[Federal Register Volume 63, Number 205 (Friday, October 23, 1998)]
[Rules and Regulations]
[Pages 56968-57023]
From the Federal Register Online via the Government Printing Office [www.gpo.gov]
[FR Doc No: 98-24836]


      

[[Page 56967]]

_______________________________________________________________________

Part II





Environmental Protection Agency





_______________________________________________________________________



40 CFR Parts 9, 86, and 89



Control of Emissions of Air Pollution From Nonroad Diesel Engines; 
Final Rule

Federal Register / Vol. 63, No. 205 / Friday, October 23, 1998 / 
Rules and Regulations

[[Page 56968]]



ENVIRONMENTAL PROTECTION AGENCY

40 CFR Parts 9, 86, and 89

[AMS-FRL-6155-3]
RIN 2060-AF76


Control of Emissions of Air Pollution From Nonroad Diesel Engines

AGENCY: Environmental Protection Agency (EPA).

ACTION: Final rule.

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SUMMARY: In this action, EPA is finalizing new emission standards for 
nonroad diesel engines. The affected engines are used in most land-
based nonroad equipment and some marine applications. The emission 
reductions resulting from the new standards will translate into 
significant, long-term improvements in air quality in many areas of the 
U.S. For engines in this large category of pollution sources, the 
standards for oxides of nitrogen and particulate matter emissions will 
be reduced by up to two-thirds from current standards. Overall, this 
program will provide much-needed assistance to states facing ozone and 
particulate air quality problems, which are causing a range of adverse 
health effects for their citizens, especially in terms of respiratory 
impairment and related illnesses.
    In compliance with the Paperwork Reduction Act, this document 
announces that the information collection requirements contained in 
this rule were approved by the Office of Management and Budget.

DATES: The amendments to 40 CFR Parts 86 and 89 are effective December 
22, 1998. The amendments to 40 CFR Part 9 are effective October 23, 
1998. The incorporation by reference of certain publications listed in 
the regulations is approved by the Director of the Federal Register as 
of December 22, 1998.

ADDRESSES: Materials relevant to this rule, including the Final 
Regulatory Impact Analysis are contained in Public Docket A-96-40, 
located at room M-1500, Waterside Mall (ground floor), U.S. 
Environmental Protection Agency, 401 M Street, S.W., Washington, DC 
20460. The docket may be inspected from 8:00 a.m. until 5:30 p.m., 
Monday through Friday. A reasonable fee may be charged by EPA for 
copying docket materials.
    For further information on electronic availability of this final 
rulemaking, see SUPPLEMENTARY INFORMATION below.

FOR FURTHER INFORMATION CONTACT: Alan Stout, U.S. EPA, Engine Programs 
and Compliance Division, (734) 214-4805; stout.alan@epamail.epa.gov.

SUPPLEMENTARY INFORMATION:

Regulated Entities

    Entities potentially regulated by this action are those that 
manufacture or introduce into commerce new compression-ignition nonroad 
engines, vehicles, or equipment, and entities that rebuild or 
remanufacture nonroad compression-ignition engines. Regulated 
categories and entities include:

------------------------------------------------------------------------
                Category                  Examples of regulated entities
------------------------------------------------------------------------
Industry...............................  Manufacturers of new nonroad
                                          diesel engines and equipment.
Industry...............................  Rebuilders and remanufacturers
                                          of nonroad diesel engines.
------------------------------------------------------------------------

    This list is not intended to be exhaustive, but rather provides a 
guide for readers regarding entities likely to be regulated by this 
action. To determine whether particular activities may be regulated by 
this action, the reader should carefully examine the regulations, 
especially the applicability criteria in 40 CFR 89.1, and the existing 
regulatory language in 40 CFR Part 89. Questions regarding the 
applicability of this action to a particular entity may be directed to 
the person listed in FOR FURTHER INFORMATION CONTACT.

Obtaining Electronic Copies of the Regulatory Documents

    The preamble, regulatory language and Final Regulatory Impact 
Analysis (Final RIA) are also available electronically from the EPA 
Internet Web site. This service is free of charge, except for any cost 
already incurred for internet connectivity. An electronic version of 
this final rule is made available on the day of publication on the 
primary Web site listed below. The EPA Office of Mobile Sources also 
publishes Federal Register actions and related documents on the 
secondary Web site listed below.

1. http://www.epa.gov/docs/fedrgstr/EPA-AIR/ (either select desired 
date or use Search feature)
2. http://www.epa.gov/OMSWWW/ (look in What's New or under the specific 
rulemaking topic)

    Please note that due to differences between the software used to 
develop the document and the software into which the document may be 
downloaded, changes in format, page length, etc., may occur.

Table of Contents

I. Introduction
II. Content of the Final Rule
    A. Emission Standards and Related Provisions
    B. Test Procedures
    C. Durability
    D. Averaging, Banking, and Trading
    E. Flexibility for Equipment Manufacturers
    F. Flexibility for Post-Manufacture Marinizers
    G. Control of Crankcase Emissions
    H. Control of Smoke
    I. Voluntary Low-Emitting Engine Program
    J. Technical Amendments
III. 2001 Review and Ensuring Emissions Control In Use
    A. 2001 Review
    B. Ensuring Emissions Control In Use
IV. Technological Feasibility
V. Projected Impacts
    A. Environmental Impacts
    B. Economic Impacts
    C. Cost-Effectiveness
VI. Public Participation
VII. Administrative Requirements
    A. Administrative Designation and Regulatory Analysis
    B. Regulatory Flexibility Act
    C. Paperwork Reduction Act
    D. Unfunded Mandates Reform Act
    E. Congressional Review Act
    F. National Technology Transfer and Advancement Act
    G. Protection of Children
    H. Enhancing Intergovernmental Partnerships
    I. Consultation and Coordination With Indian Tribal Governments
VIII. Statutory Authority

I. Introduction

    Air pollution continues to represent a serious threat to the health 
and well-being of millions of Americans and a large burden to the U.S. 
economy. Mobile source emission control programs, however, have a 
history of technological success that have made a very large 
contribution to reducing exposure to ambient air pollution. On June 17, 
1994, the Environmental Protection Agency (EPA) made an affirmative 
determination under section 213(a)(2) of the Clean Air Act that nonroad 
engines are significant contributors to ambient ozone or carbon 
monoxide (CO) levels in more than one nonattainment area (59 FR 31306, 
June 17, 1994). In the same notice, EPA also made a determination under 
section 213(a)(4) that other emissions from compression-ignition (CI) 
nonroad engines rated at or above 37 kilowatts (kW), specifically 
emissions of particulate matter (PM) and smoke, cause or contribute to 
air pollution that may reasonably be anticipated to endanger public 
health or welfare. Also in the June 1994 final rule, EPA set a first 
phase of emission standards (``Tier 1 standards'') for nonroad diesel 
engines rated 37 kW and above.1, 2 In the Notice

[[Page 56969]]

of Proposed Rulemaking (NPRM) for this final rule (September 24, 1997, 
62 FR 50152), EPA extended the finding under 213(a)(4) to CI nonroad 
engines rated under 37 kW. A more detailed discussion of the history of 
emission control programs for nonroad engines and other mobile sources 
is included in the preamble to the proposal for this rule.
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    \1\ 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. This contrasts with otto-
cycle engines (also called spark-ignition or SI engines), which 
typically operate on gasoline.
    2 This rulemaking is based on metric units. With the 
exception of engine power ratings, English units are included 
parenthetically throughout the preamble. The conversion of engine 
power ratings is included in Table 1, but is not repeated in the 
rest of the document.
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    In the NPRM, EPA estimated the contribution of nonroad diesel 
engines for comparison with other emission sources. For 1996, these 
engines were estimated to represent about 27 percent of mobile source 
emissions of oxides of nitrogen (NOX) and 13 percent of 
total NOX emissions. EPA estimates that these engines 
currently contribute about 48 percent of the directly emitted PM from 
mobile sources and 16 percent of total controllable PM emissions. In 
addition to directly emitted PM, EPA estimates that NOX 
emissions cause a significant additional amount of PM in the form of 
secondary nitrate particles. On average nationwide, this indirect PM 
represents an additional contribution to PM equal to about 30 percent 
of the total directly emitted PM tonnage. EPA projections also indicate 
that without further emission controls, the already significant 
contribution of nonroad diesels to NOX and PM will increase 
in the future. Chapter 5 of the Final Regulatory Impact Analysis (Final 
RIA) presents more complete estimates of emissions from all land-based 
nonroad diesel engines and marine diesel engines rated under 37 
kW.3
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    \3\ See also, ``Nonroad Engine and Vehicle Emission Study--
Report and Appendices,'' EPA-21A-201, November 1991 (available in 
Air Docket A-96-40).
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    This final rule is the result of several years of activity focused 
on reducing diesel engine emissions in the U.S. In 1994 and 1995, 
states and environmental groups encouraged EPA to adopt more stringent 
emission standards for highway and nonroad diesel engines to address 
the need for national pollution reduction measures to improve air 
quality in many urban areas. In response, EPA initiated discussions 
with engine manufacturers and other interested parties regarding future 
emission controls for these engines. EPA subsequently finalized new 
emission standards for heavy-duty highway engines starting with the 
2004 model year (October 21, 1997 62 FR 54695) and proposed the 
emission requirements for nonroad diesel engines that are finalized in 
this document (September 24, 1997, 62 FR 50152).
    This document finalizes a new set of emission standards for all 
nonroad diesel engines, except for locomotive engines, engines used in 
underground mining equipment, and marine engines rated at or above 37 
kW. This rule includes first-ever EPA emission standards for emissions 
from diesel engines rated under 37 kW. The emission reductions 
resulting from these engines will be a major step in reducing the human 
health and environmental impacts of ground-level ozone and particulate 
matter. Emissions from other nonroad engines not covered by this final 
rule are being addressed in other EPA rulemakings.
    As EPA has pursued the emission reductions needed to meet air 
quality goals, an important consideration has been harmonization with 
standards for nonroad engines adopted or under consideration in 
California, Europe, and elsewhere in the world. The goal of 
harmonization has been a major impetus and an important factor in the 
development of this rule. The principal goal of harmonization efforts, 
avoiding widespread duplicative design configurations, has been 
addressed in finalizing these emission standards. While some 
differences remain between EPA's final rule and the proposal 
established in Europe, EPA plans to continue its harmonization work 
with governments in Europe and in other countries. One major area in 
which a coordinated effort is being pursued is the development of a 
more effective particulate emission control program, including the 
evaluation and possible modification of the certification test cycle, 
as discussed in Section III.
    Based on the information presented in the preamble to the proposed 
rule and in the Final RIA, EPA believes the new standards are 
technologically feasible and otherwise appropriate under the Act. 
Nonetheless, it is clear that a significant amount of research and 
development will be needed on the part of engine manufacturers and 
others to comply with the new standards. Accordingly, EPA intends to 
review the feasibility of some of the standards finalized in this 
document by 2001, as described in Section III.

II. Content of the Final Rule

    This rulemaking includes a comprehensive program to reduce 
emissions from nonroad diesel engines and equipment. The program as 
finalized consists of stringent new emission standards, requirements to 
ensure that engines maintain their level of emission performance as 
they age, provisions providing compliance flexibility to engine and 
equipment manufacturers, and a voluntary program to encourage the 
introduction of low-emitting engines.

A. Emission Standards and Related Provisions

    EPA is finalizing new emission standards for PM, CO, and nonmethane 
hydrocarbons (NMHC) and NOX combined, covering all nonroad 
diesel engines except for locomotives, engines used in underground 
mining equipment, and large (rated at or above 37 kW) engines used in 
marine applications. Engines not included in this rulemaking are or 
will be addressed by other federal programs. EPA is finalizing a set of 
emission standards that vary in level and implementation date, 
depending on the rated power of the engine and other factors. The 
Agency believes that the standards finalized in this document are 
consistent with the Clean Air Act requirement that standards represent 
the ``greatest degree of emission reduction achievable'' given the 
criteria specified by the Act (see Section IV below).
1. Emission Standards
    In general, new emission standards for engines rated between 37 and 
560 kW are finalized in two tiers, building on the phase-in schedule 
adopted in 1994 in the Tier 1 rule. Table 1 lists the range of 
standards for the different power categories, including all the tiers 
of standards with the affected model years. These standards approximate 
the degree of control anticipated from existing standards covering 
engines used in heavy-duty diesel highway vehicles, with appropriate 
consideration of differences in the sizes and operational 
characteristics of the engines and in the organization of the 
industries. Specifically, the first set of new standards (Tier 2) 
generally parallel the emission standards that apply beginning with 
1998 model year highway engines (58 FR 15781, March 24, 1993). The 
second set of new standards (Tier 3) parallel standards that apply 
beginning with 2004 highway engines (October 21, 1997, 62 FR 54695). 
The standards for engines rated at or above 37 kW become effective in 
the 2001 to 2006 time frame for Tier 2 levels and 2006 to 2008 for Tier 
3 levels.

BILLING CODE 6560-50-P

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[GRAPHIC] [TIFF OMITTED] TR23OC98.000



BILLING CODE 6560-50-C

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    The standards finalized in this document for engines rated under 37 
kW are the first EPA emission standards for these engines. The Tier 1 
standards will be phased in by power category beginning in 1999, with 
Tier 2 standards phased in by power category beginning in 2004. Tier 3 
standards are not being set for these engines, or for engines rated 
over 560 kW, in this rule.
    In power categories for which Tier 3 standards are finalized, the 
Agency has chosen not to include more stringent PM standards. As 
discussed in Section III below, EPA has a number of reasons for 
deferring the establishment of a Tier 3 PM control program at this 
time, but is actively working toward this goal. The Agency believes 
that Tier 3 PM standards will be more appropriately discussed in the 
context of the improved technical understanding that will exist by the 
time of the 2001 feasibility review, also discussed in Section III.
    EPA will maintain the current smoke standards for nonroad diesel 
engines rated at or above 37 kW and will extend the applicability of 
these standards to nonroad diesel engines rated under 37 kW, except 1-
cylinder engines and marine propulsion engines. In addition, constant-
speed engines are being exempted from smoke regulations. This is 
discussed in detail in Section II.H.
2. Related Provisions
    a. Definition of Compression-Ignition. The requirements of 40 CFR 
Part 89 apply to all compression-ignition engines. Most current 
compression-ignition engines burn diesel fuel and operate over the 
conventional diesel cycle, which generally allows interchangeable use 
of the terms ``compression-ignition,'' ``diesel-cycle,'' and 
``diesel.'' Some of these engines, however, can be modified to operate 
on other fuels such as natural gas or liquefied petroleum gas. Because 
these engines do not clearly fall into existing engine categories, EPA 
proposed a definition for nonroad compression-ignition engines that 
follows from definitions established for highway engines. The proposed 
definition focuses on the engine cycle, rather than the ignition 
mechanism, with the presence of a throttle as an indicator to 
distinguish between diesel-cycle and otto-cycle operation. Use of a 
throttle to regulate power (not just to maintain smooth low-load 
operation) corresponds with otto-cycle operation. Regulating power by 
controlling the fuel supply in lieu of a throttle corresponds with lean 
combustion and diesel-cycle operation. This language allows the 
possibility that a natural gas-fueled engine equipped with a sparkplug 
will be considered a compression-ignition engine, but EPA continues to 
believe that the proposed definition is the best way to segregate these 
engines. Nonroad engines fueled by natural gas could then fall under 
emission standards for nonroad diesel engines, finalized in this 
document, or for nonroad spark-ignition engines, which are currently 
under development. The supporting documentation for EPA's introduction 
of emission standards for methanol-fueled engines provides a more 
complete consideration of the different technologies involved and lays 
out a rationale for this conclusion.4 To allow adequate time 
to certify engines that may be affected, this definition will take 
effect beginning January 1, 2000.
---------------------------------------------------------------------------

    \4\ ``Summary and Analysis of Comments on the Notice of Proposed 
Rulemaking for Emission Standards and Test Procedures for Methanol-
Fueled Vehicles and Engines,'' EPA, January 1989.
---------------------------------------------------------------------------

    b. Hobby Engines. Many extremely small engines used to power model 
airplanes, model boats, and other such hobby equipment qualify as 
nonroad compression ignition engines. EPA is not establishing an 
emission standard for these small hobby engines at this time. These 
engines are designed and operated very differently than larger engines 
used in other applications. The Agency is not aware of information 
about these engines that would allow an assessment of the feasibility 
of the proposed standards, or help to establish feasible alternative 
standards, taking into consideration the factors relevant under section 
213(a)(3) of the Act. Also, it is not clear whether such small engines 
could be appropriately and consistently tested with existing equipment, 
or, if so, whether any of the test cycles described below would 
adequately represent the in-use operation of these engines. 
Furthermore, EPA could not realistically impose the proposed useful 
life requirements or the warranty and maintenance interval provisions 
on these engines given their limited durability and frequent adjustment 
by the user. It should be noted that these engines have a low average 
annual hours of usage and an extremely low power output, and therefore 
contribute very little to the emissions inventory.
    Although there are many distinguishing features of this hobby class 
of engines, the comments received on the proposal indicate that per-
cylinder displacement provides an adequate and simple basis for 
distinguishing this class from other types of engines. Even though the 
Agency lacks the information that would allow a precise determination 
of the displacement level above which the proposed standards can be 
considered feasible, a displacement of 50 cubic centimeters per 
cylinder is well above the displacement level that is typical of this 
class of engines, and well below that of the smallest engines outside 
this group. Therefore, the final rule excludes engines with a 
displacement of less than 50 cubic centimeters per cylinder from the 
emissions standards in Part 89.
    c. NMHC Measurement. EPA in this final rule changes from a 
measurement of total hydrocarbons to nonmethane hydrocarbons. There is, 
however, no standardized method for measuring methane in diesel engine 
exhaust. Therefore, EPA will allow manufacturers to develop and use 
their own procedure to analyze nonmethane hydrocarbons, with prior 
approval from EPA, or measure total hydrocarbons and subtract 2 percent 
from the measured hydrocarbon mass to correct for methane.
    d. Selective Enforcement Audits. In the Tier 1 rule, the Agency 
adopted a program of Selective Enforcement Audits (SEAs) to ensure that 
actual production engines meet the emissions standards. The Agency is 
not making changes to this program. However, recognizing that engine 
manufacturers will be required to undertake significant engineering 
challenges in relatively short time frames in order to meet the Tier 2 
and Tier 3 standards adopted in this rulemaking, including the 
challenge of stabilizing initial production variability, EPA will only 
impose SEAs during the first year in which a standard is in effect for 
those engine families where strong evidence exists that SEA failure 
would be likely.

B. Test Procedures

    The standards finalized in this document are based on the use of 
EPA's existing steady-state (modal) test procedures. In addition, new 
steady-state test cycles are specified for constant-speed engines, 
marine propulsion engines, and engines rated under 19 kW. The Agency 
and the industry are working to better understand the sensitivity of 
nonroad diesel engine emissions to the test cycle, as discussed in 
Section III. The following sections describe EPA's selection of various 
test cycles and fuel specifications.
1. Test Cycles
    Compliance with emission standards is determined by measuring 
emissions while operating engines over a prescribed test cycle. The 
final rule, following the practice established in the

[[Page 56972]]

Tier 1 rule, specifies a cycle that is nominally the same as the 
International Organization for Standards (ISO) 8178 C1 test cycle as 
the principle test cycle for measuring emissions from most engines. 
Additional cycles are defined for specific engine types. Engines that 
are limited by design to constant-speed operation will be subject to 
testing using a test cycle equivalent to the ISO 8178 D2 cycle. This 
cycle, which omits idle and intermediate-speed modes from the C1 cycle, 
is representative of engines such as generators, which are designed 
never to run at these omitted speeds.5 Because of the more 
limited range of engine operation in the D2 cycle, manufacturers must 
ensure that engines certified with data generated with the D2 cycle are 
used exclusively in constant-speed applications. Accordingly, these 
engines must include labeling information indicating this limited 
emission certification.
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    \5\ For a description of the development of the D2 cycle, see 
``Exhaust Emission Testing of Diesel Engines for Industrial 
Applications,'' (Docket A-96-40, item II-D-26).
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    For variable-speed engines rated under 19 kW, EPA is specifying a 
test cycle that is equivalent to the ISO 8178 G2 cycle. The G2 cycle 
includes the same modes as the D2 cycle and adds a mode for operation 
at idle. The G2 and D2 cycles also have different weighting factors for 
the various modes. The G2 cycle was developed to represent the 
operation of small diesel engines used primarily at rated speed, such 
as in lawn and garden applications, generators, pumps, welders, and air 
compressors. EPA is specifying a test cycle equivalent to the ISO 8178 
E3 cycle for testing propulsion marine engines rated under 37 kW. The 
E3 cycle, which consists of engine operation at four different engine 
speeds and four different loads, was developed by ISO to represent the 
operation of propulsion marine engines, and has been supported by an 
Agency investigation. Auxiliary marine engines subject to this rule 
(i.e., engines installed on a marine vessel, but not used for 
propulsion) will be tested using the either G2, C1, or D2 test cycles, 
consistent with the constraints described above for the counterpart 
land-based nonroad engines.
    Finally, EPA will generally allow manufacturers to use the C1 test 
cycle to generate certification data for engines otherwise required to 
use the D2 or G2 test cycle. EPA will also allow manufacturers to use 
the C1 test cycle to generate certification data for propulsion marine 
engines where such engines are included in a land-based engine family. 
In each of these cases in which the manufacturer elects to use the C1 
cycle, EPA would retain its ability to test using the respective G2, 
D2, or E3 test cycle, but would also be able to test using the C1 test 
cycle. Additional discussion of EPA plans for further evaluation and 
development of appropriate test cycles is provided in Section III.
2. Test Fuel
    Section 206(h) of the Clean Air Act requires that test fuels be 
representative of in-use conditions. Therefore EPA is updating the 
specifications for the sulfur content in diesel test fuels to make them 
more representative of in-use fuels. EPA is finalizing test fuel 
specifications with a sulfur specification of 0.03 to 0.40 weight-
percent (wt%), which covers the range of sulfur levels observed for 
most in-use fuels. The final sulfur specifications are slightly 
different from that proposed (0.05 to 0.5 wt%), because EPA believes 
the final specification more appropriately covers the range of sulfur 
levels found in the majority of in-use fuels. Manufacturers will be 
free to test using any fuel within this range. Thus, they will be able 
to harmonize their nonroad test fuel with either on-highway testing 
(<0.05 wt%) or with European testing (0.1 to 0.2 wt%). Testing 
conducted by EPA would use test fuels typical of in-use fuels.
    At this time, EPA believes that the average sulfur level of diesel 
fuel being used in current nonroad engines is on the order of 0.2 wt%. 
In order to provide manufacturers with some certainty regarding how EPA 
will implement its test fuel policy, the Agency is including a 
regulatory provision specifying that it will use test fuels with sulfur 
levels no greater than 0.20 wt% when it performs testing of Tier 1 
engines and Tier 2 engines rated at or above 37 kW. EPA is not applying 
this provision to Tier 3 engines or Tier 2 engines rated under 37 kW 
because those standards do no take effect for some time, and EPA has no 
basis for determining what the properties of in-use fuels for these 
engines will be. Moreover, EPA has not determined that it would be an 
appropriate long-term policy to specify a narrow range for the sulfur 
specification. This would be especially true for engines utilizing 
catalytic aftertreatment to reduce particulate emissions. Such engines 
may comply with the emission standards when tested using a moderately 
low sulfur fuel, but have much higher particulate emissions when using 
a higher sulfur fuel with a sulfur level between 0.3 and 0.4 wt%. 
Although not addressing it at this time, EPA intends to examine test 
fuels for Tier 3 engines and Tier 2 engines rated under 37 kW in its 
2001 feasibility review.
    In the 1994 final rule, EPA allowed manufacturers to test for 
certification of PM emission levels using the low-sulfur test fuel 
specified by the California Air Resources Board (California ARB) for 
nonroad diesel engines, with a maximum sulfur content of 0.05 wt%. 
EPA's objective was to minimize any difference from the protocol 
previously established for California, because EPA finalized PM 
standards for engines rated over 130 kW only in response to industry's 
request to adopt California's PM standard, which was not considered 
technology-forcing. Under those previous regulations, testing with 
federal test fuel involved an optional adjustment of measured PM levels 
to account for the higher PM emissions associated with the higher fuel 
sulfur content.
    Effective with the Tier 2 standards (and Tier 1 standards for 
engines rated under 37 kW), EPA is eliminating the particulate 
adjustment factor for test fuels with different sulfur levels. Such an 
adjustment, while potentially appropriate for an initial, modest 
particulate emission control program for a newly regulated industry, is 
not appropriate as a long-term policy. EPA is now establishing PM 
standards that will require meaningful reductions from all sizes of 
engines used nationwide. The Clean Air Act requires EPA to ensure that 
the test procedure, including fuel specifications, adequately represent 
in-use operation. Moreover, EPA has significant concerns regarding the 
accuracy of the previously used adjustment factor equation, which was 
based on limited data. However, even if more complete data were 
available, it would not be possible for a single adjustment factor 
equation to accurately predict the effect of different sulfur levels on 
particulate emissions for each engine model. This is because the effect 
of sulfur levels on particulate emissions can vary significantly from 
engine family to engine family, especially for engines with and without 
aftertreatment.
    EPA recognizes that the sulfur level of test fuels has an effect on 
the stringency of the standards, and that the elimination of the 
particulate adjustment factor has the effect of making the particulate 
standards more stringent than they otherwise would have been. Using the 
calculated adjustment to PM emission levels for fuel sulfur finalized 
in 1994, the difference between 0.20 and 0.05 wt% would result in an 
adjustment on the order of 0.03 grams per kilowatt-hour (g/

[[Page 56973]]

kW-hr) (0.02 grams per horsepower-hour (g/hp-hr)) in PM emission 
levels. (Testing for NOX, NMHC, CO, and smoke is not 
affected, since the 1994 final rule already specified that federal test 
fuel was appropriate without adjustment for measuring emissions of 
those pollutants.) However, EPA has considered this effect in making 
its determination that the standards being adopted in this rulemaking 
are feasible.

C. Durability

    To achieve the full benefit of the emissions standards, programs 
are necessary to encourage manufacturers to design and build engines 
with durable emission controls and encourage the proper maintenance and 
repair of engines throughout their lifetime. The goal is for engines to 
maintain good emission performance throughout their in-use operation.
    When the Tier 1 standards for engines rated at or above 37 kW were 
developed, deterioration was not expected to be a problem for two 
reasons. First, the Tier 1 standards were not considered by EPA to be 
technology forcing. Second, the focus was on NOX control and 
NOX emissions performance was thought not to deteriorate for 
these engines. As a result, there are few requirements in the current 
regulations that address deterioration concerns for nonroad diesel 
engines. As tighter standards are put into place, EPA believes that it 
becomes necessary to adopt measures to address concerns about possible 
in-use emission performance degradation.
    EPA is making some changes to the existing durability program, as 
the new standards are phased in, to help ensure that engines meet 
applicable standards in use. The specific areas of the durability 
program that are being focused on here are useful life, warranty 
period, deterioration factors, allowable maintenance intervals, and 
rebuilding requirements.
1. Useful Life
    Currently, nonroad diesel engines rated at or above 37 kW are 
defined, for emission control purposes, to have a useful life of 8,000 
hours or 10 years, whichever occurs first. The in-use testing liability 
period is currently 6,000 hours or 7 years, whichever occurs first. 
Based on a study performed for EPA, this is representative of the 
average time until first rebuild for the majority of nonroad diesel 
engines.6 EPA is making no changes to these requirements.
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    \6\ ICF Incorporated, ``Industry Characterization: Nonroad Heavy 
Duty Diesel Engine Rebuilders,'' prepared for U.S. Environmental 
Protection Agency, Contract 68-C5-0010, WAN 102, January 3, 1997, 
(Docket A-96-40, item II-A-02).
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    EPA is adopting a shorter useful life and liability period for 
engines rated under 37 kW than for larger engines. Based on EPA's 
current understanding, these smaller engines have a shorter life 
expectancy. Also, engines rated under 37 kW that operate constantly at 
high speeds (at or above 3000 revolutions per minute (rpm)) and very 
small engines (those rated under 19 kW) have a shorter life expectancy 
than other small engines. As a result, EPA has adjusted the useful 
lives and liability periods for these engines accordingly. Table 2 
presents the specified useful lives and in-use testing liability 
periods being adopted.

                                Table. 2--Useful Life and Recall Testing Periods
----------------------------------------------------------------------------------------------------------------
                                                                     Useful life          Recall testing period
           Power rating                Rated engine speed    ---------------------------------------------------
                                                                 Hours        Years        Hours        Years
----------------------------------------------------------------------------------------------------------------
<19 kW...........................  All......................        3,000            5        2,250            4
19-37 kW.........................  Constant speed engines           3,000            5        2,250            4
                                    @3,000 rpm.
                                   All others...............        5,000            7        3,750            5
----------------------------------------------------------------------------------------------------------------

    Liability periods were based on the ratio of useful life and 
liability periods established for engines rated at or above 37 kW. The 
purpose of having liability periods that are shorter than the useful 
lives is to ensure that engines used in recall testing are not 
statistical outliers with poor emissions durability. However, if a 
recall were ordered, all engines in that family would be subject to the 
recall regardless of their age.
2. Warranty Period
    Tied to the useful life is the minimum warranty period imposed by 
the Clean Air Act on manufacturers of nonroad engines. Currently, the 
minimum warranty period for nonroad diesel engines rated at or above 37 
kW is 3,000 hours or 5 years of use, whichever occurs first. EPA is 
extending this minimum warranty period to most engines rated between 19 
and 37 kW; however, for engines under 19 kW and for 19 to 37 kW 
constant speed engines rated at 3000 rpm and above, EPA is specifying a 
warranty period of 1,500 hours or 2 years, whichever occurs first. The 
shorter warranty requirement for these engines is due to their shorter 
useful lives.
3. Deterioration Factors
    In the Tier 1 nonroad engine rule, EPA did not require 
manufacturers to accumulate operating time on durability data engines 
or to generate deterioration factors for engine certification because 
that rule focused on modest reductions in NOX emissions, 
requiring emission control technologies that were not expected to 
deteriorate. Analysis of highway engine data at that time led EPA to 
conclude that heavy-duty diesel engines do not generally produce more 
NOX emissions as they get older. EPA believes that this 
stability of emission control can be attributed to the fact that diesel 
engine manufacturers have met emission standards through internal 
improvements to the engine and fuel systems, rather than relying on 
aftertreatment and other devices that would be more susceptible to in-
use degradation. In fact, engine deterioration in current technology 
nonroad diesel engines could result in lower NOX emission 
levels due to a loss in cylinder compression.
    As NOX, NMHC, and PM standards are made more stringent 
and nonroad diesel engine manufacturers introduce new technologies 
solely for emission control purposes, such as aftertreatment, 
sophisticated fuel delivery controls, and exhaust gas recirculation 
(EGR), long-term emissions performance becomes a greater concern. In 
addition, emission deterioration characteristics are not well known for 
aftertreatment, EGR, and other more sophisticated emission control 
strategies.
    EPA will require the application of deterioration factors (DFs) to 
all engines covered by this rule. The DF is a factor applied to the 
certification emission test data to represent emissions at the end of 
the useful life of the engine. Separate DFs apply to each measured 
pollutant, except that a combined NMHC + NOX DF applies to 
engines that do not use aftertreatment devices, consistent with the 
form of the standard. Consistent

[[Page 56974]]

with the approach taken in other EPA programs, decreasing emissions of 
one pollutant over time would not be allowed to offset increasing 
emissions of the other pollutant in this combined DF. Currently, DFs 
are required for highway heavy-duty engines but are only required for 
nonroad diesel engines rated at or above 37 kW if engines use 
aftertreatment technologies. Deterioration factors for those engines 
are to be determined by the engine manufacturers in accordance with 
good engineering practices. EPA has not set a specified procedure. The 
deterioration factors are nevertheless subject to EPA approval.
    It is not EPA's intent to force a great deal of data gathering on 
engines using established technology for which the manufacturers have 
the experience to develop appropriate DFs. New DF testing may not be 
needed where sufficient data already exists. EPA's main interest is 
that technologies with unproven durability in nonroad applications, 
such as EGR, are demonstrated to meet emission requirements throughout 
their useful lives. However, because this rule creates a program that 
will introduce new standards and new technologies over many years, the 
DF requirement is being finalized for all engines so that EPA can be 
sure that reasonable methods are being used to ascertain the capability 
of engines to meet standards throughout their useful lives. This DF 
program will allow EPA to act in the traditional role of establishing 
emission performance standards, rather than putting EPA in a position 
in which it would appear to be prejudging the durability of specific 
technologies and designs.
    Similar to the provisions for highway engines, EPA will allow the 
nonroad engine manufacturers the flexibility of using durability 
emission data from a similar engine that has either been certified to 
the same standard or for which all of the data applicable for 
certification has been submitted. In addition, EPA is extending this 
flexibility to allow deterioration data from highway engines to be used 
for similar nonroad engine families.
    EPA is especially concerned that an unnecessarily burdensome 
durability demonstration not be required for engines using established 
technology for which the manufacturers have the experience to determine 
appropriate deterioration factors. In these cases, EPA will allow 
nonroad engine manufacturers to perform an analysis, based on good 
engineering practices, in place of actual service accumulation. For 
instance, in the case where no durability data exists for a certain 
engine but both smaller and larger engines using similar technology 
have been shown not to deteriorate for NOX in use, it would 
be possible to build a case showing no NOX deterioration for 
that engine. EPA is allowing engines to be considered as using 
established technologies if they do not meet the Tier 3 emission 
standards, unless they use EGR or aftertreatment devices. In addition, 
manufacturers of engines that do meet the Tier 3 standards but have 
technologies similar to those employed in Tier 2 designs may also rely 
on engineering analysis in lieu of actual service accumulation, with 
prior EPA approval.
    Because there may be insufficient time for manufacturers of engines 
rated below 37 kW to verify DFs before the Tier 1 compliance dates, the 
Agency is allowing manufacturers to specify DFs for these engines in 
model years 1999 and 2000 based on good engineering judgement using 
reasonably available information. Any requests for carryover of these 
models into the 2001 model year would need to include justification of 
DFs under the new requirements.
4. Allowable Maintenance Intervals
    Manufacturers are currently required to furnish the ultimate 
purchaser of each new nonroad engine with written instructions for the 
maintenance needed to ensure proper functioning of the emission control 
system. Generally, manufacturers require the owners to perform this 
maintenance as a condition of their emission warranties. Further, the 
performance of maintenance would be considered during any in-use recall 
testing conducted by the Agency.
    For the engines covered in this action, EPA believes that there is 
a need to limit the minimum maintenance intervals specified by the 
manufacturers, to ensure that the technologies employed are practical 
in use. Because the actual maintenance intervals for nonroad engines 
are likely to be similar to highway engines, EPA proposed maintenance 
requirements parallel those for highway engines (40 CFR 86.094-25).
    There are two aspects to the implementation of allowable 
maintenance interval requirements. The first relates to the maintenance 
instructions specified by manufacturers in users manuals. The second 
concerns how often maintenance has been or will be performed on engines 
undergoing testing to verify compliance with emission standards. 
Ideally these would be consistent. However, due to concerns about the 
need for more frequent maintenance in the severe operating environments 
that nonroad engines sometimes operate in, EPA is focusing its 
allowable maintenance interval requirements on testing performed by 
manufacturers to demonstrate compliance. This testing would not, of 
course, occur in severe operating environments. Manufacturers have a 
business incentive to avoid specifying overly frequent maintenance in 
user manuals, and so EPA is not, at this time, insisting that the 
intervals be reflected in user manuals. In addition, manufacturers may 
adopt shorter intervals for engines rated below 19 kW and 19 to 37 kW 
constant speed engines rated at 3000 rpm and above, subject to EPA 
approval. Subject to these modifications, the Agency is finalizing the 
proposed allowable maintenance interval requirements.
    The following minimum intervals are being adopted for adjustment, 
cleaning, repair, or replacement of various components:
    At 1,500 hours, and 1,500-hour intervals thereafter:

1. EGR related filters and coolers
2. Positive crankcase ventilation valve
3. Fuel injector tips (cleaning only)

    At 3,000 hours, and 3,000-hour intervals thereafter for engines 
rated under 130 kW or 4,500-hour intervals thereafter for engines rated 
over 130 kW:

1. Fuel injectors
2. Turbocharger
3. Electronic engine control unit and its associated sensors and 
actuators
4. PM trap or trap-oxidizer system
5. EGR system (including all related control valves and tubing)
6. Catalytic convertor
7. Any other add-on emissions-related component

    Add-on emission-related components are those whose sole or primary 
purpose is to reduce emissions or whose failure will significantly 
degrade emission control, yet not significantly affect the performance 
of the engine.
    In addition, EPA is defining the following components as critical 
emission-related components:

1. Catalytic convertor
2. Electronic engine control unit and its associated sensors and 
actuators
3. EGR system (including all related filters, coolers, control valves 
and tubing)
4. Positive crankcase ventilation valve
5. PM trap or trap-oxidizer system
6. Any other add-on emissions-related component

    If maintenance is scheduled on critical emission-related components 
in-use, EPA requires that the manufacturer show the reasonable 
likelihood that the maintenance will, in fact, be performed

[[Page 56975]]

in use. The regulations list options for this demonstration, including 
showing that performance would degrade without maintenance, providing 
survey data showing that the maintenance is performed, using a visible 
signal system, offering free maintenance, and other methods approved by 
the Administrator. These special provisions do not apply to critical 
emission-related components for which no maintenance is specified over 
the useful life of the engine.
5. Rebuilding Requirements
    In this action, EPA is addressing two concerns regarding the 
rebuilding of nonroad diesel engines, both related to new emission-
related components that may be added to the engine to meet the new 
standards. First, EPA is concerned that during engine rebuilding, there 
may not be an incentive to check and repair emission controls that do 
not affect engine performance. Second, EPA is concerned that there may 
be an incentive to rebuild engines to an older configuration due to 
real or perceived performance penalties associated with technologies 
that would be used to meet the standards finalized in this document. 
Such practices would likely result in a loss in emission control.
    EPA is requiring that parties involved in the process of rebuilding 
or remanufacturing engines (which may include the removal of the 
engine, rebuilding, assembly, reinstallation and other acts associated 
with engine rebuilding) must follow the provisions listed below to 
avoid tampering with the engine and emission controls. The 
applicability for these provisions is based on the date the engine was 
originally built. The rebuild requirements only apply to engines 
subject to the new standards being established in this rule.
    (1) During engine rebuilding, parties involved must have a 
reasonable technical basis for knowing that the rebuilt engine is 
equivalent, from an emissions standpoint, to a certified configuration 
(i.e., tolerances, calibrations, and specifications), and must identify 
the model year(s) of the resulting engine configuration. This allows 
for a rebuilder who is unable to identify the original certified 
configuration to rebuild the engine to any certified configuration.
    (2) When an engine is being rebuilt and remains installed or is 
reinstalled in the same piece of equipment, it must be rebuilt to a 
configuration of the same or later model year as the original engine. 
When an engine is being replaced, the replacement engine must be an 
engine of (or rebuilt to) a certified configuration that is equivalent, 
from an emissions standpoint, to the engine being replaced. This allows 
for rebuilt engine configurations that, although of a different model 
year than the original engine, were designed for the same tier of 
emission standards. If the replacement engine is new, it must also meet 
the requirements of 40 CFR 89.1003(b)(7), discussed in section II.E.3 
below.
    (3) At the time of rebuild, emission-related codes or signals from 
on-board monitoring systems may not be erased or reset without 
diagnosing and responding appropriately to the diagnostic codes. 
Diagnostic systems must be free of all such codes when the rebuilt 
engines are returned to service. Further, such signals may not be 
rendered inoperative during the rebuilding process.
    (4) When conducting an in-frame rebuild or the installation of a 
rebuilt engine, all emission-related components not otherwise addressed 
by the above provisions must be checked and cleaned, repaired, or 
replaced where necessary, following manufacturer recommended practices.
    Under this final rule, any person or entity engaged in the process, 
in whole or part, of rebuilding engines who fails to comply with the 
above provisions may be liable for tampering. Parties are responsible 
for the activities over which they have control and as such there may 
be more than one responsible party for a single engine in cases where 
different parties perform different tasks during the engine rebuilding 
process (e.g., engine rebuild, full engine assembly, installation). EPA 
has included no certification or in-use emissions requirements for the 
rebuilder or engine owner in this final rule.
    EPA has adopted modest recordkeeping requirements that EPA believes 
are in line with customary business practices. The records must be kept 
by persons involved in the process of nonroad engine rebuilding or 
remanufacturing and shall include the best available information on the 
total operating hours at time of rebuild and a list of the work 
performed on the engine and related emission control systems, including 
a list of replacement parts used, engine parameter adjustments, design 
element changes, and work performed as described in item (4) of the 
rebuild provisions above. EPA now requires that such records be kept 
for two years after the engine is rebuilt.
    Under this final rule, parties are required to keep the information 
for two years but are allowed to use whatever format or system they 
choose, provided that the information can be readily understood by an 
EPA enforcement officer. EPA will not require that parties keep 
information that they do not have access to as part of normal business 
practice. In cases where it is customary practice to keep records for 
engine families rather than specific engines, where the engines within 
that family are being rebuilt or remanufactured to an identical 
configuration, such recordkeeping practices should be satisfactory. 
Rebuilders may use records such as build lists, parts lists, and 
engineering parameters of the engine families being rebuilt rather than 
keeping information on individual engines, provided that each engine is 
rebuilt in the same way to those specifications.

D. Averaging, Banking, and Trading

    In this final rule, EPA is replacing the existing nonroad engine 
averaging, banking, and trading (ABT) program with a comprehensive new 
program. EPA believes the revised program is an important element in 
making the stringent emissions standards adopted in this final rule 
appropriate with regard to technological feasibility, lead time, and 
cost. The revised ABT program is intended to enhance the flexibility 
offered to engine manufacturers that will be needed in transitioning 
their entire product lines to meet the stringent NMHC + NOX 
standards and the PM standards being adopted. The ABT program also 
encourages the early introduction of cleaner engines, thus securing 
earlier emission benefits. It should be noted that as part of the 2001 
feasibility review described earlier, the Agency plans to reassess the 
appropriateness of the averaging, banking, and trading provisions 
applicable to nonroad diesel engines and modify the provisions if 
deemed necessary.
    The revised ABT program will apply to all nonroad diesel engines 
subject to Part 89. The following discussion of the revised ABT 
provisions is divided into two sections. The first section describes 
the provisions for engines rated at or above 37 kW. The second section 
describes the provisions for those engines rated under 37 kW, including 
land-based and marine engines, both of which are currently unregulated 
by EPA.
1. Revised Program for Engines Rated at or Above 37 kW
    The following section is divided into two subsections and describes 
the revised ABT program for engines at or above 37 kW. The first 
subsection describes the general provisions

[[Page 56976]]

applicable to all engines. The second subsection describes several 
provisions specific to engines certified to the existing Tier 1 
standards for engines at or above 37 kW.
    a. General Provisions. Beginning with the Tier 2 standards, the 
form of the standard changes from separate hydrocarbon and 
NOX standards to a combined NMHC + NOX standard. 
Therefore, once the Tier 2 standards take effect, credits will be based 
on combined NMHC + NOX values. In the Tier 2 time frame, 
NMHC + NOX credits will be generated against the Tier 2 
standards, which vary from 6.4 to 7.5 g/kW-hr (4.8 to 5.6 g/hp-hr), 
depending on the power rating of the engine. In the Tier 3 time frame, 
NMHC + NOX credits will be generated against the Tier 3 
standards, which vary from 4.0 to 4.7 g/kW-hr (3.0 to 3.5 g/hp-hr), 
depending on the power rating of the engine.
    The existing Tier 1 ABT program for nonroad engines does not cover 
PM emissions. Beginning with the introduction of Tier 2 engines, EPA is 
including PM emissions in the ABT program in order to provide 
manufacturers with greater flexibility in complying with the new PM 
standards. (As described later, EPA is allowing the early banking of PM 
credits from Tier 1 engines.) All PM credits will be generated against 
the Tier 2 standards until EPA adopts subsequent PM standards. Because 
EPA is including both NMHC + NOX and PM in the ABT program 
and given the tradeoff between NOX and PM emissions, 
manufacturers will not be allowed to generate credits against the 
applicable standard for one pollutant while using credits against the 
applicable standard for another pollutant on the same engine family.
    EPA is setting upper limits to the family emission limit (FEL) 
values that may be declared under the new standards. EPA is adopting an 
NMHC + NOX FEL upper limit of 10.5 g/kW-hr (7.9 g/hp-hr) for 
engines at or above 130 kW certified in the Tier 2 time frame. For Tier 
2 engines at or above 37 kW and less than 130 kW, EPA is adopting a 
NMHC + NOX FEL upper limit of 11.5 g/kW-hr (8.6 g/hp-hr). 
For Tier 3 engine families, the NMHC + NOX FEL upper limits 
are the Tier 2 NMHC + NOX standards for the same power 
category of engines.
    For PM, EPA is adopting a PM FEL upper limit of 0.54 g/kW-hr (0.40 
g/hp-hr) for engines at or above 130 kW certified in the Tier 2 time 
frame. Engines at or above 37 kW and less than 130 kW will have a PM 
FEL upper limit of 1.2 g/kW-hr (0.9 g/hp-hr) for Tier 2 engines. (EPA 
is not adopting a PM FEL upper limit beyond Tier 2 because EPA is not 
adopting Tier 3 PM standards at this time.)
    There are several other provisions EPA is adopting for the revised 
ABT program. EPA is replacing the three year credit life provision of 
the existing ABT program with no limit on credit life. In addition, EPA 
is eliminating the ``buy high/sell low'' power conversion factor 
provision of the existing ABT regulations and replacing it with a 
sales-weighted average power value. EPA is including an adjustment in 
the calculation of credits for the useful life of the engine. (The 
existing ABT program does not include any adjustment for useful life to 
the credit calculations.) EPA is also allowing manufacturers to include 
engines certified to meet the State of California's standards in the 
revised ABT program because the California ARB is expected to adopt the 
same standards for their nonroad compression-ignition engine control 
program.
    In a similar manner to the existing ABT provisions for Tier 1 
engines at or above 37 kW, EPA is not requiring any discounting of 
credits from Tier 2 or Tier 3 engines with this final rulemaking. EPA 
plans to monitor the emission levels of engines and the use of the ABT 
program over the next few years. EPA will take this information into 
account and plans to reassess the appropriateness of not having any 
discounting of credits from Tier 2 and Tier 3 engines as part of the 
2001 feasibility review.
    Finally, EPA has decided not to finalize two ABT provisions 
discussed in the proposal for this rule. First, as discussed later in 
the equipment manufacturer flexibility section, EPA is not adopting the 
proposed provision that would have given engine manufacturers the 
option to trade the NMHC + NOX and PM credits generated by 
their engines to equipment manufacturers. This is discussed further in 
Section II.E of this final rule. Second, EPA is not adopting a 
restriction which would have limited the use of PM credits to the power 
category in which the credits were generated. As with the existing Tier 
1 ABT program, credits may be exchanged across all power categories at 
or above 37 kW. (As described below, there are some restrictions on the 
trading of credits for engines below 37 kW and trading credits between 
land-based applications and marine applications.)
    b. Special Provisions for Tier 1 Engines. As described above, EPA 
is replacing the existing ABT program with a comprehensive new program. 
Based on EPA's experience with Tier 1 certification and because of 
implementation differences between the existing Tier 1 provisions and 
the newly adopted Tier 2 and later provisions, EPA is adopting two 
changes that will specifically affect engines certified to the existing 
Tier 1 standards. First, EPA is adopting a methodology for calculating 
NOX credits earned from Tier 1 engines that can be used for 
showing compliance with the Tier 2 NMHC + NOX standards. 
Second, EPA is allowing engine manufacturers to bank early PM credits 
from Tier 1 engines that can be used once the newly adopted Tier 2 
standards take effect. The changes noted in the general provisions 
discussion above, including the unlimited life, use of average power 
for credit calculations, and useful life adjustment, will also apply to 
engines certified to the existing Tier 1 standards.
    With regard to the generation of NOX credits from 
engines certified to the existing Tier 1 standards, EPA will continue 
to allow manufacturers to earn NOX credits, but not NMHC + 
NOX credits. The NOX credits earned on engines 
certified to the existing Tier 1 standards can be used to show 
compliance with the current Tier 1 NOX standard or the newly 
adopted Tier 2 NMHC + NOX standards. However, due to 
concerns over the potential to delay the Tier 3 standards with credits 
earned from Tier 1 engines, the NOX credits earned on 
engines certified to the existing Tier 1 standards cannot be used to 
show compliance with the newly adopted Tier 3 NMHC + NOX 
standards.
    With regard to the calculation of NOX credits from Tier 
1 engines that are to be banked or traded and subsequently used for 
Tier 2 NMHC + NOX compliance, EPA is requiring that the 
value of the NOX credits be discounted unless the engine on 
which the credits were earned is below the applicable Tier 1 standard 
by a specified amount. EPA believes this requirement is appropriate due 
to concerns that manufacturers could potentially earn significant 
NOX credits from their current Tier 1 engines and delay 
compliance with the Tier 2 standards, and also to encourage the pull-
ahead of newer and cleaner technologies. (Credits from Tier 1 engines 
that are to be used to show compliance for other Tier 1 engines, are 
not required to be discounted.) EPA is adopting a trigger mechanism to 
distinguish between Tier 1 engine families which are eligible for no 
adjustment and those families which must be adjusted. For engine 
families certified with a NOX FEL at or below 8.0 g/kW-hr 
(6.0 g/HP-hr), no discount will be applied to any NOX 
credits. For engine families certified at a NOX FEL above 
the 8.0 g/kW-hr trigger in the Tier

[[Page 56977]]

1 time frame, the value of the NOX credits will be 
discounted by 35 percent.
    With regard to PM credit generation, EPA is allowing early banking 
of PM credits from Tier 1 engines as soon as this final rule becomes 
effective. Under the revised program, the number of PM credits 
generated will be calculated against the Tier 2 standards and may only 
be used to show compliance once the Tier 2 PM standards take effect. 
Neither the trigger nor the credit discounting concept described above 
for Tier 1 NOX credits, will apply to PM credits.
    EPA requested comment on some additional limitations regarding the 
use of credits generated from Tier 1 engines. EPA is not adopting a 
provision that would apply a surcharge to NOX credits used 
by a manufacturer to certify more than 20 percent of its fleet. EPA is 
also not adopting any limit on the number of years a manufacturer may 
earn early PM credits from Tier 1 engines.
2. Program for Engines Rated Under 37 kW
    As noted earlier, EPA is adopting standards for engines rated under 
37 kW. These engines are currently unregulated by EPA. Therefore, the 
existing ABT program did not apply to such engines. EPA is adopting 
provisions to include both land-based and marine engines rated under 37 
kW in the revised ABT program. A number of issues have been addressed 
for these engines, including credit generation, credit life, credit 
calculation, trading across power categories, credit exchange between 
land-based and marine applications, and a special multi-year averaging 
and banking program. The following section addresses each of these 
issues.
    With regard to credit generation, EPA is making credits available 
for both NMHC + NOX emissions and for PM emissions as soon 
as the standards become effective. Because many of the engines below 19 
kW use indirect injection technology, which tends to low-emitting, EPA 
is requiring that all credits generated from engines rated under 19 kW 
be calculated against the Tier 2 standards, even prior to the Tier 2 
time frame. This requirement applies for both NMHC + NOX 
credits and PM credits. For engines rated at or above 19 kW and less 
than 37 kW, where direct injection engines are more common, EPA is 
requiring that all engines generate credits against the applicable 
standards.
    For Tier 1 engines below 37 kW, EPA is adopting FEL upper limits of 
16.0 g/kW-hr (12.0 g/hp-hr) for NMHC + NOX and 1.2 g/kW-hr 
(0.9 g/hp-hr) for PM. These levels are based on existing California ARB 
standards for nonroad diesel engines rated under 19 kW. The FEL upper 
limits for the Tier 2 standards are the Tier 1 standards.
    With regard to credit life, EPA is adopting the unlimited life 
provisions for engines rated under 37 kW, as described earlier for 
engines rated at or above 37 kW, with one exception. Because of 
concerns over the amount of credits manufacturers could earn on 
indirect injection engines under the newly adopted Tier 1 standards and 
the potential for significant delay in implementation of the Tier 2 
standards, EPA is requiring that all credits generated prior to the 
Tier 2 time frame on engines rated under 19 kW expire at the end of 
2007.
    With respect to credit generation and usage calculations, EPA is 
requiring that manufacturers use the sales-weighted average power for 
engines rated under 37 kW, as described earlier for engines rated at or 
above 37 kW. The inclusion of useful life in the calculation of 
credits, as described earlier, will also apply to the revised ABT 
program for engines rated under 37 kW.
    With respect to trading across power categories, EPA is adopting 
two restrictions on such trading because of concerns regarding 
excessive credit generation by low-emitting indirect injection engines. 
First, EPA will not allow manufacturers to use credits generated on 
engines rated under 19 kW to demonstrate compliance for engines rated 
at or above 19 kW. Second, EPA is prohibiting manufacturers from 
trading credits earned on indirect injection engines rated at or above 
19 kW to other manufacturers. (This restriction applies to engines at 
or above 37 kW as well.) Under this second restriction, a manufacturer 
would still be allowed to use such credits for averaging or banking 
purposes with other engines rated at or above 19 kW that the 
manufacturer produces itself. As part of the 2001 feasibility review 
described earlier, the Agency plans to reassess the appropriateness of 
these restrictions and modify them as appropriate.
    With respect to the exchange of credits across applications, EPA is 
adopting provisions that will prohibit manufacturers from using credits 
generated on land-based engines to demonstrate compliance for marine 
engines. EPA is concerned that manufacturers making engines used in 
both marine and land-based applications could effectively trade out of 
the marine portion of the program giving them a competitive advantage 
over small marinizers who only sell marine engines. EPA will, however, 
allow manufacturers to use credits generated on marine engines to 
demonstrate compliance for land-based applications.
    Finally, EPA is adopting a special four-year averaging and banking 
program for engines rated under 37 kW due to the short lead time before 
the Tier 1 standards begin to apply. The program would apply separately 
to engines rated under 19 kW and to engines rated at or above 19 kW and 
less than 37 kW. Under the special program, manufacturers will be 
allowed to create a negative balance of credits for the first two years 
the Tier 1 standards apply. This negative balance will have to be 
eliminated by the end of the fourth year after the Tier 1 standards 
become applicable along with a ten percent penalty for any negative 
balance of credits carried over from one year to the next. Under this 
special program, manufacturers will not be allowed to use emission 
credits obtained through trading with other engine manufacturers to 
offset their negative credit balances. The manufacturer must offset 
their negative balances within positive credits generated from their 
own engines.

E. Flexibility for Equipment Manufacturers

    In implementing the new standards, EPA desires to avoid unnecessary 
hardship for equipment manufacturers (sometimes referred to as original 
equipment manufacturers or OEMs), who install diesel engines in their 
products. There is concern that engine suppliers may not always provide 
adequate lead time for the equipment redesigns needed to accommodate 
engine design changes such as mounting locations and heat rejection 
loads. For some OEMs, even timely information on the new engine designs 
may not be sufficient because of the sheer volume of redesign work 
needed to change diverse product offerings with limited engineering 
staffs.
    In response to these concerns, the Agency is including in this 
final rule an OEM transition program to provide equipment manufacturers 
with some control of the transition process to new standards. The 
design of this program is based on extensive discussions with involved 
parties prior to the proposal, on recommendations made in the report of 
the panel convened for this rule under the Small Business Regulatory 
Enforcement Fairness Act of 1996

[[Page 56978]]

(SBREFA),\7\ and on written comments received on the proposal. It 
represents an effort on the part of the Agency to accommodate the 
flexibility needs of an extremely diverse industry without introducing 
competitive advantages, and while maintaining the environmental benefit 
sought in the standard-setting program.
---------------------------------------------------------------------------

    \7\ ``Final Report of the SBREFA Small Business Advocacy Review 
Panel for Control of Emissions of Air Pollution from Nonroad Diesel 
Engines'', May 23, 1997 (available in Air Docket A-96-40).
---------------------------------------------------------------------------

    The OEM transition program consists of four major elements, each 
directed at a specific need. Although they involve certain planning and 
recordkeeping responsibilities if taken advantage of, all of these 
elements are voluntary. An OEM has the option to continue to do 
business as under the current regulations, subject to the prohibited 
acts provisions of 40 CFR Part 89, Subpart K.\8\ The elements of the 
program are a percent-of-production allowance, a small-volume 
allowance, continuance of the Tier 1 allowance to use up existing 
inventories of engines, and availability of hardship relief. Each of 
these is discussed in detail below.
---------------------------------------------------------------------------

    \8\ Section 89.1003(a)(6) has been revised in the final rule to 
clarify that certificates of conformity will not be required for 
engines and equipment manufactured in compliance with the 
flexibility provisions of the rule. See ``Revision of Prohibited 
Acts Regulatory Text,'' EPA memorandum from Charles Moulis to Docket 
A-96-40, August 26, 1998.
---------------------------------------------------------------------------

    One element of the proposed program that is not being finalized is 
a provision for OEMs to obtain and use ABT program credits. The ABT 
provision is not being finalized because it would likely be little used 
and would greatly complicate the ABT program. It should be noted that 
OEMs may achieve a similar benefit by working to have their engine 
suppliers directly obtain and retire ABT credits in order to produce 
more previous-tier engines for the OEM. Further explanation of this 
decision is provided in the Summary and Analysis of Comments for this 
final rule.
    Another proposed program element that is being approached 
differently concerns an expanded exemption allowance for farm and 
logging equipment. EPA's rationale for limiting special treatment to 
farm and logging equipment was not supported by commenters, even those 
who were likely to benefit from it. Commenters identified a wide range 
of other applications and special situations that involved the same or 
comparable considerations as those related to farm and logging 
applications. As described further in the Percent-of-Production 
Allowance discussion below, EPA is therefore allowing expanded 
flexibility for all applications equally, not just for farm and logging 
equipment.
1. Percent-of-Production Allowance
    Each equipment manufacturer may install engines not certified to 
new emission standards in a limited percentage of machines produced for 
the U.S. market. This percentage applies separately to each power 
category and is expressed as a cumulative percentage of 80 percent over 
the 7 years beginning when the Tier 2 standard first applies in the 
category (Tier 1 for power categories under 37 kW). No exemptions are 
allowed after the seventh year. For example, an OEM may exempt 40 
percent of its 1999 production of machines that use engines rated 
between 19 and 37 kW, 30 percent of its 2000 production, and 10 percent 
of its 2001 production. If the same OEM were to produce machines using 
engines rated between 8 and 19 kW, a separate cumulative percentage 
allowance of 80 percent would apply to these machines during the seven 
years beginning in 2000.
    The Agency recognizes that the 80 percent exemption allowance, were 
it to be used to its maximum extent by all OEMs, would bring about the 
introduction of cleaner engines several months later than would have 
occurred if the new standards were to be fully implemented on their 
effective dates. However, the Agency notes too that the allowance is 
truly that--an allowance to be tapped as needed to assist OEMs in 
dealing with implementation problems that might arise. EPA is aware 
that many engine designs being planned for the new standards will fit 
the equipment with little change. Also, the desire of engine 
manufacturers to avoid producing two engine designs that, from an 
applications perspective, are redundant, will prompt them to change 
over to the new designs as quickly as they can accommodate their 
customers' needs. Although there is no way of knowing at this time how 
many exempted engines will be produced, the Agency believes it will be 
substantially less than the allowance. Moreover, the OEM flexibility 
program has been integrated with the standard-setting process from the 
beginning of this rulemaking, and as such it is a key factor in 
enabling the initiation of new standards according to the adopted 
schedule.
    Machines that use engines built before the standard goes into 
effect need not be included in the exemption count. Engines that 
produce emissions at higher levels than the standards, but for which 
the engine manufacturer uses ABT program credits to demonstrate 
compliance, count as complying engines. In power categories above 37 
kW, the exempted engines must comply with Tier 1 standards. In power 
categories below 37 kW, the exempted engines may be uncertified.
    The Agency has expanded the percent-of-production allowance from 
the proposed level because numerous commenters pointed out that there 
are applications other than farm and logging equipment for which the 
proposed allowance is inadequate. The Agency reviewed these comments 
and concluded that some additional flexibility is warranted to meet the 
requirements of paragraph 213(a)(3) of the Clean Air Act calling for 
the ``greatest degree of emission reduction achievable'' given certain 
criteria, including ``the cost of applying such technology within the 
time available to manufacturers''. The Agency is also convinced by the 
comments and its own review of equipment redesign challenges that the 
need for this flexibility is widespread across the regulated power 
bands. For example, many smaller engines must fit into very compact 
equipment packages for which cost considerations are paramount; farm 
equipment predominates in the medium-size power bands; and the largest 
engines are typically used in very low sales-volume equipment models, 
for which aggressive redesign schedules may be costly or impossible.
    This approach is superior to attempting to identify all 
applications and situations deserving of special treatment and either 
assigning individual allowances to them or granting exemptions on a 
request basis, because it maintains the proposal's focus on giving OEMs 
long-range control over how they use their assigned pool of exemptions 
for their products affected by each new set of standards, rather than 
on dictating category-by-category or model-by-model allowances. It also 
serves the goal of avoiding unnecessary complexity by avoiding the need 
for numerous equipment category definitions and exemption ``account'' 
calculations, a goal that was supported by several commenters.
    The choice of a cumulative percent allowance of 80 percent is based 
on the Agency's best estimate of the degree of flexibility needed to 
meet the requirements of the Clean Air Act. EPA believes the 80 percent 
allowance responds to the need for flexibility identified by commenters 
while ensuring approximately the same level of emission reductions 
originally proposed. EPA has examined the impact on environmental 
benefits of the combination of changes being finalized

[[Page 56979]]

for this program, including this expanded allowance for all equipment 
and the decision to treat agricultural equipment as part of this pool. 
Although the actual impact will depend on the degree to which the 
industry takes advantage of the flexibility provisions, the Agency has 
determined that the net effect will be roughly equivalent to the impact 
of the proposed program. The Summary and Analysis of Comments document 
and the Final RIA provide additional information regarding this 
decision and its net environmental impact.
2. Small Volume Allowance
    The percent-of-production approach described above may provide 
little benefit to small businesses focused on a small number of 
equipment models. Therefore EPA is allowing equipment manufacturers to 
exceed the percent-of-production allowances described above during the 
same years affected by the allowance program for general applications, 
provided they limit the number of exempted engines used in each power 
category to 700 total over the 7 years, and to 200 in any one year. In 
addition, manufacturers making use of this provision must limit 
exempted engines to a single engine family (or to a single manufacturer 
for engines rated under 37 kW) in each power category. These 
restrictions are considered necessary to maintain the intent of this 
provision--helping small businesses with limited product offerings--
rather than giving bigger exemption allowances for larger OEMs who can 
effectively use the percent-of-production provisions.
3. Existing Inventory Allowance and Replacement Engines
    The Tier 1 rule for engines rated at or above 37 kW included a 
provision for OEMs to continue to use uncertified engines built prior 
to the effective date of Tier 1 standards, until uncertified engine 
inventories are depleted. It also prohibited purposeful stockpiling of 
uncertified engines. EPA is extending this provision to the Tier 1-to-
Tier 2 and Tier 2-to-Tier 3 transitions, as well as to the under 37 kW 
engines. The existing provision that provides an exception to the Tier 
1 compliance regulations for the sale of replacement engines is also 
being extended to engines covered by this action. In extending this 
provision, the Agency is requiring that engines built to replace 
certified engines be identical in all material respects to an engine of 
a previously certified configuration that is of the same or later model 
year as the engine being replaced. The term ``identical in all material 
respects'' allows for minor differences that would not reasonably be 
expected to affect emissions.
4. Hardship Relief Provision
    EPA is providing a safety valve provision whereby an OEM that does 
not make its own engines could obtain limited additional relief by 
providing evidence that, despite its best efforts, it cannot meet the 
implementation dates, even with the OEM transition program provisions 
outlined above. Such a situation might occur if an engine supplier 
without a major business interest in the OEM were to change or drop an 
engine model very late in the implementation process. This concept was 
put forward for consideration in this rulemaking by the Small Business 
Advocacy Review Panel convened under SBREFA, as a means of addressing 
small business concerns. Comments received on the proposal, however, 
have convinced the Agency that these concerns are not limited to small 
businesses.
    Appeals for hardship relief must be made in writing, must be 
submitted before the earliest date of noncompliance, must include 
evidence that failure to comply was not the fault of the OEM (such as a 
supply contract broken by the engine supplier), and must include 
evidence that serious economic hardship to the company will result if 
relief is not granted. The Agency intends work with the applicant to 
ensure that all other remedies available under the flexibility 
provisions are exhausted before granting additional relief, and would 
limit the period of relief to no more than one year. Furthermore, 
applications for hardship relief will only be accepted during the first 
year after the effective date of an applicable new emission standard.
    To avoid the creation of a self-fulfilling prophecy, by which the 
very existence of this provision prompts engine manufacturers to delay 
engine developments, the Agency wishes to make clear that it expects 
this provision to be rarely used. Each granting of relief would be 
treated as a separate agreement with no prior guarantee of success, and 
with the inclusion of measures, agreed to in writing by the OEM, for 
recovering the lost environmental benefit.
5. Enforcement and Recordkeeping Requirements
    Engine manufacturers will be allowed to continue to build and sell 
the engines needed to meet the market demand created by the OEM 
transition program, provided they receive written assurance from the 
engine purchasers that such engines are being procured for this 
purpose. Engine manufacturers who participate in this program will be 
required to annually provide information on the number of such engines 
produced and on who they are provided to, in order to help EPA prevent 
abuse of the program.
    OEMs choosing to take advantage of the allowances must: (1) keep 
records of the production of all pieces of equipment excepted under the 
allowance provisions for at least two full years after the final year 
in which allowances are available for each power category; (2) include 
in such records the serial and model numbers and dates of production of 
equipment and installed engines, rated power of each engine, and the 
calculations used to verify that the allowances have not been exceeded 
in each power category; and (3) make these records available to the 
Agency upon request. The Agency intends to conduct only limited audits 
of these records, and expects that scrutiny by the OEMs of their 
competitors' products will help identify potential candidates for 
audits.
    Secondary manufacturers who modify or relabel and resell new 
equipment already introduced into commerce would be subject to the 
regulations in the same way as independent dealers and distributors. 
These regulations primarily concern tampering. EPA's desire to limit 
the number of machines using noncomplying engines is therefore 
satisfied by regulation of the original equipment manufacturers who 
install the engine into the machine, such that the secondary 
manufacturers do not need exemption allowances. They may sell as many 
machines with noncomplying engines as they are legally able to obtain.
    All entities that are under the control of a common entity, and 
that meet the definition of a nonroad vehicle or nonroad equipment 
manufacturer, must be considered together for the purposes of applying 
exemption allowances. This provides certain benefits for the purpose of 
pooling exemptions but also precludes the abuse of the small volume 
allowances that would exist if companies could treat each operating 
unit as a separate OEM.
    EPA recognizes that the OEM transition program may involve a 
certain amount of complexity and administrative burden that was not 
present for OEMs under the Tier 1 rule, which limited the compliance 
options for OEMs. However, this program is entirely voluntary and 
manufacturers wishing to implement the new standards in the same manner 
as for the

[[Page 56980]]

Tier 1 regulations are free to do so. The Agency intends to develop 
guidance to assist OEMs in taking advantage of these provisions, but 
also intends to fully enforce the regulations in order to ensure a fair 
implementation process that achieves the environmental benefit sought 
in setting new standards.

F. Flexibility for Post-Manufacture Marinizers

    Post-manufacture marinizers (PMMs) produce marine engines by 
modifying engines purchased from other manufacturers. They are 
therefore subject to both the engine manufacturer's concern about 
certifying engines to the standards and the OEM's concern about timely 
delivery of redesigned engines from their engine suppliers.
    EPA recognizes that the potential unavailability of certified base 
engines may make it difficult for PMMs to comply with the proposed 
emission control program, since they may not be able to obtain base 
engines in time to adjust their marinization process, especially 
considering that most of the marine engines affected by this rule are 
subject to standards beginning in 1999. Based on these concerns, EPA 
has determined that the proposed emission standards would not be 
feasible for PMMs who produce marine engines under 37 kW without some 
flexibility provisions beyond those available in the ABT program. As a 
result EPA is finalizing two additional flexibility provisions for 
PMMs.
    First, the OEM flexibility provisions discussed above are being 
extended to PMMs, as proposed. Second, provided they inform EPA in 
writing before the date Tier 1 standards would take effect, PMMs may 
elect to delay the effective dates applicable to marine engines under 
37 kW for one year, instead of using the OEM flexibility provisions. 
PMMs may not take advantage of both the delayed effective date 
provision and the OEM flexibility provisions.
    Although it provides a substantial boost in certainty to PMMs, the 
optional 1-year delay provision will have a very small environmental 
impact. This is because: (1) the marine engines under 37 kW produced by 
PMMs are a very small part of the total nonroad diesel engine 
production, (2) these engines produce relatively low emissions due to 
their small size and low usage characteristics, and (3) the total 
number of engines potentially exempted under this flexibility provision 
is not much greater than that possible under the exemption allowance 
provisions.

G. Control of Crankcase Emissions

    Crankcase gases are those exhaust gases that discharge (blowby) 
into the crankcase via the clearance between the piston and the 
cylinder wall. On most engines (those engines with open crankcases), 
these gases eventually escape from the crankcase into the atmosphere. 
Some manufacturers produce engines that route crankcase vapors to the 
air intake system of the equipment; such a design is called a closed 
crankcase. This method, also called positive crankcase ventilation, 
recirculates blowby gases through a valve back to the intake manifold 
to be burned in the combustion chamber.9
---------------------------------------------------------------------------

    \9\ U.S. Environmental Protection Agency, Office of Mobile 
Sources, NEVES, Appendix I, Chapter 4, November 1991 (available in 
Air Docket A-96-40).
---------------------------------------------------------------------------

    Since 1985, closed crankcases have been required in naturally 
aspirated (non-turbocharged) highway diesel engines (45 FR 4136, 
January 21, 1980). Turbocharged engines have not been required to have 
crankcase emission controls due to concerns related to problems 
associated with the durability and effectiveness of turbocharger and 
aftercooler components which can be affected by recycling gases 
containing particulate matter and corrosive gases. EPA is extending the 
closed crankcase requirement to nonroad engines, including the 
exemption for turbocharged diesel engines. Many naturally aspirated 
nonroad engines are already equipped with this technology; for those 
nonroad engine models still manufactured with open crankcases, EPA 
expects that closed-crankcase technology will be readily transferable. 
EPA has included the cost of closing crankcases in the analysis of the 
costs of complying with the new standards. EPA had originally proposed 
to apply the closed crankcase requirement to some Tier 1 engines, but 
has now decided to apply it only Tier 2 and later naturally aspirated 
engines because of lead-time concerns. This delay will not have a major 
environmental impact because it is short, directed at a small segment 
of the engine market, and confined to a minor emission source relative 
to exhaust emissions.
    EPA will also allow manufacturers to comply with this requirement 
by routing the crankcase emissions into the exhaust. Manufacturers 
choosing this option would effectively be required to reduce their 
engine-out exhaust emissions further than other manufacturers that 
choose to route the crankcase emissions into the engine intake. It is 
important to note that this optional approach will require that the 
engine (and equipment) be designed so that the routing would occur 
under all in-use conditions. Manufacturers using this approach will be 
required to modify their deterioration factors to account for increases 
over time in crankcase emissions. EPA will also consider using this 
approach in the future for controlling crankcase emissions from 
turbocharged engines, which are currently uncontrolled. The advantage 
of this approach is that allows manufacturers the flexibility to either 
route crankcase emissions into the engine intake, thereby combusting 
the crankcase emissions of hydrocarbons and CO, or to route the 
emissions into the exhaust (where they would be measured as part of the 
exhaust emissions) and to reduce the total exhaust emissions using 
other means.

H. Control of Smoke

1. Standards and Procedures
    In 1994, EPA finalized smoke standards for nonroad diesel engines 
rated at or above 37 kW. The specified measurement method and 
calculations are from 40 CFR Part 86, Subpart I, which was developed 
for highway engines. EPA is making no major changes to the smoke 
emission standards and procedures currently in place.
    EPA is extending the smoke standards to diesel engines rated under 
37 kW, bringing these engines under the same regulatory framework as 
the larger engines. While these new standards may lead to lower smoke 
levels from some engines, the principal intent of setting standards is 
to prevent increased levels of smoke as engines are redesigned to 
comply with Tier 2 and Tier 3 standards for gaseous and particulate 
emissions. The same numerical standards apply to the small engines. 
With minor exceptions, the same procedure, equipment, and calculation 
methods are also specified for these engines.
    In applying the smoke standards and procedures to engines rated 
under 37 kW, EPA has chosen to exempt one-cylinder engines. EPA 
believes that operation and testing of these engines is unique in ways 
that would need to be addressed before applying smoke standards. For 
example, one-cylinder engines operating on the specified test procedure 
produce puffs of smoke that may make the smoke measurement erratic. EPA 
is therefore postponing the regulation of smoke from these one-cylinder 
engines until a later rulemaking. The Agency believes the air quality 
impact of this postponement will be minimal because the large majority 
of one-cylinder diesel engines are used in generator sets and other

[[Page 56981]]

steady-state applications, which rarely experience acceleration modes--
the principal focus of smoke standards. In a similar manner, because 
two-cylinder engines operating on the specified test procedure may also 
produce puffs of smoke that would make the smoke measurement erratic, 
though to a lesser degree than single-cylinder engines, EPA will permit 
manufacturers the option of testing two-cylinder engines with a 
preconditioned muffler of the type used in the field. Such an engine 
configuration is the same as that found in use, and thus will ensure 
meaningful control of in-use smoke, even though instantaneous smoke 
emissions may be flattened out somewhat, resulting in potentially 
reduced levels of measured smoke. Engines with more than two cylinders 
will continue to be tested without a muffler, which is a ``worst case'' 
condition.
    EPA is also slightly modifying the exhaust pipe diameter 
specifications found in 40 CFR Part 86, Subpart I. The previous 
specifications called for a 2 inch (5 centimeters (cm)) inside diameter 
exhaust pipe for testing any engine rated under 101 horsepower (hp) 
maximum (75 kW), and a 5 inch (13 cm) inside diameter exhaust pipe for 
the testing any engine with a rated power of 301 hp (225 kW) or 
greater. In this action, the Agency is specifying that engines rated 
between 50 and 100 hp (37 and 75 kW) be tested with a 2 inch (5 cm) 
inside diameter exhaust pipe, while engines rated under 50 hp (37 kW) 
should be tested with an exhaust pipe of 1.5 inches (3.8 cm). EPA is 
also specifying that all engines rated over 500 hp (373 kW) should be 
tested with an exhaust pipe of 6 inches (15.2 cm).
    EPA is not establishing smoke requirements for propulsion marine 
diesel engines rated under 37 kW. EPA has concluded that the existing 
smoke test procedures are not appropriate for small propulsion marine 
engines. The Agency believes that the small environmental risks 
associated with smoke emissions from such engines do not justify the 
creation of special smoke test procedures for them at this time. EPA 
expects to reconsider this issue in the future at the same time that it 
reconsiders other smoke issues. Finally, EPA is dropping smoke 
requirements for constant speed engines until a smoke test becomes 
available for these engines, because the current smoke test cannot 
effectively be performed on them. The Agency believes the air quality 
impact will be minimal because these engines do not often experience 
acceleration modes, which are the principal focus of smoke standards.
2. Future Reconsideration of Smoke Issues
    An International Standards Organization committee (ISO TC70/SC8/
WG1) has been developing a smoke test procedure specifically for 
nonroad engines. The EPA and regulated industry recognize the value of 
harmonized test procedures and standards limits. However, this ISO 
procedure has not been finalized and thus is not included in this 
rulemaking. EPA has analyzed the draft ISO procedure (8178-9) and 
concluded that most of its elements would be appropriate for adoption. 
Thus, the Agency expects that it will adopt the ISO smoke measurement 
procedure after it is finalized. At that time EPA may also reconsider 
the issues related to the use of mufflers, single-cylinder and two-
cylinder engines, constant speed engines, marine engines and standard 
exhaust pipe diameters. It is important to note that the ISO 8178-9 
smoke emissions test procedure is very different from the procedure 
specified in Subpart I of Part 86. As a consequence , if EPA adopts the 
ISO 8178-9 procedure, then it will also need to revise the numerical 
limit values to be associated with the ISO procedure. EPA believes the 
appropriate numerical standard that should be associated with ISO 8178-
9 peak measurements is likely to be within the range of 20 to 30 
percent opacity. It is important to note, however, that this is only a 
preliminary estimate.
    EPA also expects to give future consideration to the need for an 
in-use smoke test. Some state governments have expressed a desire for a 
smoke regulatory program that would enable them to test in-use nonroad 
engines in a manner that would permit action against gross emitters of 
smoke. The main elements of such a program would be a certification 
smoke requirement for new engines, EPA guidance for state in-use smoke 
control programs (including an in-use smoke test procedure and 
accompanying limit values), and a means by which the data from the two 
programs could be related. The current smoke test procedure from Part 
86, Subpart I, does not provide data comparable to the most practical 
in-use smoke test procedure (a snap acceleration with measured 
opacity). Based on the current draft ISO 8178-9 certification smoke 
test procedure, EPA believes the future ISO test will provide the 
desired linkage.

I. Voluntary Low-Emitting Engine Program

    Officials representing certain cities, states, or regions in the 
U.S. have expressed interest in developing incentive programs to 
encourage the use of engines that go beyond federal emission standards. 
EPA also would like to encourage manufacturers to initiate 
demonstration projects to prove out these technologies in areas where 
there is a particular need for superior emission controls. EPA is 
therefore finalizing a set of voluntary standards that may be used to 
earn a designation as a ``Blue Sky Series'' low-emitting engine. The 
program, if successful, will lead to the introduction and more 
widespread use of these low-emission technologies. Possible incentives 
to encourage production of these engines are described below.
    Central to the purpose of the voluntary standards is the need to 
demonstrate superior control of particulate emissions. Because of the 
sensitivity of particulate emissions to test cycles, as described in 
Section III, testing on a transient cycle is an important element of 
the program for Blue Sky Series engines. EPA has begun work toward 
developing transient test cycles for nonroad equipment, but there is 
not yet any established or proven nonroad transient cycle. The highway 
test cycle, while not developed for nonroad engine operation, would 
result in a significant degree of control for nonroad equipment. EPA 
has therefore specified the highway transient test cycle to evaluate 
emission levels relative to the voluntary standards. If EPA adopts a 
transient test for certifying nonroad engines in the future, the Agency 
will accordingly re-evaluate the test cycle and standards for Blue Sky 
Series engines.
    To best align with future emission standards, Tier 3 emission 
levels, where applicable, were chosen as the best level for defining 
Blue Sky Series engines. This represents a reduction of approximately 
40 percent beyond the Tier 2 NMHC + NOX levels. For PM 
emissions and for engines with no Tier 3 standards, a calculated level 
corresponding to a 40 percent reduction beyond Tier 2 levels will be 
used to qualify as a Blue Sky Series engine (see Table 3).

       Table 3.--Voluntary Emission Standards in g/kW-hr (g/hp-hr)
------------------------------------------------------------------------
             Rated brake power (kW)                 NMHC+NOX       PM
------------------------------------------------------------------------
kW<8............................................         4.6       0.48
                                                        (3.4)     (0.36)

[[Page 56982]]

8kW<19...............................         4.5       0.48
                                                        (3.4)     (0.36)
19kW<37..............................         4.5       0.36
                                                        (3.4)     (0.27)
37kW<75..............................         4.7       0.24
                                                        (3.5)     (0.18)
75kW<130.............................         4.0       0.18
                                                        (3.0)     (0.13)
130kW560..................         4.0       0.12
                                                        (3.0)     (0.09)
kW>560..........................................         3.8       0.12
                                                        (2.8)     (0.09)
------------------------------------------------------------------------

    Blue Sky Series engines need to meet all the requirements that 
would otherwise be applicable to Tier 2 engines. This would include 
allowable maintenance, warranty, useful life, rebuild, and 
deterioration factor provisions. Manufacturers must demonstrate 
compliance with the CO standard by comparing the emission levels 
generated on the highway test cycle with the numerical value of the CO 
standard for the applicable tier of nonroad engines for that model 
year. Manufacturers must also demonstrate compliance with applicable 
smoke standards.
    Repeating the certification process to develop and submit test data 
to make a highway engine available for nonroad use adds a significant 
hurdle to engines expected to sell in low volumes for nonroad 
applications. Under the Blue Sky Series engine program, manufacturers 
with highway-certified engines may waive the testing requirements for 
obtaining nonroad certification. This includes the need to comply with 
the provisions related to the durability of emission controls. EPA, 
however, needs to ensure that engine designs are not tailored to the 
transient cycle with much higher emissions on a steady-state cycle. To 
accommodate this, EPA retains the ability to conduct in-use testing to 
verify that engines are operating in steady-state modes with 
substantially the same level of emission control. EPA will therefore 
require that NOX and PM emissions be no more than 20 percent 
higher on the appropriate nonroad steady-state test cycle compared with 
the highway test cycle. This is intended to provide relief for 
development testing needed to protect against in-use liability, while 
preventing any active strategies designed specifically for the 
transient test cycle at the expense of controlling emissions during 
steady-state operation. For evaluation of the performance of one of 
these engines in steady-state operation at any point in an engine's 
useful life, the Agency intends to conduct paired data generated on 
both the appropriate steady-state test cycle and the highway transient 
test cycle.
    The Blue Sky Series program begins immediately upon promulgation 
and continues through the 2004 model year. EPA will evaluate the 
program to determine if it should be continued for 2005 and later 
engines, and if so, what changes are needed to reflect the transition 
to Tier 3 emission standards. This evaluation will be considered as 
part of the 2001 feasibility review. The experience gained with these 
engines and the Tier 3 resolution of certification test cycles and PM 
standards will factor into this evaluation.
    The Agency sees substantial potential for users and state and local 
governments to establish these incentive programs. For example, the 
increasing public concern about the effects of diesel engine emissions 
on health raises the possibility that some construction companies will 
purchase Blue Sky Series engines to protect its workers or the public 
from localized emissions, especially if benefits can also be gained in 
employee or public relations, such as with highly visible projects in 
polluted city centers. Similarly, a mining company could select these 
low-emitting engines for underground applications to minimize miners' 
exposure to exhaust pollutants. A state or local government may be able 
to add incentives for companies committing to rely on Blue Sky Series 
engines in contract bidding on publicly funded construction projects in 
nonattainment areas. Some farmers may be willing to pay more for 
equipment with the cleaner engines to lower their field exposure to 
engine exhaust pollutants. In some of these applications, alternative 
fuels may be readily available, possibly even providing a cost savings 
compared to diesel fuel.
    The Agency is concerned that incentive programs not lead to a net 
detriment to the environment through the double-counting of benefits. 
Also, manufacturers have indicated that the potential to participate in 
an averaging, banking, and trading program would not be an important 
factor leading to the development of Blue Sky Series engines. EPA has 
therefore concluded that manufacturers choosing to sell an engine with 
the Blue Sky Series designation will not generate averaging, banking, 
and trading credits for demonstrating compliance with EPA programs. 
Other groups are then free to design credit programs without concern 
for any double-counting or other unintended effect of overlapping 
programs.

J. Technical Amendments

    This final rule contains technical amendments to the certification 
and emission test procedures previously adopted for nonroad diesel 
engines (40 CFR Part 89). The most significant changes are highlighted 
here; a complete description of the technical amendments is detailed in 
a memorandum to the docket.10
---------------------------------------------------------------------------

    \10\ ``Justification for Amendments to 40 CFR Part 89,'' EPA 
memorandum from Greg Orehowsky to Docket A-96-40, August 21, 1997.
---------------------------------------------------------------------------

    EPA is adding definitions of rated speed and intermediate speed. 
Rated speed is defined as the maximum full load speed for governed 
engines and speed of maximum horsepower for ungoverned engines. The 
definition for intermediate speed was based on peak torque speed and 
limits intermediate speed to 60 to 75 percent of rated speed. The 
maximum full load speed is the highest speed with an advertised power 
greater than zero. EPA is linking full load governed speed to 
advertisements at this time since no adequate language has been 
developed that mathematically defines full load governed speed as a 
point on the torque or power curve. Power curves in manufacturer's 
advertisements typically end at the governed speed. EPA believes that 
manufacturers will continue to advertise the full range of power of its 
engine. Manufacturers would therefore not set rated speed at less than 
full load governed speed. It is unlikely that manufacturers will 
advertise powers beyond the full load governed speed, since a 
manufacturer cannot guarantee power beyond this point. EPA is applying 
the new definitions to Tier 1, as well as Tier 2 and 3 programs. 
However, to avoid unnecessarily burdensome recertification, EPA is not 
requiring manufacturers to use the new definitions for Tier 1 engines 
certified prior to January 1, 1999. Engine families that are certified 
prior to January 1, 1999 may carry over certification under the old 
definitions into subsequent Tier 1 model years. All Tier 2 engines must 
meet the definitions for rated and intermediate speeds.
    Engines are grouped into families that are expected to have similar 
emissions characteristics throughout their useful lives. EPA's 
regulations list a number of characteristics which distinguish engine 
families. EPA is concerned that the phasing in of the new standards by 
power categories, which is intended as an aid to implementation, may 
actually increase manufacturers' costs without a

[[Page 56983]]

significant emissions benefit in the situation where an engine family 
marginally straddles a power category cutpoint, and therefore must be 
split. This is especially of concern for Tier 1 engines below 37 kW 
because of the short lead time provided for the certification of these 
engines, and because this group is comprised of 3 rather narrow power 
bands. Therefore, EPA is allowing the creation of Tier 1 engine 
families that straddle the power band cutpoints at 8, 19, and 37 kW, 
subject to EPA approval. To avoid potential abuse of this provision by 
a manufacturer attempting to take advantage of the least stringent 
emission standards applicable to the engines in the family, such 
grouping will be allowed only if: (1) most of the engine family's sales 
in each year are from engines with rated power in the power band with 
which the engine family is certified, and (2) all power ratings in the 
engine family that are not within the power band with which the engine 
family is certified are within 10 percent of one of the two power 
levels that define this power band. The limitations would not apply if 
the emission standards for the power band in which the engine family is 
being certified are at least as stringent as those of the power band 
that the included engines would otherwise be in. EPA may extend this 
provision beyond Tier 1 in a future action, but first wishes to examine 
its effectiveness over time in providing sufficient flexibility without 
leading to abuse.
    The amendments change the criteria for test engine selection. Test 
engine selection is no longer based on maximum fuel per stroke at 
maximum power, but is now based primarily on the highest fuel per 
stroke at peak torque and secondarily on the highest fuel per stroke at 
rated speed.
    The calibration requirements for the gaseous emission measurement 
analyzers are modified in various ways. The requirements for 
measurement accuracy below fifteen percent of full scale are revised to 
include a specific number of gas concentrations at the low end of the 
calibration curve. Also, calibration requirements are simplified to 
allow laboratories to calibrate only one analyzer range and still 
ensure accurate measurements. Additional changes to calibration 
requirements for other equipment are described in the Summary and 
Analysis of Comments document.
    Other modifications relate to the test sequence and calculation of 
emission results. A ``mode'' is defined and the procedure for dealing 
with void modes is included. The equations used to calculate emissions 
during raw sampling are corrected. The amendments also correct errors 
in the currently listed equations and include new equations that were 
mistakenly omitted.

III. 2001 Review and Ensuring Emissions Control In Use

A. 2001 Review

    Over the next several years, EPA will be actively engaged in 
programs to evaluate technology developments and progress toward 
meeting the new standards. This process will involve engine research 
programs, coordination with the involved industries, and active 
interaction with other stakeholders. This effort will culminate in a 
special review, to be concluded in 2001, to reassess the 
appropriateness of the Tier 2 standards for engines rated under 37 kW 
and the Tier 3 standards for engines rated between 37 and 560 kW. The 
review will also include proposal and adoption of appropriate Tier 3 
standards for PM. In addition to reviewing whether or not the new 
standards are technologically feasible and otherwise appropriate under 
the Clean Air Act, the Agency will examine the need for equipment 
redesign due to the new standards and will take appropriate action if 
significant adverse impacts on the nonroad equipment industry are 
identified.
    Before making a final decision in this review, EPA intends to issue 
a proposal and offer an opportunity for public comment on whether the 
standards under review are technologically feasible for implementation 
according to the proposed schedule, and are otherwise appropriate under 
the Act. Any changes to certification test procedures or Tier 3 PM 
standards would also be proposed in that document. Following the close 
of the comment period, EPA intends to issue a final Agency decision 
under section 307 of the Act.
    If, based on the information collected for the 2001 feasibility 
review, EPA finds the emission standards are not appropriate under the 
Act, EPA will propose changes to the program, possibly including 
adjustments to the levels of the standards. Consistent with the 
Statement of Principles, the adjusted standards may be more or less 
stringent than those already established or the schedule could be 
adjusted. For example, progress to date in the design of low-emitting 
heavy-duty highway diesel engines has been encouraging, and EPA 
believes that this progress may benefit designs of large nonroad diesel 
engines as well, due to the many similarities in these classes of 
engines. Therefore, the Agency believes that by 2001 it may well be 
appropriate to consider moving the standards for equal to or greater 
than 300 horsepower engines forward in time, and so expects to consider 
this issue in the 2001 feasibility review. Any change to the specified 
certification test procedure, including the possible adoption of a 
transient test cycle, will be factored into the evaluation of the 
appropriateness of the numerical standards. The standards finalized in 
this document will stay in effect unless revised by subsequent 
rulemaking procedure.
    The review may include other topics as well. Some topics identified 
in this rulemaking that the Agency plans to review are test fuel sulfur 
specifications, ABT provisions, Blue Sky Series engine standards, 
established technologies for deterioration factor determinations, and 
engine family designations.

B. Ensuring Emissions Control In Use

    Key among EPA activities directed toward completing the 2001 
feasibility review are those related to adoption of a more effective PM 
control program for nonroad diesel engines.11 The 
establishment of a more effective program will be informed not just by 
progress in engine designs but also by studies currently being 
performed by the Agency and by others on the relationship between 
diesel PM emissions and various health problems.
---------------------------------------------------------------------------

    \11\ The current control program for PM and all other pollutants 
includes an emissions standard and related emissions test procedure. 
For control of PM, as well as other regulated pollutants, an engine 
may not be equipped with a defeat device, defined as a device, 
system, or element of design which senses operation outside normal 
emission test conditions and reduces emission control effectiveness, 
including any auxiliary emission control device (AECD) that reduces 
the effectiveness of the emission control system under conditions 
which may reasonably be expected to be encountered in normal 
operation and use unless the conditions are included in the test 
procedure (40 CFR 89.107). Manufacturers must provide a detailed 
description of all auxiliary emissions control devices when they 
apply for certification (40 CFR 89.115(d)(2)). The defeat device 
prohibition is designed to ensure that proper control of emission-
related engine parameters is maintained during engine operation that 
is not substantially represented in the certification test cycle. 
Electronic controls may be considered an AECD, and subject to the 
defeat device provision.
---------------------------------------------------------------------------

    Establishing an appropriate test cycle is critical to the success 
of a more effective PM control program. Testing an engine for emissions 
consists of exercising it over a duty cycle of speeds and loads using 
an engine dynamometer. The test cycle used to measure emissions should 
represent operation typical of actual operation in the field. A test 
procedure that does not

[[Page 56984]]

adequately represent in-use operation might not lead to, on average, 
the level of control in use set by the emission standards. A test 
procedure that does reflect real world operating conditions will drive 
engine designers to develop technologies that achieve in-use control 
corresponding to the emission standards. EPA has addressed such 
concerns in the past; for example, the highway heavy-duty engine test 
cycles were changed to address transient operation (45 FR 4136, January 
21, 1980) and, more recently, EPA has revised the test cycle for light-
duty vehicles (61 FR 54852, October 22, 1996).
    EPA has concerns that the current test cycle does not adequately 
reflect transient operation, and, therefore, will not lead to the level 
of average in-use emission control reflected by the PM standard. PM 
emissions, like NOX emissions, depend somewhat on engine 
load characteristics that can be modeled in the steady-state test, but 
are most sensitive to the degree of transient engine operation. Most 
nonroad engines are used in applications that are largely transient in 
nature. Even equipment such as pumps and generators, that operate 
mostly at constant engine speeds, may depart from steady-state 
operation due to variation in engine loads over time. EPA believes that 
the Tier 2 PM emission standards, with the current steady-state test, 
will produce some degree of in-use emissions control from nonroad 
engines, especially from engines that typically operate at a constant 
speed. The level of control from the many nonroad engines that 
frequently operate in more transient modes, however, is less certain, 
especially in an engine design era involving stringent PM and 
NOX standards and electronic engine controls, as is likely 
to be the case in Tier 3. Therefore, EPA is moving forward with 
developing a transient component to the nonroad engine test cycle to 
control the transient element of PM emissions generation; this 
component would supplement the steady-state test.
    EPA has an additional concern that goes beyond choosing an 
appropriate test cycle. EPA has observed at times that manufacturers 
may tailor the design of their engines to narrowly meet the 
requirements of the emission test. This concern applies not just to PM 
emissions but to other pollutants such as NOX and 
hydrocarbons, as well. The current nonroad test cycle, with a limited 
combination of steady-state speeds and loads, does not include some of 
the operating modes that are commonly experienced in the field. In 
fact, any single prescribed test cycle, although advantageous for test 
result repeatability and predictability, may not ensure that engine 
manufacturers design robust emission controls that achieve good control 
in use. This concern is increased with the advent of electronic 
controls, which greatly increases the level of sophistication available 
to manufacturers in controlling emissions levels over the full range of 
engine operation. To address this and other concerns, in the Tier 1 
rulemaking EPA adopted the prohibition on defeat devices (see footnote 
11), which the Agency intends to implement for all tiers of standards. 
EPA may also supplement existing regulations through changes in its 
nonroad diesel engine program to better control in-use emissions, in a 
manner that will ensure effective in-use emissions control without 
unduly increasing manufacturers' testing burden and certification 
uncertainty.
    Although the Agency intends to establish its Tier 3 PM standards 
and a transient test cycle in the context of the 2001 feasibility 
review, other activities such as its investigation of in-use operation 
emissions, including possible regulatory action, may proceed on an 
earlier schedule. The concerns described above about in-use emissions 
apply to the pre-Tier 3 as well as the Tier 3 standards, and the Agency 
believes that prompt action in this area is appropriate. The two 
efforts discussed above, development of a transient test cycle for PM 
control and adoption of supplemental measures to better control in-use 
emissions, have the same overall focus--achieving effective control of 
emissions in the real world. As a result, the need for a separate 
transient test cycle may be eliminated if the measures EPA adopts to 
better control in-use emissions prove adequate for control of PM in 
use.

IV. Technological Feasibility

    The emission standards finalized in this document apply to a broad 
range of diesel engines used in a wide variety of nonroad applications. 
Section 213 (a)(3) of the Clean Air Act calls for EPA to establish 
standards that provide for the ``greatest degree of emission reduction 
achievable through the application of technology which the 
Administrator determines will be available for the engines or vehicles 
to which such standards apply, giving appropriate consideration to the 
cost of applying such technology within the period of time available to 
manufacturers and to noise, energy, and safety factors associated with 
the application of such technology.'' EPA has concluded, as described 
in the Final RIA, that the new standards will have no significant 
negative effect on noise, energy, or safety.
    Because the emission standards for nonroad diesel engines are based 
largely on the standards for highway engines and rely on the evaluation 
of technologies for complying with the standards for highway engines, 
the discussion of technological feasibility in the highway engine 
rulemaking is central to supporting the feasibility of the new 
standards for nonroad engines. This analysis of diesel engine 
technologies is contained in Chapter 4 of the Final RIA for the highway 
rulemaking. 12 This analysis is considered and applied to 
nonroad engines in Chapter 3 of the Final RIA for this rulemaking.
---------------------------------------------------------------------------

    \12\ ``Final Regulatory Impact Analysis: Control of Emissions of 
Air Pollution from Highway Heavy-Duty Engines,'' U.S. EPA, September 
16, 1997 (Docket A-95-27).
---------------------------------------------------------------------------

    The level and implementation timing of the standards finalized in 
this document are the most challenging that can be justified. Engine 
manufacturers will need to use the available lead time to develop the 
necessary emission control technologies, including transfer of 
technology from highway engines. This development effort will require 
not only achieving the targeted emission levels, but also ensuring that 
each engine will meet all performance and emission requirements over 
its useful life. The emission standards clearly represent major 
reductions compared with current emission levels.
    Emission control technology for diesel engines is in a period of 
rapid development in response to the range of emission standards 
anticipated for the years ahead. This effort will need to continue to 
meet the requirements of this final rule. However, the emission targets 
are set in the framework of a long lead time with various flexibility 
provisions, which provide manufacturers the time they will need to 
apply emission control technology developments to nonroad engines. 
Also, the experience gained in response to EPA's emission standards for 
highway engines will be invaluable in meeting the comparable 
requirements for nonroad engines. Because the technology development 
for highway engines will to a large extent constitute basic research of 
diesel engine combustion, this effort will also benefit manufacturers 
that produce no highway engines.
    On the basis of information currently available, EPA believes that 
it is feasible for nonroad diesel engine manufacturers

[[Page 56985]]

to meet the standards finalized in this document within the specified 
time frame, using combinations of the technological approaches 
discussed in the Final RIA. In addition, EPA believes that the 
flexibilities incorporated into this final rule will permit nonroad 
vehicle and equipment manufacturers to respond to engine changes in an 
orderly way. For both industries, EPA expects that meeting these 
requirements will pose a significant challenge. As described above, EPA 
plans to assess, as part of the 2001 feasibility review, the 
appropriateness of the Tier 3 standards, and the Tier 2 standards for 
engines rated under 37 kW.

V. Projected Impacts

A. Environmental Impacts

    To assess the environmental impact of the new emission standards, 
EPA has used a draft version of the new NONROAD model, developed by EPA 
for predicting emissions from nonroad equipment. Chapter 5 of the Final 
RIA contains a thorough discussion of the methodology used to project 
the emission inventories and emission reductions from nonroad equipment 
covered by the new standards. The reader is directed to the RIA for 
more information on the environmental impact of this final rule.
    The amount of growth experienced in the nonroad market will have a 
significant impact on the emission inventories and emission reductions 
expected from the new emission standards. For this environmental impact 
analysis, EPA has examined the impact of the emission standards under 
two different growth scenarios. (The growth rates used in the nonroad 
modeling are compounded growth rates.) The first scenario uses growth 
rates based on information developed by the Bureau of Economic Analysis 
(BEA). The BEA growth rates, which are prospective, are based on a 
variety of economic indicators and vary by nonroad segment (i.e., 
agriculture, construction, etc.). The BEA growth rates typically range 
from one to two percent per year. Based on trends in historical nonroad 
equipment sales, trends in nonroad fuel usage, and the continuing 
strong performance of the U.S. economy, EPA believes that the BEA 
growth rates may underestimate the future growth of the nonroad market. 
Therefore, EPA has also modeled the impact of the new standards using 
information on nonroad equipment population from a database developed 
by Power Systems Research (PSR). The growth rates based on a 
retrospective analysis of 1989 to 1996 PSR equipment population data 
result in typically higher growth rates compared to the BEA 
information. EPA believes the results from the two growth scenarios 
serve to bracket the expected environmental impact of the standards. 
The following discussion of environmental impacts presents the results 
from both the BEA growth scenario and the PSR growth scenario.
    EPA modeled the impact of the new standards for NOX, 
NMHC, and PM emissions. The modeling inputs conservatively assume that 
equipment manufacturers take full advantage of the flexibility 
provisions described earlier. EPA did not model the impacts of 
standards on CO because CO emissions from nonroad diesel equipment are 
a very small portion of the overall CO inventory and the standards are 
not expected to have a significant impact on CO levels.
    Because of the uncertainties about the degree to which the steady-
state test procedure will control PM emissions in use, especially from 
the many nonroad engines that frequently operate in transient modes, 
EPA cannot be certain that any assessment of expected PM emission 
reductions made at this time will be completely accurate. Nevertheless, 
EPA has attempted to make a reasonable estimate of these reductions by 
assuming that engines will certify at the level of the new emission 
standards, and applying EPA's best current estimates of adjustment 
factors for in-use PM emission levels, as reflected in the NONROAD 
model. These factors and other assumptions in the model are still under 
review, and will continue to be improved in the future as new 
information becomes available. The baseline levels used in this 
analysis are consistent with the position taken in the Tier 1 rule that 
no PM benefits are claimed from the Tier 1 PM standard. EPA believes 
that this approach provides a reasonable estimate of PM benefits from 
the new standards but actual benefits could vary significantly from 
these levels.
    Based on the results of the modeling, the expected emission 
benefits from the new standards are quite substantial. Tables 4, 5, and 
6 contain the nationwide NOX, NMHC, and PM inventories, 
respectively, under the baseline scenario, which assumes only the 
current Tier 1 standards are in effect, and under the control scenario, 
which assumes the new standards take effect. (The PM reductions 
contained in Table 6 are direct PM and do not include secondary PM 
benefits, which are described below.) By 2020, the emission reductions 
due to the new standards exceed 50 percent for both NOX and 
NMHC, and 40 percent for PM. All percentages are calculated relative to 
the baseline inventories, which assumes only the current Tier 1 
standards are in effect.

                          Table 4.--NO2 Emissions Inventory From Nonroad Diesel Engines
                                                  [Short tons]
----------------------------------------------------------------------------------------------------------------
                                                         PSR growth rates                BEA growth rates
                                                 ---------------------------------------------------------------
                  Calendar year                    With current      With new      With current      With new
                                                     standards       standards       standards       standards
----------------------------------------------------------------------------------------------------------------
2000............................................       2,932,000       2,916,000       2,740,000       2,727,000
2010............................................       3,787,000       2,576,000       2,827,000       1,954,000
2020............................................       5,445,000       2,689,000       3,005,000       1,463,000
----------------------------------------------------------------------------------------------------------------


                         Table 5.--NMHC Emissions Inventory From Nonroad Diesel Engines
                                                  [Short tons]
----------------------------------------------------------------------------------------------------------------
                                                         PSR growth rates                BEA growth rates
                                                 ---------------------------------------------------------------
                  Calendar year                    With current      With new      With current      With new
                                                     standards       standards       standards       standards
----------------------------------------------------------------------------------------------------------------
2000............................................         361,000         350,000         337,000         328,000

[[Page 56986]]

2010............................................         419,000         256,000         301,000         193,000
2020............................................         619,000         258,000         317,000         138,000
----------------------------------------------------------------------------------------------------------------


                          Table 6.--PM Emissions Inventory From Nonroad Diesel Engines
                                                  [Short tons]
----------------------------------------------------------------------------------------------------------------
                                                         PSR growth rates                BEA growth rates
                                                 ---------------------------------------------------------------
                  Calendar year                    With current      With new      With current      With new
                                                     standards       standards       standards       standards
----------------------------------------------------------------------------------------------------------------
2000............................................         294,000         292,000         271,000         269,000
2010............................................         410,000         270,000         295,000         195,000
2020............................................         604,000         338,000         315,000         170,000
----------------------------------------------------------------------------------------------------------------

    In addition to the effect of the new emission standards on direct 
PM emissions noted above, the standards are expected to reduce the 
concentrations of secondary PM. Secondary PM is formed when 
NOX reacts with ammonia in the atmosphere to yield ammonium 
nitrate particulate. Systems Applications International, under contract 
with EPA, evaluated the effect of the NOX reductions on the 
formation of nitrate particulate.13 The report concluded 
that, as a national average, each 100 tons of NOX reduction 
will result in about 4 tons of secondary PM reduction. This conversion 
rate varies from region to region, and is greatest in the West. EPA 
estimates that the approximately 2.8 million tons per year of 
NOX reduction projected in 2020 resulting from this final 
rule (assuming PSR growth rates) will result in a national average of 
about 110,000 tons per year reduction in secondary PM. This level of 
secondary PM reduction is equivalent to about 40 percent of the 
projected direct PM reductions determined from Table 6 (based on PSR 
growth rates).
---------------------------------------------------------------------------

    \13\ ``Benefits of Mobile Source NOX Related 
Particulate Matter Reductions,'' Systems Applications International, 
EPA Contract No. 68-C5-0010, WAN 1-8, October 1996 (available in Air 
Docket A-96-40).
---------------------------------------------------------------------------

    As discussed below in section V.B, some technology upgrades 
associated with this program may have been introduced absent the 
changes in emission standards. Any emission reductions that would 
normally have occurred with improvements in technology should not be 
considered in determining the benefits and cost effectiveness of new 
emission standards. However, EPA believes that as manufacturers 
modernize and improve the technologies used on nonroad engines, they 
are faced with many choices on how to employ the new technologies to 
the greatest advantage for their customers. Many times, in the absence 
of requirements to meet tighter emission standards, the manufacturer 
will design the parameters of a new technology, or similarly, redesign 
the existing engine, to minimize fuel consumption or some other 
desirable trait, while not taking advantage of the emissions control 
capability of the new technology. Because none of these technologies 
leads to inherently lower emissions, EPA has not made any adjustments 
to the emission reduction or cost-effectiveness calculations to account 
for emission benefits that would have occurred independent of the new 
standards.

B. Economic Impacts

    In assessing the economic impact of changing the emission 
standards, EPA has made a best estimate of the combination of 
technologies that an engine manufacturer might use to meet the new 
standards at an acceptable cost. EPA published detailed cost estimates 
with the proposed rule, which has been extensively revised based on 
information received during the public comment period. The principal 
change incorporated into the analysis for the final rule is the 
inclusion of estimated costs for adding or improving turbocharging and 
aftercooler systems. The substantial additional costs for these 
technologies are offset to a great degree by the expected savings from 
reduced fuel consumption. These and other changes to the estimated 
economic impact analysis are described in the Summary and Analysis of 
Comments.
    While equipment manufacturers bear no responsibility for meeting 
emission standards, they will need to make changes in the design of 
their equipment models to accommodate the new engines. EPA's treatment 
of the impacts of the new emission standards therefore includes an 
analysis of costs for equipment manufacturers. Full details of EPA's 
cost and cost-effectiveness analyses can be found in Chapters 4 and 6 
of the Final RIA.
    Estimated cost increases are broken into purchase price and total 
life-cycle operating costs. The incremental purchase price for new 
engines and equipment is comprised of variable costs (for hardware and 
assembly time) and fixed costs (for research and development (R&D), 
retooling, and certification). Total operating costs include any 
expected increases in maintenance or fuel consumption. Cost estimates 
based on these projected technology packages represent an expected 
incremental cost of engines as they begin to comply with new emission 
standards. Costs in subsequent years are projected to decrease due to 
several factors, as described below. Separate projected costs were 
derived for engines and equipment used in six different ranges of rated 
power; costs were developed for engines near the middle of the listed 
ranges. All costs are presented in 1995 dollars. Life-cycle costs have 
been discounted to the year of sale using a discount rate of 7 percent.
1. Engine Technologies
    The following discussion provides a brief description of those 
technologies

[[Page 56987]]

EPA projects will be needed to comply with the new emission standards. 
In some cases it is difficult to make a distinction between 
technologies needed to reduce emissions for compliance with emission 
standards and those technologies that offer other benefits for improved 
fuel economy, power density, and other aspects of engine performance. 
EPA believes that without new emission standards, manufacturers would 
continue research on and eventually deploy many technological upgrades 
to improve engine performance or more cost-effectively control 
emissions. Modifications to fuel injection systems and the introduction 
of electronic controls are expected to continue, regardless of any 
change in emission standards, to improve engine performance. Some 
further development with a focus on NOX, HC, and PM 
emissions will nevertheless play an important role in achieving 
emission reduction targets.
    Because several technology upgrades have benefits that go beyond 
reducing emissions, a difficulty in assessing the impact of new 
emission standards is establishing the appropriate technology baseline 
from which to make projections. Ideally, the analysis would establish 
the mix of technologies that manufacturers would have introduced absent 
the changes in emission standards, then make a projection for any 
additional changes in hardware or calibration required to comply with 
those standards. The costs of those projected technology and 
calibration changes would then most accurately quantify the impact of 
setting new emission standards. While it is difficult to take into 
account the effect of ongoing technology development, EPA believes that 
assessing the full cost of the anticipated technologies as an impact of 
the new emission standards would inappropriately exclude from 
consideration the observed benefits for engine performance, fuel 
consumption, and durability. Short of having sufficient data to predict 
the future with a reasonable degree of confidence, EPA faces the need 
to devise an alternate approach to quantifying the true impact of the 
new emission standards. EPA believes the observed value of performance 
improvements in the field justifies the use of a discount based on 
equal weighting of emission and non-emission benefits of those 
technologies which clearly have substantial non-emission benefits, 
namely electronic controls, fuel injection changes, turbocharging, and 
engine modifications. For some or all of these technologies, a greater 
value for the non-emission benefits could likely be justified.
    A variety of technological improvements are projected for complying 
with the multiple tiers of new emission standards. Selecting these 
technology packages requires extensive engineering analysis and 
judgment. The fact that manufacturers have nearly a full decade before 
implementation of the most challenging of the new standards ensures 
that technologies will develop significantly before reaching 
production. This ongoing development will lead to reduced costs in 
three ways. First, research will lead to enhanced effectiveness for 
individual technologies, allowing manufacturers to use simpler packages 
of emission control technologies than would be predicted given the 
current state of development. Similarly, the continuing effort to 
improve the emission control technologies will include innovations that 
allow lower-cost production. Finally, manufacturers will focus research 
efforts on any potential drawbacks, such as increased fuel consumption 
or maintenance costs, attempting to minimize or overcome any negative 
effects.
    A combination of technology upgrades are anticipated as a result of 
the new emission standards. Modifications to basic engine design 
features, such as piston bowl shape and engine block and head geometry, 
can improve intake air characteristics and distribution during 
combustion. Manufacturers are expected to introduce electronic controls 
on most engines rated at or above 37 kW. Advanced fuel-injection 
techniques and hardware will allow designers to modify various fuel 
injection parameters for higher pressure, further rate shaping, and 
some split injection. For Tier 3 standards, EPA expects that many 
engines will see further fuel injection improvements and will 
incorporate a moderate degree of cooled exhaust gas recirculation. 
Details of the mix of technologies included in the cost analysis can be 
found in Chapter 4 of the Final RIA.
    While the following analysis projects a relatively uniform emission 
control strategy for designing the different categories of engines, 
this should not suggest that EPA expects a single combination of 
technologies will be used by all manufacturers. In fact, depending on 
basic engine emission characteristics, EPA expects that control 
technology packages will gradually be fine-tuned to different 
applications. Furthermore, EPA expects manufacturers to use averaging, 
banking, and trading programs as a means to deploy varying degrees of 
emission control technologies on different engines. EPA nevertheless 
believes that the projections presented here provide a cost estimate 
representative of the different approaches manufacturers may ultimately 
take.
2. Engine Costs
    The projected costs of these new technologies for meeting the new 
standards are itemized in the Final RIA and summarized in Table 7. For 
the Tier 1 standards for engines rated under 37 kW, estimated costs 
vary widely. Those engines that already operate with emissions low 
enough to meet the Tier 1 standards will bear costs only for certifying 
the engine, or about $10 per engine. For the remaining one-third of 
engines expected to need reduced emissions, adding engine modifications 
leads to total costs of around $90. The anticipated increase in 
operating costs will similarly be focused on the minority of engines 
that need design improvements, totaling about $130 in net present value 
(npv) over the lifetime of those engines. The calculated sales-weighted 
composite increase in both the purchase price and the operating costs 
for all engines rated under 37 kW is less than $50.  ..................

                                                         Table 7.--Projected Unit Costs--Engines
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                                                                                             Power (kW)
              Cost category                      Year of  production       -----------------------------------------------------------------------------
                                                                                0-37        37-75        75-130      130-450      450-560        560+
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                                                         Tier 1
--------------------------------------------------------------------------------------------------------------------------------------------------------
Incremental purchase price..............  1...............................          $34  ...........  ...........  ...........  ...........  ...........
Life-cycle Operating Costs (npv)........  All.............................           44  ...........  ...........  ...........  ...........  ...........

[[Page 56988]]

                                                                         Tier 2
--------------------------------------------------------------------------------------------------------------------------------------------------------
Incremental purchase price..............  1...............................           72         $124         $425         $464       $1,355         $683
Life-cycle Operating Costs (npv)........  All.............................           44           59         -147         -262       -1,347            0
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                                                         Tier 3
--------------------------------------------------------------------------------------------------------------------------------------------------------
Incremental purchase price..............  1...............................  ...........          240          511          758        1,858  ...........
                                          6...............................  ...........          120          297          435          535  ...........
Life-cycle Operating Costs (npv)........  All.............................  ...........           97         -652         -826       -1,212  ...........
--------------------------------------------------------------------------------------------------------------------------------------------------------

    Tier 2 standards, which apply to the full range of power ratings, 
involve higher estimated cost impacts. The set of technologies 
anticipated for Tier 2 engines include varying degrees of engine 
modifications, improved fuel injection, electronic controls, 
turbocharging, aftercooling, and exhaust gas recirculation. A small 
increase in operating costs is expected for engines rated between 37 
and 75 kW, but for other engines operating costs are expected to remain 
unchanged or in some cases to decrease as a result of charge air 
cooling, as described in the Final RIA. The price of engines rated 
under 75 kW is expected to increase by about $100. Engines rated 
between 75 and 450 kW will likely see cost increases between $400 and 
$500, while larger engines may see price increases approaching or 
exceeding $1,000. The projected cost of compliance with Tier 3 
standards entails increases from Tier 2 costs that follow a similar 
pattern to the increases for Tier 2 standards, though the Tier 3 
standards apply only to engines rated between 37 and 560 kW.
    Characterizing these estimated costs in the context of their 
fraction of the total purchase price and life-cycle operating costs is 
helpful in gauging the economic impact of the new standards. ICF 
conducted a study to characterize the range of current engine 
costs.14 Although the incremental cost projections in Table 
7 increase dramatically with increasing power rating, they in fact 
represent a comparable price change relative to the total price of the 
engine. The estimated cost increases for all engines are at most 13 
percent of estimated engine prices (after typical discounts and 
rebates). Moreover, the cost savings described below further reduce the 
projected impact of the new emission standards; long-term cost 
increases are expected to be 8 percent of total engine price or less.
---------------------------------------------------------------------------

    \14\ ``Engine Price (On-Highway and Nonroad) & Life-cycle Cost 
Methodology,'' memorandum from Thomas Uden, ICF, Inc. to Alan Stout, 
U.S. EPA, March 21, 1997 (available in Air Docket A-96-40).
---------------------------------------------------------------------------

    For the long term, EPA has identified two principal factors that 
would cause the estimated incremental costs to decrease over time. 
First, since fixed costs are assumed to be recovered over a fixed 
period, these costs disappear from the analysis after they have been 
fully recovered. This has a most striking effect on the projected costs 
for engines rated over 450 kW, for which the much higher projected 
costs are dominated by fixed costs. Second, the analysis incorporates 
the expectation that manufacturers will apply ongoing research to 
making emission controls more effective and less costly over time. 
Research in the costs of manufacturing has consistently shown that as 
manufacturers gain experience in production, they are able to apply 
innovations to simplify machining and assembly operations, use lower 
cost materials, and reduce the number or complexity of component 
parts.15 The analysis incorporates the effects of this 
learning curve by projecting that the variable costs of producing the 
low-emitting engines decreases by 20 percent starting with the third 
year of production and by reducing variable costs again by 20 percent 
starting with the sixth year of production. Table 7 lists the projected 
costs for each category of engine, including the set of numbers that 
illustrate the projected reduction in long-term costs for Tier 3 
engines.
---------------------------------------------------------------------------

    \15\ ``Learning Curves in Manufacturing,'' Linda Argote and 
Dennis Epple, Science, February 23, 1990, Vol. 247, pp. 920-924 
(available in Air Docket A-96-40).
---------------------------------------------------------------------------

3. Equipment Costs
    In addition to the costs directly associated with engines that are 
redesigned to meet new standards, costs may also result from the need 
to redesign the nonroad equipment in which these engines are used. Such 
redesigns could occur if the engine has a different shape or heat 
rejection rate, or is no longer made available in the configuration 
previously used. Based on their experience with the Tier 1 standards 
set in 1994, equipment manufacturers have told EPA that the main 
barrier to accommodating complying engines is the late delivery of such 
engines by engine manufacturers, which cuts into the lead time that 
equipment manufacturers need to properly redesign their equipment. 
Thus, attempts were made in developing this rulemaking to provide 
compliance flexibility to help equipment manufacturers avoid business 
disruptions resulting from the changes associated with new emission 
standards.
    In addition, the Tier 3 emission standards and implementation dates 
for engines rated at or above 37 kW and Tier 2 emission standards and 
implementation dates for engines rated under 37 kW are based on the 
premise that no significant equipment redesign beyond that required to 
accommodate engines meeting the previous tier of standards will be 
required to accommodate the new engines. Equipment manufacturers may, 
of course, choose to spread equipment redesigning over the time frame 
for both first and second tiers of standards. This analysis accounts 
for this flexibility by projecting one major redesign for each 
equipment model, spreading the costs of this redesign over both tiers 
of standards. For each tier of standards, EPA projects that equipment 
manufacturers will have sufficient opportunity to accommodate complying 
engines and to market their product. EPA will consider the potential 
for multiple design changes to equipment models during the 2001 
Feasibility Review.
    In assessing the economic impact of the new emission standards, EPA 
has made a best estimate of the modifications to equipment that relate

[[Page 56989]]

to packaging (installing engines in equipment engine compartments), 
power train (torque curve), and heat rejection effects of the new 
complying engines. The incremental purchase price for new engines is 
comprised of fixed costs (for R&D and retooling) and variable costs 
(for new or modified components). In its analysis, EPA attributes all 
changes in operating costs (i.e., additional maintenance and fuel 
economy benefit or penalty) to the cost estimates for engines. After a 
new standard takes effect, projected equipment costs in subsequent 
years would be reduced for the same reasons as described in the engine 
cost section above. Separate projected costs were determined for 
equipment using the same ranges of power ratings used above. Full 
details of EPA's equipment cost analysis can be found in Chapter 4 of 
the Final RIA.
    a. Projected Equipment Changes. As described earlier, the amount of 
time that an equipment manufacturer has to integrate a new engine into 
a piece of equipment is of critical importance. These manufacturers 
have experienced that late engine delivery may prevent them from 
adequately engineering their equipment designs, resulting in the need 
for various improvised changes. In this case, the costs associated with 
the engine change would be for fabricated components and other hardware 
changes more than for engineering time. In contrast, with adequate lead 
time, an equipment manufacturer can invest enough engineering time to 
design around the new engine, usually with minimal increase in hardware 
costs. Depending on the degree of change required, sales volumes, and 
other factors, actual costs in either of these scenarios may be 
comparable. EPA's analysis follows the latter scenario, emphasizing 
engineering time over hardware costs.
    The biggest change anticipated for equipment redesign is in 
changing the engine compartments to accommodate the physical changes to 
engines, especially for those engines that add air-to-air aftercoolers. 
The costs for engine development and the principal hardware components 
(radiator and plumbing) associated with air-to-air aftercooling are 
included as costs to the engines, as described above. What remains to 
be quantified for equipment manufacturers is then the effort to make 
space for the larger engine system and to integrate the engine into the 
overall functioning of the equipment. Extensive engineering time is 
allocated to this effort. In addition, significant costs are included 
for new, added, or improved materials that may be required, such as 
brackets, hoses, gaskets, or sheet metal.
    b. Projected Equipment Costs. The costs of the projected equipment 
changes resulting from the new standards are itemized in the Final RIA 
and summarized in Table 8. For the Tier 1 emission standards that apply 
to equipment with engines rated under 37 kW, the estimated composite 
cost increase is $24 per piece of equipment. As described in the 
section on engine costs above, this estimate is based on the 
determination that many of the engines for this range of equipment 
already operate with emissions low enough to meet the Tier 1 standards.

                                         Table 8.--Projected Unit Costs
----------------------------------------------------------------------------------------------------------------
                                                                     Power (kW)
               Tier                -----------------------------------------------------------------------------
                                        0-37        37-75        75-130      130-450      450-560        560+
----------------------------------------------------------------------------------------------------------------
              TIER 1
Equipment.........................          $24  ...........  ...........  ...........  ...........  ...........
Total Engine and Equipment........           59  ...........  ...........  ...........  ...........  ...........
              TIER 2
Equipment.........................            8         $125         $441         $340       $1,315         $404
Total Engine and Equipment........           80          250          867          804        2,670        1,087
        TIER 3: Short-Term
Equipment.........................  ...........           42          147          113          439  ...........
Total Engine and Equipment........  ...........          282          658          872        2,296  ...........
         TIER 3: Long-Term
Equipment.........................  ...........            3            4            5            7  ...........
Total Engine and Equipment........  ...........          122          301          440          543  ...........
----------------------------------------------------------------------------------------------------------------

    For Tier 2 standards, the relatively low equipment costs for 
equipment rated under 75 kW reflect the higher sales volume of this 
range. The highest projected cost of $1315 for equipment utilizing 
engines rated between 450 and 560 kW demonstrates that high unit 
equipment costs are due to amortizing large fixed costs over small 
sales volumes. These large fixed costs result from the effort to 
accommodate air-to-air aftercooling. Equipment with engines rated over 
560 kW are expected to require less redesign, and have correspondingly 
lower costs, since no changes in aftercooling are anticipated for these 
models as a result of Tier 2 emission standards.
    The projected incremental cost of complying with Tier 3 standards 
are lower than that for Tier 2 standards, because EPA expects most of 
the significant changes to equipment designs will occur for Tier 2 
standards. For Tier 3 standards, projected equipment costs range from 
$42 to $439.
    As discussed in the section on engine costs above, characterizing 
both these estimated incremental equipment and engine costs in the 
context of their fraction of the total equipment purchase price is 
useful for evaluating the economic impact of the new standards. EPA 
collected quoted retail (list) prices on several equipment pieces to 
characterize the range of current equipment prices. The combined 
incremental costs estimated for equipment and engines together for all 
power ranges are almost all under 2 percent of list prices, while many 
are well below 1 percent.
    Furthermore, as described in the section on engine costs above, the 
cost savings from full amortization of fixed costs and application of a 
learning curve further reduce the projected cost impact of the new 
standards. Table 8 shows the projected equipment costs for each 
category of equipment, including the long-term cost projections for 
complying with Tier 3 standards. The table also presents the combined 
costs estimated

[[Page 56990]]

for equipment and engines (excluding changes to operating costs).
4. Aggregate Costs to Society
    The above analysis presents unit cost estimates for each power 
category. With current data for equipment sales for each category and 
projections for the future, these costs can be translated into a total 
projected cost to the nation for the new emission standards in any 
year. Accounting for the projected favorable impact of the new 
standards on operating costs, primarily from fuel savings in larger 
engines, would produce negative aggregate costs (net economic gains) in 
future years. However, because it is difficult to accurately assess the 
fuel economy impacts of hardware changes and the degree to which these 
savings would have developed in the absence of new emission standards, 
EPA has conservatively chosen to present aggregate costs to society 
without factoring in the expected changes in operating costs. Using 
only the increased purchase prices leads to aggregate costs of about $5 
million in the first year the new standards apply, increasing to a peak 
of about $550 million in 2010 as increasing numbers of engines become 
subject to the new standards. The following years show declining 
aggregate costs as the per-unit cost of compliance decreases, resulting 
in a minimum aggregate cost of about $390 million in 2017. After 2017, 
stable engine costs applied to a slowly growing market lead to slowly 
increasing aggregate costs.
    As described earlier, EPA developed the cost and cost-effectiveness 
analyses by attributing half of the cost of certain technologies to 
benefits unrelated to emission control. To analyze the sensitivity of 
the cost analysis to this assumption, EPA estimated unit costs by 
attributing the full cost of these technologies to the new emission 
standards. EPA then estimated the effect of these increased costs on 
the 20-year costs to society. Assigning the full cost of technology as 
an to the emission control program, the 20-year fleetwide discounted 
cost is estimated to be $4.4 billion, approximately $1.2 billion higher 
than calculated using the base case. Similarly, the resulting 20-year 
annualized fleetwide costs are $411 million per year, approximately 
$115 million higher than the base case results.
    EPA also developed alternative cost figures to test the sensitivity 
of distributing fixed costs over worldwide production of nonroad 
engines and equipment. Because some countries are not expected to adopt 
harmonized emission standards in the foreseeable future, manufacturers 
could choose to distribute fixed costs over a subset of foreign sales. 
Since it is very difficult to quantify sales volumes for individual 
countries for all the companies that participate in the U.S. market, 
EPA made the simplifying assumption that fixed costs could be 
distributed over only half of engines sold into other countries. 
Distributing costs over this smaller number of engines leads to a 20-
year fleetwide discounted cost of $3.6 billion, approximately $0.4 
billion higher than the base case results. The corresponding 20-year 
annualized fleetwide costs are $339 million per year, approximately $40 
million higher than the base case results.

C. Cost-Effectiveness

    EPA has estimated the cost-effectiveness (i.e., the cost per ton of 
emission reduction) of the Tier 1, Tier 2 and Tier 3 standards for the 
same power categories of nonroad equipment highlighted earlier in this 
section. Chapter 6 of the Final RIA contains a more detailed discussion 
of the cost-effectiveness analysis.
    As described above in the preceding section, the projected cost of 
complying with the new standards will vary by power category and model 
year. Therefore, the cost-effectiveness will also vary from model year 
to model year. For comparison purposes, the discounted costs (including 
increased engine costs and equipment costs), emission reductions (in 
short tons), and cost-effectiveness of the NMHC + NOX 
standards are shown in Table 9 for the same model years discussed in 
the preceding section. EPA believes this is a conservative estimate 
because EPA assumed for the sake of this analysis that all of the 
increased costs presented earlier were attributable to NMHC + 
NOX control and none of the costs were attributed to PM 
control. NOX reductions represent approximately 90 percent 
of the total NMHC + NOX emission reductions expected from 
the new standards. In addition, the costs presented in Table 9 do not 
include the expected effect on operating costs over the lifetime of the 
equipment. EPA expects the operating costs to offset much, if not all, 
of the increased engine and equipment costs presented in Table 9 for 
engines above 75 kW due to expected improvements in fuel economy for 
engines meeting the new standards.

                           Table 9.--Cost-effectiveness of the New NMHC+NOX Standards
----------------------------------------------------------------------------------------------------------------
                                                                                       Discounted
                                                                          Discounted    lifetime     Discounted
                  Standard                     Power (kW)     Year of     engine and    NMHC+NOX   lifetime cost-
                                                             production   equipment    reductions  effectiveness
                                                                             cost        (tons)       per ton
----------------------------------------------------------------------------------------------------------------
Tier 1......................................      0-37                1          $59         0.20          $300
Tier 2......................................      0-37                1           80         0.04         2,090
                                              ............            6           35  ...........           910
                                                 37-75                1          249         0.49           510
                                                75-130                1          867         1.02           850
                                               130-450                1          804         1.82           440
                                               450-560                1        2,670         7.68           350
                                                  >560                1        1,087         9.83           110
                                              ............            6        1,025  ...........           100
Tier 3......................................     37-75                1          282         0.51           560
                                              ............            6          160  ...........           320
                                                75-130                1          658         0.82           800
                                              ............            6          442  ...........           540
                                               130-450                1          872         1.46           600
                                              ............            6          545  ...........           380
                                               450-560                1        2,296         5.91           390
                                              ............            6        1,991  ...........           340
----------------------------------------------------------------------------------------------------------------


[[Page 56991]]

    Weighting the projected cost and emission benefit numbers presented 
above by the populations of the individual power categories, EPA 
calculated the cost-effectiveness of the new NMHC + NOX 
standards for the entire nonroad diesel engine fleet. Table 10 contains 
the resulting fleet-wide cost-effectiveness results for the Tier 2 and 
Tier 3 standards. The sensitivity analyses described in Section V.B.4. 
above would affect cost-effectiveness calculations in the same way as 
described for fleetwide total costs. The Appendix to the Final RIA 
includes cost-effectiveness results for the sensitivity analysis in 
which full costs are attributed to emissions control.

  Table 10.--Fleet-wide Cost-effectiveness of the New Nonroad NMHC+NOX
                                Standards
------------------------------------------------------------------------
                                                             Discounted
                                                           lifetime cost-
                         Standard                          effectiveness
                                                              per ton
------------------------------------------------------------------------
Tier 2...................................................          $600
Tier 3--Short term.......................................           650
Tier 3--Long term........................................           410
------------------------------------------------------------------------

     For comparison to other PM control strategies, EPA has also 
analyzed the cost-effectiveness of the new standards by very 
conservatively assuming that half of the increased costs were 
attributable to PM control. Such a fleet-wide discounted lifetime cost-
effectiveness represents the highest figure that could be expected for 
cost-effectiveness of the new standards and was calculated to provide 
an indication of the upper bound of PM cost-effectiveness values. The 
resulting fleet-wide discounted lifetime cost-effectiveness of the Tier 
1 and Tier 2 PM standards is approximately $2,300 per ton.
    In an effort to evaluate the cost-effectiveness of the NMHC + 
NOX controls for nonroad engines, EPA has summarized the 
cost-effectiveness results for four other recent EPA mobile source 
rulemakings that required reductions in NOX (or NMHC + 
NOX) emissions. The heavy-duty vehicle portion of the Clean 
Fuel Fleet Vehicle Program yielded a cost-effectiveness of 
approximately $1,500/ton of NOX, Phase II of the 
Reformulated Gasoline Program yielded approximately $5,000/ton of 
NOX, the most recent NMHC + NOX standards for 
highway heavy-duty diesel engines yielded a cost-effectiveness of $100-
$600/ton of NMHC + NOX, and the newly adopted standards for 
locomotive engines yielded a cost-effectiveness of $160-$250/ton of 
NOX. The cost-effectiveness of the new NMHC + NOX 
standards for nonroad diesel engines presented above are more favorable 
than the cost-effectiveness of both the clean fuel fleet vehicle 
program and reformulated gasoline. The cost-effectiveness of the new 
NMHC + NOX standards for nonroad diesel engines is 
comparable to the cost-effectiveness of the most recent NMHC + 
NOX standards for heavy-duty highway diesel engines and 
slightly less favorable than the cost-effectiveness of the locomotive 
standards.
    EPA has also summarized the cost-effectiveness results for two 
other recent EPA mobile source rulemakings that required reductions in 
PM emissions. The cost-effectiveness of the most recent urban bus 
engine PM standard was estimated to be $10,000-$16,000/ton and the 
cost-effectiveness of the urban bus retrofit/rebuild program was 
estimated to be approximately $25,000/ton. The PM cost-effectiveness of 
the new emission standards presented above are more favorable than 
either of the urban bus programs.
    In addition to the benefits of reducing ozone within and 
transported into urban ozone nonattainment areas, the NOX 
reductions from the new standards are expected to have beneficial 
impacts with respect to crop damage, secondary particulate formation, 
acid deposition, eutrophication, visibility, and forests, as described 
earlier. Because of the difficulty of quantifying the monetary value of 
these societal benefits, the cost-effectiveness values presented do not 
assign any numerical value to these additional benefits. However, based 
on an analysis of existing studies that have estimated the value of 
such benefits in the past, the Agency believes that the actual monetary 
value of the multiple environmental and public health benefits produced 
by large NOX reductions similar to those projected under 
this final rule will likely be greater than the estimated compliance 
costs.

VI. Public Participation

    A wide variety of interested parties participated in the rulemaking 
process that culminates with this final rule. This process provided 
several opportunities for public comment over a period of more than two 
years. An Advance Notice of Proposed Rulemaking (ANPRM) (60 FR 45580, 
August 31, 1995) announced EPA's intention to address emissions from 
nonroad diesel engines, and a Supplemental ANPRM (62 FR 199, January 2, 
1997) detailed the framework for a proposed rule. Comments received 
during this period were considered in the development of the NPRM and 
are discussed in that document. These comments included information 
received from small businesses as a part of the multi-agency Small 
Business Advocacy Review Panel process which was completed prior to the 
NPRM and is described below under the discussion of the Regulatory 
Flexibility Act. The formal comment period and public hearing 
associated with the NPRM provided another opportunity for public input. 
EPA has also met with a variety of stakeholders at various points in 
the process, including environmental organizations, engine 
manufacturers, equipment manufacturers, and states.
    EPA has prepared a detailed Summary and Analysis of Comments 
document which describes the comments received on the NPRM and presents 
the Agency's response to each of these comments. The Summary and 
Analysis of Comments document is available in the docket for this rule 
and on the Office of Mobile Sources internet home page.

VII. Administrative Requirements

A. Administrative Designation and Regulatory Analysis

    Under Executive Order 12866, the Agency must assess whether this 
regulatory action is ``significant'' and therefore subject to Office of 
Management and Budget (OMB) review and the requirements of the 
Executive Order (58 FR 51735, Oct. 4, 1993). The order defines 
``significant regulatory action'' as any regulatory action that is 
likely to result in a rule that may:
    (1) Have an annual effect on the economy of $100 million or more or 
adversely affect in a material way the economy, a sector of the 
economy, productivity, competition, jobs, the environment, public 
health or safety, or State, local, or tribal governments or 
communities;
    (2) Create a serious inconsistency or otherwise interfere with an 
action taken or planned by another agency;
    (3) Materially alter the budgetary impact of entitlements, grants, 
user fees, or loan programs or the rights and obligations of recipients 
thereof; or,
    (4) Raise novel legal or policy issues arising out of legal 
mandates, the President's priorities, or the principles set forth in 
the Executive Order.
    Pursuant to the terms of Executive Order 12866, EPA has determined 
that this rulemaking is a ``significant regulatory action'' because the 
new standards and other regulatory provisions, if implemented, are 
expected to have an annual effect on the economy in excess of $100 
million. A

[[Page 56992]]

Final RIA has been prepared and is available in the docket associated 
with this rulemaking. This action was submitted to OMB for review as 
required by Executive Order 12866. Any written comments from OMB and 
any EPA response to OMB comments are in the public docket for this 
rulemaking.

B. Regulatory Flexibility Act

    The Regulatory Flexibility Act, 5 U.S.C. 601-612, was amended by 
the Small Business Regulatory Enforcement Fairness Act of 1996 
(SBREFA), Pub. L. 104-121, to ensure that concerns regarding small 
entities are adequately considered during the development of new 
regulations that affect them. In response to the provisions of this 
statute, EPA identified industries that would be subject to this 
rulemaking and provided information to and received comment from small 
entities and representatives of small entities in these industries 
prior to the formal proposal of the program. Small entities submitted 
written comments on the January, 1997 Supplemental Advance Notice of 
Proposed Rulemaking and oral comments at an informal workshop in 
Chicago. From these and other interactions, EPA developed a list of 
potential provisions that might offer flexibility to small entities 
while meeting air quality goals.
    The Agency convened a Small Business Advocacy Review Panel under 
section 609(b) of the Regulatory Flexibility Act. The Panel distributed 
the list of potential flexibility provisions to the identified small 
entity contacts for further comment and held a teleconference which led 
to further improvement of the flexibility options. The Panel then 
received additional written comments on potential options. Based on 
suggestions from small entities before and after the convening of the 
Panel, the Panel identified a set of five flexibility provisions to 
address small business concerns which it recommended to the Agency for 
proposal in the rule. As detailed in Chapter 4 of the Final RIA, the 
five recommended provisions were the following: (1) flexibility for 
equipment manufacturers to aggregate and use exemption allowances on a 
schedule that best suited their needs, (2) equivalent flexibility for 
manufacturers of equipment using small engines as for those using 
larger engines, (3) provision for equipment manufacturers to purchase 
credits in the averaging, banking, and trading program and to use those 
credits to exempt more equipment, (4) dropping of the requirement that 
the small volume allowance be restricted to a single equipment model, 
and (5) adoption of a hardship relief provision. Subsequently, EPA 
incorporated all five recommended provisions into the Notice of 
Proposed Rulemaking. Subsequently, EPA incorporated all five 
recommended provisions into the Notice of Proposed Rulemaking.
    After evaluating additional comments received on the proposed 
regulatory alternatives, EPA is adopting some of the provisions as they 
were recommended by the Panel as well as alternative flexibility 
provisions. The Agency is adopting the first two provisions, although 
by removing a special broader exemption for farming and logging 
equipment and instead increasing the allowances available to 
manufacturers of all types of equipment, the benefit to most small 
entities will actually be greater than under the proposed program. EPA 
is also adopting the fifth provision, establishing hardship relief.
    The Agency agreed with commenters who said that the third 
provision, allowing equipment manufacturers to purchase ABT program 
credits, would not likely provide significant relief to equipment 
manufacturers while adding the complexity of credit accounting and 
recordkeeping. This provision was not finalized. The fourth provision 
was adopted in a revised form, expanding the small volume allowance to 
multiple equipment models while establishing limitations to prevent 
widespread use of this provision by larger companies for whom this 
allowance is not intended.
    The Agency believes that, taken as a whole, the flexibility 
provisions established in this final rule provide small businesses with 
at least the same and probably greater flexibility compared to the set 
of provisions recommended by the Panel, while meeting the Agency's air 
quality goals. These provisions represent a very significant mitigation 
of the economic impacts on small equipment manufacturers compared to 
the impacts that might otherwise have occurred if small businesses had 
not been consulted. The final set of flexibility provisions and EPA's 
rationale for adopting these provisions are discussed in detail in 
Section II.E above and in the Summary and Analysis of Comments 
document.
    EPA prepared an Initial Regulatory Flexibility Analysis which 
analyzed the economic impacts of the proposed rule on small companies 
and discussed related issues. EPA has now prepared a Final Regulatory 
Flexibility Analysis, which is incorporated in Chapter 4 (Economic 
Impact) of the Final Regulatory Impact Analysis associated with this 
final rule. The Final Regulatory Flexibility Analysis presents the 
Agency's final assessments of the impacts this rule is likely to have 
on small entities.
    The Final Regulatory Flexibility Analysis incorporates comments 
received related to the Initial Regulatory Flexibility Analysis and 
reassesses the impact of the regulations on small entities. As did the 
Initial document, the Final Regulatory Flexibility Analysis analyzes 
the four separate but related industries that will be subject to this 
proposed rule and that contain small businesses as defined by 
regulations of the Small Business Administration (SBA): nonroad diesel 
engine manufacturing, manufacturing of nonroad diesel equipment, post-
manufacturer marinizing of diesel engines, and the rebuilding or 
remanufacturing of diesel nonroad engines. A detailed economic analysis 
was conducted only for equipment manufacturers, for several reasons. 
First, there is only one manufacturer of diesel engines affected by the 
proposed rule that meets SBA's small business criteria, and this small 
engine manufacturer would have impacts from the proposal that are 
similar to those impacts experienced by large nonroad engine 
manufacturers as described elsewhere in this final rule. Second, 
marinizers are expected to experience impacts similar to those of 
nonroad equipment manufacturers since changes made by the original 
engine manufacturers might require changes in the parts and process 
involved in marinization. Finally, engine rebuilders/remanufacturers 
will not be significantly economically impacted, since the provisions 
of this final rule for these entities does not require a substantial 
change to their current practices.
    As described above in Section II, this rule includes flexibility 
provisions for equipment manufacturers (both large and small 
manufacturers). The Final Regulatory Flexibility Analysis concludes 
that the final rule, with its compliance flexibility provisions, will 
result in an estimated 11 percent of small equipment manufacturers 
having annual compliance costs greater than 1 percent of their sales 
revenues. Also, an estimated 7 percent of small equipment manufacturers 
would experience a compliance cost impact greater than 3 percent of 
sales revenues. EPA believes the effects of the flexibility provisions 
are conservatively estimated, in part because the hardship relief 
provisions and the more generous exemption allowances finalized in this 
rule were not taken into account in the analysis. EPA considers the 
flexibility provisions

[[Page 56993]]

put in place by this rule to be a very effective way of minimizing 
significant economic impacts on small equipment manufacturers 
consistent with the Agency's air quality objectives.

C. Paperwork Reduction Act

    The Paperwork Reduction Act, 44 U.S.C. 3501 et seq., requires 
agencies to submit for OMB review and approval, federal requirements 
and activities that result in the collection of information from ten or 
more persons. Information collection requirements may include 
reporting, labeling, and recordkeeping requirements. Federal agencies 
may not impose penalties on persons who fail to comply with collections 
of information that do not display a currently valid OMB control 
number.
    The information collection requirements in this final rule have 
been approved by OMB without comment under the Paperwork Reduction Act, 
except for the requirement that engine manufacturers' annual reports 
include information on engines produced for the equipment manufacturer 
flexibility program, discussed above in section II.E.5. This 
requirement was not included in the Information Collection Request 
(ICR) submitted to OMB because it was not formally proposed by EPA in 
the NPRM. This reporting requirement was, however, put forth in the 
NPRM for comment, and is being adopted in the final rule based on 
further analysis and consideration of comments received. EPA plans to 
submit a separate ICR for this requirement. The following ICR documents 
have been prepared by EPA:

------------------------------------------------------------------------
                                                           OMB  control
            EPA ICR No.                     Title               No.
------------------------------------------------------------------------
0011.09...........................  Selective                  2060-0604
                                     Enforcement
                                     Auditing and
                                     recordkeeping
                                     requirements for on-
                                     highway HDE,
                                     nonroad compression
                                     ignition engines,
                                     and on-highway
                                     light-duty vehicles
                                     and Light duty
                                     trucks.
0095.10...........................  Pre-certification          2060-0007
                                     and testing
                                     exemption reporting
                                     and recordkeeping
                                     requirements.
0282.10...........................  Emission Defect            2060-0048
                                     Information and
                                     Voluntary Emission
                                     recall reports.
1684.04...........................  Compression Ignition       2060-0104
                                     Non-Road Engine
                                     Certification
                                     Application.
1695.03...........................  Amendment to the           2060-0104
                                     Information
                                     Collection Request
                                     Emission Standards
                                     for New Nonroad
                                     Spark-Ignition
                                     Engines.
1826.01...........................  Information                2060-0369
                                     collection for
                                     equipment
                                     manufacturer
                                     flexibility.
------------------------------------------------------------------------

    The Information Collection Requests (ICR) were subject to public 
notice and comment prior to OMB approval and, as a result, EPA finds 
that there is ``good cause'' under section 553(b) of the Administrative 
Procedures Act (5 U.S.C. 553 (b)) to include these information 
collection requirements in 40 CFR Part 9 without additional notice and 
comment. EPA received various comments on the rulemaking provisions 
covered by the ICRs, but no comments on the paperwork burden or other 
information in the ICRs. All comments that were submitted to EPA are 
considered in the Summary and Analysis of Comments, which can be found 
in the docket (A-96-40). A copy of any of the submitted ICR documents 
may be obtained from Sandy Farmer, OPPE Regulatory Information 
Division, U.S. Environmental Protection Agency (2137), 401 M St., S.W., 
Washington, DC 20460, or by calling (202) 260-2740.

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 for 
any one year. Before promulgating an EPA rule for which a written 
statement is needed, section 205 of the UMRA generally requires EPA to 
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 final rule contains no federal mandates (under the regulatory 
provisions of Title II of the UMRA) for state, local, or tribal 
governments. The rule imposes no enforceable duties on any of these 
governmental entities. Nothing in the final program will significantly 
or uniquely affect small governments. EPA has determined that this rule 
contains federal mandates that may result in expenditures of $100 
million or more in any one year for the private sector. EPA believes 
that the proposed program represents the least costly, most cost-
effective approach to achieve the air quality goals of the rule. The 
cost-benefit analysis required by UMRA is contained in the Final RIA. 
The reader is directed to Section VII.A for further information 
regarding these analyses.

E. Congressional Review Act

    The Congressional Review Act, 5 U.S.C. 801 et seq., as added by the 
Small Business Regulatory Enforcement Fairness Act of 1996, generally 
provides that before a rule may take effect, the agency promulgating 
the rule must submit a rule report, which includes a copy of the rule, 
to each House of the Congress and to the Comptroller General of the 
United States. EPA will submit a report containing this rule and other 
required information to the U.S. Senate, the U.S. House of 
Representatives, and the Comptroller General of the United States prior 
to publication of the rule in the Federal Register. This rule is a 
``major rule'' as defined by 5 U.S.C. 804(2).

F. National Technology Transfer and Advancement Act

    Section 12(d) of the National Technology Transfer and Advancement 
Act of 1995 (``NTTAA''), Public Law 104-113, section 12(d) (15 U.S.C. 
272

[[Page 56994]]

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. The NTTAA directs EPA 
to provide Congress, through OMB, explanations when the Agency decides 
not to use available and applicable voluntary consensus standards.
    This final rule involves technical standards. While commenters 
suggested the use of ISO 8178 test procedures for measuring emissions, 
the Agency has decided not to rely on these ISO procedures in this 
rulemaking. The Agency has determined that these procedures would be 
impracticable because they rely too heavily on reference testing 
conditions. Because the test procedures in these regulations need to 
represent in-use operation typical of operation in the field, they must 
be based on a range of ambient conditions. EPA has determined that the 
ISO procedures are not broadly usable in their current form, and 
therefore cannot be adopted by reference. EPA has instead chosen to 
continue to rely on the procedures outlined in 40 CFR Part 89. EPA is 
hopeful that future ISO test procedures will be developed that are 
usable for the broad range of testing needed, and that such procedures 
could then be adopted by reference. EPA also expects that any 
development of revised test procedures will be done in accordance with 
ISO procedures and in a balanced manner and thus include the 
opportunity for involvement of a range of interested parties 
(potentially including parties such as industry, EPA, state 
governments, and environmental groups) so that the resulting procedures 
can represent these different interests.

G. Protection of Children

    Executive Order 13045, entitled ``Protection of Children from 
Environmental Health Risks and Safety Risks'' (62 FR 19885, April 23, 
1997), applies to a rule that is determined to be ``economically 
significant,'' as defined under Executive Order 12866, if the 
environmental health or safety risk addressed by the rule has a 
disproportionate effect on children. For these rules, the Agency must 
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 final rule is not subject to Executive Order 13045, because 
this rule does not involve decisions on environmental health or safety 
risks that may disproportionately affect children.

H. Enhancing Intergovernmental Partnerships

    Under Executive Order 12875, EPA may not issue a regulation that is 
not required by statute and that creates a mandate upon a State, local 
or tribal government, unless the Federal government provides the funds 
necessary to pay the direct compliance costs incurred by those 
governments. If the mandate is unfunded, EPA must provide to the Office 
of Management and Budget a description of the extent of EPA's prior 
consultation with representatives of affected State, local and tribal 
governments, the nature of their concerns, copies of any written 
communications from the governments, and a statement supporting the 
need to issue the regulation. In addition, Executive Order 12875 
requires EPA to develop an effective process permitting elected 
officials and other representatives of State, local and tribal 
governments ``to provide meaningful and timely input in the development 
of regulatory proposals containing significant unfunded mandates.''
    This rule will be implemented at the federal level and imposes 
compliance obligations only on private industry. The rule thus creates 
no mandate on State, local or tribal governments, nor does it impose 
any enforceable duties on these entities. Accordingly, the requirements 
of Executive Order 12875 do not apply to this rule.

I. Consultation and Coordination With Indian Tribal Governments

    Under Executive Order 13084, EPA may not issue a regulation that is 
not required by statute, that significantly or uniquely affects the 
communities of Indian tribal governments, and that imposes substantial 
direct compliance costs on those communities, unless the Federal 
government provides the funds necessary to pay the direct compliance 
costs incurred by the tribal governments. If the mandate is unfunded, 
EPA must provide to the Office of Management and Budget, in a 
separately identified section of the preamble to the rule, a 
description of the extent of EPA's prior consultation with 
representatives of affected tribal governments, a summary of the nature 
of their concerns, and a statement supporting the need to issue the 
regulation. In addition, Executive Order 13084 requires EPA to develop 
an effective process permitting elected and other representatives of 
Indian tribal governments ``to provide meaningful and timely input in 
the development of regulatory policies on matters that significantly or 
uniquely affect their communities.''
    This rule does not significantly or uniquely affect the communities 
of Indian tribal governments. As noted above, this rule will be 
implemented at the federal level and imposes compliance obligations 
only on private industry. Accordingly, the requirements of Executive 
Order 13084 do not apply to this rule.

VIII. Statutory Authority

    In accordance with section 213(a) of the Clean Air Act, 42 U.S.C. 
7547(a), EPA conducted a study of emissions from nonroad engines, 
vehicles, and equipment in 1991. Based on the results of that study, 
EPA determined that emissions of NOX, volatile organic 
compounds (including hydrocarbons), and CO from nonroad engines and 
equipment contribute significantly to ozone and CO concentrations in 
more than one nonattainment area. See 59 FR 31306, June 17, 1994. Given 
this determination, section 213(a)(3) of the Act requires EPA to 
promulgate (and from time to time revise) emissions standards for those 
classes or categories of new nonroad engines, vehicles, and equipment 
that in EPA's judgment cause or contribute to such air pollution. EPA 
has determined that the engines regulated under this final rule ``cause 
or contribute'' to such air pollution. See 59 FR 31306, June 17, 1994.
    Where EPA determines that other emissions from new nonroad engines, 
vehicles, or equipment significantly contribute to air pollution that 
may reasonably be anticipated to endanger public health or welfare, 
section 213(a)(4) authorizes EPA to establish (and from time to time 
revise) emission standards from those classes or categories of new 
nonroad engines, vehicles, and equipment that EPA determines cause or 
contribute to such air pollution. In the June 1994 final rule, EPA made 
this determination for emissions of PM and smoke from nonroad engines 
in general and for CI nonroad engines rated at or above 37 kW. This 
rule extends the same findings to nonroad diesel engines rated under 37 
kW.

List of Subjects

40 CFR Part 9

    Environmental protection, Reporting and recordkeeping requirements.

[[Page 56995]]

40 CFR Part 86

    Administrative practice and procedure, Confidential business 
information, Labeling, Motor vehicle pollution, Reporting and 
recordkeeping requirements.

40 CFR Part 89

    Environmental protection, Administrative practice and procedure, 
Confidential business information, Diesel fuel, Imports, Incorporation 
by reference, Motor vehicle pollution, Reporting and recordkeeping 
requirements, Research, Warranties.

    Dated: August 27, 1998.
Carol M. Browner,
Administrator.
    For the reasons set out in the preamble, title 40, chapter I, parts 
9, 86, and 89 of the Code of Federal Regulations are amended as set 
forth below.

PART 9--[AMENDED]

    1. The authority citation for part 9 continues to read as follows:

    Authority: 7 U.S.C. 135 et seq., 136-136y; 15 U.S.C. 2001, 2003, 
2005, 2006, 2601-2671; 21 U.S.C. 331j, 346a, 348; 31 U.S.C. 9701; 33 
U.S.C. 1251 et seq., 1311, 1313d, 1314, 1318, 1321, 1326, 1330, 1342 
1344, 1345 (d) and (e), 1361; E.O. 11735, 38 FR 21243, 3 CFR, 1971-
1975 Comp. p. 973; 42 U.S.C. 241, 242b, 243, 246, 300f, 300g, 300g-
1, 300g-2, 300g-3, 300g-4, 300g-5, 300g-6, 300j-1, 300j-2, 300j-3, 
300j-4, 300j-9, 1857 et seq., 6901-6992k, 7401-7671q, 7542, 9601-
9657, 11023, 11048.

    2. Section 9.1 is amended in the table by removing the center 
heading ``Control of Emissions From New and In-Use Nonroad Engines'' 
and the entries under that center heading and adding a new center 
heading and entries in numerical order to read as follows:


Sec. 9.1  OMB approvals under the Paperwork Reduction Act.

* * * * *

------------------------------------------------------------------------
                                                            OMB control
                     40 CFR citation                            No.
------------------------------------------------------------------------
                  *        *        *        *        *
  Control of Emissions From New and In-Use Nonroad Compression-Ignition
                                Engines
------------------------------------------------------------------------
89.1....................................................       2060-0124
89.2....................................................       2060-0124
89.114-89.120...........................................       2060-0287
89.122-89.127...........................................       2060-0287
89.129..................................................       2060-0287
89.203-89.207...........................................       2060-0287
89.209-89.211...........................................       2060-0287
89.304-89.331...........................................       2060-0287
89.404-89.424...........................................       2060-0287
89.505-89.512...........................................       2060-0064
89.603-89.605...........................................       2060-0095
89.607-89.610...........................................       2060-0095
89.611..................................................      2060-0007,
                                                               2060-0095
89.612..................................................       2060-0095
89.801-89.803...........................................       2060-0048
89.903..................................................       2060-0124
89.905-89.911...........................................       2060-0007
                  *        *        *        *        *
------------------------------------------------------------------------

PART 86--CONTROL OF EMISSIONS FROM NEW AND IN-USE HIGHWAY VEHICLES 
AND ENGINES

    3. The heading of part 86 is revised as set forth above.
    4. The authority citation for part 86 continues to read as follows:

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

    5. Section 86.884-8 is amended by revising the table in paragraph 
(c)(4) to read as follows:


Sec. 86.884-8  Dynamometer and engine equipment.

* * * * *
    (c) * * *
    (4) * * *

------------------------------------------------------------------------
                                                               Exhaust
                                                                 pipe
                  Maximum rated horsepower                     diameter
                                                               (inches)
------------------------------------------------------------------------
HP>50......................................................          1.5
50HP>100........................................          2.0
100HP>200.......................................          3.0
200HP>300.......................................          4.0
300HP>500.......................................          5.0
HP5006.0........................................
------------------------------------------------------------------------

* * * * *

PART 89--CONTROL OF EMISSIONS FROM NEW AND IN-USE NONROAD 
COMPRESSION-IGNITION ENGINES

    6. The heading of part 89 is revised as set forth above.
    7. The authority citation for part 89 continues to read as follows:

    Authority: Sections 202, 203, 204, 205, 206, 207, 208, 209, 213, 
215, 216, and 301(a) of the Clean Air Act, as amended (42 U.S.C. 
7521, 7522, 7523, 7524, 7525, 7541, 7542, 7543, 7547, 7549, 7550, 
and 7601(a)).

    8. The following sections are redesignated as set forth in the 
following table:

------------------------------------------------------------------------
                                                                 New
                      Old designation                        designation
------------------------------------------------------------------------
89.101-96..................................................       89.101
89.102-96..................................................       89.102
89.103-96..................................................       89.103
89.104-96..................................................       89.104
89.105-96..................................................       89.105
89.106-96..................................................       89.106
89.107-96..................................................       89.107
89.108-96..................................................       89.108
89.109-96..................................................       89.109
89.110-96..................................................       89.110
89.111-96..................................................       89.111
89.112-96..................................................       89.112
89.113-96..................................................       89.113
89.114-96..................................................       89.114
89.115-96..................................................       89.115
89.116-96..................................................       89.116
89.117-96..................................................       89.117
89.118-96..................................................       89.118
89.119-96..................................................       89.119
89.120-96..................................................       89.120
89.121-96..................................................       89.121
89.122-96..................................................       89.122
89.123-96..................................................       89.123
89.124-96..................................................       89.124
89.125-96..................................................       89.125
89.126-96..................................................       89.126
89.127-96..................................................       89.127
89.128-96..................................................       89.128
89.129-96..................................................       89.129
89.201-96..................................................       89.201
89.202-96..................................................       89.202
89.203-96..................................................       89.203
89.204-96..................................................       89.204
89.205-96..................................................       89.205
89.206-96..................................................       89.206
89.207-96..................................................       89.207
89.208-96..................................................       89.208
89.209-96..................................................       89.209
89.210-96..................................................       89.210
89.211-96..................................................       89.211
89.212-96..................................................       89.212
89.301-96..................................................       89.301
89.302-96..................................................       89.302
89.303-96..................................................       89.303
89.304-96..................................................       89.304
89.305-96..................................................       89.305
89.306-96..................................................       89.306
89.307-96..................................................       89.307
89.308-96..................................................       89.308
89.309-96..................................................       89.309
89.310-96..................................................       89.310
89.311-96..................................................       89.311
89.312-96..................................................       89.312
89.313-96..................................................       89.313
89.314-96..................................................       89.314
89.315-96..................................................       89.315
89.316-96..................................................       89.316
89.317-96..................................................       89.317
89.318-96..................................................       89.318
89.319-96..................................................       89.319
89.320-96..................................................       89.320
89.321-96..................................................       89.321
89.322-96..................................................       89.322
89.323-96..................................................       89.323
89.324-96..................................................       89.324
89.325-96..................................................       89.325
89.326-96..................................................       89.326
89.327-96..................................................       89.327
89.328-96..................................................       89.328
89.329-96..................................................       89.329
89.330-96..................................................       89.330
89.331-96..................................................       89.331
89.401-96..................................................       89.401
89.402-96..................................................       89.402
89.403-96..................................................       89.403
89.404-96..................................................       89.404
89.405-96..................................................       89.405
89.406-96..................................................       89.406

[[Page 56996]]

89.407-96..................................................       89.407
89.408-96..................................................       89.408
89.409-96..................................................       89.409
89.410-96..................................................       89.410
89.411-96..................................................       89.411
89.412-96..................................................       89.412
89.413-96..................................................       89.413
89.414-96..................................................       89.414
89.415-96..................................................       89.415
89.416-96..................................................       89.416
89.417-96..................................................       89.417
89.418-96..................................................       89.418
89.419-96..................................................       89.419
89.420-96..................................................       89.420
89.421-96..................................................       89.421
89.422-96..................................................       89.422
89.423-96..................................................       89.423
89.424-96..................................................       89.424
89.425-96..................................................       89.425
89.501-96..................................................       89.501
89.502-96..................................................       89.502
89.503-96..................................................       89.503
89.504-96..................................................       89.504
89.505-96..................................................       89.505
89.506-96..................................................       89.506
89.507-96..................................................       89.507
89.508-96..................................................       89.508
89.509-96..................................................       89.509
89.510-96..................................................       89.510
89.511-96..................................................       89.511
89.512-96..................................................       89.512
89.513-96..................................................       89.513
89.514-96..................................................       89.514
89.515-96..................................................       89.515
89.516-96..................................................       89.516
89.601-96..................................................       89.601
89.602-96..................................................       89.602
89.603-96..................................................       89.603
89.604-96..................................................       89.604
89.605-96..................................................       89.605
89.606-96..................................................       89.606
89.607-96..................................................       89.607
89.608-96..................................................       89.608
89.609-96..................................................       89.609
89.610-96..................................................       89.610
89.611-96..................................................       89.611
89.612-96..................................................       89.612
89.613-96..................................................       89.613
------------------------------------------------------------------------

    9. In part 89, all internal section references are revised as 
indicated in the above redesignation table.

Subpart A--[Amended]

    10. Section 89.1 is amended by revising paragraphs (a) and (b)(4), 
by removing the word ``and'' at the end of paragraph (b)(3), and adding 
paragraph (b)(5), to read as follows:


Sec. 89.1  Applicability.

    (a) This part applies to nonroad compression-ignition engines.
    (b) * * *
    (4) Engines used in marine vessels as defined in the General 
Provisions of the United States Code, 1 U.S.C. 3 , if those engines 
have a rated power at or above 37 kW; and
    (5) Engines with a per cylinder displacement of less than 50 cubic 
centimeters.
    11. Section 89.2 is amended by revising the definition of Nonroad 
vehicle or nonroad equipment manufacturer, removing the definition of 
Nonroad compression-ignition engine and adding new definitions in 
alphabetical order to read as follows:


Sec. 89.2  Definitions.

* * * * *
    Auxiliary marine diesel engine means a marine diesel engine that is 
not a propulsion marine diesel engine.
    Blue Sky Series engine means a nonroad engine meeting the 
requirements of Sec. 89.112(f).
* * * * *
    Compression-ignition means relating to a type of engine with 
operating characteristics significantly similar to the theoretical 
Diesel combustion cycle. The non-use of a throttle to regulate intake 
air flow for controlling power during normal operation is indicative of 
a compression-ignition engine. This definition is applicable beginning 
January 1, 2000.
    Constant-speed engine means an engine that is governed to operate 
only at rated speed.
    Crankcase emissions means airborne substances emitted to the 
atmosphere from any portion of the engine crankcase ventilation or 
lubrication systems.
* * * * *
    Exhaust gas recirculation means an emission control 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 prior to 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 prior to or during 
combustion is not considered to be exhaust gas recirculation for the 
purposes of this part.
* * * * *
    Full load governed speed is the maximum full load speed as 
specified by the manufacturer in the sales and service literature and 
certification application. This speed is the highest engine speed with 
an advertised power greater than zero.
* * * * *
    Intermediate speed means peak torque speed if peak torque speed 
occurs from 60 to 75 percent of rated speed. If peak torque speed is 
less than 60 percent of rated speed, intermediate speed means 60 
percent of rated speed. If peak torque speed is greater than 75 percent 
of rated speed, intermediate speed means 75 percent of rated speed.
    Marine diesel engine means a compression-ignition engine that is 
intended to be installed on a vessel.
* * * * *
    Nonroad vehicle or nonroad equipment manufacturer means any person 
engaged in the manufacturing or assembling of new nonroad vehicles or 
equipment or importing such vehicles or equipment for resale, or who 
acts for and is under the control of any such person in connection with 
the distribution of such vehicles or equipment. A nonroad vehicle or 
equipment manufacturer does not include any dealer with respect to new 
nonroad vehicles or equipment received by such person in commerce. A 
nonroad vehicle or equipment manufacturer does not include any person 
engaged in the manufacturing or assembling of new nonroad vehicles or 
equipment who does not install an engine as part of that manufacturing 
or assembling process. All nonroad vehicle or equipment manufacturing 
entities that are under the control of the same person are considered 
to be a single nonroad vehicle or nonroad equipment manufacturer.
* * * * *
    Post-manufacture marinizer means a person who produces a marine 
diesel engine by substantially modifying a certified or uncertified 
complete or partially complete engine, and is not controlled by the 
manufacturer of the base engine or by an entity that also controls the 
manufacturer of the base engine. For the purpose of this definition, 
``substantially modify'' means changing an engine in a way that could 
change engine emission characteristics.
* * * * *
    Propulsion marine diesel engine means a marine diesel engine that 
is intended to move a vessel through the water or direct the movement 
of a vessel.
    Rated speed is the maximum full load governed speed for governed 
engines and the speed of maximum horsepower for ungoverned engines.
    Specific emissions means emissions expressed on the basis of 
observed brake power, using units of g/kW-hr. Observed brake power 
measurement includes accessories on the engine if these accessories are 
required for running an emission test (except for the cooling fan). 
When it is not possible to test the engine in the gross conditions, for 
example, if the engine and transmission form a single integral unit, 
the engine

[[Page 56997]]

may be tested in the net condition. Power corrections from net to gross 
conditions will be allowed with prior approval of the Administrator.
* * * * *
    Tier 1 engine means an engine subject to the Tier 1 emission 
standards listed in Sec. 89.112(a).
    Tier 2 engine means an engine subject to the Tier 2 emission 
standards listed in Sec. 89.112(a).
    Tier 3 engine means an engine subject to the Tier 3 emission 
standards listed in Sec. 89.112(a).
* * * * *
    U.S.-directed production volume means the number of nonroad 
equipment, vehicle, or marine diesel engine units produced by a 
manufacturer for which the manufacturer has reasonable assurance that 
sale was or will be made to ultimate purchasers in the United States.
* * * * *
    Vessel has the meaning given to it in 1 U.S.C. 3.
    12. Section 89.3 is amended by adding new acronyms in alphabetical 
order to read as follows:


Sec. 89.3  Acronyms and abbreviations.

* * * * *
    EGR  Exhaust gas recirculation.
* * * * *
    NMHC  Nonmethane hydrocarbon.
* * * * *
    PM  Particulate matter.
* * * * *
    THC  Total hydrocarbon.
* * * * *


Sec. 89.4  [Removed and Reserved]

    13. Remove and reserve Sec. 89.4.
    14. Section 89.6 is amended by revising the last sentence in 
paragraph (b)(1) introductory text and the table in paragraph (b)(1) to 
read as follows:


Sec. 89.6  Reference materials.

* * * * *
    (b) * * *
    (1) * * * Copies of these materials may be obtained from American 
Society for Testing and Materials, 100 Barr Harbor Drive, West 
Conshohocken, PA 19428-2959.

----------------------------------------------------------------------------------------------------------------
                  Document number and name                                 40 CFR part 89 reference
----------------------------------------------------------------------------------------------------------------
ASTM D86-97:
    ``Standard Test Method for Distillation of Petroleum     Appendix A to Subpart D.
     Products at Atmospheric Pressure''.
ASTM D93-97:
    ``Standard Test Methods for Flash Point by Pensky-       Appendix A to Subpart D.
     Martens Closed Cup Tester''.
ASTM D129-95:
    ``Standard Test Method for Sulfur in Petroleum Products  Appendix A to Subpart D.
     (General Bomb Method)''.
ASTM D287-92:
    ``Standard Test Method for API Gravity of Crude          Appendix A to Subpart D
     Petroleum and Petroleum Products'' (Hydrometer Method).
ASTM D445-97:
    ``Standard Test Method for Kinematic Viscosity of        Appendix A to Subpart D.
     Transparent and Opaque Liquids (the Calculation of
     Dynamic Viscosity)''.
ASTM D613-95:
    ``Standard Test Method for Cetane Number of Diesel Fuel  Appendix A to Subpart D.
     Oil''.
ASTM D1319-98:
    ``Standard Test Method for Hydrocarbon Types in Liquid   Appendix A to Subpart D.
     Petroleum Products by Fluorescent Indicator
     Adsorption''.
ASTM D2622-98:
    ``Standard Test Method for Sulfur in Petroleum Products  Appendix A to Subpart D.
     by Wavelength Dispersive X-ray Fluorescence
     Spectrometry''.
ASTM D5186-96:
    ``Standard Test Method for ``Determination of the        Appendix A to Subpart D.
     Aromatic Content and Polynuclear Aromatic Content of
     Diesel Fuels and Aviation Tubine Fuels By
     Supercritical Fluid Chromatography''.
ASTM E29-93a:
    ``Standard Practice for Using Significant Digits in      89.120; 89.207; 89.509.
     Test Data to Determine Conformance with
     Specifications''.
----------------------------------------------------------------------------------------------------------------

* * * * *

Subpart B--[Amended]

    15. The newly designated Sec. 89.102 is amended by revising the 
section heading and paragraph (a) and adding new paragraphs (c), (d), 
(e), (f), (g), and (h) to read as follows:


Sec. 89.102  Effective dates, optional inclusion, flexibility for 
equipment manufacturers.

    (a) This subpart applies to all engines described in Sec. 89.101 
with the following power rating and manufactured after the following 
dates:
    (1) Less than 19 kW and manufactured on or after January 1, 2000;
    (2) Greater than or equal to 19 kW but less than 37 kW and 
manufactured on or after January 1, 1999;
    (3) Greater than or equal to 37 kW but less than 75 kW and 
manufactured on or after January 1, 1998;
    (4) Greater than or equal to 75 kW but less than 130 kW and 
manufactured on or after January 1, 1997;
    (5) Greater than or equal to 130 kW but less than or equal to 560 
kW and manufactured on or after January 1, 1996;
    (6) Greater than 560 kW and manufactured on or after January 1, 
2000.
* * * * *
    (c) Engines meeting the voluntary standards described in 
Sec. 89.112(f) may be designated as Blue Sky Series engines through the 
2004 model year.
    (d) Implementation flexibility for equipment and vehicle 
manufacturers and post-manufacture marinizers. Nonroad equipment and 
vehicle manufacturers and post-manufacture marinizers may take any of 
the otherwise prohibited actions identified in Sec. 89.1003(a)(1) with 
respect to nonroad equipment and vehicles and marine diesel engines, 
subject to the requirements of paragraph (e) of this section. The 
following allowances apply separately to each engine power category 
subject to standards under Sec. 89.112:
    (1) Percent-of-production allowances. (i) Equipment rated at or 
above 37 kW. For nonroad equipment and vehicles with engines rated at 
or above 37 kW, a manufacturer may take any of the actions identified 
in Sec. 89.1003(a)(1) for a portion of its U.S.-directed production 
volume of such equipment and vehicles during the seven years 
immediately following the date on which Tier 2 engine standards first 
apply to engines

[[Page 56998]]

used in such equipment and vehicles, provided that the seven-year sum 
of these portions in each year, as expressed as a percentage for each 
year, does not exceed 80, and provided that all such equipment and 
vehicles or equipment contain Tier 1 engines;
    (ii) Equipment rated under 37 kW. For nonroad equipment and 
vehicles and marine diesel engines with engines rated under 37 kW, a 
manufacturer may take any of the actions identified in 
Sec. 89.1003(a)(1) for a portion of its U.S.-directed production volume 
of such equipment and vehicles during the seven years immediately 
following the date on which Tier 1 engine standards first apply to 
engines used in such equipment and vehicles, provided that the seven-
year sum of these portions in each year, as expressed as a percentage 
for each year, does not exceed 80.
    (2) Small volume allowances. A nonroad equipment or vehicle 
manufacturer or post-manufacture marinizer may exceed the production 
percentages in paragraph (d)(1) of this section, provided that in each 
regulated power category the manufacturer's total of excepted nonroad 
equipment and vehicles and marine diesel engines:
    (i) Over the years in which the percent-of-production allowance 
applies does not exceed 100 units times the number of years in which 
the percent-of-production allowance applies; and
    (ii) Does not exceed 200 units in any year; and
    (iii) Does not use engines from more than one engine family, or, 
for excepted equipment vehicles, and marine diesel engines using 
engines not belonging to any engine family, from more than one engine 
manufacturer.
    (3) Inclusion of previous-tier engines. Nonroad equipment and 
vehicles and marine diesel engines built with previous tier or 
noncertified engines under the existing inventory provisions of 
Sec. 89.1003(b)(4) need not be included in determining compliance with 
paragraphs (d)(1) and (d)(2) of this section.
    (e) Recordkeeping and calculation to verify compliance. The 
following shall apply to nonroad equipment or vehicle manufacturers and 
post-manufacture marinizers who produce excepted equipment or vehicles 
or marine diesel engines under the provisions of paragraph (d) of this 
section:
    (1) For each power category in which excepted nonroad equipment or 
vehicles or marine diesel engines are produced, a calculation to verify 
compliance with the requirements of paragraph (d) of this section shall 
be made by the nonroad equipment or vehicle manufacturer or post-
manufacture marinizer. This calculation shall be made no later than 
December 31 of the year following the last year in which allowances are 
used, and shall be based on actual production information from the 
subject years. If both the percent-of-production and small volume 
allowances have been exceeded, then the manufacturer is in violation of 
section 203 of the Act and Sec. 89.1003, except as provided under 
paragraphs (f) and (h) of this section.
    (2) A nonroad equipment or vehicle manufacturer or post-manufacture 
marinizer shall keep records of all nonroad equipment and vehicles and 
marine diesel engines excepted under the provisions of paragraph (d) of 
this section, for each power category in which exceptions are taken. 
These records shall include equipment and engine model numbers, serial 
numbers, and dates of manufacture, and engine rated power. In addition, 
the manufacturer shall keep records sufficient to demonstrate the 
verifications of compliance required in paragraph (e)(1) of this 
section. All records shall be kept until at least two full years after 
the final year in which allowances are available for each power 
category, and shall be made available to EPA upon request.
    (f) Hardship relief. Nonroad equipment and vehicle manufacturers 
and post-manufacture marinizers may take any of the otherwise 
prohibited actions identified in Sec. 89.1003(a)(1) if approved by the 
Administrator, and subject to the following requirements:
    (1) Application for relief must be submitted to the Engine Programs 
and Compliance Division of the EPA in writing prior to the earliest 
date in which the applying manufacturer would be in violation of 
Sec. 89.1003. The manufacturer must submit evidence showing that the 
requirements for approval have been met.
    (2) The applying manufacturer must not be the manufacturer of the 
engines used in the equipment for which relief is sought. This 
requirement does not apply to post-manufacture marinizers.
    (3) The conditions causing the impending violation must not be 
substantially the fault of the applying manufacturer.
    (4) The conditions causing the impending violation must be such 
that the applying manufacturer will experience serious economic 
hardship if relief is not granted.
    (5) The applying manufacturer must demonstrate that no allowances 
under paragraph (d) of this section will be available to avoid the 
impending violation.
    (6) Any relief granted must begin within one year after the 
implementation date of the standard applying to the engines being used 
in the equipment, or to the marine diesel engines, for which relief is 
requested, and may not exceed one year in duration.
    (7) The Administrator may impose other conditions on the granting 
of relief including provisions to recover the lost environmental 
benefit.
    (g) Allowance for the production of engines. Engine manufacturers 
may take any of the otherwise prohibited actions identified in 
Sec. 89.1003(a)(1) with regard to uncertified engines or Tier 1 
engines, as appropriate, if the engine manufacturer has received 
written assurance from the equipment manufacturer that the engine is 
required to meet the demand for engines created under paragraph (d), 
(f), or (h) of this section.
    (h) Alternative Flexibility for Post-Manufacture Marinizers. Post-
manufacture marinizers may elect to delay the effective date of the 
Tier 1 standards in Sec. 89.112 for marine diesel engines rated under 
37 kW by one year, instead of using the provisions of paragraphs (d) 
and (f) of this section. Post-manufacture marinizers wishing to take 
advantage of this provision must inform the Director of the Engine 
Programs and Compliance Division of their intent to do so in writing 
before the date that the standards would otherwise take effect.
    16. The newly designated Sec. 89.104 is amended by revising 
paragraphs (a), (b), and (c) to read as follows:


Sec. 89.104  Useful life, recall, and warranty periods.

    (a) The useful life is based on the rated power and rated speed of 
the engine.
    (1) For all engines rated under 19 kW, and for constant speed 
engines rated under 37 kW with rated speeds greater than or equal to 
3,000 rpm, the useful life is a period of 3,000 hours or five years of 
use, whichever first occurs.
    (2) For all other engines rated at or above 19 kW and under 37 kW, 
the useful life is a period of 5,000 hours or seven years of use, 
whichever first occurs.
    (3) For all engines rated at or above 37 kW, the useful life is a 
period of 8,000 hours of operation or ten years of use, whichever first 
occurs.
    (b) Engines are subject to recall testing for a period based on the 
rated power and rated speed of the engines. However, in a recall, 
engines in the subject class or category would be

[[Page 56999]]

subject to recall regardless of actual years or hours of operation.
    (1) For all engines rated under 19 kW, and for constant speed 
engines rated under 37 kW with rated speeds greater than or equal to 
3,000 rpm, the engines are subject to recall testing for a period of 
2,250 hours or four years of use, whichever first occurs.
    (2) For all other engines rated at or above 19 kW and under 37 kW, 
the engines are subject to recall for a period of 3,750 hours or five 
years of use, whichever first occurs.
    (3) For all engines rated at or above 37 kW, the engines are 
subject to recall for a period of 6,000 hours of operation or seven 
years of use, whichever first occurs.
    (c) The warranty periods for warranties imposed by the Clean Air 
Act and Sec. 89.1007 for all engines rated under 19 kW, and for 
constant speed engines rated under 37 kW with rated speeds greater than 
or equal to 3,000 rpm, are 1,500 hours of operation or two years of 
use, whichever first occurs. For all other engines, the warranty 
periods for warranties imposed by the Clean Air Act and Sec. 89.1007 
are 3,000 hours of operation or five years of use, whichever first 
occurs.
* * * * *
    17. The newly designated Sec. 89.109 is revised to read as follows:


Sec. 89.109  Maintenance instructions and minimum allowable maintenance 
intervals.

    (a) The manufacturer must furnish or cause to be furnished to the 
ultimate purchaser of each new nonroad engine subject to standards 
under this part written instructions for the maintenance needed to 
ensure proper functioning of the emission control system. Paragraphs 
(b) through (h) of this section do not apply to Tier 1 engines with 
rated power at or above 37 kW.
    (b) Maintenance performed on equipment, engines, subsystems or 
components used to determine exhaust emission deterioration factors is 
classified as either emission-related or nonemission-related and each 
of these can be classified as either scheduled or unscheduled. Further, 
some emission-related maintenance is also classified as critical 
emission-related maintenance.
    (c) This paragraph (c) specifies emission-related scheduled 
maintenance for purposes of obtaining durability data for nonroad 
engines. The maintenance intervals specified below are minimum 
intervals:
    (1) All emission-related scheduled maintenance for purposes of 
obtaining durability data must occur at the same or longer hours of use 
intervals as those specified in the manufacturer's maintenance 
instructions furnished to the ultimate purchaser of the engine under 
paragraph (a) of this section. This maintenance schedule may be updated 
as necessary throughout the testing of the engine, provided that no 
maintenance operation is deleted from the maintenance schedule after 
the operation has been performed on the test equipment or engine.
    (2) Any emission-related maintenance which is performed on 
equipment, engines, subsystems, or components must be technologically 
necessary to ensure in-use compliance with the emission standards. The 
manufacturer must submit data which demonstrate to the Administrator 
that all of the emission-related scheduled maintenance which is to be 
performed is technologically necessary. Scheduled maintenance must be 
approved by the Administrator prior to being performed or being 
included in the maintenance instructions provided to the purchasers 
under paragraph (a) of this section.
    (i) The Administrator may require longer maintenance intervals than 
those listed in paragraphs (c)(3) and (c)(4) of this section where the 
listed intervals are not technologically necessary.
    (ii) The Administrator may allow manufacturers to specify shorter 
maintenance intervals than those listed in paragraphs (c)(3) and (c)(4) 
of this section where technologically necessary for engines rated under 
19 kW, or for constant speed engines rated under 37 kW with rated 
speeds greater than or equal to 3,000 rpm.
    (3) The adjustment, cleaning, repair, or replacement of items 
listed in paragraphs (c)(3)(i) through (c)(3)(iii) of this section 
shall occur at 1,500 hours of use and at 1,500-hour intervals 
thereafter.
    (i) Exhaust gas recirculation system-related filters and coolers.
    (ii) Positive crankcase ventilation valve.
    (iii) Fuel injector tips (cleaning only).
    (4) The adjustment, cleaning and repair of items in paragraphs 
(c)(4)(i) through (c)(4)(vii) of this section shall occur at 3,000 
hours of use and at 3,000-hour intervals thereafter for nonroad 
compression-ignition engines rated under 130 kW, or at 4,500-hour 
intervals thereafter for nonroad compression-ignition engines rated at 
or above 130 kW.
    (i) Fuel injectors.
    (ii) Turbocharger.
    (iii) Electronic engine control unit and its associated sensors and 
actuators.
    (iv) Particulate trap or trap-oxidizer system (including related 
components).
    (v) Exhaust gas recirculation system (including all related control 
valves and tubing) except as otherwise provided in paragraph (c)(3)(i) 
of this section.
    (vi) Catalytic convertor.
    (vii) Any other add-on emission-related component (i.e., a 
component whose sole or primary purpose is to reduce emissions or whose 
failure will significantly degrade emission control and whose function 
is not integral to the design and performance of the engine).
    (d) Scheduled maintenance not related to emissions which is 
reasonable and technologically necessary (e.g., oil change, oil filter 
change, fuel filter change, air filter change, cooling system 
maintenance, adjustment of idle speed, governor, engine bolt torque, 
valve lash, injector lash, timing, lubrication of the exhaust manifold 
heat control valve, etc.) may be performed on durability vehicles at 
the least frequent intervals recommended by the manufacturer to the 
ultimate purchaser, (e.g., not the intervals recommended for severe 
service).
    (e) Adjustment of engine idle speed on emission data engines may be 
performed once before the low-hour emission test point. Any other 
engine, emission control system, or fuel system adjustment, repair, 
removal, disassembly, cleaning, or replacement on emission data 
vehicles shall be performed only with advance approval of the 
Administrator.
    (f) Equipment, instruments, or tools may not be used to identify 
malfunctioning, maladjusted, or defective engine components unless the 
same or equivalent equipment, instruments, or tools will be available 
to dealerships and other service outlets and:
    (1) Are used in conjunction with scheduled maintenance on such 
components; or
    (2) Are used subsequent to the identification of a vehicle or 
engine malfunction, as provided in paragraph (e) of this section for 
emission data engines; or
    (3) Specifically authorized by the Administrator.
    (g) All test data, maintenance reports, and required engineering 
reports shall be compiled and provided to the Administrator in 
accordance with Sec. 89.124.
    (h)(1) The components listed in paragraphs (h)(1)(i) through 
(h)(1)(vi) of this section are defined as critical emission-related 
components.
    (i) Catalytic converter.
    (ii) Electronic engine control unit and its associated sensors and 
actuators.
    (iii) Exhaust gas recirculation system (including all related 
filters, coolers, control valves, and tubing).

[[Page 57000]]

    (iv) Positive crankcase ventilation valve.
    (v) Particulate trap or trap-oxidizer system.
    (vi) Any other add-on emission-related component (i.e., a component 
whose sole or primary purpose is to reduce emissions or whose failure 
will significantly degrade emission control and whose function is not 
integral to the design and performance of the engine).
    (2) All critical emission-related scheduled maintenance must have a 
reasonable likelihood of being performed in use. The manufacturer must 
show the reasonable likelihood of such maintenance being performed in-
use. Critical emission-related scheduled maintenance items which 
satisfy one of the conditions defined in paragraphs (h)(2)(i) through 
(h)(2)(vi) of this section will be accepted as having a reasonable 
likelihood of being performed in use.
    (i) Data are presented which establish for the Administrator a 
connection between emissions and vehicle performance such that as 
emissions increase due to lack of maintenance, vehicle performance will 
simultaneously deteriorate to a point unacceptable for typical 
operation.
    (ii) Survey data are submitted which adequately demonstrate to the 
Administrator with an 80 percent confidence level that 80 percent of 
such engines already have this critical maintenance item performed in-
use at the recommended interval(s).
    (iii) A clearly displayed visible signal system approved by the 
Administrator is installed to alert the equipment operator that 
maintenance is due. A signal bearing the message ``maintenance needed'' 
or ``check engine,'' or a similar message approved by the 
Administrator, shall be actuated at the appropriate usage point or by 
component failure. This signal must be continuous while the engine is 
in operation and not be easily eliminated without performance of the 
required maintenance. Resetting the signal shall be a required step in 
the maintenance operation. The method for resetting the signal system 
shall be approved by the Administrator. The system must not be designed 
to deactivate upon the end of the useful life of the engine or 
thereafter.
    (iv) A manufacturer may desire to demonstrate through a survey that 
a critical maintenance item is likely to be performed without a visible 
signal on a maintenance item for which there is no prior in-use 
experience without the signal. To that end, the manufacturer may in a 
given model year market up to 200 randomly selected vehicles per 
critical emission-related maintenance item without such visible 
signals, and monitor the performance of the critical maintenance item 
by the owners to show compliance with paragraph (h)(2)(ii) of this 
section. This option is restricted to two consecutive model years and 
may not be repeated until any previous survey has been completed. If 
the critical maintenance involves more than one engine family, the 
sample will be sales weighted to ensure that it is representative of 
all the families in question.
    (v) The manufacturer provides the maintenance free of charge, and 
clearly informs the customer that the maintenance is free in the 
instructions provided under paragraph (a) of this section.
    (vi) The manufacturer uses any other method which the Administrator 
approves as establishing a reasonable likelihood that the critical 
maintenance will be performed in-use.
    (3) Visible signal systems used under paragraph (h)(2)(iii) of this 
section are considered an element of design of the emission control 
system. Therefore, disabling, resetting, or otherwise rendering such 
signals inoperative without also performing the indicated maintenance 
procedure is a prohibited act.
    18. The newly designated Sec. 89.110 is amended by removing ``and'' 
at the end of paragraph (b)(9), by adding a semicolon at the end of 
paragraph (b)(10), and by adding new paragraphs (b)(11) and (b)(12) to 
read as follows:


Sec. 89.110  Emission control information label.

* * * * *
    (b) * * *
    (11) Engines belonging to an engine family that has been certified 
as a constant-speed engine using the test cycle specified in Table 2 of 
appendix B to subpart E of this part must contain the statement on the 
label: ``constant-speed only''; and
    (12) Engines meeting the voluntary standards described in 
Sec. 89.112(f)(1) to be designated as Blue Sky Series engines must 
contain the statement on the label: ``Blue Sky Series''.
* * * * *
    19. The newly designated Sec. 89.112 is amended by revising 
paragraphs (a), (b), and (d), and adding new paragraphs (e) and (f) to 
read as follows:


Sec. 89.112  Oxides of nitrogen, carbon monoxide, hydrocarbon, and 
particulate matter exhaust emission standards.

    (a) Exhaust emission from nonroad engines to which this subpart is 
applicable shall not exceed the applicable exhaust emission standards 
contained in Table 1, as follows:

BILLING CODE 6560-50-P

[[Page 57001]]

[GRAPHIC] [TIFF OMITTED] TR23OC98.001



BILLING CODE 6560-50-C

[[Page 57002]]

    (b) Exhaust emissions of oxides of nitrogen, carbon monoxide, 
hydrocarbon, and nonmethane hydrocarbon are measured using the 
procedures set forth in subpart E of this part.
* * * * *
    (d) In lieu of the NOX standards, NMHC + NOX 
standards, and PM standards specified in paragraph (a) of this section, 
manufacturers may elect to include engine families in the averaging, 
banking, and trading program, the provisions of which are specified in 
subpart C of this part. The manufacturer must set a family emission 
limit (FEL) not to exceed the levels contained in Table 2. The FEL 
established by the manufacturer serves as the standard for that engine 
family. Table 2 follows:

BILLING CODE 6560-50-P
[GRAPHIC] [TIFF OMITTED] TR23OC98.002


BILLING CODE 6560-50-C

[[Page 57003]]

    (e) Naturally aspirated nonroad engines to which this subpart is 
applicable shall not discharge crankcase emissions into the ambient 
atmosphere, unless such crankcase emissions are permanently routed into 
the exhaust and included in all exhaust emission measurements. This 
provision applies to all Tier 2 engines and later models. This 
provision does not apply to engines using turbochargers, pumps, 
blowers, or superchargers for air induction.
    (f) The following paragraphs define the requirements for low-
emitting Blue Sky Series engines:
    (1) Voluntary standards. Engines may be designated ``Blue Sky 
Series'' engines through the 2004 model year by meeting the voluntary 
standards listed in Table 3, which apply to all certification and in-
use testing, as follows:

            Table 3.--Voluntary Emission Standards (g/kW-hr)
------------------------------------------------------------------------
              Rated Brake  Power (kW)                 NMHC+NOX      PM
------------------------------------------------------------------------
kW<8..............................................          4.6     0.48
8kW<19.................................          4.5     0.48
19kW<37................................          4.5     0.36
37kW<75................................          4.7     0.24
75kW<130...............................          4.0     0.18
130kW560....................          4.0     0.12
kW>560............................................          3.8     0.12
------------------------------------------------------------------------

    (2) Additional standards. Blue Sky Series engines are subject to 
all provisions that would otherwise apply under this part, except as 
specified in paragraph (f)(3) of this section.
    (3) Test procedures. NOX, NMHC, and PM emissions are 
measured using the procedures set forth in 40 CFR part 86, subpart N, 
in lieu of the procedures set forth in subpart E of this part. CO 
emissions may be measured using the procedures set forth either in 40 
CFR part 86, subpart N, or in Subpart E of this part. Manufacturers may 
use an alternate procedure to demonstrate the desired level of emission 
control if approved in advance by the Administrator. Engines meeting 
the requirements to qualify as Blue Sky Series engines must be capable 
of maintaining a comparable level of emission control when tested using 
the procedures set forth in paragraph (c) of this section and subpart E 
of this part. The numerical emission levels measured using the 
procedures from subpart E of this part may be up to 20 percent higher 
than those measured using the procedures from 40 CFR part 86, subpart 
N, and still be considered comparable.
    20. The newly designated Sec. 89.113 is amended by revising 
paragraph (b) and adding new paragraph (c) to read as follows:


Sec. 89.113  Smoke emission standard.

* * * * *
    (b) Opacity levels are to be measured and calculated as set forth 
in 40 CFR part 86, subpart I. Notwithstanding the provisions of 40 CFR 
part 86, subpart I, two-cylinder nonroad engines may be tested using an 
exhaust muffler that is representative of exhaust mufflers used with 
the engines in use.
    (c) The following engines are exempt from the requirements of this 
section:
    (1) Single-cylinder engines;
    (2) Propulsion marine diesel engines; and
    (3) Constant-speed engines.
    21. The newly designated Sec. 89.114 is amended by revising the 
section heading, paragraph (a) and the heading of paragraph (b) to read 
as follows:


Sec. 89.114  Special and alternate test procedures.

    (a) Special test procedures. The Administrator may, on the basis of 
written application by a manufacturer, establish special test 
procedures other than those set forth in this part, for any nonroad 
engine that the Administrator determines is not susceptible to 
satisfactory testing under the specified test procedures set forth in 
subpart E of this part or 40 CFR part 86, subpart I.
    (b) Alternate test procedures. * * *
    22. The newly designated Sec. 89.116 is amended by adding a new 
paragraph (e) to read as follows:


Sec. 89.116  Engine families.

* * * * *
    (e)(1) This paragraph (e) applies only to the placement of Tier 1 
engines with power ratings under 37 kW into engine families. The 
provisions of paragraphs (a) through (d) of this section also apply to 
these engines. The power categories referred to in this paragraph (e) 
are those for which separate standards or implementation dates are 
described in Sec. 89.112.
    (2) A manufacturer may place engines with power ratings in one 
power category into an engine family comprised of engines with power 
ratings in another power category, and consider all engines in the 
engine family as being in the latter power category for the purpose of 
determining compliance with the standards and other requirements of 
this part, subject to approval in advance by the Administrator and the 
following restrictions:
    (i) The engines that have power ratings outside the engine family's 
power category must constitute less than half of the engine family's 
sales in each model year for which the engine family grouping is made; 
and
    (ii) The engines that have power ratings outside the engine 
family's power category must have power ratings that are within ten 
percent of either of the two power levels that define the engine 
family's power category.
    (3) The restrictions described in paragraphs (e)(2)(i) and 
(e)(2)(ii) of this section do not apply if the emissions standards and 
other requirements of this part are at least as stringent for the 
engine family's power category as those of the other power categories 
containing engines in the engine family.
    23. The newly designated Sec. 89.117 is amended by revising 
paragraph (a) and adding a new paragraph (d) to read as follows:


Sec. 89.117  Test fleet selection.

    (a) The manufacturer must select for testing, from each engine 
family, the engine with the most fuel injected per stroke of an 
injector, primarily at the speed of maximum torque and secondarily at 
rated speed.
* * * * *
    (d) For establishing deterioration factors, the manufacturer shall 
select the engines, subsystems, or components to be used to determine 
exhaust emission deterioration factors for each engine-family control 
system combination. Engines, subsystems, or components shall be 
selected so that their emission deterioration characteristics are 
expected to represent those of in-use engines, based on good 
engineering judgment.
    24. The newly designated Sec. 89.118 is amended by revising the 
section heading and adding new introductory text and a new paragraph 
(e) to read as follows:


Sec. 89.118  Deterioration factors and service accumulation.

    This section applies to service accumulation used to determine 
deterioration factors and service accumulation used to condition test 
engines. Paragraphs (a) and (b) of this section apply only for service 
accumulation used to condition test engines. Paragraph (e) of this 
section applies only for service accumulation used to determine 
deterioration factors. Paragraphs (c) and (d) of this section apply for 
all service accumulation required by this part.
* * * * *
    (e) This paragraph (e) describes service accumulation and 
alternative requirements for the purpose of developing deterioration 
factor.

[[Page 57004]]

    (1) Service accumulation on engines, subsystems, or components 
selected by the manufacturer under Sec. 89.117(d). The manufacturer 
shall describe the form and extent of this service accumulation in the 
application for certification.
    (2) Determination of exhaust emission deterioration factors. The 
manufacturer shall determine the deterioration factors in accordance 
with the applicable provisions of this part based on service 
accumulation and related testing, according to the manufacturer's 
procedures, except as provided in paragraph (e)(3) of this section.
    (3) Alternatives to service accumulation and testing for the 
determination of a deterioration factor. A written explanation of the 
appropriateness of using an alternative must be included in the 
application for certification.
    (i) Carryover and carryacross of durability emission data. In lieu 
of testing an emission data or durability data engine selected under 
Sec. 89.117(d), a manufacturer may, with Administrator approval, use 
exhaust emission deterioration data on a similar engine for which 
certification to the same standard has previously been obtained or for 
which all applicable data required under Sec. 89.124 has previously 
been submitted. This data must be submitted in the application for 
certification.
    (ii) Use of on-highway deterioration data. In the case where a 
manufacturer produces a certified on-highway engine that is similar to 
the nonroad engine to be certified, deterioration data from the on-
highway engine may be applied to the nonroad engine. This application 
of deterioration data from an on-highway engine to a nonroad engine is 
subject to Administrator approval, and the determination of whether the 
engines are similar must be based on good engineering judgment.
    (iii) Engineering analysis for established technologies. (A) In the 
case where an engine family uses established technology, an analysis 
based on good engineering practices may be used in lieu of testing to 
determine a deterioration factor for that engine family, subject to 
Administrator approval.
    (B) Engines for which the certification levels are not at or below 
the Tier 3 NMHC+NOX standards described in Sec. 89.112 are 
considered established technology, except as provided in paragraph 
(e)(3)(iii)(D) of this section.
    (C) Manufacturers may petition the Administrator to consider an 
engine with a certification level below the Tier 3 NMHC+NOX 
standards as established technology. This petition must be based on 
proof that the technology used is not significantly different than that 
used on engines that have certification levels that are not below the 
Tier 3 NMHC+NOX levels.
    (D) Engines using exhaust gas recirculation or aftertreatment are 
excluded from the provision set forth in paragraphs (e)(3)(iii)(A) 
through (e)(3)(iii)(C) of this section.
    (E) The manufacturer shall provide a written statement to the 
Administrator that all data, analyses, test procedures, evaluations, 
and other documents, on which the deterioration factor is based, are 
available to the Administrator upon request.
    (iv) Interim provision for engines rated under 37 kW. For model 
year 1999 and 2000 engines rated under 37 kW, manufacturers may 
determine deterioration factors based on good engineering judgement and 
reasonably available information. The manufacturer must maintain and 
provide to the Administrator, if requested, all information used to 
determine deterioration factors for these engines.
    25. The newly designated Sec. 89.119 is amended by revising 
paragraph (d) to read as follows:


Sec. 89.119  Emission tests.

* * * * *
    (d) The provisions of this paragraph (d) apply only to Tier 1 
nonroad engines without exhaust aftertreatment rated at or above 37 kW.
    (1) Particulate emission measurements from Tier 1 nonroad engines 
without exhaust aftertreatment rated at or above 37 kW may be adjusted 
to a sulfur content of 0.05 weight percent.
    (2) Adjustments to the particulate measurement shall be made using 
the following equation:

    PMadj=PM-[BSFC  x  0.0917  x  (FSF-0.0005)]

Where:

PMadj=adjusted measured PM level [g/Kw-hr].
PM=measured weighted PM level [g/Kw-hr].
BSFC=measured brake specific fuel consumption [G/Kw-hr].
FSF=fuel sulfur weight fraction.

    (3) Where a manufacturer certifies using test fuel with a sulfur 
content less than or equal to 0.050 weight percent, EPA shall not use 
emission data collected using test fuel with a sulfur content greater 
than 0.050 weight percent to determine compliance with the Tier 1 PM 
standards.
    (4) Where a manufacturer certifies using test fuel with a sulfur 
content greater than 0.050 weight percent, EPA shall not use emission 
data collected using test fuel with a sulfur content greater than 0.050 
weight percent to determine compliance with the Tier 1 PM standards, 
unless EPA adjusts the PM measurement using the equation specified in 
paragraph (d)(2) of this section.
    26. The newly designated Sec. 89.120 is amended by revising 
paragraph (c) and adding paragraph (e) to read as follows:


Sec. 89.120  Compliance with emission standards.

* * * * *
    (c) For each nonroad engine family, except Tier 1 engine families 
with rated power at or above 37 kW that do not employ aftertreatment, a 
deterioration factor must be determined and applied.
    (1) The applicable exhaust emission standards (or family emission 
limits, as appropriate) for nonroad compression-ignition engines apply 
to the emissions of engines for their useful life.
    (2) [Reserved]
    (3)(i) This paragraph (c)(3) describes the procedure for 
determining compliance of an engine with emission standards (or family 
emission limits, as appropriate), based on deterioration factors 
supplied by the manufacturer. The NMHC + NOX deterioration 
factors shall be established based on the sum of the pollutants, except 
as provided in paragraph (c)(3)(iv) of this section. When establishing 
deterioration factors for NMHC + NOX, a negative 
deterioration (emissions decrease from the official emissions test 
result) for one pollutant may not offset deterioration of the other 
pollutant.
    (ii) Separate emission deterioration factors, determined by the 
manufacturer according to the requirements of Sec. 89.118, shall be 
provided in the certification application for each engine-system 
combination. Separate deterioration factors shall be established for 
each regulated pollutant, except that a combined NMHC + NOX 
deterioration factor shall be established for compression-ignition 
nonroad engines not utilizing aftertreatment technology. For smoke 
testing, separate deterioration factors shall also be established for 
the acceleration mode (designated as ``A''), the lugging mode 
(designated as ``B''), and peak opacity (designated as ``C'').
    (iii) Compression-ignition nonroad engines not utilizing 
aftertreatment technology (e.g., particulate traps). For CO, NMHC + 
NOX, and particulate, the official exhaust emission results 
for each emission data engine at the selected test point shall be 
adjusted by addition of the appropriate deterioration factor. However, 
if the deterioration factor supplied by the manufacturer is

[[Page 57005]]

less than zero, it shall be zero for the purposes of this paragraph 
(c)(3)(iii).
    (iv) Compression-ignition nonroad engines utilizing aftertreatment 
technology (e.g., particulate traps). For CO, NMHC + NOX, 
and particulate, the official exhaust emission results for each 
emission data engine at the selected test point shall be adjusted by 
multiplication by the appropriate deterioration factor. Separate NMHC 
and NOX deterioration factors shall be applied to the 
results for these pollutants prior to combining the results. If the 
deterioration factor supplied by the manufacturer is less than one, it 
shall be one for the purposes of this paragraph (c)(3)(iv).
    (v) For acceleration smoke (``A''), lugging smoke (``B''), and peak 
opacity (``C''), the official exhaust emission results for each 
emission data engine at the selected test point shall be adjusted by 
the addition of the appropriate deterioration factor. However if the 
deterioration supplied by the manufacturer is less than zero, it shall 
be zero for the purposes of this paragraph (c)(3)(v).
    (vi) The emission values to compare with the standards (or family 
emission limits, as appropriate) shall be the adjusted emission values 
of paragraphs (c)(3)(iii) through (v) of this section, rounded to the 
same number of significant figures as contained in the applicable 
standard in accordance with ASTM E29-93a, for each emission data 
engine. This procedure has been incorporated by reference at Sec. 89.6.
    (4) Every test engine of an engine family must comply with all 
applicable standards (or family emission limits, as appropriate), as 
determined in paragraph (c)(3)(vi) of this section, before any engine 
in that family will be certified.
* * * * *
    (e) For the purposes of setting an NMHC + NOX 
certification level or FEL, one of the following options shall be used 
for the determination of NMHC for an engine family. The manufacturer 
must declare which option is used in its application for certification 
of that engine family.
    (1) The manufacturer may assume that up to two percent of the 
measured THC is methane (NMHC = 0.98  x  THC).
    (2) The manufacturer may measure NMHC emissions using a method 
approved by the Administrator prior to the start of testing. This 
option allows the determination of NMHC emissions by subtracting 
measured methane emissions from measured THC emissions.
    27. The newly designated Sec. 89.124 is amended by adding paragraph 
(a)(3) to read as follows:


Sec. 89.124  Record retention, maintenance, and submission.

    (a) * * *
    (3) Information required to be kept by the manufacturer in 
Sec. 89.118(e)(3) for alternatives to service accumulation and testing 
for the determination of a deterioration factor.
* * * * *
    28. The newly designated Sec. 89.125 is amended by revising 
paragraph (b) to read as follows:


Sec. 89.125  Production engines, annual report.

* * * * *
    (b) The manufacturer must annually, within 30 days after the end of 
the model year, notify the Administrator of the number of engines 
produced by engine family, by gross power, by displacement, by fuel 
system, and, for engines produced under the provision of 
Sec. 89.102(g), by engine model and purchaser (or shipping destination 
for engines used by the engine manufacturer), or by other categories as 
the Administrator may require.
    29. The newly designated Sec. 89.126 is amended by revising 
paragraph (c) to read as follows:


Sec. 89.126  Denial, revocation of certificate of conformity.

* * * * *
    (c) If a manufacturer knowingly commits an infraction specified in 
paragraph (b)(1) or (b)(4) of this section, knowingly commits any other 
fraudulent act which results in the issuance of a certificate of 
conformity, or fails to comply with the conditions specified in 
Sec. 89.203(d), Sec. 89.206(c), Sec. 89.209(c) or Sec. 89.210(g), the 
Administrator may deem such certificate void ab initio.
* * * * *
    30. A new Sec. 89.130 is added to subpart B to read as follows:


Sec. 89.130  Rebuild practices.

    (a) The provisions of this section are applicable to engines 
subject to the standards prescribed in Sec. 89.112 and are applicable 
to the process of engine rebuilding (or rebuilding a portion of an 
engine or engine system). This section does not apply to Tier 1 engines 
rated at or above 37 kW. The process of engine rebuilding generally 
includes disassembly, replacement of multiple parts due to wear, and 
reassembly, and also may include the removal of the engine from the 
vehicle and other acts associated with rebuilding an engine.
    (b) When rebuilding an engine, portions of an engine, or an engine 
system, there must be a reasonable technical basis for knowing that the 
resultant engine is equivalent, from an emissions standpoint, to a 
certified configuration (i.e., tolerances, calibrations, 
specifications), and the model year(s) of the resulting engine 
configuration must be identified. A reasonable basis would exist if:
    (1) Parts installed, whether the parts are new, used, or rebuilt, 
are such that a person familiar with the design and function of motor 
vehicle engines would reasonably believe that the parts perform the 
same function with respect to emission control as the original parts; 
and
    (2) Any parameter adjustment or design element change is made only:
    (i) In accordance with the original engine manufacturer's 
instructions; or
    (ii) Where data or other reasonable technical basis exists that 
such parameter adjustment or design element change, when performed on 
the engine or similar engines, is not expected to adversely affect in-
use emissions.
    (c) When an engine is being rebuilt and remains installed or is 
reinstalled in the same equipment, it must be rebuilt to a 
configuration of the same or later model year as the original engine. 
When an engine is being replaced, the replacement engine must be an 
engine of (or rebuilt to) a certified configuration that is equivalent, 
from an emissions standpoint, to the engine being replaced.
    (d) At time of rebuild, emission-related codes or signals from on-
board monitoring systems may not be erased or reset without diagnosing 
and responding appropriately to the diagnostic codes, regardless of 
whether the systems are installed to satisfy requirements in 
Sec. 89.109 or for other reasons and regardless of form or interface. 
Diagnostic systems must be free of all such codes when the rebuilt 
engine is returned to service. Such signals may not be rendered 
inoperative during the rebuilding process.
    (e) When conducting a rebuild without removing the engine from the 
equipment, or during the installation of a rebuilt engine, all critical 
emission-related components listed in 40 CFR part 86, subpart B, not 
otherwise addressed by paragraphs (b) through (d) of this section must 
be checked and cleaned, adjusted, repaired, or replaced as necessary, 
following manufacturer recommended practices.
    (f) Records shall be kept by parties conducting activities included 
in paragraphs (b) through (e) of this section. The records shall 
include at

[[Page 57006]]

minimum the hours of operation at time of rebuild, a listing of work 
performed on the engine, and emission-related control components 
including a listing of parts and components used, engine parameter 
adjustments, emission-related codes or signals responded to and reset, 
and work performed under paragraph (e) of this section.
    (1) Parties may keep records in whatever format or system they 
choose as long as the records are understandable to an EPA enforcement 
officer or can be otherwise provided to an EPA enforcement officer in 
an understandable format when requested.
    (2) Parties are not required to keep records of information that is 
not reasonably available through normal business practices including 
information on activities not conducted by themselves or information 
that they cannot reasonably access.
    (3) Parties may keep records of their rebuilding practices for an 
engine family rather than on each individual engine rebuilt in cases 
where those rebuild practices are followed routinely.
    (4) Records must be kept for a minimum of two years after the 
engine is rebuilt.

Subpart C--[Amended]

    31. The newly designated Sec. 89.203 is revised to read as follows:


Sec. 89.203  General provisions.

    (a) The averaging, banking, and trading programs for 
NOX, NMHC+NOX, and PM emissions from eligible 
nonroad engines are described in this subpart. Participation in these 
programs is voluntary.
    (b) Requirements for Tier 1 engines rated at or above 37 kW. (1) A 
nonroad engine family is eligible to participate in the averaging, 
banking, and trading program for NOX emissions and the 
banking and trading program for PM emissions if it is subject to 
regulation under subpart B of this part with certain exceptions 
specified in paragraph (b)(2) of this section. No averaging, banking, 
and trading program is available for meeting the Tier 1 HC, CO, or 
smoke emission standards specified in subpart B of this part. No 
averaging program is available for meeting the Tier 1 PM emission 
standards specified in subpart B of this part.
    (2) Nonroad engines may not participate in the averaging, banking, 
and trading programs if they are exported or are sold as Blue Sky 
Series engines as described in Sec. 89.112(f). Nonroad engines 
certified on a special test procedure under Sec. 89.114(a), may not 
participate in the averaging, banking and trading programs unless the 
manufacturer has requested that the engines be included in the 
averaging, banking, and trading programs at the time the request for 
the special test procedure is made and has been granted approval by the 
Administrator for inclusion in the averaging, banking, and trading 
programs.
    (3) A manufacturer may certify one or more nonroad engine families 
at NOX family emission limits (FELs) above or below the Tier 
1 NOX emission standard, provided the summation of the 
manufacturer's projected balance of all NOX credit 
transactions in a given model year is greater than or equal to zero, as 
determined under Sec. 89.207(a). A manufacturer may certify one or more 
nonroad engine families at PM FELs below the Tier 2 PM emission 
standard that will be applicable to those engine families.
    (i) FELs for NOX may not exceed the Tier 1 upper limit 
specified in Sec. 89.112(d).
    (ii) An engine family certified to an FEL is subject to all 
provisions specified in this part, except that the applicable FEL 
replaces the emission standard for the family participating in the 
averaging, banking, and trading program.
    (iii) A manufacturer of an engine family with a NOX FEL 
exceeding the Tier 1 NOX emission standard must obtain 
NOX emission credits sufficient to address the associated 
credit shortfall via averaging, banking, or trading.
    (iv) An engine family with a NOX FEL below the 
applicable Tier 1 standard may generate emission credits for averaging, 
banking, trading, or a combination thereof. An engine family with a PM 
FEL below the Tier 2 standard that will be applicable to that engine 
family may generate emission credits for banking, trading, or a 
combination thereof. Emission credits may not be used to offset an 
engine family's emissions that exceed its applicable FEL. Credits may 
not be used to remedy nonconformity determined by a Selective 
Enforcement Audit (SEA) or by recall (in-use) testing. However, in the 
case of an SEA failure, credits may be used to allow subsequent 
production of engines for the family in question if the manufacturer 
elects to recertify to a higher FEL.
    (4) NOX credits generated in a given model year may be 
used to address credit shortfalls with other engines during that model 
year or in any subsequent model year except as noted under paragraph 
(b)(5)(ii) of this section. PM credits may be used to address credit 
shortfalls with Tier 2 and later engines greater than or equal to 37 kW 
and Tier 1 and later engines less than 37 kW and greater than or equal 
to 19 kW. Credits generated in one model year may not be used for prior 
model years.
    (5) The following provisions apply to the use of Tier 1 
NOX credits for showing compliance with the Tier 2 or Tier 3 
NMHC+NOX standards.
    (i) A manufacturer may use NOX credits from engines 
subject to the Tier 1 NOX standard to address 
NMHC+NOX credit shortfalls with engines in the same 
averaging set subject to Tier 1 NMHC+NOX or Tier 2 
NMHC+NOX emission standards.
    (ii) A manufacturer may not use NOX credits from engines 
subject to the Tier 1 standards to address NMHC+NOX credit 
shortfalls with engines subject to the Tier 3 NMHC+NOX 
emission standards.
    (c) Requirements for Tier 2 and later engines rated at or above 37 
kW and Tier 1 and later engines rated under 37 kW.
    (1) A nonroad engine family is eligible to participate in the 
averaging, banking, and trading programs for NMHC+NOX 
emissions and PM emissions if it is subject to regulation under subpart 
B of this part with certain exceptions specified in paragraph (c)(2) of 
this section. No averaging, banking, and trading program is available 
for meeting the CO or smoke emission standards specified in subpart B 
of this part.
    (2) Nonroad engines may not participate in the averaging, banking, 
and trading programs if they are exported or are sold as Blue Sky 
Series engines as described in Sec. 89.112(f). Nonroad engines 
certified on a special test procedure under Sec. 89.114(a), may not 
participate in the averaging, banking and trading programs unless the 
manufacturer has requested that the engines be included in the 
averaging, banking, and trading programs at the time the request for 
the special test procedure is made and has been granted approval by the 
Administrator for inclusion in the averaging, banking, and trading 
programs.
    (3)(i) A manufacturer may certify one or more nonroad engine 
families at FELs above or below the applicable NMHC+NOX 
emission standard and PM emission standard, provided the summation of 
the manufacturer's projected balance of all NMHC+NOX credit 
transactions and the summation of the manufacturer's projected balance 
of all PM credit transactions in a given model year in a given 
averaging set is greater than or equal to zero, as determined under 
Sec. 89.207(b).
    (A) FELs for NMHC+NOX and FELs for PM may not exceed the 
upper limits specified in Sec. 89.112(d).

[[Page 57007]]

    (B) An engine family certified to an FEL is subject to all 
provisions specified in this part, except that the applicable FEL 
replaces the emission standard for the family participating in the 
averaging, banking, and trading program.
    (C) A manufacturer of an engine family with an FEL exceeding the 
applicable emission standard must obtain emission credits sufficient to 
address the associated credit shortfall via averaging, banking, or 
trading, within the restrictions described in Sec. 89.204(c) and 
Sec. 89.206(b)(4).
    (D) An engine family with an FEL below the applicable standard may 
generate emission credits for averaging, banking, trading, or a 
combination thereof. Emission credits may not be used to offset an 
engine family's emissions that exceed its applicable FEL. Credits may 
not be used to remedy nonconformity determined by a Selective 
Enforcement Audit (SEA) or by recall (in-use) testing. However, in the 
case of an SEA failure, credits may be used to allow subsequent 
production of engines for the family in question if the manufacturer 
elects to recertify to a higher FEL.
    (ii)(A) In lieu of generating credits under paragraph (c)(3)(i) of 
this section, a manufacturer may certify one or more nonroad engine 
families rated under 37 kW at family emission limits (FELs) above or 
below the applicable NMHC+NOX emission standard and PM 
emission standard. The summation of the manufacturer's projected 
balance of all NMHC+NOX credit transactions and the 
summation of the manufacturer's projected balance of all PM credit 
transactions in a given model year, as determined under Sec. 89.207(b), 
are each allowed to be less than zero. Separate calculations shall be 
required for the following two categories of engines: engines rated 
under 19 kW and engines rated at or above 19 kW and under 37 kW.
    (B) For each calendar year a negative credit balance exists as of 
December 31, a penalty equal to ten percent of the negative credit 
balance as of December 31 of the calendar year shall be added to the 
negative credit balance. The resulting negative credit balance shall be 
carried into the next calendar year.
    (C) For engines rated under 19 kW, a manufacturer will be allowed 
to carry over a negative credit balance until December 31, 2003. For 
engines rated at or above 19 kW and under 37 kW, a manufacturer will be 
allowed to carry over a negative credit balance until December 31, 
2002. As of these dates, the summation of the manufacturer's projected 
balance of all NMHC+NOX credit transactions and the 
summation of the manufacturer's projected balance of all PM credit 
transactions must each be greater than or equal to zero.
    (D) FELs for NMHC+NOX and FELs for PM may not exceed the 
upper limits specified in Sec. 89.112(d).
    (E) An engine family certified to an FEL is subject to all 
provisions specified in this part, except that the applicable 
NMHC+NOX FEL or PM FEL replaces the NMHC+NOX 
emission standard or PM emission standard for the family participating 
in the averaging and banking program.
    (F) A manufacturer of an engine family with an FEL exceeding the 
applicable emission standard must obtain emission credits sufficient to 
address the associated credit shortfall via averaging or banking. The 
exchange of emission credits generated under this program with other 
nonroad engine manufacturers in trading is not allowed.
    (G) An engine family with an FEL below the applicable standard may 
generate emission credits for averaging, banking, or a combination 
thereof. Emission credits may not be used to offset an engine family's 
emissions that exceed its applicable FEL. Credits may not be used to 
remedy nonconformity determined by a Selective Enforcement Audit (SEA) 
or by recall (in-use) testing. However, in the case of an SEA failure, 
credits may be used to allow subsequent production of engines for the 
family in question if the manufacturer elects to recertify to a higher 
FEL.
    (4)(i) Except as noted in paragraphs (c)(4)(ii), (c)(4)(iii), and 
(c)(4)(iv) of this section, credits generated in a given model year may 
be used during that model year or used in any subsequent model year. 
Except as allowed under paragraph (c)(3)(ii) of this section, credits 
generated in one model year may not be used for prior model years.
    (ii) Credits generated from engines rated under 19 kW prior to the 
implementation date of the applicable Tier 2 standards, shall expire on 
December 31, 2007.
    (iii) Credits generated from engines rated under 19 kW under the 
provisions of paragraph (c)(3)(ii) shall expire on December 31, 2003.
    (iv) Credits generated from engines rated at or above 19 kW and 
under 37 kW under the provisions of paragraph (c)(3)(ii) of this 
section shall expire on December 31, 2002.
    (5) Except as provided in paragraph (b)(3) of this section, engine 
families may not generate credits for one pollutant while also using 
credits for another pollutant in the same model year.
    (d) Manufacturers must demonstrate compliance under the averaging, 
banking, and trading programs for a particular model year within 270 
days of the end of the model year. Except as allowed under paragraph 
(c)(3)(ii) of this section, manufacturers that have certified engine 
families to FELs above the applicable emission standards and do not 
have sufficient emission credits to offset the difference between the 
emission standards and the FEL for such engine families will be in 
violation of the conditions of the certificate of conformity for such 
engine families. The certificates of conformity may be voided ab initio 
under Sec. 89.126(c) for those engine families.
    32. The newly designated Sec. 89.204 is revised to read as follows:


Sec. 89.204  Averaging.

    (a) Requirements for Tier 1 engines rated at or above 37 kW. A 
manufacturer may use averaging to offset an emission exceedance of a 
nonroad engine family caused by a NOX FEL above the 
applicable emission standard. NOX credits used in averaging 
may be obtained from credits generated by another engine family in the 
same model year, credits banked in a previous model year, or credits 
obtained through trading.
    (b) Requirements for Tier 2 and later engines rated at or above 37 
kW and Tier 1 and later engines rated under 37 kW. A manufacturer may 
use averaging to offset an emission exceedance of a nonroad engine 
family caused by an NMHC+NOX FEL or a PM FEL above the 
applicable emission standard. Credits used in averaging may be obtained 
from credits generated by another engine family in the same model year, 
credits banked in previous model years that have not expired, or 
credits obtained through trading. The use of credits shall be within 
the restrictions described in paragraph (c) of this section, 
Sec. 89.206(b)(4) and Sec. 89.203(b)(5)(ii).
    (c) Averaging sets for emission credits. The averaging and trading 
of NOX emission credits, NMHC + NOX emission 
credits, and PM emissions credits will only be allowed between engine 
families in the same averaging set. The averaging sets for the 
averaging and trading of NOX emission credits, NMHC + 
NOX emission credits, and PM emission credits for nonroad 
engines are defined as follows:
    (1) Eligible engines rated at or above 19 kW, other than marine 
diesel engines, constitute an averaging set.
    (2) Eligible engines rated under 19 kW, other than marine diesel 
engines, constitute an averaging set.

[[Page 57008]]

    (3) Marine diesel engines rated at or above 19 kW constitute an 
averaging set. Emission credits generated from marine diesel engines 
rated at or above 19 kW may be used to address credit shortfalls for 
eligible engines rated at or above 19 kW other than marine diesel 
engines.
    (4) Marine diesel engines rated under 19 kW constitute an averaging 
set. Emission credits generated from marine diesel engines rated under 
19 kW may be used to address credit shortfalls for eligible engines 
rated under 19 kW other than marine diesel engines.
    33. The newly designated Sec. 89.205 is revised to read as follows:


Sec. 89.205  Banking.

    (a) Requirements for Tier 1 engines rated at or above 37 kW. (1) A 
manufacturer of a nonroad engine family with a NOX FEL below 
the applicable standard for a given model year may bank credits in that 
model year for use in averaging and trading in any subsequent model 
year.
    (2) A manufacturer of a nonroad engine family may bank 
NOX credits up to one calendar year prior to the effective 
date of mandatory certification. Such engines must meet the 
requirements of subparts A, B, D, E, F, G, H, I, J, and K of this part.
    (3)(i) A manufacturer of a nonroad engine family may bank PM 
credits from Tier 1 engines under the provisions specified in 
Sec. 89.207(b) for use in averaging and trading in the Tier 2 or later 
timeframe.
    (ii) Such engine families are subject to all provisions specified 
in subparts A, B, D, E, F, G, H, I, J, and K of this part, except that 
the applicable PM FEL replaces the PM emission standard for the family 
participating in the banking and trading program.
    (b) Requirements for Tier 2 and later engines rated at or above 37 
kW and Tier 1 and later engines rated under 37 kW. (1) A manufacturer 
of a nonroad engine family with an NMHC + NOX FEL or a PM 
FEL below the applicable standard for a given model year may bank 
credits in that model year for use in averaging and trading in any 
following model year.
    (2) For engine rated under 37 kW, a manufacturer of a nonroad 
engine family may bank credits prior to the effective date of mandatory 
certification. Such engines must meet the requirements of subparts A, 
B, D, E, F, G, H, I, J, and K of this part.
    (c) A manufacturer may bank actual credits only after the end of 
the model year and after EPA has reviewed the manufacturer's end-of-
year reports. During the model year and before submittal of the end-of-
year report, credits originally designated in the certification process 
for banking will be considered reserved and may be redesignated for 
trading or averaging in the end-of-year report and final report.
    (d) Credits declared for banking from the previous model year that 
have not been reviewed by EPA may be used in averaging or trading 
transactions. However, such credits may be revoked at a later time 
following EPA review of the end-of-year report or any subsequent audit 
actions.
    34. The newly designated Sec. 89.206 is revised to read as follows:


Sec. 89.206  Trading.

    (a) Requirements for Tier 1 engines rated at or above 37 kW. (1) A 
nonroad engine manufacturer may exchange emission credits with other 
nonroad engine manufacturers within the same averaging set in trading.
    (2) Credits for trading can be obtained from credits banked in a 
previous model year or credits generated during the model year of the 
trading transaction.
    (3) Traded credits can be used for averaging, banking, or further 
trading transactions within the restrictions described in 
Sec. 89.204(c).
    (b) Requirements for Tier 2 and later engines rated at or above 37 
kW and Tier 1 and later engines rated under 37 kW. (1) A nonroad engine 
manufacturer may exchange emission credits with other nonroad engine 
manufacturers within the same averaging set in trading.
    (2) Credits for trading can be obtained from credits banked in 
previous model years that have not expired or credits generated during 
the model year of the trading transaction.
    (3) Traded credits can be used for averaging, banking, or further 
trading transactions within the restrictions described in 
Sec. 89.204(c) and paragraph (b)(4) of this section.
    (4) Emission credits generated from engines rated at or above 19 kW 
utilizing indirect fuel injection may not be traded to other 
manufacturers.
    (c) In the event of a negative credit balance resulting from a 
transaction, both the buyer and the seller are liable, except in cases 
deemed involving fraud. Certificates of all engine families 
participating in a negative trade may be voided ab initio under 
Sec. 89.126(c).
    35. The newly designated Sec. 89.207 is revised to read as follows:


Sec. 89.207  Credit calculation.

    (a) Requirements for calculating NOX credits from Tier 1 
engines rated at or above 37 kW. (1) For each participating engine 
family, emission credits (positive or negative) are to be calculated 
according to one of the following equations and rounded, in accordance 
with ASTM E29-93a, to the nearest one-hundredth of a megagram (Mg). 
This ASTM procedure has been incorporated by reference (see Sec. 89.6). 
Consistent units are to be used throughout the equation.
    (i) For determining credit availability from all engine families 
generating credits: Emission credits = (Std-FEL)  x  (Volume)  x  
(AvgPR)  x  (UL)  x  (Adjustment)  x  (10-6)
    (ii) For determining credit usage for all engine families requiring 
credits to offset emissions in excess of the standard:
Emission credits = (Std-FEL)  x  (Volume)  x  (AvgPR)  x  (UL)  x  
(10-6)

Where:

Std = the applicable Tier 1 NOX nonroad engine emission 
standard, in grams per kilowatt-hour.
FEL = the NOX family emission limit for the engine family 
in grams per kilowatt-hour.
Volume = the number of nonroad engines eligible to participate in 
the averaging, banking, and trading program within the given engine 
family during the model year. Engines sold to equipment or vehicle 
manufacturers under the provisions of Sec. 89.102(g) shall not be 
included in this number. Quarterly production projections are used 
for initial certification. Actual applicable production/sales volume 
is used for end-of-year compliance determination.
AvgPR = the average power rating of all of the configurations within 
an engine family, calculated on a sales-weighted basis, in 
kilowatts.
UL = the useful life for the engine family, in hours.
Adjustment = a one-time adjustment, as specified in paragraph (a)(2) 
of this section, to be applied to Tier 1 NOX credits to 
be banked or traded for determining compliance with the Tier 1 
NOX standards or Tier 2 NOX+NMHC standards 
specified in subpart B of this part. Banked credits traded in a 
subsequent model year will not be subject to an additional 
adjustment. Banked credits used in a subsequent model year's 
averaging program will not have the adjustment restored.

    (2) If an engine family is certified to a NOX FEL of 8.0 
g/kW-hr or less, an Adjustment value of 1.0 shall be used in the credit 
generation calculation described in paragraph (a)(1)(i) of this 
section. If an engine family is certified to a NOX FEL above 
8.0 g/kW-hr, an Adjustment value of 0.65 shall be used in the credit 
generation calculation described in paragraph (a)(1)(i) of this 
section. If the credits are to be used by the credit-generating 
manufacturer for averaging purposes in the same model year in which 
they are generated, an Adjustment value of 1.0 shall be used for all 
engines regardless of the level of

[[Page 57009]]

the NOX FEL. If the credits are to be banked by the credit-
generating manufacturer and used in a subsequent model year for another 
Tier 1 engine family, an Adjustment value of 1.0 shall be used for all 
engines regardless of the level of the NOX FEL.
    (b) Requirements for calculating NMHC + NOX Credits from 
Tier 2 and later engines rated at or above 37 kW and Tier 1 and later 
engines rated under 37 kW and PM credits from all engines. (1) For each 
participating engine family, NOX + NMHC emission credits and 
PM emission credits (positive or negative) are to be calculated 
according to one of the following equations and rounded, in accordance 
with ASTM E29-93a, to the nearest one-hundredth of a megagram (Mg). 
This procedure has been incorporated by reference (see Sec. 89.6). 
Consistent units are to be used throughout the equation.
    (i) For determining credit availability from all engine families 
generating credits:
Emission credits = (Std-FEL) x (Volume) x (AvgPR) x (UL) x 
(10-6)
    (ii) For determining credit usage for all engine families requiring 
credits to offset emissions in excess of the standard:
Emission credits = (Std-FEL) x (Volume) x (AvgPR) x (UL) x 
(10-6)

Where:

Std = the current and applicable nonroad engine emission standard, in 
grams per kilowatt-hour, except for PM calculations where it is the 
applicable nonroad engine Tier 2 PM emission standard, and except for 
engines rated under 19 kW where it is the applicable nonroad engine 
Tier 2 emission standard, in grams per kilowatt-hour. (Engines rated 
under 19 kW participating in the averaging and banking program 
provisions of Sec. 89.203(c)(3)(ii) shall use the Tier 1 standard for 
credit calculations.)
FEL = the family emission limit for the engine family in grams per 
kilowatt-hour.
Volume = the number of nonroad engines eligible to participate in the 
averaging, banking, and trading program within the given engine family 
during the model year. Engines sold to equipment or vehicle 
manufacturers under the provisions of Sec. 89.102(g) shall not be 
included in this number. Quarterly production projections are used for 
initial certification. Actual applicable production/sales volume is 
used for end-of-year compliance determination.
AvgPR = the average power rating of all of the configurations within an 
engine family, calculated on a sales-weighted basis, in kilowatts.
UL = the useful life for the given engine family, in hours.

    36. The newly designated Sec. 89.208 is revised to read as follows:


Sec. 89.208  Labeling.

    For all nonroad engines included in the averaging, banking, and 
trading programs, the family emission limits to which the engine is 
certified must be included on the label required in Sec. 89.110.
    37. The newly designated Sec. 89.209 is amended by revising 
paragraph (a) to read as follows:


Sec. 89.209  Certification.

    (a) In the application for certification a manufacturer must:
    (1) Declare its intent to include specific engine families in the 
averaging, banking, and trading programs.
    (2) Submit a statement that the engines for which certification is 
requested will not, to the best of the manufacturer's belief, cause the 
manufacturer to have a negative credit balance when all credits are 
calculated for all the manufacturer's engine families participating in 
the averaging, banking, and trading programs, except as allowed under 
Sec. 89.203(c)(3)(ii).
    (3) Declare the applicable FELs for each engine family 
participating in averaging, banking, and trading.
    (i) The FELs must be to the same number of significant digits as 
the emission standard for the applicable pollutant.
    (ii) In no case may the FEL exceed the upper limits prescribed in 
Sec. 89.112(d).
    (4) Indicate the projected number of credits generated/needed for 
this family; the projected applicable production/sales volume, by 
quarter; and the values required to calculate credits as given in 
Sec. 89.207.
    (5) Submit calculations in accordance with Sec. 89.207 of projected 
emission credits (positive or negative) based on quarterly production 
projections for each participating family.
    (6)(i) If the engine family is projected to have negative emission 
credits, state specifically the source (manufacturer/engine family or 
reserved) of the credits necessary to offset the credit deficit 
according to quarterly projected production, or, if the engine family 
is to be included in the provisions of Sec. 89.203(c)(3)(ii), state 
that the engine family will be subject to those provisions.
    (ii) If the engine family is projected to generate credits, state 
specifically (manufacturer/engine family or reserved) where the 
quarterly projected credits will be applied.
* * * * *
    38. The newly designated Sec. 89.210 is amended by revising 
paragraphs (b) and (c) to read as follows:


Sec. 89.210  Maintenance of records.

* * * * *
    (b) The manufacturer of any nonroad engine family that is certified 
under the averaging, banking, and trading programs must establish, 
maintain, and retain the following adequately organized and indexed 
records for each such family:
    (1) EPA engine family;
    (2) Family emission limits (FEL);
    (3) Power rating for each configuration tested;
    (4) Projected applicable production/sales volume for the model 
year; and
    (5) Actual applicable production/sales volume for the model year.
    (c) Any manufacturer producing an engine family participating in 
trading reserved credits must maintain the following records on a 
quarterly basis for each engine family in the trading program:
    (1) The engine family;
    (2) The actual quarterly and cumulative applicable production/sales 
volume;
    (3) The values required to calculate credits as given in 
Sec. 89.207;
    (4) The resulting type and number of credits generated/required;
    (5) How and where credit surpluses are dispersed; and
    (6) How and through what means credit deficits are met.
* * * * *
    39. The newly designated Sec. 89.211 is amended by revising 
paragraphs (a) and (c) to read as follows:


Sec. 89.211  End-of-year and final reports.

    (a) End-of-year and final reports must indicate the engine family, 
the actual applicable production/sales volume, the values required to 
calculate credits as given in Sec. 89.207, and the number of credits 
generated/required. Manufacturers must also submit how and where credit 
surpluses were dispersed (or are to be banked) and/or how and through 
what means credit deficits were met. Copies of contracts related to 
credit trading must be included or supplied by the broker, if 
applicable. The report shall include a calculation of credit balances 
to show that the summation of the manufacturer's use of credits results 
in a credit balance equal to or greater than zero, except as allowed 
under Sec. 89.203(c)(3)(ii). Manufacturers participating under the 
program

[[Page 57010]]

described in Sec. 89.203(c)(3)(ii) shall include the NMHC + 
NOX credit balance and the PM credit balance as of December 
31 of that calendar year.
* * * * *
    (c)(1) End-of-year reports must be submitted within 90 days of the 
end of the model year to: Director, Engine Programs and Compliance 
Division (6405-J), U.S. Environmental Protection Agency, 401 M Street 
S.W., Washington, DC 20460.
    (2) Final reports must be submitted within 270 days of the end of 
the model year to: Director, Engine Programs and Compliance Division 
(6405-J), U.S. Environmental Protection Agency, 401 M Street S.W., 
Washington, DC 20460.
* * * * *
    40. The newly designated Sec. 89.212 is revised to read as follows:


Sec. 89.212  Notice of opportunity for hearing.

    Any voiding of the certificate under Secs. 89.203(d), 89.206(c), 
89.209(c) or 89.210(g) will be made only after the manufacturer 
concerned has been offered an opportunity for a hearing conducted in 
accordance with Secs. 89.512 and 89.513 and, if a manufacturer requests 
such a hearing, will be made only after an initial decision by the 
Presiding Officer.

Subpart D--[Amended]

    41. The newly designated Sec. 89.302 is revised to read as follows:


Sec. 89.302  Definitions.

    The definitions in subpart A of this part apply to this subpart. 
For terms not defined in this part, the definitions in 40 CFR part 86, 
subparts A, D, I, and N, apply to this subpart.
    42. The newly designated Sec. 89.304 is amended by revising 
paragraph (c) to read as follows:


Sec. 89.304  Equipment required for gaseous emissions; overview.

* * * * *
    (c) Analyzers used are a non-dispersive infrared (NDIR) absorption 
type for carbon monoxide and carbon dioxide analysis; a heated flame 
ionization (HFID) type for hydrocarbon analysis; and a chemiluminescent 
detector (CLD) or heated chemiluminescent detector (HCLD) for oxides of 
nitrogen analysis. Sections 89.309 through 89.324 set forth a full 
description of analyzer requirements and specifications.
    43. The newly designated Sec. 89.307 is amended by revising 
paragraphs (b)(7) and (b)(8) to read as follows:


Sec. 89.307  Dynamometer calibration.

* * * * *
    (b) * * *
    (7) The measured torque must be within either 2 percent of point or 
1 percent of the engine maximum torque of the calculated torque.
    (8) If the measured torque is not within the above requirements, 
adjust or repair the system. Repeat steps in paragraphs (b)(1) through 
(b)(6) of this section with the adjusted or repaired system.
* * * * *
    44. The newly designated Sec. 89.308 is amended by revising 
paragraph (b) to read as follows:


Sec. 89.308  Sampling system requirements for gaseous emissions.

* * * * *
    (b) If water is removed by condensation, the sample gas temperature 
shall be monitored within the water trap or the sample dewpoint shall 
be monitored downstream. In either case, the indicated temperature 
shall not exceed 7 deg.C.
    45. The newly designated Sec. 89.309 is amended by removing and 
reserving paragraph (a)(3) and revising paragraphs (a)(4)(iii), 
(a)(5)(i)(C), and (a)(5)(i)(D) to read as follows:


Sec. 89.309  Analyzers required for gaseous emissions.

    (a) * * *
    (3) [Reserved]
    (4) * * *
    (iii) The FID oven must be capable of maintaining temperature 
within 5.5 deg.C of the set point.
* * * * *
    (5) * * *
    (i) * * *
    (C) For raw analysis, an ice bath or other cooling device located 
after the NOX converter (optional for dilute analysis).
    (D) A chemiluminescent detector (CLD or HCLD).
* * * * *
    46. The newly designated Sec. 89.310 is amended by revising 
paragraphs (a)(1) and (c) to read as follows:


Sec. 89.310  Analyzer accuracy and specifications.

    (a) * * *
    (1) Response time. As necessary, measure and account for the 
response time of the analyzer.
* * * * *
    (c) Emission measurement accuracy--Bag sampling. (1) Good 
engineering practice dictates that exhaust emission sample analyzer 
readings below 15 percent of full-scale chart deflection should 
generally not be used.
    (2) Some high resolution read-out systems, such as computers, data 
loggers, and so forth, can provide sufficient accuracy and resolution 
below 15 percent of full scale. Such systems may be used provided that 
additional calibrations of at least 4 non-zero nominally equally spaced 
points, using good engineering judgement, below 15 percent of full 
scale are made to ensure the accuracy of the calibration curves. If a 
gas divider is used, the gas divider must conform to the accuracy 
requirements specified in Sec. 89.312(c). The procedure in paragraph 
(c)(3) of this section may be used for calibration below 15 percent of 
full scale.
    (3) The following procedure shall be followed:
    (i) Span the analyzer using a calibration gas meeting the accuracy 
requirements of Sec. 89.312(c), within the operating range of the 
analyzer, and at least 90% of full scale.
    (ii) Generate a calibration over the full concentration range at a 
minimum of 6, approximately equally spaced, points (e.g. 15, 30, 45, 
60, 75, and 90 percent of the range of concentrations provided by the 
gas divider). If a gas divider or blender is being used to calibrate 
the analyzer and the requirements of paragraph (c)(2) of this section 
are met, verify that a second calibration gas between 10 and 20 percent 
of full scale can be named within 2 percent of its certified 
concentration.
    (iii) If a gas divider or blender is being used to calibrate the 
analyzer, input the value of a second calibration gas (a span gas may 
be used for the CO2 analyzer) having a named concentration between 10 
and 20 percent of full scale. This gas shall be included on the 
calibration curve. Continue adding calibration points by dividing this 
gas until the requirements of paragraph (c)(2) of this section are met.
    (iv) Fit a calibration curve per Sec. 89.319 through Sec. 89.322 
for the full scale range of the analyzer using the calibration data 
obtained with both calibration gases.
* * * * *
    47. The newly designated Sec. 89.312 is amended by removing and 
reserving paragraph (b)(2), revising paragraphs (c)(2), (d), and (f) 
and adding a new paragraph (g) to read as follows:


Sec. 89.312  Analytical gases.

* * * * *
    (b) * * *
    (2) [Reserved].
    (c) * * *
    (2) Mixtures of gases having the following chemical compositions 
shall be available:
    (i) C3H8 and purified synthetic air ;
    (ii) C3H8 and purified nitrogen (optional for 
raw measurements);

[[Page 57011]]

    (iii) CO and purified nitrogen;
    (iv) NOX and purified nitrogen (the amount of 
NO2 contained in this calibration gas must not exceed 5 
percent of the NO content);
    (v) CO2 and purified nitrogen.
* * * * *
    (d) Oxygen interference check gases shall contain propane with 350 
ppmC 75 ppmC hydrocarbon. The three oxygen interference 
gases shall contain 21%  1% O2, 10%  
1% O2, and 5%  1% O2. The 
concentration value shall be determined to calibration gas tolerances 
by chromatographic analysis of total hydrocarbons plus impurities or by 
dynamic blending. Nitrogen shall be the predominant diluent with the 
balance oxygen.
* * * * *
    (f) Hydrocarbon analyzer burner air. The concentration of oxygen 
for raw sampling must be within 1 mole percent of the oxygen 
concentration of the burner air used in the latest oxygen interference 
check (%O2I). If the difference in oxygen concentration is 
greater than 1 mole percent, then the oxygen interference must be 
checked and, if necessary, the analyzer adjusted to meet the 
%O2I requirements. The burner air must contain less than 2 
ppmC hydrocarbon.
    (g) Gases for the methane analyzer shall be single blends of 
methane using air as the diluent.
    48. The newly designated Sec. 89.314 is amended by revising 
paragraphs (a) and (b) to read as follows:


Sec. 89.314  Pre-and post-test calibration of analyzers.

* * * * *
    (a) The calibration is checked by using a zero gas and a span gas 
whose nominal value is between 75 percent and 100 percent of full-
scale, inclusive, of the measuring range.
    (b) After the end of the final mode, a zero gas and the same span 
gas will be used for rechecking. As an option, the zero and span may be 
rechecked at the end of each mode or each test segment. The analysis 
will be considered acceptable if the difference between the two 
measuring results is less than 2 percent of full scale.


Sec. 89.316  [Amended]

    49. The newly designated Sec. 89.316 is amended by removing and 
reserving paragraph (b).
    50. The newly designated Sec. 89.317 is amended by revising 
paragraphs (g), (h), and (k) to read as follows:


Sec. 89.317  NOX converter check.

* * * * *
    (g) Turn on the NOX generator O2 (or air) 
supply and adjust the O2 (or air) flow rate so that the NO 
indicated by the analyzer is about 10 percent less than indicated in 
paragraph (f) of this section. Record the concentration of NO in this 
NO+O2 mixture.
    (h) Switch the NOX generator to the generation mode and 
adjust the generation rate so that the NO measured on the analyzer is 
20 percent of that measured in paragraph (f) of this section. There 
must be at least 10 percent unreacted NO at this point. Record the 
concentration of residual NO.
* * * * *
    (k) Turn off the NOX generator O2 (or air) 
supply. The analyzer will now indicate the NOX in the 
original NO-in-N2 mixture. This value should be no more than 
5 percent above the value indicated in paragraph (f) of this section.
* * * * *
    51. The newly designated Sec. 89.318 is amended by revising 
paragraphs (c)(2) heading, (c)(2)(i) and (c)(2)(iv) to read as follows:


Sec. 89.318  Analyzer interference checks.

* * * * *
    (c) * * *
    (2) NOx analyzer water quench check. (i) This check 
applies to wet measurements only. An NO span gas having a concentration 
of 80 to 100 percent of full scale of a normal operating range shall be 
passed through the CLD (or HCLD) and the response recorded as D. The NO 
span gas shall then be bubbled through water at room temperature and 
passed through the CLD (or HCLD) and the analyzer response recorded as 
AR. Determine and record the bubbler absolute operating pressure and 
the bubbler water temperature. (It is important that the NO span gas 
contains minimal NO2 concentration for this check. No 
allowance for absorption of NO2 in water has been made in 
the following quench calculations. This test may be optionally run in 
the NO mode to minimize the effect of any NO2 in the NO span 
gas.)
* * * * *
    (iv)(A) The maximum raw or dilute exhaust water vapor concentration 
expected during testing (designated as Wm) can be estimated from the 
CO2 span gas (or as defined in the equation in this 
paragraph and designated as A) criteria in paragraph (c)(1) of this 
section and the assumption of a fuel atom H/C ratio of 1.8:1 as:

Wm(%)=0.9 x A(%)

Where:

A = maximum CO2 concentration expected in the sample system during 
testing.
    (B) Percent water quench shall not exceed 3 percent and shall be 
calculated by:
[GRAPHIC] [TIFF OMITTED] TR23OC98.003

    52. The newly designated Sec. 89.319 is amended by revising 
paragraphs (b)(1), (b)(2), (c), (d) heading, (d) introductory text, 
(d)(2), and (d)(6) to read as follows:


Sec. 89.319  Hydrocarbon analyzer calibration.

* * * * *
    (b) * * *
    (1) Follow good engineering practices for initial instrument start-
up and basic operating adjustment using the appropriate fuel (see 
Sec. 89.312(e)) and zero-grade air.
    (2) Optimize the FID's response on the most common operating range. 
The response is to be optimized with respect to fuel pressure or flow. 
Efforts shall be made to minimize response variations to different 
hydrocarbon species that are expected to be in the exhaust. Good 
engineering judgment is to be used to trade off optimal FID response to 
propane-in-air against reductions in relative responses to other 
hydrocarbons. A good example of trading off response on propane for 
relative responses to other hydrocarbon species is given in Society of 
Automotive Engineers (SAE) Paper No. 770141, ``Optimization of Flame 
Ionization Detector for Determination of Hydrocarbon in Diluted 
Automotive Exhausts''; author Glenn D. Reschke. It is also required 
that the response be set to optimum condition with respect to air flow 
and sample flow. Heated Flame Ionization Detectors (HFIDs) must be at 
their specified operating temperature. One of the following procedures 
is required for FID or HFID optimization:
    (i) The procedure outlined in Society of Automotive Engineers (SAE) 
paper No. 770141, ``Optimization of a Flame Ionization Detector for 
Determination of Hydrocarbon in Diluted Automotive Exhausts''; author, 
Glenn D. Reschke. This procedure has been incorporated by reference at 
Sec. 89.6.
    (ii) The HFID optimization procedures outlined in 40 CFR part 86, 
subpart D.
    (iii) Alternative procedures may be used if approved in advance by 
the Administrator.
    (iv) The procedures specified by the manufacturer of the FID or 
HFID.
* * * * *
    (c) Initial and periodic calibration. Prior to introduction into 
service, after any maintenance which could alter

[[Page 57012]]

calibration, and monthly thereafter, the FID or HFID hydrocarbon 
analyzer shall be calibrated on all normally used instrument ranges 
using the steps in this paragraph (c). Use the same flow rate and 
pressures as when analyzing samples. Calibration gases shall be 
introduced directly at the analyzer, unless the ``overflow'' 
calibration option of 40 CFR part 86, subpart N, for the HFID is taken. 
New calibration curves need not be generated each month if the existing 
curve can be verified as continuing to meet the requirements of 
paragraph (c)(3) of this section.
    (1) Adjust analyzer to optimize performance.
    (2) Zero the hydrocarbon analyzer with zero-grade air.
    (3) Calibrate on each used operating range with propane-in-air 
(dilute or raw) or propane-in-nitrogen (raw) calibration gases having 
nominal concentrations starting between 10-15 percent and increasing in 
at least six incremental steps to 90 percent (e.g., 15, 30, 45, 60, 75, 
and 90 percent of that range) of that range. The incremental steps are 
to be spaced to represent good engineering practice. For each range 
calibrated, if the deviation from a least-squares best-fit straight 
line is 2 percent or less of the value at each data point, 
concentration values may be calculated by use of a single calibration 
factor for that range. If the deviation exceeds 2 percent at each non-
zero data point and within 0.3 percent of full scale on the 
zero, the best-fit non-linear equation which represents the data to 
within these limits shall be used to determine concentration.
    (d) Oxygen interference optimization (required for raw). Choose a 
range where the oxygen interference check gases will fall in the upper 
50 percent. Conduct the test, as outlined in this paragraph, with the 
oven temperature set as required by the instrument manufacturer. Oxygen 
interference check gas specifications are found in Sec. 89.312(d).
* * * * *
    (2) Span the analyzer with the 21% oxygen interference gas 
specified in Sec. 89.312(d).
* * * * *
    (6) Calculate the percent of oxygen interference (designated as 
percent O2I) for each mixture in paragraph (d)(4) of this 
section.

percent O2I = ((B-C)  x  100)/B

Where:
A = hydrocarbon concentration (ppmC) of the span gas used in paragraph 
(d)(2) of this section.
B = hydrocarbon concentration (ppmC) of the oxygen interference check 
gases used in paragraph (d)(4) of this section.
C = analyzer response (ppmC) = A/D; where
D = (percent of full-scale analyzer response due to A)  x  (percent of 
full-scale analyzer response due to B).
* * * * *
    53. The newly designated Sec. 89.320 is amended by revising 
paragraph (c) to read as follows:


Sec. 89.320  Carbon monoxide analyzer calibration.

* * * * *
    (c) Initial and periodic calibration. Prior to its introduction 
into service, after any maintenance which could alter calibration, and 
every two months thereafter, the NDIR carbon monoxide analyzer shall be 
calibrated. New calibration curves need not be generated every two 
months if the existing curve can be verified as continuing to meet the 
requirements of paragraph (c)(3) of this section.
    (1) Adjust the analyzer to optimize performance.
    (2) Zero the carbon monoxide analyzer with either zero-grade air or 
zero-grade nitrogen.
    (3) Calibrate on each used operating range with carbon monoxide-in-
N2 calibration gases having nominal concentrations starting 
between 10 and 15 percent and increasing in at least six incremental 
steps to 90 percent (e.g., 15, 30, 45, 60, 75, and 90 percent) of that 
range. The incremental steps are to be spaced to represent good 
engineering practice. For each range calibrated, if the deviation from 
a least-squares best-fit straight line is 2 percent or less of the 
value at each non-zero data point and within  0.3 percent 
of full scale on the zero, concentration values may be calculated by 
use of a single calibration factor for that range. If the deviation 
exceeds these limits, the best-fit non-linear equation which represents 
the data to within these limits shall be used to determine 
concentration.
* * * * *
    54. The newly designated Sec. 89.321 is amended by revising 
paragraph (c) to read as follows:


Sec. 89.321  Oxides of nitrogen analyzer calibration.

* * * * *
    (c) Initial and periodic calibration. Prior to its introduction 
into service, after any maintenance which could alter calibration, and 
monthly thereafter, the chemiluminescent oxides of nitrogen analyzer 
shall be calibrated on all normally used instrument ranges. New 
calibration curves need not be generated each month if the existing 
curve can be verified as continuing to meet the requirements of 
paragraph (c)(3) of this section. Use the same flow rate as when 
analyzing samples. Proceed as follows:
    (1) Adjust analyzer to optimize performance.
    (2) Zero the oxides of nitrogen analyzer with zero-grade air or 
zero-grade nitrogen.
    (3) Calibrate on each normally used operating range with NO-in-
N2 calibration gases with nominal concentrations starting at 
between 10 and 15 percent and increasing in at least six incremental 
steps to 90 percent (e.g., 15, 30, 45, 60, 75, and 90 percent) of that 
range. The incremental steps are to be spaced to represent good 
engineering practice. For each range calibrated, if the deviation from 
a least-squares best-fit straight line is 2 percent or less of the 
value at each non-zero data point and within  0.3 percent 
of full scale on the zero, concentration values may be calculated by 
use of a single calibration factor for that range. If the deviation 
exceeds these limits, the best-fit non-linear equation which represents 
the data to within these limits shall be used to determine 
concentration.
* * * * *
    55. The newly designated Sec. 89.322 is amended by revising 
paragraph (a) to read as follows:


Sec. 89.322  Carbon dioxide analyzer calibration.

    (a) Prior to its introduction into service, after any maintenance 
which could alter calibration, and bi-monthly thereafter, the NDIR 
carbon dioxide analyzer shall be calibrated on all normally used 
instrument ranges. New calibration curves need not be generated each 
month if the existing curve can be verified as continuing to meet the 
requirements of paragraph (a)(3) of this section. Proceed as follows:
    (1) Follow good engineering practices for instrument start-up and 
operation. Adjust the analyzer to optimize performance.
    (2) Zero the carbon dioxide analyzer with either zero-grade air or 
zero-grade nitrogen.
    (3) Calibrate on each normally used operating range with carbon 
dioxide-in-N2 calibration or span gases having nominal 
concentrations starting between 10 and 15 percent and increasing in at 
least six incremental steps to 90 percent (e.g., 15, 30, 45, 60, 75, 
and 90 percent) of that range. The incremental steps are to be spaced 
to represent good engineering practice. For each range calibrated, if 
the deviation from a least-squares best-fit straight line is 2 percent 
or less of the value at each

[[Page 57013]]

non-zero data point and within  0.3 percent of full scale 
on the zero, concentration values may be calculated by use of a single 
calibration factor for that range. If the deviation exceeds these 
limits, the best-fit non-linear equation which represents the data to 
within these limits shall be used to determine concentration.
* * * * *
    56. The newly designated Sec. 89.324 is revised to read as follows:


Sec. 89.324  Calibration of other equipment.

    (a) Other test equipment used for testing shall be calibrated as 
often as required by the instrument manufacturer or necessary according 
to good practice.
    (b) If a methane analyzer is used, the methane analyzer shall be 
calibrated prior to introduction into service and monthly thereafter:
    (1) Follow the manufacturer's instructions for instrument startup 
and operation. Adjust the analyzer to optimize performance.
    (2) Zero the methane analyzer with zero-grade air.
    (3) Calibrate on each normally used operating range with 
CH4 in air with nominal concentrations starting between 10 
and 15 percent and increasing in at least six incremental steps to 90 
percent (e.g., 15, 30, 45, 60, 75, and 90 percent) of that range. The 
incremental steps are to be spaced to represent good engineering 
practice. For each range calibrated, if the deviation from a least-
squares best-fit straight line is 2 percent or less of the value at 
each non-zero data point and within  0.3 percent of full 
scale on the zero, concentration values may be calculated by use of a 
single calibration factor for that range. If the deviation exceeds 
these limits, the best-fit non-linear equation which represents the 
data to within these limits shall be used to determine concentration.
    57. The newly designated Sec. 89.328 is amended by revising 
paragraphs (b)(1) and (b)(2) to read as follows:


Sec. 89.328  Inlet and exhaust restrictions.

* * * * *
    (b) * * *
    (1) Equip the test engine with an air inlet system presenting an 
air inlet restriction within 5 percent of the upper limit at maximum 
air flow, as specified by the engine manufacturer for a clean air 
cleaner. A system representative of the installed engine may be used. 
In other cases a test shop system may be used.
    (2) The exhaust backpressure must be within 5 percent of the upper 
limit at maximum declared power, as specified by the engine 
manufacturer. A system representative of the installed engine may be 
used. In other cases a test shop system may be used.
    58. The newly designated Sec. 89.330 is amended by revising 
paragraph (b)(2) and adding paragraph (b)(3) to read as follows:


Sec. 89.330  Lubricating oil and test fuels.

* * * * *
    (b) Test fuels. * * *
    (2) Use petroleum fuel meeting the specifications in Table 4 in 
Appendix A of this subpart, or substantially equivalent specifications 
approved by the Administrator, for exhaust emission testing. The grade 
of diesel fuel used must be commercially designated as ``Type 2-D'' 
grade diesel fuel and recommended by the engine manufacturer.
    (3) Testing of Tier 1 engines rated under 37 kW or Tier 2 engines 
rated at or above 37 kW that is conducted by the Administrator shall be 
performed using test fuels that meet the specifications in Table 4 in 
Appendix A of this subpart and that have a sulfur content no higher 
than 0.20 weight percent.
* * * * *
    59-63. Tables 1 through 4 of Appendix A to subpart D are revised 
and Table 5 is removed to read as follows:

Appendix A To Subpart D--Tables

                Table 1.--Abbreviations Used in Subpart D
------------------------------------------------------------------------
CLD....................................  Chemiluminescent detector.
CO.....................................  Carbon monoxide.
CO2....................................  Carbon dioxide.
HC.....................................  Hydrocarbons.
HCLD...................................  Heated chemiluminescent
                                          detector.
HFID...................................  Heated flame ionization
                                          detector.
GC.....................................  Gas chromatograph.
NDIR...................................  Non-dispersive infra-red
                                          analyzer.
NIST...................................  National Institute for
                                          Standards and Testing.
NO.....................................  Nitric Oxide.
NO2....................................  Nitrogen Dioxide.
NOX....................................  Oxides of nitrogen.
O2.....................................  Oxygen.
------------------------------------------------------------------------


               Table 2.--Symbols Used in Subparts D and E
------------------------------------------------------------------------
         Symbol                    Term                    Unit
------------------------------------------------------------------------
conc...................  Concentration (ppm by    ppm
                          volume).
f......................  Engine specific
                          parameter considering
                          atmospheric conditions
FFCB...................  Fuel specific factor
                          for the carbon balance
                          calculation
FFD....................  Fuel specific factor
                          for exhaust flow
                          calculation on dry
                          basis
FFH....................  Fuel specific factor
                          representing the
                          hydrogen to carbon
                          ratio
FFW....................  Fuel specific factor
                          for exhaust flow
                          calculation on wet
                          basis
FR.....................  Rate of fuel consumed..  g/h
GAIRW..................  Intake air mass flow     kg/h
                          rate on wet basis.
GAIRD..................  Intake air mass flow     kg/h
                          rate on dry basis.
GEXHW..................  Exhaust gas mass flow    kg/h
                          rate on wet basis.
GFuel..................  Fuel mass flow rate....  kg/h
H......................  Absolute humidity        g/kg
                          (water content related
                          to dry air).
i......................  Subscript denoting an
                          individual mode
KH.....................  Humidity correction
                          factor
L......................  Percent torque related   %
                          to maximum torque for
                          the test mode.
mass...................  Pollutant mass flow....  g/h
nd,i...................  Engine speed (average    1/min
                          at the i'th mode
                          during the cycle).
Ps.....................  Dry atmospheric          kPa
                          pressure.
Pd.....................  Test ambient saturation  kPa
                          vapor pressure at
                          ambient temperature.
P......................  Observed brake power     kW
                          output uncorrected.
PAUX...................  Declared total power     kW
                          absorbed by
                          auxiliaries fitted for
                          the test.
PM.....................  Maximum power measured   kW
                          at the test speed
                          under test conditions.
Pi.....................  Pi = PM,i + PAUX,i
PB.....................  Total barometric         kPa
                          pressure (average of
                          the pre-test and post-
                          test values).
Pv.....................  Saturation pressure at   kPa
                          dew point temperature.

[[Page 57014]]

Ra.....................  Relative humidity of     %
                          the ambient air.
S......................  Dynamometer setting....  kW
T......................  Absolute temperature at  K
                          air inlet.
Tbe....................  Air temperature after    K
                          the charge air cooler
                          (if applicable)
                          (average).
Tclout.................  Coolant temperature      K
                          outlet (average).
TDd....................  Absolute dewpoint        K
                          temperature.
Td,i...................  Torque (average at the   N-m
                          i'th mode during the
                          cycle).
TSC....................  Temperature of the       K
                          intercooled air.
Tref...................  Reference temperature..  K
VEXHD..................  Exhaust gas volume flow  m3/h
                          rate on dry basis.
VAIRW..................  Intake air volume flow   m3/h
                          rate on wet basis.
PB.....................  Total barometric         kPa
                          pressure.
VEXHW..................  Exhaust gas volume flow  m3/h
                          rate on wet basis.
WF.....................  Weighing factor
WFE....................  Effective weighing
                          factor
------------------------------------------------------------------------


                            Table 3.--Measurement Accuracy and Calibration Frequency
----------------------------------------------------------------------------------------------------------------
      No.                 Item           Calibration accuracy 1               Calibration frequency
----------------------------------------------------------------------------------------------------------------
1..............  Engine speed..........   2%.......  30 days.
2..............  Torque................  Larger of   30 days.
                                          2% of point or  1% of engine
                                          maximum.
3..............  Fuel consumption (raw    2% of      30 days.
                  measurement).           engine maximum.
4..............  Air consumption (raw     2% of      As required.
                  measurement).           engine maximum.
5..............  Coolant temperature...  2 deg.K...  As required.
6..............  Lubricant temperature.  2 deg.K...  As required.
7..............  Exhaust backpressure..   1.0% of    As required.
                                          engine maximum.
8..............  Inlet depression......  1.0% of engine maximum  As required.
9..............  Exhaust gas             15 deg.K..  As required.
                  temperature.
10.............  Air inlet temperature   2 deg.K...  As required.
                  (combustion air).
11.............  Atmospheric pressure..   0.5%.....  As required.
12.............  Humidity (combustion     0.5......  As required.
                  air) (g of H2O/Kg of
                  dry air).
13.............  Fuel temperature......  2 deg.K...  As required.
14.............  Temperature with        2 deg.K...  As required.
                  regard to dilution
                  tunnel.
15.............  Dilution air humidity    0.5......  As required.
                  (g of H2O/Kg of dry
                  air).
16.............  HC analyzer...........   2%.......  Monthly or as required.
17.............  CO analyzer...........   2%.......  Once per 60 days or as required.
18.............  NOX analyzer..........   2%.......  Monthly or as required.
19.............  Methane analyzer......   2%.......  Monthly or as required.
20.............  NOX converter           90%...................  Monthly.
                  efficiency check.
21.............  CO2 analyzer..........   2%.......  Once per 60 days or as required.
----------------------------------------------------------------------------------------------------------------
1 All accuracy requirements pertain to the final recorded value which is inclusive of the data acquisition
  system.


                                   Table 4.--Federal Test Fuel Specifications
----------------------------------------------------------------------------------------------------------------
               Item                                   Procedure (ASTM) \1\                     Value (type 2-D)
----------------------------------------------------------------------------------------------------------------
Cetane............................  D613-95.................................................  40-48
Distillation Range:
    IBP,  deg.C...................  D86-97..................................................  171-204
    10% point,  deg.C.............  86-97...................................................  204-238
    50% point,  deg.C.............  86-97...................................................  243-282
    90% point,  deg.C.............  86-97...................................................  293-332
    EP,  deg.C....................  86-97...................................................  321-366
    Gravity, API..................  D287-92.................................................  32-37
Total Sulfur, %mass...............  D129-95 or D2622-98.....................................  0.03--0.40
Hydrocarbon composition:
    Aromatics, %vol...............  D1319-98 or D5186-96....................................  \2\ 10
Paraffins, Naphthenes, Olefins....  D1319-98................................................  (\3\)
Flashpoint,  deg.C (minimum)......  D93-97..................................................  54
Viscosity @ 38 deg.C, Centistokes.  D445-97.................................................  2.0-3.2
----------------------------------------------------------------------------------------------------------------
\1\ All ASTM procedures in this table have been incorporated by reference. See Sec.  89.6.
\2\ Minimum.
\3\ Remainder.


[[Page 57015]]

Subpart E--[Amended]

    64. The newly designated Sec. 89.401 is amended by revising 
paragraph (b) to read as follows:


Sec. 89.401  Scope; applicability.

* * * * *
    (b) Exhaust gases, either raw or dilute, are sampled while the test 
engine is operated using the appropriate test cycle on an engine 
dynamometer. The exhaust gases receive specific component analysis 
determining concentration of pollutant, exhaust volume, the fuel flow 
(raw analysis), and the power output during each mode. Emissions are 
reported as grams per kilowatt hour (g/kW-hr).
* * * * *
    65. The newly designated Sec. 89.402 is revised to read as follows:


Sec. 89.402  Definitions.

    The definitions in subpart A of this part apply to this subpart. 
For terms not defined in this part, the definitions in 40 CFR part 86, 
subparts A, D, I, and N, apply to this subpart.
    66. The newly designated Sec. 89.404 is amended by revising 
paragraph (b) and removing paragraph (e) to read as follows:


Sec. 89.404  Test procedure overview.

* * * * *
    (b) The test is designed to determine the brake-specific emissions 
of hydrocarbons, carbon monoxide, oxides of nitrogen, and particulate 
matter. For more information on particulate matter sampling see 
Sec. 89.112(c). The test cycles consist of various steady-state 
operating modes that include different combinations of engine speeds 
and loads. These procedures require the determination of the 
concentration of each pollutant, exhaust volume, the fuel flow (raw 
analysis), and the power output during each mode. The measured values 
are weighted and used to calculate the grams of each pollutant emitted 
per kilowatt hour (g/kW-hr).
* * * * *
    67. The newly designated Sec. 89.405 is amended by revising 
paragraphs (d), (e), and (f) to read as follows:


Sec. 89.405  Recorded information.

* * * * *
    (d) Test data; pre-test.
    (1) Date and time of day.
    (2) Test number.
    (3) Intermediate speed and rated speed as defined in Sec. 89.2 and 
maximum observed torque for these speeds.
    (4) Recorder chart or equivalent. Identify the zero traces for each 
range used, and span traces for each range used.
    (5) Air temperature after and pressure drop across the charge air 
cooler (if applicable) at maximum observed torque and rated speed.
    (e) Test data; modal.
    (1) Recorder chart or equivalent. Identify for each test mode the 
emission concentration traces and the associated analyzer range(s). 
Identify the start and finish of each test.
    (2) Observed engine torque.
    (3) Observed engine rpm.
    (4) Record engine torque and engine rpm continuously during each 
mode with a chart recorder or equivalent recording device.
    (5) Intake air flow (for raw mass flow sampling method only) and 
depression for each mode.
    (6) Engine intake air temperature at the engine intake or 
turbocharger inlet for each mode.
    (7) Mass fuel flow (for raw sampling) for each mode.
    (8) Engine intake humidity.
    (9) Coolant temperature outlet.
    (10) Engine fuel inlet temperature at the pump inlet.
    (f) Test data; post-test.
    (1) Recorder chart or equivalent. Identify the zero traces for each 
range used and the span traces for each range used. Identify hangup 
check, if performed.
    (2) Total number of hours of operation accumulated on the engine.
    68. The newly designated Sec. 89.406 is amended by revising 
paragraphs (b) and (c)(1) to read as follows:


Sec. 89.406  Pre-test procedures.

* * * * *
    (b) Replace or clean the filter elements and then vacuum leak check 
the system per Sec. 89.316(a). Allow the heated sample line, filters, 
and pumps to reach operating temperature.
    (c) * * *
    (1) Check the sample-line temperatures (see Sec. 89.309(a)(4)(ii) 
and (a)(5)(i)(A)).
* * * * *
    69. The newly designated Sec. 89.407 is amended by revising 
paragraphs (a), (c), and (d)(2) to read as follows:


Sec. 89.407  Engine dynamometer test run.

    (a) Measure and record the temperature of the air supplied to the 
engine, the fuel temperature, the intake air humidity, and the observed 
barometric pressure during the sampling for each mode. The fuel 
temperature shall be less than or equal to 43C during the sampling for 
each mode.
* * * * *
    (c) The following steps are taken for each test:
    (1) Install instrumentation and sample probes as required.
    (2) Perform the pre-test procedure as specified in Sec. 89.406.
    (3) Read and record the general test data as specified in 
Sec. 89.405(c).
    (4) Start cooling system.
    (5) Precondition (warm up) the engine in the following manner:
    (i) For variable-speed engines:
    (A) Operate the engine at idle for 2 to 3 minutes;
    (B) Operate the engine at approximately 50 percent power at the 
peak torque speed for 5 to 7 minutes;
    (C) Operate the engine at rated speed and maximum horsepower for 25 
to 30 minutes;
    (ii) For constant-speed engines:
    (A) Operate the engine at minimum load for 2 to 3 minutes;
    (B) Operate the engine at 50 percent load for 5 to 7 minutes;
    (C) Operate the engine at maximum load for 25 to 30 minutes;
    (iii) Optional. It is permitted to precondition the engine at rated 
speed and maximum horsepower until the oil and water temperatures are 
stabilized. The temperatures are defined as stabilized if they are 
maintained within 2 percent of point on an absolute basis for 2 
minutes. The engine must be operated a minimum of 10 minutes for this 
option. This optional procedure may be substituted for the procedure in 
paragraph (c)(5)(i)or (c)(5)(ii) of this section;
    (iv) Optional. If the engine has been operating on service 
accumulation for a minimum of 40 minutes, the service accumulation may 
be substituted for the procedure in paragraphs (c)(5)(i) through (iii) 
of this section.
    (6) Read and record all pre-test data specified in Sec. 89.405(d).
    (7) Start the test cycle (see Sec. 89.410) within 20 minutes of the 
end of the warmup. (See paragraph (c)(13) of this section.) A mode 
begins when the speed and load requirements are stabilized to within 
the requirements of Sec. 89.410(b). A mode ends when valid emission 
sampling for that mode ends. For a mode to be valid, the speed and load 
requirements must be maintained continuously during the mode. Sampling 
in the mode may be repeated until a valid sample is obtained as long 
the speed and torque requirements are met.
    (8) Calculate the torque for any mode with operation at rated 
speed.
    (9) During the first mode with intermediate speed operation, if 
applicable, calculate the torque corresponding to 75 and 50 percent of 
the maximum observed torque for the intermediate speed.

[[Page 57016]]

    (10) Record all modal data specified in Sec. 89.405(e) during a 
minimum of the last 60 seconds of each mode.
    (11) Record the analyzer(s) response to the exhaust gas during the 
a minimum of the last 60 seconds of each mode.
    (12) Test modes may be repeated, as long as the engine is 
preconditioned by running the previous mode. In the case of the first 
mode of any cycle, precondition according to paragraph (c)(5) of this 
section.
    (13) If a delay of more than 20 minutes, but less than 4 hours, 
occurs between the end of one mode and the beginning of another mode, 
precondition the engine by running the previous mode. If the delay 
exceeds 4 hours, the test shall include preconditioning (begin at 
paragraph (c)(2) of this section).
    (14) The speed and load points for each mode are listed in Tables 1 
through 4 of Appendix B of this subpart. The engine speed and load 
shall be maintained as specified in Sec. 89.410(b).
    (15) If at any time during a test mode, the test equipment 
malfunctions or the specifications in paragraph (c)(14) of this section 
are not met, the test mode is void and may be aborted. The test mode 
may be restarted by preconditioning with the previous mode.
    (16) Fuel flow and air flow during the idle load condition may be 
determined just prior to or immediately following the dynamometer 
sequence, if longer times are required for accurate measurements.
    (d) * * *
    (2) Each analyzer range that may be used during a test mode must 
have the zero and span responses recorded prior to the execution of the 
test. Only the zero and span for the range(s) used to measure the 
emissions during the test are required to be recorded after the 
completion of the test .
* * * * *
    70. The newly designated Sec. 89.408 is amended by revising 
paragraph (e) to read as follows:


Sec. 89.408  Post-test procedures.

* * * * *
    (e) For a valid test, the zero and span checks performed before and 
after each test for each analyzer must meet the following requirements:
    (1) The span drift (defined as the change in the difference between 
the zero response and the span response) must not exceed 3 percent of 
full-scale chart deflection for each range used.
    (2) The zero response drift must not exceed 3 percent of full-scale 
chart deflection.
    71. The newly designated Sec. 89.410 is amended by revising 
paragraphs (a), (b), and (c) to read as follows:


Sec. 89.410  Engine test cycle.

    (a) Emissions shall be measured using one of the test cycles 
specified in Tables 1 through 4 of Appendix B of this subpart, subject 
to the provisions of paragraphs (a)(1) through (a)(4) of this section. 
These cycles shall be used to test engines on a dynamometer.
    (1) The 8-mode test cycle described in Table 1 of Appendix B of 
this subpart shall be used for all engines, except constant speed 
engines, engines rated under 19 kW, and propulsion marine diesel 
engines.
    (2) The 5-mode test cycle described in Table 2 of Appendix B of 
this subpart shall be used for constant-speed engines as defined in 
Sec. 89.2. Any engine certified under this test cycle must meet the 
labeling requirements of Sec. 89.110(b)(11).
    (3) The 6-mode test cycle described in Table 3 of Appendix B of 
this subpart shall be used for variable speed engines rated under 19 
kW.
    (4) Notwithstanding the provisions of paragraphs (a)(1) through 
(a)(3) of this section, the 4-mode test cycle described in Table 4 of 
Appendix B of this subpart shall be used for propulsion marine diesel 
engines.
    (5) Notwithstanding the provisions of paragraphs (a)(1) through 
(a)(4) of this section:
    (i) Manufacturers may use the 8-mode test cycle described in Table 
1 of Appendix B of this subpart for:
    (A) Constant speed engines, or variable speed engines rated under 
19 kW; or
    (B) Propulsion marine diesel engines, provided the propulsion 
marine diesel engines are certified in an engine family that includes 
primarily non-marine diesel engines, and the manufacturer obtains 
advance approval from the Administrator.
    (ii) The Administrator may use the 8-mode test cycle specified in 
Table 1 of Appendix B of this subpart during testing of any engine 
which was certified based on emission data collected from that test 
cycle.
    (b) During each non-idle mode, hold the specified load to within 2 
percent of the engine maximum value and speed to within 2 
percent of point. During each idle mode, speed must be held within the 
manufacturer's specifications for the engine, and the throttle must be 
in the fully closed position and torque must not exceed 5 percent of 
the peak torque value of mode 5.
    (c) For any mode except those involving either idle or full-load 
operation, if the operating conditions specified in paragraph (b) of 
this section cannot be maintained, the Administrator may authorize 
deviations from the specified load conditions. Such deviations shall 
not exceed 10 percent of the maximum torque at the test speed. The 
minimum deviations above and below the specified load necessary for 
stable operation shall be determined by the manufacturer and approved 
by the Administrator prior to the test run.
* * * * *
    72. The newly designated Sec. 89.411 is amended by revising 
paragraphs (d)(5) and (e)(5) to read as follows:


Sec. 89.411  Exhaust sample procedure--gaseous components.

* * * *
    (d) * * *
    (5) Zero and span each range to be used on each analyzer operated 
prior to the beginning of the test cycle. The span gases shall have a 
concentration between 75 and 100 percent of full-scale chart 
deflection. The flow rates and system pressures shall be approximately 
the same as those encountered during sampling. The HFID analyzer shall 
be zeroed and spanned either through the overflow sampling system or 
through the analyzer port.
* * * * *
    (e) * * *
    (5) If the difference between the readings obtained greater than or 
equal to 2 percent of full scale deflection, clean the sample probe and 
the sample line.
* * * * *
    73. The newly designated Sec. 89.412 is amended by revising 
paragraph (c)(3) and removing and reserving paragraph (g)(1) to read as 
follows:


Sec. 89.412  Raw gaseous exhaust sampling and analytical system 
description.

* * * * *
    (c) * * *
    (3) The location of optional valve V16 may not be greater than 61 
cm from the sample pump.
* * * * *
    (g) * * *
    (1) [Reserved].
* * * * *
    74. The newly designated Sec. 89.413 is amended by revising 
paragraph (d) and removing paragraph (e) to read as follows:


Sec. 89.413  Raw sampling procedures.

* * * * *
    (d) All gaseous heated sampling lines shall be fitted with a heated 
filter to extract solid particles from the flow of gas required for 
analysis. The sample

[[Page 57017]]

line for CO and CO2 analysis may be heated or unheated.
    75. The newly designated Sec. 89.414 is amended by revising 
paragraph (a) to read as follows:


Sec. 89.414  Air flow measurement specifications.

    (a) The air flow measurement method used must have a range large 
enough to accurately measure the air flow over the engine operating 
range during the test. Overall measurement accuracy must be 
 2 percent of the maximum engine value for all modes. The 
Administrator must be advised of the method used prior to testing.
* * * * *
    76. The newly designated Sec. 89.415 is revised to read as follows:


Sec. 89.415  Fuel flow measurement specifications.

    The fuel flow rate measurement instrument must have a minimum 
accuracy of 2 percent of the engine maximum fuel flow rate. The 
controlling parameters are the elapsed time measurement of the event 
and the weight or volume measurement.
    77. The newly designated Sec. 89.418 is amended by revising 
paragraphs (b), (c), (d), (f) introductory text, (f)(1), and (g) and 
the table in paragraph (e) to read as follows:


Sec. 89.418  Raw emission sampling calculations.

* * * * *
    (b) The exhaust gas flow rate GEXHW and VEXHW 
shall be determined for each mode.
    (1) For measurements using the mass flow method, see 
Sec. 89.416(a).
    (2) For measurements using the fuel consumption and exhaust gas 
concentrations method, use the following equations:
[GRAPHIC] [TIFF OMITTED] TR23OC98.004

Where:
[GRAPHIC] [TIFF OMITTED] TR23OC98.005

[GRAPHIC] [TIFF OMITTED] TR23OC98.006

[GRAPHIC] [TIFF OMITTED] TR23OC98.007

[GRAPHIC] [TIFF OMITTED] TR23OC98.008

K = 3.5
    (3) Humidity values may be calculated from either one of the 
following equations:
[GRAPHIC] [TIFF OMITTED] TR23OC98.009

or
[GRAPHIC] [TIFF OMITTED] TR23OC98.010

    (c) When applying GEXHW, the measured ``dry'' 
concentration shall be corrected to a wet basis, if not already 
measured on a wet basis. This section is applicable only for 
measurements made on raw exhaust gas. Correction to a wet basis shall 
be according to the following formula:
    ConcWET = Kw  x  ConcDRY
    Where: KW is determined according to the equations in 
paragraph (c)(1) or (c)(2) of this section.
    (1) For measurements using the mass flow method (see 
Sec. 89.416(a)):
[GRAPHIC] [TIFF OMITTED] TR23OC98.011

Where:
[GRAPHIC] [TIFF OMITTED] TR23OC98.012

[GRAPHIC] [TIFF OMITTED] TR23OC98.013

 = H/C mole ratio of the fuel.

    (2) For measurements using the fuel consumption and exhaust gas 
concentrations method (see Sec. 89.416(b)):
[GRAPHIC] [TIFF OMITTED] TR23OC98.014


[[Page 57018]]


Where:
[GRAPHIC] [TIFF OMITTED] TR23OC98.015

    (d) As the NOX emission depends on intake air 
conditions, the NOX concentration shall be corrected for 
intake air temperature and humidity with the factor Kh given 
in the following formula. For engines operating on alternative 
combustion cycles, other correction formulas may be used if they can be 
justified or validated. The formula follows:
[GRAPHIC] [TIFF OMITTED] TR23OC98.016

    (e) * * *

----------------------------------------------------------------------------------------------------------------
                  Gas                           u               v               w                 conc.
----------------------------------------------------------------------------------------------------------------
NOX....................................        0.001587         0.00205        0.00205   ppm.
CO.....................................        0.000966         0.00125        0.00125   ppm.
HC.....................................        0.000478                        0.000618  ppm.
CO2....................................       15.19            19.64          19.64      percent.
----------------------------------------------------------------------------------------------------------------
Note: The given coefficients u, v, and w are calculated for 273.15  deg.K (0  deg.C) and 101.3 kPa. In cases
  where the reference conditions vary from those stated, an error may occur in the calculations.

    (f) The following equations may be used to calculate the 
coefficients u, v, and w in paragraph (e) of this section for other 
conditions of temperature and pressure:
    (1) For the calculation of u, v, and w for NOX (as 
NO2), CO, HC (in paragraph (e) of this section as 
CH1.80), CO2, and O2:

Where:

w = 4.4615.10-5  x  M if conc. in ppm
w = 4.4615.10-1  x  M if conc. in percent
v = w
u = w/Air
M = Molecular weight
Air = Density of dry air at 273.15  deg.K (0 
deg.C), 101.3 kPa = 1.293 kg/m\3\
* * * * *
    (g)(1) The emission shall be calculated for all individual 
components in the following way where power at idle is equal to zero:
[GRAPHIC] [TIFF OMITTED] TR23OC98.017

    (2) The weighting factors and the number of modes (n) used in the 
calculation in paragraph (g)(1) of this section are according to 
Sec. 89.410.
    78. The newly designated Sec. 89.420 is amended by revising 
paragraph (a) introductory text to read as follows:


Sec. 89.420  Background sample.

    (a) Background samples are produced by continuously drawing a 
sample of dilution air during the exhaust collection phase of each test 
cycle mode.
* * * * *
    79. The newly designated Sec. 89.422 is amended by revising the 
table in paragraph (d)(3) to read as follows:


Sec. 89.422  Dilute sampling procedures--CVS calibration.

* * * * *
    (d) * * *
    (3) * *

                                                              Calibration Data Measurements
--------------------------------------------------------------------------------------------------------------------------------------------------------
              Parameter                        Symbol                                      Units                                     Tolerances
--------------------------------------------------------------------------------------------------------------------------------------------------------
Barometric pressure (corrected).....  PB                        kPa (Inches Hg)...........................................  0.034 (0.01).
Air temperature, flowmeter..........  ETI                       deg.C (deg.F).............................................  0.14 (0.25).
Pressure depression upstream of LFE.  EPI                       kPa(Inches H2O)...........................................  0.012 (0.05).
Pressure drop across LFE matrix.....  EDP                       kPa (Inches H2O)..........................................  0.001 (0.005).
Air flow............................  Qs                        m3/min. (Ft3/min).........................................  0.5 pct.
CFV inlet depression................  PPI                       kPa (Inches Hg)...........................................  0.055 (0.016).
CFV outlet pressure.................  PPO                       kPa (Inches Hg)...........................................  0.17 (0.05).
Temperature at venturi inlet........  Tv                        deg.C (deg.F).............................................  0.28 (0.5)
Specific gravity of manometer fluid.  Sp.Gr                     ..........................................................  (1.75 oil).
--------------------------------------------------------------------------------------------------------------------------------------------------------

* * * *


Sec. 89.423  [Removed and Reserved]

    80. Remove and reserve the newly designated Sec. 89.423.
    81. The newly designated Sec. 89.424 is amended by revising 
paragraphs (a), (d)(6), and (e), and the definition for M \1\ in the 
CO2e equation in paragraph (d)(3) to read as follows:


Sec. 89.424  Dilute emission sampling calculations.

    (a) The final reported emission test results are computed by use of 
the following formula:
[GRAPHIC] [TIFF OMITTED] TR23OC98.018

Where:
Awm = Weighted mass emission level (HC, CO, CO2, 
PM, or NOX) in g/kW-hr.
gi = Mass flow in grams per hour, = grams measured during 
the mode divided by the sample time for the mode.
WFi = Effective weighing factor.
Pi = Power measured during each mode (Power set = zero for 
the idle mode).
* * * * *
    (d) * * *
    (3) * * *
    M \1\ = Fuel mass consumed during the mode.
* * * * *
    (6) Measured ``dry'' concentrations shall be corrected to a wet 
basis, if not already measured on a wet basis. This section is 
applicable only for measurements made on dilute exhaust gas. Correction 
to a wet basis shall be according to the following formula:

ConcWET = KW  x  ConcDRY

    Where: KW is determined according to the equation in 
paragraph (d)(6)(i) or (d)(6)(ii), of this section.
    (i) For wet CO2 measurement:

[[Page 57019]]

[GRAPHIC] [TIFF OMITTED] TR23OC98.019


    (ii) For dry CO2 measurement:
    [GRAPHIC] [TIFF OMITTED] TR23OC98.020
    
    (iii) For the equations in paragraph (d)(6)(i) and (d)(6)(ii) of 
this section, the following equation applies:
[GRAPHIC] [TIFF OMITTED] TR23OC98.021

    Where: Ha and Hd are the grams of water per 
kilogram of dry air; as illustrated in the following equations:
[GRAPHIC] [TIFF OMITTED] TR23OC98.022

[GRAPHIC] [TIFF OMITTED] TR23OC98.023

    (e) The final modal reported brake-specific fuel consumption (bsfc) 
shall be computed by use of the following formula:
[GRAPHIC] [TIFF OMITTED] TR23OC98.024

Where:

bsfc = brake-specific fuel consumption for a mode in grams of fuel per 
kilowatt-hour (kW-hr).
M = mass of fuel in grams, used by the engine during a mode.
kW-hr = total kilowatts integrated with respect to time for a mode.
* * * * *


Sec. 89.425  [Removed and Reserved]

    82. Remove and reserve the newly designated Sec. 89.425.
    83-87. Appendix B to Subpart E of part 89 is revised to read as 
follows:

Appendix B To Subpart E of Part 89--Tables

                             Table 1.--8-Mode Test Cycle for Variable-Speed Engines
----------------------------------------------------------------------------------------------------------------
                                                                             Observed
                                                                            torque \2\    Minimum
          Test segment                Mode number       Engine speed \1\   (percent of    time in     Weighting
                                                                               max.         mode       factors
                                                                            observed)    (minutes)
----------------------------------------------------------------------------------------------------------------
1...............................  1..................  Rated.............          100          5.0         0.15
1...............................  2..................  Rated.............           75          5.0         0.15
1...............................  3..................  Rated.............           50          5.0         0.15
1...............................  4..................  Rated.............           10          5.0         0.10
2...............................  5..................  Int...............          100          5.0         0.10
2...............................  6..................  Int...............           75          5.0         0.10
2...............................  7..................  Int...............           50          5.0         0.10
2...............................  8..................  Idle..............            0          5.0        0.15
----------------------------------------------------------------------------------------------------------------
\1\ Engine speed (non-idle):  2 percent of point. Engine speed (idle): Within manufacturer's
  specifications. Idle speed is specified by the manufacturer.
\2\ Torque (non-idle): Throttle fully open for 100 percent points. Other non-idle points:  2 percent
  of engine maximum value. Torque (idle): Throttle fully closed. Load less than 5 percent of peak torque.


                             Table 2.--5-Mode Test Cycle for Constant-Speed Engines
----------------------------------------------------------------------------------------------------------------
                                                                             Observed
                                                                            torque \2\    Minimum
                Mode number                        Engine\1\ Speed         (percent of    time in     Weighting
                                                                               max.         mode       factors
                                                                            observed)    (minutes)
----------------------------------------------------------------------------------------------------------------
1.........................................  Rated........................          100          5.0         0.05
2.........................................  Rated........................           75          5.0         0.25
3.........................................  Rated........................           50          5.0         0.30
4.........................................  Rated........................           25          5.0         0.30
5.........................................  Rated........................           10          5.0        0.10
----------------------------------------------------------------------------------------------------------------
\1\ Engine speed: 2 percent of point.
\2\ Torque: Throttle fully open for 100 percent point. Other points:  2 percent of engine maximum
  value.


[[Page 57020]]


                            Table 3.--6-Mode Test Cycle for Engines Rated Under 19 kW
----------------------------------------------------------------------------------------------------------------
                                                                             Observed
                                                                            torque \2\    Minimum
                Mode number                        Engine speed \1\        (percent of    time in     Weighting
                                                                               max.         mode       factors
                                                                            observed)    (minutes)
----------------------------------------------------------------------------------------------------------------
1.........................................  Rated........................          100          5.0         0.09
2.........................................  Rated........................           75          5.0         0.20
3.........................................  Rated........................           50          5.0         0.29
4.........................................  Rated........................           25          5.0         0.30
5.........................................  Rated........................           10          5.0         0.07
6.........................................  Idle.........................            0          5.0        0.05
----------------------------------------------------------------------------------------------------------------
\1\ Engine speed (non-idle):  2 percent of point. Engine speed (idle): Within manufacturer's
  specifications. Idle speed is specified by the manufacturer.
\2\ Torque (non-idle): Throttle fully open for operation at 100 percent point. Other nonidle points:  2 percent of engine maximum value. Torque (idle): Throttle fully closed. Load less than 5 percent of
  peak torque.


                        Table 4.--4-Mode Test Cycle for Propulsion Marine Diesel Engines
----------------------------------------------------------------------------------------------------------------
                                                   Engine speed   Observed power
                                                   \1\ (percent    \2\ (percent    Minimum time      Weighting
                   Mode number                        of max.         of max.         in mode         factors
                                                     observed)       observed)       (minutes)
----------------------------------------------------------------------------------------------------------------
1...............................................             100             100             5.0            0.20
2...............................................              91              75             5.0            0.50
3...............................................              80              50             5.0            0.15
4...............................................              63              25             5.0           0.15
----------------------------------------------------------------------------------------------------------------
\1\ Engine speed:  2 percent of point.
\2\ Power: Throttle fully open for operation at 100 percent point. Other points:  2 percent of
  engine maximum value.

Subpart F--[Amended]

    88. The newly designated Sec. 89.505 is amended by revising 
paragraph (e) to read as follows:


Sec. 89.505  Maintenance of records; submittal of information.

* * * * *
    (e) All reports, submissions, notifications, and requests for 
approvals made under this subpart are addressed to: Director, Engine 
Programs and Compliance Division (6405-J), U.S. Environmental 
Protection Agency, 401 M Street SW, Washington, DC 20460.
    89. The newly designated Sec. 89.506 is amended by revising 
paragraph (g) to read as follows:


Sec. 89.506  Right of entry and access.

* * * * *
    (g) A manufacturer is responsible for locating its foreign testing 
and manufacturing facilities in jurisdictions where local law does not 
prohibit an EPA enforcement officer(s) or EPA authorized 
representative(s) from conducting the entry and access activities 
specified in this section. EPA will not attempt to make any inspections 
which it has been informed that local foreign law prohibits.
    90. The newly designated Sec. 89.509 is amended by revising 
paragraphs (a) and (b) to read as follows.


Sec. 89.509  Calculation and reporting of test results.

    (a) Initial test results are calculated following the applicable 
test procedure specified in Sec. 89.508(a). The manufacturer rounds 
these results, in accordance with ASTM E29-93a, to the number of 
decimal places contained in the applicable emission standard expressed 
to one additional significant figure. This procedure has been 
incorporated by reference. See Sec. 89.6.
    (b) Final test results are calculated by summing the initial test 
results derived in paragraph (a) of this section for each test engine, 
dividing by the number of tests conducted on the engine, and rounding 
in accordance with the procedure specified in paragraph (a) of this 
section to the same number of decimal places contained in the 
applicable standard expressed to one additional significant figure.
* * * * *
    91. The newly designated Sec. 89.512 is amended by revising 
paragraph (b) to read as follows.


Sec. 89.512  Request for public hearing.

* * * * *
    (b) The manufacturer's request must be filed with the Administrator 
not later than 15 days after the Administrator's notification of the 
decision to suspend or revoke, unless otherwise specified by the 
Administrator. The manufacturer must simultaneously serve two copies of 
this request upon the Director of the Engine Programs and Compliance 
Division and file two copies with the Hearing Clerk of the Agency. 
Failure of the manufacturer to request a hearing within the time 
provided constitutes a waiver of the right to a hearing. Subsequent to 
the expiration of the period for requesting a hearing as of right, the 
Administrator may, at her or his discretion and for good cause shown, 
grant the manufacturer a hearing to contest the suspension or 
revocation.
* * * * *
    92. The newly designated Sec. 89.513 is amended by revising 
paragraph (e)(2) to read as follows.


Sec. 89.513  Administrative procedures for public hearing.

* * * * *
    (e) Filing and service. * * *
    (2) To the maximum extent possible, testimony will be presented in 
written form. Copies of written testimony will be served upon all 
parties as soon as practicable prior to the start of the hearing. A 
certificate of service will be provided on or accompany each document 
or paper filed with the Hearing Clerk. Documents to be served upon the 
Director of the Engine Programs and Compliance Division must be sent by 
registered mail to: Director, Engine Programs and Compliance Division 
(6405-J), U.S. Environmental Protection Agency, 401

[[Page 57021]]

M Street SW., Washington, DC 20460. Service by registered mail is 
complete upon mailing.
* * * * *

Subpart G--[Amended]

    93. The newly designated Sec. 89.602 is amended by revising the 
definition for ``Fifteen working day hold period'' to read as follows:


Sec. 89.602  Definitions.

* * * * *
    Fifteen working day hold period. The period of time between a 
request for final admission and the automatic granting of final 
admission (unless EPA intervenes) for a nonconforming nonroad engine 
conditionally imported pursuant to Sec. 89.605 or Sec. 89.609. Day one 
of the hold period is the first working day (see definition for 
``working day'' in this section) after the Engine Programs and 
Compliance Division of EPA receives a complete and valid application 
for final admission.
* * * * *
    94. The newly designated Sec. 89.603 is amended by revising 
paragraph (d) to read as follows:


Sec. 89.603  General requirements for importation of nonconforming 
nonroad engines.

* * * * *
    (d) The ICI must submit to the Engine Programs and Compliance 
Division of EPA a copy of all approved applications for certification 
used to obtain certificates of conformity for the purpose of importing 
nonconforming nonroad engines pursuant to Sec. 89.605 or Sec. 89.609. 
In addition, the ICI must submit to the Engine Programs and Compliance 
Division a copy of all approved production changes implemented pursuant 
to Sec. 89.605 or subpart B of this part. Documentation submitted 
pursuant to this paragraph (d) must be provided to the Engine Programs 
and Compliance Division within 10 working days of approval of the 
certification application (or production change) by EPA.
    95. The newly designated Sec. 89.604 is amended by revising 
paragraphs (c)(4) and (d) to read as follows:


Sec. 89.604  Conditional admission.

* * * * *
    (c) * * *
    (4) A copy of the written record is to be submitted to the Engine 
Programs and Compliance Division of EPA within five working days of the 
transfer date.
    (d) Notwithstanding any other requirement of this subpart or U.S. 
Customs Service regulations, an ICI may also assume responsibility for 
the modification and testing of a nonconforming nonroad engine which 
was previously imported by another party. The ICI must be a holder of a 
currently valid certificate of conformity for that specific nonroad 
engine or authorized to import it pursuant to Sec. 89.609 at the time 
of assuming such responsibility. The ICI must comply with all the 
requirements of Sec. 89.603, Sec. 89.604, and either Sec. 89.605 or 
Sec. 89.609, as applicable. For the purposes of this subpart, the ICI 
has ``imported'' the nonroad engine as of the date the ICI assumes 
responsibility for the modification and testing of the nonroad engine. 
The ICI must submit written notification to the Engine Programs and 
Compliance Division of EPA within 10 working days of the assumption of 
that responsibility.
    96. The newly designated Sec. 89.605 is amended by revising 
paragraphs (a)(2)(i), (a)(3)(vi), and (c) to read as follows:


Sec. 89.605  Final admission of certified nonroad engines.

    (a) * * *
    (2) * * *
    (i) The ICI attests that the nonroad engine has been modified in 
accordance with the provisions of the ICI's certificate of conformity; 
presents to EPA a statement written by the applicable Original Engine 
Manufacturer that the Original Engine Manufacturer must provide to the 
ICI, and to EPA, information concerning production changes to the class 
of nonroad engines described in the ICI's application for 
certification; delivers to the Engine Programs and Compliance Division 
of EPA notification by the ICI of any production changes already 
implemented by the Original Engine Manufacturer at the time of 
application and their effect on emissions; and obtains from EPA written 
approval to use this demonstration option; or.
* * * * *
    (3) * * *
    (vi) A report concerning these production changes is to be made to 
the Engine Programs and Compliance Division of EPA within ten working 
days of initiation of the production change. The cause of any failure 
of an emission test is to be identified, if known;
* * * * *
    (c) Except as provided in paragraph (b) of this section, EPA 
approval for final admission of a nonroad engine under this section is 
presumed to have been granted if the ICI does not receive oral or 
written notice from EPA to the contrary within 15 working days of the 
date that the Engine Programs and Compliance Division of EPA receives 
the ICI's application under paragraph (a) of this section. EPA notice 
of nonapproval may be made to any employee of the ICI. It is the 
responsibility of the ICI to ensure that the Engine Programs and 
Compliance Division of EPA receives the application and to confirm the 
date of receipt. During this 15 working day hold period, the nonroad 
engine is to be stored at a location where the Administrator has 
reasonable access to the nonroad engine for the Administrator's 
inspection. The storage is to be within 50 miles of the ICI's testing 
facility to allow the Administrator reasonable access for inspection 
and testing. A storage facility not meeting this criterion must be 
approved in writing by the Administrator prior to the submittal of the 
ICI's application under paragraph (a) of this section.
    97. The newly designated Sec. 89.609 is amended by revising 
paragraph (d) to read as follows:


Sec. 89.609  Final admission of modification nonroad engines and test 
nonroad engines.

* * * * *
    (d) Except as provided in paragraph (c) of this section, EPA 
approval for final admission of a nonroad engine under this section is 
presumed to have been granted if the ICI does not receive oral or 
written notice from EPA to the contrary within 15 working days of the 
date that the Engine Programs and Compliance Division of EPA receives 
the ICI's application under paragraph (b) of this section. Such EPA 
notice of nonapproval may be made to any employee of the ICI. It is the 
responsibility of the ICI to ensure that the Engine Programs and 
Compliance Division of EPA receives the application and to confirm the 
date of receipt. During this 15 working day hold period, the nonroad 
engine is stored at a location where the Administrator has reasonable 
access to the nonroad engine for the Administrator's inspection. The 
storage is to be within 50 miles of the ICI's testing facility to allow 
the Administrator reasonable access for inspection and testing. A 
storage facility not meeting this criterion must be approved in writing 
by the Administrator prior to the submittal of the ICI's application 
under paragraph (b) of this section.
* * * * *
    98. The newly designated Sec. 89.610 is amended by revising 
paragraph (b)(1) to read as follows:


Sec. 89.610  Maintenance instructions, warranties, emission labeling.

* * * * *

[[Page 57022]]

    (b) * * * (1) ICIs must submit to the Engine Programs and 
Compliance Division of EPA sample copies (including revisions) of any 
warranty documents required by this section prior to importing nonroad 
engines under this subpart.
* * * * *
    99. The newly designated Sec. 89.611 is amended by revising 
paragraph (g) to read as follows:


Sec. 89.611  Exemptions and exclusions.

* * * * *
    (g) An application for exemption and exclusion provided for in 
paragraphs (b), (c), and (e) of this section is to be mailed to: U.S. 
Environmental Protection Agency, Office of Mobile Sources, Engine 
Programs and Compliance Division (6405-J), 401 M Street, SW, 
Washington, DC 20460, Attention: Imports.

Subpart J--[Amended]

    100. Section 89.903 is amended by revising paragraph (b) to read as 
follows:


Sec. 89.903  Application of section 216(10) of the Act.

* * * * *
    (b) EPA will maintain a list of nonroad engines that have been 
determined to be excluded because they are used solely for competition. 
This list will be available to the public and may be obtained by 
writing to the following address: Chief, Selective Enforcement Auditing 
Section, Engine Programs and Compliance Division (6405-J), 
Environmental Protection Agency, 401 M Street SW, Washington, DC 20460.
* * * * *
    101. Section 89.905 is amended by revising paragraph (f) to read as 
follows:


Sec. 89.905  Testing exemption.

* * * * *
    (f) A manufacturer of new nonroad engines may request a testing 
exemption to cover nonroad engines intended for use in test programs 
planned or anticipated over the course of a subsequent one-year period. 
Unless otherwise required by the Director, Engine Programs and 
Compliance Division, a manufacturer requesting such an exemption need 
only furnish the information required by paragraphs (a)(1) and (d)(2) 
of this section along with a description of the record-keeping and 
control procedures that will be employed to assure that the engines are 
used for purposes consistent with paragraph (a) of this section.
    102. Section 89.906 is amended by revising paragraphs (a)(3) 
introductory text, (a)(3)(iii)(D), and (b) to read as follows:


Sec. 89.906  Manufacturer-owned exemption and precertification 
exemption.

    (a) * * *
    (3) Unless the requirement is waived or an alternate procedure is 
approved by the Director, Engine Programs and Compliance Division, the 
manufacturer must permanently affix a label to each nonroad engine on 
exempt status. This label should:
* * * * *
    (iii) * * *
    (D) The statement ``This nonroad engine is exempt from the 
prohibitions of 40 CFR 89.1003.''
* * * * *
    (b) Any independent commercial importer that desires a 
precertification exemption pursuant to Sec. 89.611(b)(3) and is in the 
business of importing, modifying, or testing uncertified nonroad 
engines for resale under the provisions of subpart G of this part, must 
apply to the Director, Engine Programs and Compliance Division. The 
Director may require such independent commercial importer to submit 
information regarding the general nature of the fleet activities, the 
number of nonroad engines involved, and a demonstration that adequate 
record-keeping procedures for control purposes will be employed.
    103. Section 89.911 is revised to read as follows:


Sec. 89.911  Submission of exemption requests.

    Requests for exemption or further information concerning exemptions 
and/or the exemption request review procedure should be addressed to: 
Chief, Selective Enforcement Auditing Section, Engine Programs and 
Compliance Division (6405-J), Environmental Protection Agency, 401 M 
Street SW, Washington, DC 20460.
    104. Section 89.1003 is amended by revising paragraphs (a)(3), 
(a)(5), (a)(6), (b)(4), and (b)(7) to read as follows:


Sec. 89.1003  Prohibited acts.

    (a) * * *
    (3)(i) For a person to remove or render inoperative a device or 
element of design installed on or in a nonroad engine, vehicle or 
equipment in compliance with regulations under this part prior to its 
sale and delivery to the ultimate purchaser, or for a person knowingly 
to remove or render inoperative such a device or element of design 
after the sale and delivery to the ultimate purchaser; or
    (ii) For a person to manufacture, sell or offer to sell, or 
install, a part or component intended for use with, or as part of, a 
nonroad engine, vehicle or equipment, where a principal effect of the 
part or component is to bypass, defeat, or render inoperative a device 
or element of design installed on or in a nonroad engine in compliance 
with regulations issued under this part, and where the person knows or 
should know that the part or component is being offered for sale or 
installed for this use or put to such use; or
    (iii) for a person to deviate from the provisions of Sec. 89.130 
when rebuilding an engine (or rebuilding a portion of an engine or 
engine system).
* * * * *
    (5) For a person to circumvent or attempt to circumvent the 
residence time requirements of paragraph (2)(iii) of the nonroad engine 
definition in Sec. 89.2.
    (6) For a manufacturer of nonroad vehicles or equipment to 
distribute in commerce, sell, offer for sale, or introduce into 
commerce a nonroad vehicle or piece of equipment which contains an 
engine not covered by a certificate of conformity, except as otherwise 
allowed by this part.
    (b) * * *
    (4) Certified nonroad engines shall be used in all vehicles and 
equipment manufactured on or after the applicable model years in 
Sec. 89.112 that are self-propelled, portable, transportable, or are 
intended to be propelled while performing their function, unless the 
manufacturer of the vehicle or equipment can prove that the vehicle or 
equipment will be used in a manner consistent with paragraph (2) of the 
definition of nonroad engine in Sec. 89.2. After the date on which a 
new standard takes effect, nonroad vehicle and equipment manufacturers 
may continue to use nonroad engines built prior to this date that are 
not certified to the standard until inventories of those engines are 
depleted; however, stockpiling of such nonroad engines will be 
considered a violation of this section.
* * * * *
    (7) A new nonroad engine intended solely to replace a nonroad 
engine in a piece of nonroad equipment, where the engine requiring 
replacement is not certified or is certified to emission standards that 
are less stringent than those in effect when the replacement engine is 
built, shall not be subject to the prohibitions of paragraph (a)(1) of 
this section or to the requirements of Sec. 89.105 and paragraph (b)(4) 
of this section, provided that:
    (i) The engine manufacturer has ascertained that no engine produced 
by itself or by the manufacturer of the engine that is being replaced, 
if different, and certified to the

[[Page 57023]]

requirements of this subpart, is available with the appropriate 
physical or performance characteristics to repower the equipment; and
    (ii) The engine manufacturer or its agent takes ownership and 
possession of the engine being replaced in partial exchange for the 
replacement engine; and
    (iii) The replacement engine is clearly labeled with the following 
language, or similar alternate language approved by the Administrator: 
THIS ENGINE DOES NOT COMPLY WITH FEDERAL NONROAD OR ON-HIGHWAY EMISSION 
REQUIREMENTS. SALE OR INSTALLATION OF THIS ENGINE FOR ANY PURPOSE OTHER 
THAN AS A REPLACEMENT ENGINE FOR AN ENGINE MANUFACTURED PRIOR TO 
JANUARY 1 [INSERT APPROPRIATE YEAR] IS A VIOLATION OF FEDERAL LAW 
SUBJECT TO CIVIL PENALTY; and
    (iv) In cases where an engine is to be imported for replacement 
purposes under the provisions of this paragraph (b)(7), the term 
``engine manufacturer'' shall not apply to an individual or other 
entity that does not possess a current Certificate of Conformity issued 
by EPA under this part; and
    (v) Where the replacement engine is intended to replace an engine 
that is certified to emission standards that are less stringent than 
those in effect when the replacement engine is built, the replacement 
engine shall be identical in all material respects to a certified 
configuration of the same or later model year as the engine being 
replaced; and
    (vi) Engines sold pursuant to the provisions of this paragraph 
(b)(7) will neither generate nor use emission credits and will not be 
part of any accounting under the averaging, banking and trading 
program.
    105. Section 89.1007 is amended by revising paragraph (c) to read 
as follows:


Sec. 89.1007  Warranty provisions.

* * * * *
    (c) For the purposes of this section, the owner of any nonroad 
engine warranted under this part is responsible for the proper 
maintenance of the engine. Proper maintenance includes replacement and 
service, at the owner's expense at a service establishment or facility 
of the owner's choosing, of all parts, items, or devices related to 
emission control (but not designed for emission control) under the 
terms of the last sentence of section 207(a)(3) of the Act, unless such 
part, item, or device is covered by any warranty not mandated by this 
Act.

[FR Doc. 98-24836 Filed 10-22-98; 8:45 am]
BILLING CODE 6560-50-P