[Code of Federal Regulations]
[Title 40, Volume 31]
[Revised as of July 1, 2007]
From the U.S. Government Printing Office via GPO Access
[CITE: 40CFR1068.255]

[Page 834-836]
 
                   TITLE 40--PROTECTION OF ENVIRONMENT
 
         CHAPTER I--ENVIRONMENTAL PROTECTION AGENCY (CONTINUED)
 
PART 1068_GENERAL COMPLIANCE PROVISIONS FOR 
NONROAD PROGRAMS--Table of Contents
 
                   Subpart C_Exemptions and Exclusions
 
Sec.  1068.255  What are the provisions for exempting engines for hardship for
equipment manufacturers and secondary engine manufacturers?

    This section describes how, in unusual circumstances, we may exempt 
certain engines to prevent a hardship to an equipment manufacturer or a 
secondary engine manufacturer. This section does not apply to products 
that are subject to vehicle-based 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

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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 you need for your own equipment or if 
complying engines are available from other engine 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 an 
engine 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 to be exempted.
    (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 a complying engine.
    (4) Whether there was any breach of contract by an engine supplier.
    (5) The potential for market disruption.
    (b) Engine exemption. As an engine manufacturer, you may produce 
nonconforming engines for the equipment we exempt in paragraph (a) of 
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 permanent, legible label, written in block letters 
in English, to a readily visible part of each exempted engine. 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 or whom to contact for further information.
    (4) One of the following statements:
    (i) If the engine does not meet any emission standards: ``THIS 
ENGINE IS EXEMPT UNDER 40 CFR 1068.255 FROM EMISSION STANDARDS AND 
RELATED REQUIREMENTS.''.
    (ii) 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.
    (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) For the purpose of this section, a secondary engine manufacturer 
is a manufacturer that produces an engine by modifying an engine that is 
made by a different manufacturer for a different type of application. 
This includes, for example, automotive engines converted for use in 
industrial applications, or land-based engines converted for use in 
marine applications. This applies whether the secondary engine 
manufacturer is modifying a complete or partially complete engine and 
whether the engine was previously certified to emission standards or 
not. To be a secondary engine manufacturer, you must not be controlled 
by the manufacturer of the base engine (or by an entity that also 
controls the manufacturer of the base engine). In addition, equipment 
manufacturers that substantially modify engines become secondary engine 
manufacturers. For the purpose of this definition, ``substantially 
modify'' means changing an engine in a way that could change its 
emission characteristics.
    (2) 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 can approve the 
exemption under this section, you must 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

[[Page 836]]

emission standards that would otherwise apply, we will calculate the 
lost environmental benefit based on the compliance level you select for 
your engines.
    (3) The labeling requirements in paragraph (b) of this section apply 
to your exempted engines; however, if you certify engines to specific 
compliance levels, state on the label the compliance levels that apply 
to each engine.

[67 FR 68347, Nov. 8, 2002, as amended at 69 FR 39268, June 29, 2004; 70 
FR 40514, July 13, 2005]