exempting engines/equipment 
used solely for competition?

    (a) New engines/equipment you produce that are used solely for 
competition are generally excluded from emission standards. See the 
standard-setting parts for specific provisions where applicable.
    (b) If you modify any engines/equipment after they have been placed 
into service in the United States so they will be used solely for 
competition, they are exempt without request. This exemption applies 
only to the prohibition in Sec.  1068.101(b)(1) and is valid only as 
long as the engine/equipment is used solely for competition.
    (c) If you modify any engines/equipment under paragraph (b) of this 
section, you must destroy the original emission labels. If you loan, 
lease, sell, or give any of these engines/equipment to someone else, 
you must tell the new owner (or operator, if applicable) in writing 
that they may be used only for competition.
    157. Section 1068.240 is amended by revising paragraphs (a), 
(b)(2), (b)(5), and (e) and adding paragraph (f) to read as follows:


Sec.  1068.240  What are the provisions for exempting new replacement 
engines?

    (a) You are eligible for the exemption for new replacement engines 
only if you are a certificate holder. Note that this exemption does not 
apply for locomotives (40 CFR 1033.601) and that unique provisions 
apply to marine compression-ignition engines (40 CFR 1042.615).
    (b) * * *
    (2) The engine being replaced was not originally subject to 
emission standards, or was originally subject to less stringent 
emission standards than those that would otherwise apply to the new 
engine.
* * * * *
    (5) You make the replacement engine in a configuration identical in 
all material respects to the engine being replaced (or that of another 
certified engine of the same or later model year) and meet all the 
requirements of Sec.  1068.265. This requirement applies only if the 
old engine was subject to emission standards less stringent than those 
in effect when you produce the replacement engine.
* * * * *
    (e) Replacement engines exempted under this section may not 
generate or use emission credits under the standard-setting part, nor 
be part of any associated credit calculations.
    (f) The provisions of this section may not be used to circumvent 
emission standards that apply to new engines under the standard-setting 
part.
    158. Section 1068.245 is amended by revising paragraphs (a) and (f) 
to read as follows:


Sec.  1068.245  What temporary provisions address hardship due to 
unusual circumstances?

    (a) After considering the circumstances, we may permit you to 
introduce into U.S. commerce engines/equipment that do not comply with 
emission-related requirements for a limited time if all the following 
conditions apply:
    (1) Unusual circumstances that are clearly outside your control and 
that could not have been avoided with reasonable discretion prevent you 
from meeting requirements from this chapter.
    (2) You exercised prudent planning and were not able to avoid the 
violation; you have taken all reasonable steps to minimize the extent 
of the nonconformity.
    (3) Not having the exemption will jeopardize the solvency of your 
company.
    (4) No other allowances are available under the regulations in this 
chapter to avoid the impending violation, including the provisions of 
Sec.  1068.250.
* * * * *
    (f) Add a permanent, legible label, written in English, to a 
readily visible part of all engines/equipment exempted under this 
section. This label must include at least the following items:
    (1) The label heading ``EMISSION CONTROL INFORMATION''.
    (2) Your corporate name and trademark.
    (3) Engine displacement (in liters), rated power, and model year of 
the engine/equipment, (as applicable) or whom to contact for further 
information.
    (4) One of the following statements:
    (i) If the engine/equipment does not meet any emission standards:
    (A) ``THIS ENGINE IS EXEMPT UNDER 40 CFR 1068.245 FROM EMISSION 
STANDARDS AND RELATED REQUIREMENTS.''; or
    (B) ``THIS EQUIPMENT IS EXEMPT UNDER 40 CFR 1068.245 FROM EMISSION 
STANDARDS AND RELATED REQUIREMENTS.''.
    (ii) If the engines/equipment meet alternate emission standards as 
a condition of an exemption under this section, we may specify a 
different statement to identify the alternate emission standards.
    159. Section 1068.250 is amended by revising the section heading 
and

[[Page 28379]]

paragraphs (b), (c)(1)(i), (d)(5), (j), and (k) to read as follows:


Sec.  1068.250  What are the provisions for extending compliance 
deadlines for small businesses under hardship?

* * * * *
    (b) To be eligible for this exemption, you must be a small 
business.
    (c) * * *
    (1) * * *
    (i) In the case of importers of engines/equipment produced by other 
companies, show that you attempted to find a manufacturer capable of 
supplying complying products as soon as you became aware of the 
applicable requirements, but were unable to do so.
* * * * *
    (d) * * *
    (5) Identify the level of compliance you can achieve. For example, 
you may be able to produce engines/equipment that meet a somewhat less 
stringent emission standard than the regulations in this chapter 
require.
* * * * *
    (j) We may approve extensions of the compliance deadlines as 
reasonable under the circumstances up to one model year at a time, and 
up to three years total.
    (k) Add a permanent, legible label, written in English, to a 
readily visible part of all engines/equipment exempted under this 
section. This label must include at least the following items:
    (1) The label heading ``EMISSION CONTROL INFORMATION''.
    (2) Your corporate name and trademark.
    (3) Engine displacement (in liters), rated power, and model year of 
the engine/equipment or whom to contact for further information.
    (4) One of the following statements:
    (i) If the engine/equipment does not meet any emission standards:
    (A) ``THIS ENGINE IS EXEMPT UNDER 40 CFR 1068.250 FROM EMISSION 
STANDARDS AND RELATED REQUIREMENTS.'', or
    (B) ``THIS EQUIPMENT IS EXEMPT UNDER 40 CFR 1068.250 FROM EMISSION 
STANDARDS AND RELATED REQUIREMENTS.''.
    (ii) If the engine/equipment meets alternate emission standards as 
a condition of an exemption under this section, we may specify a 
different statement to identify the alternate emission standards.
    160. Section 1068.255 is revised to read as follows:


Sec.  1068.255  What are the provisions for exempting engines and fuel-
system components for hardship for equipment manufacturers and 
secondary engine manufacturers?

    This section describes how, in unusual circumstances, we may 
approve an exemption to prevent hardship to an equipment manufacturer 
or a secondary engine manufacturer. This section does not apply to 
products that are subject to equipment-based exhaust emission 
standards.
    (a) Equipment exemption. As an equipment manufacturer, you may ask 
for approval to produce exempted equipment for up to 12 months. We will 
generally limit this to the first year that new or revised emission 
standards apply. Send the Designated Officer a written request for an 
exemption before you are in violation. In your request, you must show 
you are not at fault for the impending violation and that you would 
face serious economic hardship if we do not grant the exemption. This 
exemption is not available under this paragraph (a) if you manufacture 
the engine or fuel-system components you need for your own equipment or 
if complying engines or fuel-system components are available from other 
manufacturers that could be used in your equipment, unless we allow it 
elsewhere in this chapter. We may impose other conditions, including 
provisions to use products meeting less stringent emission standards or 
to recover the lost environmental benefit. In determining whether to 
grant the exemptions, we will consider all relevant factors, including 
the following:
    (1) The number of engines or fuel-system components involved.
    (2) The size of your company and your ability to endure the 
hardship.
    (3) The amount of time you had to redesign your equipment to 
accommodate complying products.
    (4) Whether there was any breach of contract by a supplier.
    (5) The potential for market disruption.
    (b) Engine and fuel-system component exemption. As an engine 
manufacturer or fuel-system component manufacturer, you may produce 
nonconforming products for the equipment we exempt in paragraph (a) of 
this section. You do not have to request this exemption, but you must 
have written assurance from equipment manufacturers that they need a 
certain number of exempted products under this section. Label engines 
or fuel-system components as follows:
    (1) Engines. Add a permanent, legible label, written in English, to 
a readily visible part of each exempted engine. This label must include 
at least the following items:
    (i) The label heading ``EMISSION CONTROL INFORMATION''.
    (ii) Your corporate name and trademark.
    (iii) Engine displacement (in liters), rated power, and model year 
of the engine or whom to contact for further information.
    (iv) If the engine does not meet any emission standards: ``THIS 
ENGINE IS EXEMPT UNDER 40 CFR 1068.255 FROM EMISSION STANDARDS AND 
RELATED REQUIREMENTS.''. If the engine meets alternate emission 
standards as a condition of an exemption under this section, we may 
specify a different statement to identify the alternate emission 
standards.
    (2) Fuel-system components. Add a permanent, legible label, written 
in English, to a readily visible part of each fuel-system component 
exempted under this section. This label must prominently include at 
least the following items:
    (i) Your corporate name and trademark.
    (ii) The statement ``EXEMPT UNDER 40 CFR 1068.255.''.
    (c) Secondary engine manufacturers. As a secondary engine 
manufacturer, you may ask for approval to produce exempted engines 
under this section for up to 12 months. We may require you to certify 
your engines to compliance levels above the emission standards that 
apply. For example, the in the case of multiple tiers of emission 
standards, we may require you to meet the standards from the previous 
tier.
    (1) The provisions in paragraph (a) of this section that apply to 
equipment manufacturers requesting an exemption apply equally to you, 
except that you may manufacture the engines. Before we approve an 
exemption under this section, we will generally require that you commit 
to a plan to make up the lost environmental benefit.
    (i) If you produce uncertified engines under this exemption, we 
will calculate the lost environmental benefit based on our best 
estimate of uncontrolled emission rates for your engines.
    (ii) If you produce engines under this exemption that are certified 
to a compliance level less stringent than the emission standards that 
would otherwise apply, we will calculate the lost environmental benefit 
based on the compliance level you select for your engines.
    (2) The labeling requirements in paragraph (b) of this section 
apply to your exempted engines; however, if you certify engines to 
specific compliance

[[Page 28380]]

levels, state on the label the compliance levels that apply to each 
engine.
    161. Section 1068.260 is revised to read as follows:


Sec.  1068.260  What provisions apply for selling or shipping certified 
engines that are not yet in the certified configuration?

    The provisions of Sec.  1068.101(a)(1) generally require that all 
new engines be in their certified configuration before being introduced 
into U.S. commerce. All emission-related components generally need to 
be installed on an engine for such an engine to be in its certified 
configuration. This section specifies exceptions to these requirements 
for engines. This section does not apply to equipment subject to 
equipment-based standards. (Note: See Sec.  1068.262 for provisions 
related to manufacturers introducing into U.S. commerce partially 
complete engines for which someone else holds the certificate of 
conformity.)
    (a) Shipping an engine separately from an aftertreatment component 
that you have specified as part of its certified configuration will not 
be a violation of the prohibitions in Sec.  1068.101(a)(1) if you 
follow the provisions of paragraph (b) or (c) of this section. Note 
that the standard-setting parts allows this exemption for delegated 
final assembly only for the following engines:
    (1) Stationary compression-ignition engines (see 40 CFR part 60, 
subpart IIII).
    (2) Stationary spark-ignition engines (see 40 CFR part 60, subpart 
JJJJ).
    (3) Land-based nonroad compression-ignition engines (see 40 CFR 
part 1039).
    (4) Marine spark-ignition engines (see 40 CFR part 1045).
    (5) Marine compression-ignition engines (see 40 CFR part 1042).
    (6) Large nonroad spark-ignition engines (see 40 CFR part 1048).
    (b) If you do not manufacture the equipment in which the engine 
will be installed, you must meet all the following conditions to ship 
engines without aftertreatment components specified in your application 
for certification:
    (1) Apply for and receive a certificate of conformity for the 
engine and its emission control system before shipment.
    (2) Provide installation instructions in enough detail to ensure 
that the engine will be in its certified configuration if someone 
follows these instructions.
    (3) Have a contractual agreement with each equipment manufacturer 
obligating the equipment manufacturer to complete the final assembly of 
the engine so it is in its certified configuration when installed in 
the equipment. This agreement must also obligate the equipment 
manufacturer to provide the affidavits and cooperate with the audits 
required under paragraph (b)(6) of this section.
    (4) Include the cost of all aftertreatment components in the cost 
of the engine. For purposes of importation, you may itemize your 
invoice to separately identify the cost of aftertreatment components 
that will be shipped separately. A copy of your invoice from the 
aftertreatment manufacturer may be needed to avoid payment of 
importation duties that include the value of aftertreatment components.
    (5) Ship the aftertreatment components directly to the equipment 
manufacturer, or arrange for separate shipment by the component 
manufacturer to the equipment manufacturer.
    (6) Take appropriate additional steps to ensure that all engines 
will be in their certified configuration when installed by the 
equipment manufacturer. At a minimum do the following:
    (i) Obtain annual affidavits from every equipment manufacturer to 
whom you sell engines under this section. Include engines that you sell 
through distributors or dealers. The affidavits must list the part 
numbers of the aftertreatment devices that equipment manufacturers 
install on each engine they purchase from you under this section.
    (ii) If you sell engines to 16 or more equipment manufacturers 
under the provisions of this section, you must annually audit four 
equipment manufacturers to whom you sell engines under this section. To 
select individual equipment manufacturers, divide all the affected 
equipment manufacturers into quartiles based on the number of engines 
they buy from you; select a single equipment manufacturer from each 
quartile each model year. Vary the equipment manufacturers you audit 
from year to year, though you may repeat an audit in a later model year 
if you find or suspect that a particular equipment manufacturer is not 
properly installing aftertreatment devices. If you sell engines to 
fewer than 16 equipment manufacturers under the provisions of this 
section, you may instead set up a plan to audit each equipment 
manufacturer on average once every four model years. Audits must 
involve the assembling companies' facilities, procedures, and 
production records to monitor their compliance with your instructions, 
must include investigation of some assembled engines, and must confirm 
that the number of aftertreatment devices shipped were sufficient for 
the number of engines produced. You must keep records of these audits 
for five years after the end of the model year and provide a report to 
us describing any uninstalled or improperly installed aftertreatment 
components. Send us these reports within 90 days of the audit, except 
as specified in paragraph (e) of this section.
    (iii) If you sell engines to fewer than 16 equipment manufacturers 
under the provisions of this section, you must conduct audits as 
described in paragraph (b)(6)(ii) of this section or propose an 
alternative plan for ensuring that equipment manufacturers properly 
install aftertreatment devices.
    (7) Describe the following things in your application for 
certification:
    (i) How you plan to use the provisions of this section.
    (ii) A detailed plan for auditing equipment manufacturers, as 
described in paragraph (b)(6) of this section.
    (iii) All other steps you plan to take under paragraph (b)(6) of 
this section.
    (8) Keep records to document how many engines you produce under 
this exemption. Also, keep records to document your contractual 
agreements under paragraph (b)(3) of this section. Keep all these 
records for five years after the end of the model year and make them 
available to us upon request.
    (9) Make sure the engine has the emission control information label 
we require under the standard-setting part. Apply an additional 
temporary label or tag in a way that makes it unlikely that the engine 
will be installed in equipment other than in its certified 
configuration. The label or tag must identify the engine as incomplete 
and include a clear statement that failing to install the 
aftertreatment device, or otherwise bring the engine into its certified 
configuration, is a violation of federal law subject to civil penalty.
    (10) You must keep a supply of aftertreatment devices available at 
your production facility so you can test production-line engines as 
specified in the standard-setting part or in subpart E of this part. 
Use a new catalyst with each tested engine, following the specified 
procedures for stabilizing emission levels. Keep records showing how 
you randomly selected these catalysts, consistent with applicable 
requirements.
    (c) If you manufacture engines and install them in equipment you 
also produce, you must take steps to ensure that your facilities, 
procedures, and production records are set up to ensure that equipment 
and engines are assembled in their proper certified configurations. You 
may demonstrate

[[Page 28381]]

compliance with this requirement by maintaining a database showing how 
you pair aftertreatment components with the appropriate engines.
    (d) Once the equipment manufacturer takes possession of an engine 
exempted under this section and the engine reaches the point of final 
equipment assembly, the exemption expires and the engine is subject to 
all the prohibitions in Sec.  1068.101.
    (e) You must notify us within 15 days if you find from an audit or 
another source that an equipment manufacturer has failed to meet its 
obligations under this section.
    (f) We may suspend, revoke, or void an exemption under this 
section, as follows:
    (1) We may suspend or revoke your exemption for the entire family 
if we determine that any of the engines are not in their certified 
configuration after installation in the equipment, or if you fail to 
comply with the requirements of this section. If we suspend or revoke 
the exemption for any of your families under this paragraph (f), this 
exemption will not apply for future certificates unless you demonstrate 
that the factors causing the nonconformity do not apply to the other 
families. We may suspend or revoke the exemption for shipments to a 
single facility where final assembly occurs.
    (2) We may void your exemption for the entire family if you 
intentionally submit false or incomplete information or fail to keep 
and provide to EPA the records required by this section. We may 
suspend, revoke, or void an exemption under this section, as follows:
    (g) You are liable for the in-use compliance of any engine that is 
exempt under this section.
    (h) It is a violation of the Act for any person to introduce into 
U.S. commerce a previously exempted engine, including as part of a 
piece of equipment, without complying fully with the installation 
instructions.
    (i) [Reserved]
    (j) In certain circumstances you may ship engines with emission-
related components that are not yet assembled to the engine. This 
allowance is limited to situations where the final assembly depends on 
equipment design parameters and we determine that shipment of the fully 
assembled engine is impractical. For example, you may generally ship 
aftertreatment devices along with engines rather than installing them 
on the engine before shipment. You do not need an exemption to ship an 
engine under this paragraph (j).
    (k) You do not need an exemption to ship engines without specific 
components if they are not emission-related components identified in 
Appendix I of this part. For example, you may generally ship engines 
without radiators needed to cool the engine. You may ask us at the time 
of certification to allow you to ship your engines without other 
equipment-related components (such as a vehicle speed sensor) that are 
described in your application for certification. If we allow it, we may 
specify conditions that we determine are needed to ensure that shipping 
the engine without such components will not result in the engine being 
operated outside of its certified configuration.
    (l) You may ask us to provide a temporary exemption to allow you to 
complete production of your engines at different facilities, as long as 
you maintain control of the engines until they are in their certified 
configuration. We may require you to take specific steps to ensure that 
such engines are in their certified configuration before reaching the 
ultimate purchaser. You may request an exemption under this paragraph 
(l) in your application for certification, or in a separate submission 
to the Designated Compliance Officer.
    162. A new Sec.  1068.262 is added to read as follows:


Sec.  1068.262  What are the provisions for temporarily exempting 
engines for shipment to secondary engine manufacturers?

    Except as specified in paragraph (f) of this section, all new 
engines in the United States are presumed to be subject to the 
prohibitions of Sec.  1068.101. This section specifies when 
manufacturers may introduce into U.S. commerce partially complete 
engines that have a certificate of conformity held by a secondary 
engine manufacturer and are not yet in their certified configuration. 
(Note: See Sec.  1068.260 for provisions related to manufacturers 
introducing into U.S. commerce partially complete engines for which 
they hold the certificate of conformity.) This exemption is temporary, 
as described in paragraph (e) of this section.
    (a) Manufacturers may introduce into U.S. commerce partially 
complete engines as described in this section if they have a written 
request for such engines from a secondary manufacturer that has 
certified the engine and will finish the engine assembly. The original 
engine manufacturer must apply a temporary label to each engine to make 
clear that the engine is not yet in its certified configuration. The 
temporary label must include the corporate names of both the original 
and certifying manufacturers and the engine family name for the engine. 
The original engine manufacturer may not apply a permanent emission 
control information label identifying the engine's eventual 
certification status.
    (b) The provisions of this section apply only where the secondary 
engine manufacturer has substantial control over the design and 
assembly of emission controls. In determining whether a manufacturer 
has substantial control over the design and assembly of emission 
controls, we would consider the degree to which the secondary 
manufacturer would be able to ensure that the engine will conform to 
the regulations in its final configuration. Such secondary 
manufacturers may finish assembly of partially complete engines in the 
following cases:
    (1) You obtain an engine that is not fully assembled, with the 
intent to manufacture a complete engine.
    (2) You obtain an engine with the intent to modify it before it 
reaches the ultimate purchaser.
    (3) You obtain an engine with the intent to install it in equipment 
that will be subject to equipment-based standards.
    (c) The manufacturer that will hold the certificate must include 
the following information in its application for certification:
    (1) Identify the original engine manufacturer of the partially 
complete engine or of the complete engine you will modify.
    (2) Describe briefly how and where final assembly will be 
completed. Specify how you have the ability to ensure that the engines 
will conform to the regulations in their final configuration. (Note: 
Paragraph (b) of this section prohibits using the provisions of this 
section unless you have substantial control over the design and 
assembly of emission controls.)
    (3) State unconditionally that the engines will comply with all 
applicable regulations in their final configuration.
    (d) [Reserved]
    (e) These provisions are intended only to allow you to obtain 
engines in the specific circumstances identified in this section, so 
any exemption under this section expires when you complete the assembly 
of the engine/equipment in its final configuration.
    (f) Reduced-scale hobby engines are not presumed to be engines 
subject to the prohibitions of Sec.  1068.101. Hobby engines are 
compression-ignition engines with a per-cylinder displacement of less 
than 50 cubic centimeters or spark-ignition engines installed in 
reduced-scale models of vehicles that are not capable of transporting a 
person. Other engines

[[Page 28382]]

that do not have a valid certificate of conformity or exemption when 
introduced into U.S. commerce are presumed to be engines subject to the 
prohibitions of Sec.  1068.101 unless we determine that such engines 
are excluded from the prohibitions of Sec.  1068.101.
    (g) For purposes of this section, an allowance to introduce engines 
into U.S. commerce includes a conditional allowance to sell, introduce, 
or deliver such partially complete engines into commerce in the United 
States or import them into the United States. It does not include a 
general allowance to offer such partially complete engines for sale 
because this exemption is intended to apply only for cases in which the 
certificate holder already has an arrangement to purchase the engines 
from the original engine manufacturer. This exemption does not allow 
the original engine manufacturer to subsequently offer the engines for 
sale to a different manufacturer who will hold the certificate unless 
that second manufacturer has also complied with the requirements of 
this part.
    (h) No exemption is needed to import equipment that does not 
include an engine. No exemption is available under this section for 
equipment subject to equipment-based standards if the engine has been 
installed.
    163. Section 1068.265 is revised to read as follows:


Sec.  1068.265  What provisions apply to engines/equipment that are 
conditionally exempted from certification?

    Engines produced under an exemption for replacement engines (Sec.  
1068.240) or engines/equipment produced under an exemption for hardship 
(Sec.  1068.245, Sec.  1068.250, or Sec.  1068.255) may need to meet 
alternate emission standards as a condition of the exemption. The 
standard-setting part may similarly exempt engines/equipment from all 
certification requirements, or allow us to exempt engines/equipment 
from all certification requirements for certain cases, but require the 
engines/equipment to meet alternate standards. In these cases, all the 
following provisions apply:
    (a) Your engines/equipment must meet the alternate standards we 
specify in (or pursuant to) the exemption section, and all other 
requirements applicable to engines/equipment that are subject to such 
standards.
    (b) You need not apply for and receive a certificate for the exempt 
engines/equipment. However, you must comply with all the requirements 
and obligations that would apply to the engines/equipment if you had 
received a certificate of conformity for them, unless we specifically 
waive certain requirements.
    (c) You must have emission data from test engines/equipment using 
the appropriate procedures that demonstrate compliance with the 
alternate standards, unless the engines/equipment are identical in all 
material respects to engines/equipment that you have previously 
certified to standards that are the same as, or more stringent than, 
the alternate standards.
    (d) Unless we specify otherwise elsewhere in the standard-setting 
part, you must meet the labeling requirements in the standard-setting 
part, with the following exceptions:
    (1) Modify the family designation by eliminating the character that 
identifies the model year.
    (2) See the provisions of the applicable exemption for appropriate 
language to replace the compliance statement otherwise required in the 
standard-setting part.
    (e) You may not generate emission credits for averaging, banking, 
or trading with engines/equipment meeting requirements under the 
provisions of this section.
    (f) Keep records to show that you meet the alternate standards, as 
follows:
    (1) If your exempted engines/equipment are identical to previously 
certified engines/equipment, keep your most recent application for 
certification for the certified family.
    (2) If you previously certified a similar family, but have modified 
the exempted engines/equipment in a way that changes them from their 
previously certified configuration, keep your most recent application 
for certification for the certified family, a description of the 
relevant changes, and any test data or engineering evaluations that 
support your conclusions.
    (3) If you have not previously certified a similar family, keep all 
the records we specify for the application for certification and any 
additional records the standard-setting part requires you to keep.
    (g) We may require you to send us an annual report of the engines/
equipment you produce under this section.

Subpart D--Amended]

    164. Section 1068.301 is revised to read as follows:


Sec.  1068.301  What general provisions apply?

    (a) This subpart applies to you if you import into the United 
States engines or equipment subject to our emission standards or 
equipment containing engines subject to our emission standards.
    (b) In general, engines/equipment that you import must be covered 
by a certificate of conformity unless they were built before emission 
standards started to apply. This subpart describes the limited cases 
where we allow importation of exempt or excluded engines/equipment. For 
equipment not subject to equipment-based exhaust emission standards, an 
exemption of the engine allows you to import the equipment.
    (c) The U.S. Customs Service may prevent you from importing engines 
or equipment if you do not meet the requirements of this subpart. In 
addition, U.S. Customs Service regulations may contain other 
requirements for engines/equipment imported into the United States (see 
19 CFR Chapter I).
    (d) Complete the appropriate EPA declaration form before importing 
any engines or equipment. These forms are available on the Internet at 
http://www.epa.gov/otaq/imports or by phone at 734-214-4100. Importers 
must keep the forms for five years and make them available promptly 
upon request.
    165. Section 1068.305 is revised to read as follows:


Sec.  1068.305  How do I get an exemption or exclusion for imported 
engines/equipment?

    (a) You must meet the requirements of the specific exemption or 
exclusion you intend to use and complete the appropriate declaration 
form described in Sec.  1068.301(d).
    (b) If we ask for it, prepare a written request in which you do the 
following:
    (1) Give your name, address, telephone number, and taxpayer 
identification number.
    (2) Give the engine/equipment owner's name, address, telephone 
number, and taxpayer identification number.
    (3) Identify the make, model, identification number, and original 
production year of all engines/equipment.
    (4) Identify which exemption or exclusion in this subpart allows 
you to import nonconforming engines/equipment and describe how your 
engine/equipment qualifies.
    (5) Tell us where you will keep your engines/equipment if you might 
need to store them until we approve your request.
    (6) Authorize us to inspect or test your engines/equipment as the 
Act allows.
    (c) We may ask for more information.
    (d) You may import the nonconforming engines/equipment you identify 
in your request if you get prior written approval from us. The U.S.

[[Page 28383]]

Customs Service may require you to show them the approval letter. We 
may temporarily or permanently approve the exemptions or exclusions, as 
described in this subpart.
    (e) Meet the requirements specified for the appropriate exemption 
in this part or the standard-setting part, including any labeling 
requirements that apply.
    166. Section 1068.310 is revised to read as follows:


Sec.  1068.310  What are the exclusions for imported engines/equipment?

    If you show us that your engines/equipment qualify under one of the 
paragraphs of this section, we will approve your request to import such 
excluded engines/equipment. You must have our approval before importing 
engines/equipment under paragraph (a) of this section. You may, but are 
not required to request our approval to import the engines/equipment 
under paragraph (b) or (c) of this section. The following engines/
equipment are excluded:
    (a) Engines/equipment used solely for competition. Engines/
equipment that you demonstrate will be used solely for competition are 
excluded from the restrictions on imports in Sec.  1068.301(b), but 
only if they are properly labeled. See the standard-setting part for 
provisions related to this demonstration. Section 1068.101(b)(4) 
prohibits anyone from using these excluded engines/equipment for 
purposes other than competition.
    (b) Stationary engines. The definition of nonroad engine in Sec.  
1068.30 does not include certain engines used in stationary 
applications. Such engines (and equipment containing such engines) may 
be subject to the standards of 40 CFR part 60. Engines that are 
excluded from the definition of nonroad engine in this part and are not 
required to be certified to standards under 40 CFR part 60 are not 
subject to the restrictions on imports in Sec.  1068.301(b), but only 
if they are properly labeled and there is clear and convincing evidence 
that each engine will be used in a stationary application (see 
paragraph (2)(iii) of the definition of ``Nonroad engine''). Section 
1068.101 restricts the use of stationary engines for non-stationary 
purposes, unless they are certified under 40 CFR part 60 to the same 
standards that would apply to nonroad engines for the same model year.
    (c) Other engines/equipment. The standard-setting parts may exclude 
engines/equipment used in certain applications. For example, engines 
used in aircraft and very small engines used in hobby vehicles are 
generally excluded. Engines/equipment used in underground mining are 
excluded if they are regulated by the Mine Safety and Health 
Administration.
    167. Section 1068.315 is revised to read as follows:


Sec.  1068.315  What are the permanent exemptions for imported engines/
equipment?

    We may approve a permanent exemption from the restrictions on 
imports under Sec.  1068.301(b) under the following conditions:
    (a) National security exemption. You may import an engine or piece 
of equipment under the national security exemption in Sec.  1068.225, 
but only if it is properly labeled.
    (b) Manufacturer-owned engine/equipment exemption. You may import 
manufacturer-owned engines/equipment, as described in Sec.  1068.215.
    (c) Replacement engine exemption. You may import a nonconforming 
replacement engine as described in Sec.  1068.240. To use this 
exemption, you must be a certificate holder for a family we regulate 
under the same part as the replacement engine.
    (d) Extraordinary circumstances exemption. You may import a 
nonconforming engine or piece of equipment if we grant hardship relief 
as described in Sec.  1068.245.
    (e) Small-volume manufacturer exemption. You may import a 
nonconforming engine or piece of equipment if we grant hardship relief 
for a small-volume manufacturer, as described in Sec.  1068.250.
    (f) Equipment-manufacturer hardship exemption. You may import a 
nonconforming engine if we grant an exemption for the transition to new 
or revised emission standards, as described in Sec.  1068.255.
    (g) [Reserved]
    (h) Identical configuration exemption. Unless specified otherwise 
in the standard-setting part, you may import nonconforming engines/
equipment if they are identical to certified engines/equipment produced 
by the same manufacturer, subject to the following provisions:
    (1) You must meet all the following criteria:
    (i) You have owned the engines/equipment for at least six months.
    (ii) You agree not to sell, lease, donate, trade, or otherwise 
transfer ownership of the engines/equipment for at least five years. 
During this period, the only acceptable way to dispose of the engines/
equipment is to destroy or export them.
    (iii) You use data or evidence sufficient to show that the engines/
equipment are in a configuration that is identical to engines/equipment 
the original manufacturer has certified to meet emission standards that 
apply at the time the manufacturer finished assembling or modifying the 
engines/equipment in question. If you modify the engines/equipment to 
make them identical, you must completely follow the original 
manufacturer's written instructions.
    (2) We will tell you in writing if we find the information 
insufficient to show that the engines/equipment are eligible for this 
exemption. In this case, we will not consider your request further 
until you address our concerns.
    (i) Ancient engine/equipment exemption. If you are not the original 
engine/equipment manufacturer, you may import nonconforming engines/
equipment that are subject to a standard-setting part and were first 
manufactured at least 21 years earlier, as long as they are still in 
their original configurations.
    168. Section 1068.320 is revised to read as follows:


Sec.  1068.320  How must I label imported engines/equipment with an 
exclusion or a permanent exemption?

    (a) For engines/equipment imported under Sec.  1068.310(a) or (b), 
you must place a permanent label or tag on all engines/equipment. If no 
specific label requirements in the standard-setting part apply for 
these engines/equipment, you must meet the following requirements:
    (1) Attach the label or tag in one piece so no one can remove it 
without destroying or defacing it.
    (2) Make sure it is durable and readable for the engine/equipment's 
entire life.
    (3) Secure it to a part of the engine/equipment needed for normal 
operation and not normally requiring replacement.
    (4) Write it in English.
    (5) For labels on the engine, make the labels readily visible to 
the average person after the engine is installed in the equipment.
    (b) On the engine/equipment label or tag, do the following:
    (1) Include the heading ``EMISSION CONTROL INFORMATION''.
    (2) Include your full corporate name and trademark.
    (3) State the engine displacement (in liters) and rated power. If 
the engine's rated power is not established, state the approximate 
power rating accurately enough to allow a determination of which 
standards would otherwise apply.
    (4) State: ``THIS ENGINE IS EXEMPT FROM THE REQUIREMENTS OF

[[Page 28384]]

[identify the part referenced in Sec.  1068.1(a) that would otherwise 
apply], AS PROVIDED IN [identify the paragraph authorizing the 
exemption (for example, ``40 CFR 1068.315(a)'')]. INSTALLING THIS 
ENGINE IN ANY DIFFERENT APPLICATION MAY BE A VIOLATION OF FEDERAL LAW 
SUBJECT TO CIVIL PENALTY.''.
    (c) Get us to approve alternate label language if it is more 
accurate for your engine/equipment.
    169. Section 1068.325 is revised to read as follows:


Sec.  1068.325  What are the temporary exemptions for imported engines/
equipment?

    You may import engines/equipment under certain temporary 
exemptions, subject to the conditions in this section. We may ask the 
U.S. Customs Service to require a specific bond amount to make sure you 
comply with the requirements of this subpart. You may not sell or lease 
one of these engines/equipment while it is in the United States. You 
must eventually export the engine/equipment as we describe in this 
section unless you get a certificate of conformity for it or it 
qualifies for one of the permanent exemptions in Sec.  1068.315. 
Section 1068.330 specifies an additional temporary exemption allowing 
you to import certain engines/equipment you intend to modify.
    (a) Exemption for repairs or alterations. You may temporarily 
import nonconforming engines/equipment under bond solely for repair or 
alteration. You may operate the engine/equipment in the United States 
only as necessary to repair it, alter it, or ship it to or from the 
service location. Export the engine/equipment directly after servicing 
is complete.
    (b) Testing exemption. You may temporarily import nonconforming 
engines/equipment under bond for testing if you follow the requirements 
of Sec.  1068.210. You may operate the engines/equipment in the United 
States only as needed to perform tests. This exemption expires one year 
after you import the engine/equipment, unless we approve an extension. 
The engine/equipment must be exported before the exemption expires.
    (c) Display exemption. You may temporarily import nonconforming 
engines/equipment under bond for display, as described in Sec.  
1068.220. This exemption expires one year after you import the engine/
equipment, unless we approve your request for an extension. We may 
approve an extension of up to one more year for each request, but no 
more than three years in total. The engine/equipment must be exported 
by the time the exemption expires or directly after the display 
concludes, whichever comes first.
    (d) Export exemption. You may temporarily import nonconforming 
engines/equipment to export them, as described in Sec.  1068.230. You 
may operate the engine/equipment in the United States only as needed to 
prepare it for export. Label the engine/equipment as described in Sec.  
1068.230.
    (e) Diplomatic or military exemption. You may temporarily import 
nonconforming engines/equipment without bond if you represent a foreign 
government in a diplomatic or military capacity. In your request to the 
Designated Officer (see Sec.  1068.305), include either written 
confirmation from the U.S. State Department that you qualify for this 
exemption or a copy of your orders for military duty in the United 
States. We will rely on the State Department or your military orders to 
determine when your diplomatic or military status expires, at which 
time you must export your exempt engines/equipment.
    (f) Delegated-assembly exemption. You may import a nonconforming 
engine for final assembly under the provisions of Sec.  1068.260. 
However, this does not include the staged-assembly provisions of Sec.  
1068.260(j).
    (g) Partially complete engine exemption. You may import an engine 
if another company already has a certificate of conformity and will be 
modifying the engine to be in its final, certified configuration under 
the provisions of Sec.  1068.262.


Sec.  1068.330  [Removed]

    170. Section 1068.330 is removed.
    171. Section 1068.335 is revised to read as follows:


Sec.  1068.335  What are the penalties for violations?

    (a) All imported engines/equipment. Unless you comply with the 
provisions of this subpart, importation of nonconforming engines/
equipment violates sections 203 and 213(d) of the Act (42 U.S.C. 7522 
and 7547(d)). You may then have to export the engines/equipment, or pay 
civil penalties, or both. The U.S. Customs Service may seize unlawfully 
imported engines and equipment.
    (b) Temporarily imported engines/equipment. If you do not comply 
with the provisions of this subpart for a temporary exemption under 
Sec.  1068.325 or Sec.  1068.330, you may forfeit the total amount of 
the bond in addition to the sanctions we identify in paragraph (a) of 
this section. We will consider an engine or piece of equipment to be 
exported if it has been destroyed or delivered to the U.S. Customs 
Service for export or other disposition under applicable Customs laws 
and regulations. EPA or the U.S. Customs Service may offer you a grace 
period to allow you to export temporarily exempted engines/equipment 
without penalty after the exemption expires.

Subpart E--[Amended]

    172. Section 1068.401 is revised to read as follows:


Sec.  1068.401  What is a selective enforcement audit?

    (a) We may conduct or require you to conduct emission tests on your 
production engines/equipment in a selective enforcement audit. This 
requirement is independent of any requirement for you to routinely test 
production-line engines/equipment. For products subject to equipment-
based standards, but tested using engine-based test procedures, this 
subpart applies to the engines and/or the equipment, as applicable. 
Otherwise this subpart applies to engines for products subject to 
engine-based standards and to equipment for products subject to 
equipment-based standards.
    (b) If we send you a signed test order, you must follow its 
directions and the provisions of this subpart. We may tell you where to 
test the engines/equipment. This may be where you produce the engines/
equipment or any other emission testing facility.
    (c) If we select one or more of your families for a selective 
enforcement audit, we will send the test order to the person who signed 
the application for certification or we will deliver it in person.
    (d) If we do not select a testing facility, notify the Designated 
Officer within one working day of receiving the test order where you 
will test your engines/equipment.
    (e) You must do everything we require in the audit without delay.
    173. Section 1068.405 is revised to read as follows:


Sec.  1068.405  What is in a test order?

    (a) In the test order, we will specify the following things:
    (1) The family and configuration (if any) we have identified for 
testing.
    (2) The engine/equipment assembly plant, storage facility, or (if 
you import the engines/equipment) port facility from which you must 
select engines/equipment.
    (3) The procedure for selecting engines/equipment for testing, 
including a selection rate.

[[Page 28385]]

    (4) The test procedures, duty cycles, and test points, as 
appropriate, for testing the engines/equipment to show that they meet 
emission standards.
    (b) We may state that we will select the test engines/equipment.
    (c) We may identify alternate families or configurations for 
testing in case we determine the intended engines/equipment are not 
available for testing or if you do not produce enough engines/equipment 
to meet the minimum rate for selecting test engines/equipment.
    (d) We may include other directions or information in the test 
order.
    (e) We may ask you to show us that you meet any additional 
requirements that apply to your engines/equipment (closed crankcases, 
for example).
    (f) In anticipation of a potential audit, you may give us a list of 
your preferred families and the corresponding assembly plants, storage 
facilities, or (if you import the engines/equipment) port facilities 
from which we should select engines/equipment for testing. The 
information would apply only for a single model year, so it would be 
best to include this information in your application for certification. 
If you give us this list before we issue a test order, we will consider 
your recommendations, but we may select engines/equipment differently.
    (g) If you also do routine production-line testing with the 
selected family in the same time period, the test order will tell you 
what changes you might need to make in your production-line testing 
schedule.
    174. Section 1068.410 is revised to read as follows:


Sec.  1068.410  How must I select and prepare my engines/equipment?

    (a) Selecting engines/equipment. Select engines/equipment as 
described in the test order. If you are unable to select test engines/
equipment this way, you may ask us to approve an alternate plan, as 
long as you make the request before you start selecting engines/
equipment.
    (b) Assembling engines/equipment. Produce and assemble test 
engines/equipment using your normal production and assembly process for 
that family.
    (1) Notify us directly if you make any change in your production, 
assembly, or quality control processes that might affect emissions 
between the time you receive the test order and the time you finish 
selecting test engines/equipment.
    (2) If you do not fully assemble engines/equipment at the specified 
location, we will describe in the test order how to select components 
to finish assembling the engines/equipment. Assemble these components 
onto the test engines/equipment using your documented assembly and 
quality control procedures.
    (c) Modifying engines/equipment. Once an engine or piece of 
equipment is selected for testing, you may adjust, repair, prepare, or 
modify it or check its emissions only if one of the following is true:
    (1) You document the need for doing so in your procedures for 
assembling and inspecting all your production engines/equipment and 
make the action routine for all the engines/equipment in the family.
    (2) This subpart otherwise allows your action.
    (3) We approve your action in advance.
    (d) Engine/equipment malfunction. If an engine/equipment 
malfunction prevents further emission testing, ask us to approve your 
decision to either repair the engine or delete it from the test 
sequence.
    (e) Setting adjustable parameters. Before any test, we may adjust 
or require you to adjust any adjustable parameter to any setting within 
its physically adjustable range.
    (1) We may adjust or require you to adjust idle speed outside the 
physically adjustable range as needed until the engine has stabilized 
emission levels (see paragraph (f) of this section). We may ask you for 
information needed to establish an alternate minimum idle speed.
    (2) We may make or specify adjustments within the physically 
adjustable range by considering their effect on emission levels, as 
well as how likely it is someone will make such an adjustment with in-
use engines/equipment.
    (f) Stabilizing emission levels. (1) Before you test production-
line engines/equipment for exhaust emission, you may operate the 
engine/equipment to stabilize the exhaust emission levels. Using good 
engineering judgment, operate your engines/equipment in a way that 
represents the way production engines/equipment will be used. You may 
operate each engine or piece of equipment for no more than the greater 
of two periods:
    (i) 50 hours.
    (ii) The number of hours you operated your emission-data engine/
equipment for certifying the family (see 40 CFR part 1065, subpart E).
    (2) Use good engineering judgment and follow the standard-setting 
part to stabilize equipment for evaporative emissions, where 
appropriate.
    (g) Damage during shipment. If shipping the engine/equipment to a 
remote facility for testing under a selective enforcement audit makes 
necessary an adjustment or repair, you must wait until after the 
initial emission test to do this work. We may waive this requirement if 
the test would be impossible or unsafe, or if it would permanently 
damage the engine/equipment. Report to us, in your written report under 
Sec.  1068.450, all adjustments or repairs you make on test engines/
equipment before each test.
    (h) Shipping engines/equipment. If you need to ship engines/
equipment to another facility for testing, make sure the test engines/
equipment arrive at the test facility within 24 hours after being 
selected. You may ask that we allow more time if you are unable to do 
this.
    (i) Retesting after invalid tests. You may retest an engine or 
piece of equipment if you determine an emission test is invalid under 
the standard-setting part. Explain in your written report reasons for 
invalidating any test and the emission results from all tests. If you 
retest an engine or piece of equipment and, within ten days after 
testing, ask to substitute results of the new tests for the original 
ones, we will answer within ten days after we receive your information.
    (j) Retesting after reaching a fail decision. You may retest your 
engines/equipment once a fail decision for the audit has been reached 
based on the first test on each engine or piece of equipment under 
Sec.  1068.420(c). You may test each engine or piece of equipment up to 
a total of three times, but you must perform the same number of tests 
on each engine or piece of equipment. You may further operate the 
engine/equipment to stabilize emission levels before testing, subject 
to the provisions of paragraph (f) of this section. We may approve 
retesting at other times if you send us a request with satisfactory 
justification.
    175. Section 1068.415 is revised to read as follows:


Sec.  1068.415  How do I test my engines/equipment?

    (a) Use the test procedures specified in the standard-setting part 
for showing that your engines/equipment meet emission standards. The 
test order will give further testing instructions.
    (b) If no test cells are available at a given facility, you may 
make alternate testing arrangements with our approval.
    (c) Test at least two engines/equipment in each 24-hour period 
(including void tests). However, if your projected U.S. nonroad sales 
within the family are less than 7,500 for the year, you may test a 
minimum of one per 24-

[[Page 28386]]

hour period. If you request and justify it, we may approve a lower 
testing rate.
    (d) For exhaust emissions, accumulate service on test engines/
equipment at a minimum rate of 6 hours per engine or piece of equipment 
during each 24-hour period. The first 24-hour period for service 
accumulation begins when you finish preparing an engine or piece of 
equipment for testing. The minimum service accumulation rate does not 
apply on weekends or holidays. You may ask us to approve a lower 
service accumulation rate. We may require you to accumulate hours more 
rapidly than the minimum rate, as appropriate. Plan your service 
accumulation to allow testing at the rate specified in paragraph (c) of 
this section. Select operation for accumulating operating hours on your 
test engines/equipment to represent normal in-use operation for the 
family.
    (e) Test engines/equipment in the same order you select them.
    176. Section 1068.420 is revised to read as follows:


Sec.  1068.420  How do I know when my family fails an SEA?

    (a) A failed engine or piece of equipment is one whose final 
deteriorated test results exceed an applicable emission standard for 
any regulated pollutant.
    (b) Continue testing engines/equipment until you reach a pass 
decision for all pollutants or a fail decision for one pollutant.
    (c) You reach a pass decision for the SEA requirements when the 
number of failed engines/equipment is less than or equal to the pass 
decision number in Appendix A to this subpart for the total number of 
engines/equipment tested. You reach a fail decision for the SEA 
requirements when the number of failed engines/equipment is greater 
than or equal to the fail decision number in Appendix A to this subpart 
for the total number of engines/equipment you test. An acceptable 
quality level of 40 percent is the basis for the pass or fail decision.
    (d) Consider test results in the same order as the engine/equipment 
testing sequence.
    (e) If you reach a pass decision for one pollutant, but need to 
continue testing for another pollutant, we will disregard these later 
test results for the pollutant with the pass decision.
    (f) Appendix A to this subpart lists multiple sampling plans. Use 
the sampling plan for the projected sales volume you reported in your 
application for the audited family.
    (g) We may choose to stop testing after any number of tests.
    (h) If we test some of your engines/equipment in addition to your 
own testing, we may decide not to include your test results as official 
data for those engines/equipment if there is substantial disagreement 
between your testing and our testing. We will reinstate your data as 
valid if you show us that we made an error and your data are correct.
    (i) If we rely on our test data instead of yours, we will notify 
you in writing of our decision and the reasons we believe your facility 
is not appropriate for doing the tests we require under this subpart. 
You may request in writing that we consider your test results from the 
same facility for future testing if you show us that you have made 
changes to resolve the problem.
    177. Section 1068.425 is revised to read as follows:


Sec.  1068.425  What happens if one of my production-line engines/
equipment exceeds the emission standards?

    (a) If one of your production-line engines/equipment fails to meet 
one or more emission standards (see Sec.  1068.420), the certificate of 
conformity is automatically suspended for that engine or piece of 
equipment. You must take the following actions before your certificate 
of conformity can cover that engine or piece of equipment:
    (1) Correct the problem and retest the engine/equipment to show it 
complies with all emission standards.
    (2) Include in your written report a description of the test 
results and the remedy for each engine or piece of equipment (see Sec.  
1068.450).
    (b) You may at any time ask for a hearing to determine whether the 
tests and sampling methods were proper (see subpart G of this part).
    178. Section 1068.430 is revised to read as follows:


Sec.  1068.430  What happens if a family fails an SEA?

    (a) We may suspend your certificate of conformity for a family if 
it fails the SEA under Sec.  1068.420. The suspension may apply to all 
facilities producing engines/equipment from a family, even if you find 
noncompliant engines/equipment only at one facility.
    (b) We will tell you in writing if we suspend your certificate in 
whole or in part. We will not suspend a certificate until at least 15 
days after the family fails the SEA. The suspension is effective when 
you receive our notice.
    (c) Up to 15 days after we suspend the certificate for a family, 
you may ask for a hearing to determine whether the tests and sampling 
methods were proper (see subpart G of this part). If we agree before a 
hearing that we used erroneous information in deciding to suspend the 
certificate, we will reinstate the certificate.
    179. Section 1068.435 is revised to read as follows:


Sec.  1068.435  May I sell engines/equipment from a family with a 
suspended certificate of conformity?

    You may sell engines/equipment that you produce after we suspend 
the family's certificate of conformity only if one of the following 
occurs:
    (a) You test each engine or piece of equipment you produce and show 
it complies with emission standards that apply.
    (b) We conditionally reinstate the certificate for the family. We 
may do so if you agree to recall all the affected engines/equipment and 
remedy any noncompliance at no expense to the owner if later testing 
shows that engines/equipment in the family still do not comply.
    180. Section 1068.440 is amended by revising paragraph (b) to read 
as follows:


Sec.  1068.440  How do I ask EPA to reinstate my suspended certificate?

* * * * *
    (b) Give us data from production-line testing showing that engines/
equipment in the remedied family comply with all the emission standards 
that apply.
    181. Section 1068.445 is revised to read as follows:


Sec.  1068.445  When may EPA revoke my certificate under this subpart 
and how may I sell these engines/equipment again?

    (a) We may revoke your certificate for a family in the following 
cases:
    (1) You do not meet the reporting requirements under this subpart.
    (2) Your family fails an SEA and your proposed remedy to address a 
suspended certificate is inadequate to solve the problem or requires 
you to change the engine/equipment's design or emission control system.
    (b) To sell engines/equipment from a family with a revoked 
certificate of conformity, you must modify the family and then show it 
complies with the applicable requirements.
    (1) If we determine your proposed design change may not control 
emissions for the engine/equipment's full useful life, we will tell you 
within five working days after receiving your report. In this case we 
will decide whether production-line testing will be enough for us to 
evaluate the change or whether you need to do more testing.
    (2) Unless we require more testing, you may show compliance by 
testing production-line engines/equipment as described in this subpart.

[[Page 28387]]

    (3) We will issue a new or updated certificate of conformity when 
you have met these requirements.
    182. Section 1068.450 is amended by revising paragraphs (a), (b), 
and (c) to read as follows:


Sec.  1068.450  What records must I send to EPA?

    (a) Within 30 calendar days of the end of each audit, send us a 
report with the following information:
    (1) Describe any facility used to test production-line engines/
equipment and state its location.
    (2) State the total U.S.-directed production volume and number of 
tests for each family.
    (3) Describe your test engines/equipment, including the family's 
identification and the engine/equipment's model year, build date, model 
number, identification number, and number of hours of operation before 
testing for each test engine or piece of equipment.
    (4) Identify where you accumulated hours of operation on the 
engines/equipment and describe the procedure and schedule you used.
    (5) Provide the test number; the date, time and duration of 
testing; test procedure; initial test results before and after 
rounding; final test results; and final deteriorated test results for 
all tests. Provide the emission figures for all measured pollutants. 
Include information for both valid and invalid tests and the reason for 
any invalidation.
    (6) Describe completely and justify any nonroutine adjustment, 
modification, repair, preparation, maintenance, or test for the test 
engine/equipment if you did not report it separately under this 
subpart. Include the results of any emission measurements, regardless 
of the procedure or type of equipment.
    (7) Report on each failed engine or piece of equipment as described 
in Sec.  1068.425.
    (b) We may ask you to add information to your written report, so we 
can determine whether your new engines/equipment conform with the 
requirements of this subpart.
    (c) An authorized representative of your company must sign the 
following statement:
    We submit this report under Sections 208 and 213 of the Clean Air 
Act. Our testing conformed completely with the requirements of 40 CFR 
part 1068. We have not changed production processes or quality-control 
procedures for the family in a way that might affect the emission 
control from production engines/equipment. All the information in this 
report is true and accurate, to the best of my knowledge. I know of the 
penalties for violating the Clean Air Act and the regulations. 
(Authorized Company Representative)
* * * * *
    183. Section 1068.455 is amended by revising paragraphs (d)(2), 
(d)(3), and (e) to read as follows:


Sec.  1068.455  What records must I keep?

* * * * *
    (d) * * *
    (2) The name of anyone who authorizes adjusting, repairing, 
preparing, or modifying a test engine/equipment and the names of all 
supervisors who oversee this work.
    (3) If you shipped the engine/equipment for testing, the date you 
shipped it, the associated storage or port facility, and the date the 
engine/equipment arrived at the testing facility.
* * * * *
    (e) If we ask, you must give us projected or actual production for 
a family. Include each assembly plant if you produce engines/equipment 
at more than one plant.
* * * * *
    184. Appendix A to Subpart E is amended by revising Table A-1 and 
the heading and footnote for Table A-2 to read as follows:

Appendix A to Subpart E of Part 1068--Plans for Selective Enforcement 
Auditing

* * * * *

                                      Table A-1.--Sampling Plan Code Letter
----------------------------------------------------------------------------------------------------------------
                                                                            Minimum number of tests    Maximum
                   Projected family sales                     Code letter --------------------------  number of
                                                                  \1\        To pass      To fail       tests
----------------------------------------------------------------------------------------------------------------
20-50.......................................................           AA            3            5           20
20-99.......................................................            A            4            6           30
100-299.....................................................            B            5            6           40
300-499.....................................................            C            5            6           50
500+........................................................            D            5            6          60
----------------------------------------------------------------------------------------------------------------
\1\ A manufacturer may optionally use either the sampling plan for code letter ``AA'' or sampling plan for code
  letter ``A'' for Selective Enforcement Audits of families with annual sales between 20 and 50 engines/
  equipment. Additionally, the manufacturer may switch between these plans during the audit.

Table A-2.-- Sampling Plans for Different Family Sales Volumes

* * * * *
\a\ Stage refers to the cumulative number of engines/equipment 
tested.

    185. The heading of subpart F is revised to read as follows:

Subpart F--Reporting Defects and Recalling Engines/Equipment

    186. Section 1068.501 is revised to read as follows:


Sec.  1068.501  How do I report emission-related defects?

    This section addresses the certificate holder's responsibility to 
investigate and report emission-related defects in design, materials, 
or workmanship. The provisions of this section do not limit your 
liability under this part or the Clean Air Act. For example, selling an 
engine/equipment that does not conform to your application for 
certification is a violation of Sec.  1068.101(a)(1), independent of 
the requirements of this section. The requirements of this section 
apply separately to each certificate holder if there is more than one 
certificate holder for the equipment.
    (a) General provisions. As a certifying manufacturer, you must 
investigate in certain circumstances whether engines/equipment that 
have been introduced into U.S. commerce under your certificate have 
incorrect, improperly installed, or otherwise defective emission-
related components or systems. This includes defects in design, 
materials, or workmanship. You must also send us reports as specified 
by this section.
    (1) This section addresses defects for any of the following 
emission-related

[[Page 28388]]

components, or systems containing the following components:
    (i) Electronic control units, aftertreatment devices, fuel-metering 
components, EGR-system components, crankcase-ventilation valves, all 
components related to charge-air compression and cooling, and all 
sensors associated with any of these components.
    (ii) For engines and equipment subject to evaporative emission 
standards, fuel tanks, fuel caps, and fuel lines and connectors.
    (iii) Any other component whose primary purpose is to reduce 
emissions.
    (iv) Any other component whose failure might increase emissions of 
any pollutant without significantly degrading engine/equipment 
performance.
    (2) The requirements of this section relate to defects in any of 
the components or systems identified in paragraph (a)(1) of this 
section if the defects might affect any of the parameters or 
specifications in Appendix II of this part or might otherwise affect 
the emissions of any pollutant.
    (3) For the purposes of this section, defects do not include damage 
to emission-related components or systems (or maladjustment of 
parameters) caused by owners improperly maintaining or abusing their 
engines/equipment.
    (4) The requirements of this section do not apply to emission 
control information labels. Note however, that Sec.  1068.101(a)(1) 
prohibits the sale of engines/equipment without proper labels, which 
also applies to misprinted labels.
    (5) You must track the information specified in paragraph (b)(1) of 
this section. You must assess this data at least every three months to 
evaluate whether you exceed the thresholds specified in paragraphs (e) 
and (f) of this section. Where thresholds are based on a percentage of 
engines/equipment in the family, use actual sales figures for the whole 
model year when they become available. Use projected sales figures 
until the actual sales figures become available. You are not required 
to collect additional information other than that specified in 
paragraph (b)(1) of this section before reaching a threshold for an 
investigation specified in paragraph (e) of this section.
    (6) You may ask us to allow you to use alternate methods for 
tracking, investigating, reporting, and correcting emission-related 
defects. In your request, explain and demonstrate why you believe your 
alternate system will be at least as effective in the aggregate in 
tracking, identifying, investigating, evaluating, reporting, and 
correcting potential and actual emissions-related defects as the 
requirements in this section. In this case, provide all available data 
necessary to demonstrate why an alternate system is appropriate for 
your engines/equipment and how it will result in a system at least as 
effective as that required under this section.
    (7) If we determine that emission-related defects result in a 
substantial number of properly maintained and used engines/equipment 
not conforming to the regulations of this chapter during their useful 
life, we may order you to conduct a recall of your engines/equipment 
(see Sec.  1068.505).
    (8) Send all reports required by this section to the Designated 
Officer.
    (9) This section distinguishes between defects and possible 
defects. A possible defect exists anytime there is an indication that 
an emission-related component or system might have a defect, as 
described in paragraph (b)(1) of this section.
    (b) Investigation of possible defects. Investigate possible defects 
as follows:
    (1) If the number of engines/equipment that have a possible defect, 
as defined by this paragraph (b)(1), exceeds a threshold specified in 
paragraph (e) of this section, you must conduct an investigation to 
determine if an emission-related component or system is actually 
defective. You must classify an engine/equipment component or system as 
having a possible defect if any of the following sources of information 
shows there is a significant possibility that a defect exists:
    (i) A warranty claim is submitted for the component, whether this 
is under your emission-related warranty or any other warranty.
    (ii) Your quality-assurance procedures suggest that a defect may 
exist.
    (iii) You receive any other information for which good engineering 
judgment would indicate the component or system may be defective, such 
as information from dealers, field-service personnel, equipment 
manufacturers, hotline complaints, or engine diagnostic systems.
    (2) If the number of shipped replacement parts for any individual 
component is high enough that good engineering judgment would indicate 
a significant possibility that a defect exists, you must conduct an 
investigation to determine if it is actually defective. Note that this 
paragraph (b)(2) does not require data-tracking or recording provisions 
related to shipment of replacement parts.
    (3) Your investigation must be prompt, thorough, consider all 
relevant information, follow accepted scientific and engineering 
principles, and be designed to obtain all the information specified in 
paragraph (d) of this section.
    (4) Your investigation needs to consider possible defects that 
occur only within the useful life period, or within five years after 
the end of the model year, whichever is longer.
    (5) You must continue your investigation until you are able to show 
that there is no emission-related defect or you obtain all the 
information specified for a defect report in paragraph (d) of this 
section. Send us an updated defect report anytime you have significant 
additional information.
    (6) If a component with a possible defect is used in additional 
families or model years, you must investigate whether the component may 
be defective when used in these additional families or model years, and 
include these results in any defect report you send under paragraph (c) 
of this section.
    (7) If your initial investigation concludes that the number of 
engines/equipment with a defect is fewer than any of the thresholds 
specified in paragraph (f) of this section, but other information later 
becomes available that may show that the number of engines/equipment 
with a defect exceeds a threshold, then you must resume your 
investigation. If you resume an investigation, you must include the 
information from the earlier investigation to determine whether to send 
a defect report.
    (c) Reporting defects. You must send us a defect report in either 
of the following cases:
    (1) Your investigation shows that the number of engines/equipment 
with a defect exceeds a threshold specified in paragraph (f) of this 
section. Send the defect report within 21 days after the date you 
identify this number of defective engines/equipment. See paragraph (h) 
of this section for reporting requirements that apply if the number of 
engines/equipment with a defect does not exceed any of the thresholds 
in paragraph (f) of this section.
    (2) You know there are emission-related defects for a component or 
system in a number of engines/equipment that exceeds a threshold 
specified in paragraph (f) of this section, regardless of how you 
obtain this information. Send the defect report within 21 days after 
you learn that the number of defects exceeds a threshold.

[[Page 28389]]

    (d) Contents of a defect report. Include the following information 
in a defect report:
    (1) Your corporate name and a person to contact regarding this 
defect.
    (2) A description of the defect, including a summary of any 
engineering analyses and associated data, if available.
    (3) A description of the engines/equipment that have the defect, 
including families, models, and range of production dates.
    (4) An estimate of the number and percentage of each class or 
category of affected engines/equipment that have the defect, and an 
explanation of how you determined this number. Describe any statistical 
methods you used under paragraph (g)(6) of this section.
    (5) An estimate of the defect's impact on emissions, with an 
explanation of how you calculated this estimate and a summary of any 
emission data demonstrating the impact of the defect, if available.
    (6) A description of your plan for addressing the defect or an 
explanation of your reasons for not believing the defects must be 
addressed.
    (e) Thresholds for conducting a defect investigation. You must 
begin a defect investigation based on the following number of engines/
equipment that may have the defect:
    (1) For engines/equipment with maximum engine power at or below 560 
kW:
    (i) For families with annual sales below 500 units: 50 or more 
engines/equipment.
    (ii) For families with annual sales from 500 to 50,000 units: more 
than 10.0 percent of the total number of engines/equipment in the 
family.
    (iii) For families with annual sales from 50,000 to 550,000 units: 
more than the total number of engines/equipment represented by the 
following equation:

Investigation threshold = 5,000 + (Production units-50,000) x 0.04

    (iv) For families with annual sales above 550,000 units: 25,000 or 
more engines/equipment.
    (2) For engines/equipment with maximum engine power greater than 
560 kW:
    (i) For families with annual sales below 250 units: 25 or more 
engines/equipment.
    (ii) For families with annual sales at or above 250 units: more 
than 10.0 percent of the total number of engines/equipment in the 
family.
    (f) Thresholds for filing a defect report. You must send a defect 
report based on the following number of engines/equipment that have the 
defect:
    (1) For engines/equipment with maximum engine power at or below 560 
kW:
    (i) For families with annual sales below 1,000 units: 20 or more 
engines/equipment.
    (ii) For families with annual sales from 1,000 to 50,000 units: 
more than 2.0 percent of the total number of engines/equipment in the 
family.
    (iii) For families with annual sales from 50,000 to 550,000 units: 
more than the total number of engines/equipment represented by the 
following equation:

Reporting threshold = 1,000 + (Production units -50,000) x 0.01

    (iv) For families with annual sales above 550,000 units: 6,000 or 
more engines/equipment.
    (2) For engines/equipment with maximum engine power greater than 
560 kW:
    (i) For families with annual sales below 150 units: 10 or more 
engines/equipment.
    (ii) For families with annual sales from 150 to 750 units: 15 or 
more engines/equipment.
    (iii) For families with annual sales above 750 units: more than 2.0 
percent of the total number of engines/equipment in the family.
    (g) How to count defects. (1) Track defects separately for each 
model year and family as much as possible. If information is not 
identifiable by model year or family, use good engineering judgment to 
evaluate whether you exceed a threshold in paragraph (e) or (f) of this 
section. Consider only your U.S.-directed production volume.
    (2) Within a family, track defects together for all components or 
systems that are the same in all material respects. If multiple 
companies separately supply a particular component or system, treat 
each company's component or system as unique.
    (3) For engine-based standards, if a possible defect is not 
attributed to any specific part of the engine, consider the complete 
engine a distinct component for evaluating whether you exceed a 
threshold in paragraph (e) of this section. For equipment-based 
standards, if a possible defect is not attributed to any specific part 
of the equipment, consider the complete piece of equipment a distinct 
component for evaluating whether you exceed a threshold in paragraph 
(e) of this section.
    (4) If you correct defects before they reach the ultimate purchaser 
as a result of your quality-assurance procedures, count these against 
the investigation thresholds in paragraph (e) of this section unless 
you routinely check every engine or piece of equipment in the family. 
Do not count any corrected defects as actual defects under paragraph 
(f) of this section.
    (5) Use aggregated data from all the different sources identified 
in paragraph (b)(1) of this section to determine whether you exceed a 
threshold in paragraphs (e) and (f) of this section.
    (6) If information is readily available to conclude that the 
possible defects identified in paragraph (b)(1) of this section are 
actual defects, count these toward the reporting thresholds in 
paragraph (f) of this section.
    (7) During an investigation, use appropriate statistical methods to 
project defect rates for engines/equipment that you are not otherwise 
able to evaluate. For example, if 75 percent of the components replaced 
under warranty are available for evaluation, it would be appropriate to 
extrapolate known information on failure rates to the components that 
are unavailable for evaluation. Take steps as necessary to prevent bias 
in sampled data. Make adjusted calculations to take into account any 
bias that may remain.
    (h) Investigation reports. Once you trigger an investigation 
threshold under paragraph (e) of this section, you must report your 
progress and conclusions. In your reports, include the information 
specified in paragraph (d) of this section, or explain why the 
information is not relevant. Send us the following reports:
    (1) While you are investigating, send us mid-year and end-of-year 
reports to describe the methods you are using and the status of the 
investigation. Send these status reports no later than June 30 and 
December 31 of each year.
    (2) If you find that the number of components or systems with an 
emission-related defect exceeds a threshold specified in paragraph (f) 
of this section, send us a report describing your findings within 21 
days after the date you reach this conclusion.
    (3) If you find that the number of components or systems with an 
emission-related defect does not exceed any of the thresholds specified 
in paragraph (f) of this section, send us a final report supporting 
this conclusion. For example, you may exclude warranty claims that 
resulted from misdiagnosis and you may exclude defects caused by 
improper maintenance, improper use, or misfueling. Send this report 
within 21 days after the date you reach this conclusion.
    (i) Future production. If you identify a design or manufacturing 
defect that prevents engines/equipment from meeting the requirements of 
this part,

[[Page 28390]]

you must correct the defect as soon as possible for future production 
of engines/equipment in every family affected by the defect. This 
applies without regard to whether you are required to conduct a defect 
investigation or submit a defect report under this section.
    187. Section 1068.505 is revised to read as follows:


Sec.  1068.505  How does the recall program work?

    (a) If we make a determination that a substantial number of 
properly maintained and used engines/equipment do not conform to the 
regulations of this chapter during their useful life, you must submit a 
plan to remedy the nonconformity of your engines/equipment. We will 
notify you of our determination in writing. Our notice will identify 
the class or category of engines/equipment affected and describe how we 
reached our conclusion. If this happens, you must meet the requirements 
and follow the instructions in this subpart. You must remedy at your 
expense noncompliant engines/equipment that have been properly 
maintained and used, as described in Sec.  1068.510(a)(7). You may not 
transfer this expense to a dealer (or equipment manufacturer for 
engine-based standards) through a franchise or other agreement.
    (b) You may ask for a hearing if you disagree with our 
determination (see subpart G of this part).
    (c) Unless we withdraw the determination of noncompliance, you must 
respond to it by sending a remedial plan to the Designated Officer by 
the later of these two deadlines:
    (1) Within 60 days after we notify you.
    (2) Within 60 days after a hearing.
    (d) Once you have sold engines/equipment to the ultimate purchaser, 
we may inspect or test the engines/equipment only if the purchaser 
permits it, or if state or local inspection programs separately provide 
for it.
    (e) You may ask us to allow you to conduct your recall differently 
than specified in this subpart, consistent with section 207(c) of the 
Act (42 U.S.C. 7541(c)).
    (f) You may do a voluntary recall under Sec.  1068.535, unless we 
have made the determination described in Sec.  1068.535(a).
    (g) For purposes of recall, owner means someone who owns an engine 
or piece of equipment affected by a remedial plan.
    188. Section 1068.510 is revised to read as follows:


Sec.  1068.510  How do I prepare and apply my remedial plan?

    (a) In your remedial plan, describe all of the following:
    (1) The class or category of engines/equipment to be recalled, 
including the number of engines/equipment involved and the model year 
or other information needed to identify the engines/equipment.
    (2) The modifications, alterations, repairs, corrections, 
adjustments, or other changes you will make to correct the affected 
engines/equipment.
    (3) A brief description of the studies, tests, and data that 
support the effectiveness of the remedy you propose to use.
    (4) The instructions you will send to those who will repair the 
engines/equipment under the remedial plan.
    (5) How you will determine the owners' names and addresses.
    (6) How you will notify owners; include copies of any notification 
letters.
    (7) The proper maintenance or use you will specify, if any, as a 
condition to be eligible for repair under the remedial plan. Describe 
how these specifications meet the provisions of paragraph (e) of this 
section. Describe how the owners should show they meet your conditions.
    (8) The steps owners must take for you to do the repair. You may 
set a date or a range of dates, specify the amount of time you need, 
and designate certain facilities to do the repairs.
    (9) Which company (or group) you will assign to do or manage the 
repairs.
    (10) If your employees or authorized warranty agents will not be 
doing the work, state who will and describe their qualifications.
    (11) How you will ensure an adequate and timely supply of parts.
    (12) The effect of proposed changes on fuel consumption, 
driveability, and safety of the engines/equipment you will recall; 
include a brief summary of the information supporting these 
conclusions.
    (13) How you intend to label the engines/equipment you repair and 
where you will place the label on the engine/equipment (see Sec.  
1068.515).
    (b) We may require you to add information to your remedial plan.
    (c) We may require you to test the proposed repair to show it will 
remedy the noncompliance.
    (d) Use all reasonable means to locate owners. We may require you 
to use government or commercial registration lists to get owners' names 
and addresses, so your notice will be effective.
    (e) The maintenance or use that you specify as a condition for 
eligibility under the remedial plan may include only things you can 
show would cause noncompliance. Do not require use of a component or 
service identified by brand, trade, or corporate name, unless we 
approved this approach with your original certificate of conformity. 
Also, do not place conditions on who maintained the engine/equipment.
    (f) We may require you to adjust your repair plan if we determine 
owners would be without their engines/equipment or equipment for an 
unreasonably long time.
    (g) We will tell you in writing within 15 days of receiving your 
remedial plan whether we have approved or disapproved it. We will 
explain our reasons for any disapproval.
    (h) Begin notifying owners within 15 days after we approve your 
remedial plan. If we hold a hearing, but do not change our position 
about the noncompliance, you must begin notifying owners within 60 days 
after we complete the hearing, unless we specify otherwise.
    189. Section 1068.515 is revised to read as follows:


Sec.  1068.515  How do I mark or label repaired engines/equipment?

    (a) Attach a label to engines/equipment you repair under the 
remedial plan. At your discretion, you may label or mark engines/
equipment you inspect but do not repair.
    (b) Make the label from a durable material suitable for its planned 
location. Make sure no one can remove the label without destroying or 
defacing it.
    (c) On the label, designate the specific recall campaign and state 
where you repaired or inspected the engine/equipment.
    (d) We may waive or modify the labeling requirements if we 
determine they are overly burdensome.
    190. Section 1068.520 is revised to read as follows:


Sec.  1068.520  How do I notify affected owners?

    (a) Notify owners by first class mail, unless we say otherwise. We 
may require you to use certified mail. Include the following in your 
notice:
    (1) State: ``The U.S. Environmental Protection Agency has 
determined that your engine/equipment may be emitting pollutants in 
excess of the federal emission standards, as defined in Title 40 of the 
Code of Federal Regulations. These emission standards were established 
to protect the public health or welfare from air pollution.''.
    (2) State that you (or someone you designate) will repair these 
engines/equipment at your expense.

[[Page 28391]]

    (3) If we approved maintenance and use conditions in your remedial 
plan, state that you will make these repairs only if owners show their 
engines/equipment meet the conditions for proper maintenance and use. 
Describe these conditions and how owners should prove their engines/
equipment are eligible for repair.
    (4) Describe the components your repair will affect and say 
generally how you will repair the engines/equipment.
    (5) State that the engine/equipment, if not repaired, may fail an 
emission inspection test if state or local law requires one.
    (6) Describe any adverse effects on its performance or driveability 
that would be caused by not repairing the engine/equipment.
    (7) Describe any adverse effects on the functions of other 
components that would be caused by not repairing the engine/equipment.
    (8) Specify the date you will start the repairs, the amount of time 
you will need to do them, and where you will do them. Include any other 
information owners may need to know.
    (9) Include a self-addressed card that owners can mail back if they 
have sold the engine/equipment; include a space for owners to write the 
name and address of a buyer.
    (10) State that owners should call you at a phone number you give 
to report any difficulty in obtaining repairs.
    (11) State: ``To ensure your full protection under the emission 
warranty on your [engine/equipment] by federal law, and your right to 
participate in future recalls, we recommend you have your [engine/
equipment] serviced as soon as possible. We may consider your not 
servicing it to be improper maintenance.''.
    (b) We may require you to add information to your notice or to send 
more notices.
    (c) You may not in any communication with owners or dealers say or 
imply that your noncompliance does not exist or that it will not 
degrade air quality.
    191. Section 1068.525 is amended by revising paragraphs (b) and (c) 
to read as follows:


Sec.  1068.525  What records must I send to EPA?

* * * * *
    (b) From the time you begin to notify owners, send us a report 
within 25 days of the end of each calendar quarter. Send reports for 
six consecutive quarters or until all the engines/equipment are 
inspected, whichever comes first. In these reports, identify the 
following:
    (1) The range of dates you needed to notify owners.
    (2) The total number of notices sent.
    (3) The number of engines/equipment you estimate fall under the 
remedial plan (explain how you determined this number).
    (4) The cumulative number of engines/equipment you inspected under 
the remedial plan.
    (5) The cumulative number of these engines/equipment you found 
needed the specified repair.
    (6) The cumulative number of these engines/equipment you have 
repaired.
    (7) The cumulative number of engines/equipment you determined to be 
unavailable due to exportation, theft, retirement, or other reasons 
(specify).
    (8) The cumulative number of engines/equipment you disqualified for 
not being properly maintained or used.
    (c) If your estimated number of engines/equipment falling under the 
remedial plan changes, change the estimate in your next report and add 
an explanation for the change.
* * * * *
    192. Section 1068.530 is amended by revising paragraph (b) to read 
as follows:


Sec.  1068.530  What records must I keep?

* * * * *
    (b) Keep a record of the names and addresses of owners you 
notified. For each engine or piece of equipment, state whether you did 
any of the following:
    (1) Inspected the engine/equipment.
    (2) Disqualified the engine/equipment for not being properly 
maintained or used.
    (3) Completed the prescribed repairs.
* * * * *
    193. Section 1068.535 is amended by revising the introductory text 
and paragraph (c) to read as follows:


Sec.  1068.535  How can I do a voluntary recall for emission-related 
problems?

    If we have made a determination that a substantial number of 
properly maintained and used engines/equipment do not conform to the 
regulations of this chapter during their useful life, you may not use a 
voluntary recall or other alternate means to meet your obligation to 
remedy the noncompliance. Thus, this section only applies where you 
learn that your family does not meet the requirements of this chapter 
and we have not made such a determination.
* * * * *
    (c) From the time you start the recall campaign, send us a report 
within 25 days of the end of each calendar quarter, following the 
guidelines in Sec.  1068.525(b). Send reports for six consecutive 
quarters or until all the engines/equipment are inspected, whichever 
comes first.
* * * * *
    194. Appendix I to part 1068 is amended by revising paragraph I to 
read as follows:

Appendix I to Part 1068--Emission-Related Components

* * * * *
    I. Emission-related components include any engine/equipment 
parts related to the following systems:
    1. Air-induction system.
    2. Fuel system, including evaporative emission controls.
    3. Ignition system.
    4. Exhaust gas recirculation systems.
    5. All components comprising the combustion chamber, including 
the piston, piston rings, block, head, and valves.
* * * * *
    195. A new part 1074 is added to subchapter U of chapter I to read 
as follows:

PART 1074--PREEMPTION OF STATE STANDARDS AND PROCEDURES FOR WAIVER 
OF FEDERAL PREEMPTION FOR NONROAD ENGINES AND NONROAD VEHICLES

Subpart A--Applicability and General Provisions
Sec.
1074.1 Applicability.
1074.5 Definitions.
1074.10 Scope of preemption.
1074.12 Scope of preemption--specific provisions for locomotives and 
locomotive engines.
Subpart B--Procedures for Authorization
1074.101 Procedures for California nonroad authorization requests.
1074.105 Criteria for granting authorization.
1074.110 Adoption of California standards by other States.
1074.115 Relationship of Federal and State standards.

    Authority: 42 U.S.C. 7401-7671q.

Subpart A--Applicability and General Provisions


Sec.  1074.1  Applicability.

    The requirements of this part apply with respect to state and local 
standards and other requirements relating to the control of emissions 
from nonroad engines and nonroad vehicles.


Sec.  1074.5  Definitions.

    The definitions in this section apply to this part. As used in this 
part, all undefined terms have the meaning the Act gives to them. The 
definitions follow:
    Act means the Clean Air Act, as amended, 42 U.S.C. 7401-7671q.
    Administrator means the Administrator of the Environmental

[[Page 28392]]

Protection Agency and any authorized representatives.
    Commercial means an activity engaged in as a vocation.
    Construction equipment or vehicle means any internal combustion 
engine-powered machine primarily used in construction and located on 
commercial construction sites.
    Engine used in a locomotive means either an engine placed in a 
locomotive to move other equipment, freight, or passenger traffic, or 
an engine mounted on a locomotive to provide auxiliary power.
    Farm equipment or vehicle means any internal combustion engine-
powered machine primarily used in the commercial production and/or 
commercial harvesting of food, fiber, wood, or commercial organic 
products or for the processing of such products for further use on the 
farm.
    Locomotive means a piece of equipment meeting the definition of 
locomotive in 40 CFR 1033.901 that is propelled by a nonroad engine.
    New has the following meanings:
    (1) For locomotives, new has the meaning given in 40 CFR 1033.901.
    (2) For engines used in locomotives, new means an engine 
incorporated in (or intended to be incorporated in) in a new 
locomotive.
    (3) For other nonroad engines and equipment, new means a domestic 
or imported nonroad engine or nonroad vehicle the equitable or legal 
title to which has never been transferred to an ultimate purchaser. 
Where the equitable or legal title to an engine or vehicle is not 
transferred to an ultimate purchaser until after the engine or vehicle 
is placed into service, then the engine or vehicle will no longer be 
new once it is placed into service. A nonroad engine or vehicle is 
placed into service when it is used for its functional purposes. This 
paragraph (3) does not apply to locomotives or engines used in 
locomotives.
    Nonroad engine has the meaning given in 40 CFR 1068.30
    Primarily used means used 51 percent or more.
    States and localities means any or all of the states, 
commonwealths, and territories in the United States including the 
District of Columbia and any or all of their political subdivisions.
    Ultimate purchaser means the first person who in good faith 
purchases a new nonroad engine or new nonroad vehicle or equipment for 
purposes other than resale.
    United States has the meaning given in 40 CFR 1068.30.


Sec.  1074.10  Scope of preemption.

    (a) States and localities are preempted from adopting or enforcing 
standards or other requirements relating to the control of emissions 
from new engines smaller than 175 horsepower that are primarily used in 
farm or construction equipment or vehicles, as defined in this part. 
For equipment that is used in applications in addition to farming or 
construction activities, if the equipment is primarily used as farm 
and/or construction equipment or vehicles (as defined in this part), it 
is considered farm or construction equipment or vehicles.
    (b) For nonroad engines or vehicles other than those described in 
paragraph (a) of this section and Sec.  1074.12, States and localities 
are preempted from enforcing any standards or other requirements 
relating to control of emissions from nonroad engines or vehicles 
except as provided in subpart B of this part.


Sec.  1074.12  Scope of preemption specific provisions for locomotives 
and locomotive engines.

    (a) States and localities are preempted from adopting or enforcing 
standards or other requirements relating to the control of emissions 
from new locomotives and new engines used in locomotives.
    (b) During a period equivalent in length to 133 percent of the 
useful life, expressed as MW-hrs (or miles where applicable), beginning 
at the point at which the locomotive or engine becomes new, those 
standards or other requirements which are preempted include, but are 
not limited to, the following: emission standards, mandatory fleet 
average standards, certification requirements, retrofit and aftermarket 
equipment requirements, and nonfederal in-use testing requirements. The 
standards and other requirements specified in the preceding sentence 
are preempted whether applicable to new or other locomotives or 
locomotive engines.

Subpart B--Procedures for Authorization


Sec.  1074.101  Procedures for California nonroad authorization 
requests.

    (a) California must request authorization from the Administrator to 
enforce its adopted standards and other requirements relating to 
control of emissions from nonroad engines or vehicles that are not 
preempted by Sec.  1074.10(a) or Sec.  1074.12. The request must 
include the record on which the state rulemaking was based.
    (b) After receiving the authorization request, the Administrator 
will provide notice and opportunity for a public hearing regarding such 
requests.


Sec.  1074.105  Criteria for granting authorization.

    (a) The Administrator will grant the authorization if California 
determines that its standards will be, in the aggregate, at least as 
protective of public health and welfare as otherwise applicable federal 
standards.
    (b) The authorization will not be granted if the Administrator 
finds that any of the following are true:
    (1) California's determination is arbitrary and capricious.
    (2) California does not need such standards to meet compelling and 
extraordinary conditions.
    (3) The California standards and accompanying enforcement 
procedures are not consistent with section 209 of the Act (42 U.S.C. 
7543).
    (c) In considering any request from California to authorize the 
state to adopt or enforce standards or other requirements relating to 
control of emissions from new nonroad spark-ignition engines smaller 
than 50 horsepower, the Administrator will give appropriate 
consideration to safety factors (including the potential increased risk 
of burn or fire) associated with compliance with the California 
standard.


Sec.  1074.110  Adoption of California standards by other States.

    (a) Except as described in paragraph (b) of this section, any state 
other than California that has plan provisions approved under Part D of 
Title I of the Act (42 U.S.C. 7501 to 7515) may adopt and enforce 
emission standards for any period for nonroad engines and vehicles 
subject to the following requirements:
    (1) The state must provide notice to the Administrator that it has 
adopted such standards.
    (2) Such standards may not apply to new engines smaller than 175 
horsepower that are used in farm or construction equipment or vehicles, 
or to new locomotives or new engines used in locomotives.
    (3) Such standards and implementation and enforcement must be 
identical, for the period concerned, to the California standards 
authorized by the Administrator.
    (4) The state must adopt such standards at least two years before 
the standards first take effect.
    (5) California must have adopted such standards two years before 
the standards first take effect in the state that is adopting them 
under this section.
    (b) States and localities, other than the State of California, may 
not adopt or

[[Page 28393]]

attempt to enforce any standard or other requirement applicable to the 
control of emissions from spark-ignition engines smaller than 50 
horsepower, except standards or other requirements that were adopted by 
that state before September 1, 2003.


Sec.  1074.115  Relationship of Federal and State standards.

    If state standards apply to a new nonroad engine or vehicle 
pursuant to authorization granted under section 209 of the Act (42 
U.S.C. 7543), compliance with such state standards will be treated as 
compliance with the otherwise applicable standards of this chapter for 
engines or vehicles introduced into commerce in that state.

[FR Doc. 07-1998 Filed 5-17-07; 8:45 am]
BILLING CODE 6560-50-P