[Federal Register Volume 73, Number 196 (Wednesday, October 8, 2008)]
[Rules and Regulations]
[Pages 59034-59380]
From the Federal Register Online via the Government Printing Office [www.gpo.gov]
[FR Doc No: E8-21093]



[[Page 59033]]

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Part II





Environmental Protection Agency





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40 CFR Parts 9, 60, 80 et al.



Control of Emissions From Nonroad Spark-Ignition Engines and Equipment; 
Final Rule

Federal Register / Vol. 73, No. 196 / Wednesday, October 8, 2008 / 
Rules and Regulations

[[Page 59034]]


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ENVIRONMENTAL PROTECTION AGENCY

40 CFR Parts 9, 60, 80, 85, 86, 89, 90, 91, 92, 94, 1027, 1033, 
1039, 1042, 1045, 1048, 1051, 1054, 1060, 1065, 1068, and 1074

[EPA-HQ-OAR-2004-0008; FRL-8712-8]
RIN 2060-AM34


Control of Emissions From Nonroad Spark-Ignition Engines and 
Equipment

AGENCY: Environmental Protection Agency (EPA).

ACTION: Final rule.

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SUMMARY: We are setting emission standards for new nonroad spark-
ignition engines that will substantially reduce emissions from these 
engines. The exhaust emission standards apply starting in 2010 for new 
marine spark-ignition engines, including first-time EPA standards for 
sterndrive and inboard engines. The exhaust emission standards apply 
starting in 2011 and 2012 for different sizes of new land-based, spark-
ignition engines at or below 19 kilowatts (kW). These small engines are 
used primarily in lawn and garden applications. We are also adopting 
evaporative emission standards for vessels and equipment using any of 
these engines. In addition, we are making other minor amendments to our 
regulations.
    We estimate that by 2030, this rule will result in significantly 
reduced pollutant emissions from regulated engine and equipment 
sources, including estimated annual nationwide reductions of 604,000 
tons of volatile organic hydrocarbon emissions, 132,200 tons of 
NOX emissions, and 5,500 tons of directly-emitted 
particulate matter (PM2.5) emissions. These reductions 
correspond to significant reductions in the formation of ground-level 
ozone. We also expect to see annual reductions of 1,461,000 tons of 
carbon monoxide emissions, with the greatest reductions in areas where 
there have been problems with individual exposures. The requirements in 
this rule will substantially benefit public health and welfare and the 
environment. We estimate that by 2030, on an annual basis, these 
emission reductions will prevent 230 PM-related premature deaths, 
between 77 and 350 ozone-related premature deaths, approximately 1,700 
hospitalizations and emergency room visits, 23,000 work days lost, 
180,000 lost school days, 590,000 acute respiratory symptoms, and other 
quantifiable benefits every year. The total annual benefits of this 
rule in 2030 are estimated to be between $1.8 billion and $4.4 billion, 
assuming a 3% discount rate. The total annual benefits of this rule in 
2030 are estimated to be between $1.6 billion and $4.3 billion, 
assuming a 7% discount rate. Estimated costs in 2030 are many times 
less at approximately $190 million.

DATES: This rule is effective on December 8, 2008. The incorporation by 
reference of certain publications listed in this regulation is approved 
by the Director of the Federal Register as of December 8, 2008.

ADDRESSES:
    Docket: All documents in the docket are listed in the 
www.regulations.gov index. Although listed in the index, some 
information is not publicly available, such as CBI or other information 
whose disclosure is restricted by statute. Certain other material, such 
as copyrighted material, will be publicly available only in hard copy. 
Publicly available docket materials are available either electronically 
in www.regulations.gov or in hard copy at the ``Control of Emissions 
from Nonroad Spark-Ignition Engines, Vessels and Equipment'' Docket. 
The docket is located in the EPA Headquarters Library, Room Number 3334 
in the EPA West Building, located at 1301 Constitution Ave., NW., 
Washington, DC. The EPA/DC Public Reading Room hours of operation will 
be 8:30 a.m. to 4:30 p.m. Eastern Standard Time (EST), Monday through 
Friday, excluding holidays. The telephone number for the Public Reading 
Room is (202) 566-1744 and the telephone number for the Docket is (202) 
566-1742.

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

SUPPLEMENTARY INFORMATION:

Does This Action Apply to Me?

    This action will affect you if you produce or import new spark-
ignition engines intended for use in marine vessels or in new vessels 
using such engines. This action will also affect you if you produce or 
import new spark-ignition engines below 19 kilowatts used in nonroad 
equipment, including agricultural and construction equipment, or 
produce or import such nonroad vehicles.
    The following table gives some examples of entities that may have 
to follow the regulations; however, since these are only examples, you 
should carefully examine the regulations. Note that we are adopting 
minor changes in the regulations that apply to a wide range of products 
that may not be reflected in the following table (see Section VIII). If 
you have questions, call the person listed in the FOR FURTHER 
INFORMATION CONTACT section above:

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

Table of Contents

I. Introduction
    A. Overview
    B. Why Is EPA Taking This Action?
    C. What Regulations Currently Apply to Nonroad Engines or 
Vehicles?
    D. Putting This Rule into Perspective
    E. What Requirements Are We Adopting?
    F. How Is This Document Organized?
    G. Judicial Review
II. Public Health and Welfare Effects
    A. Public Health Impacts
    B. Air Toxics
    C. Carbon Monoxide

[[Page 59035]]

III. Sterndrive and Inboard Marine Engines
    A. Overview
    B. Engines Covered by This Rule
    C. Exhaust Emission Standards
    D. Test Procedures for Certification
    E. Additional Certification and Compliance Provisions
    F. Small-Business Provisions
    G. Technological Feasibility
IV. Outboard and Personal Watercraft Engines
    A. Overview
    B. Engines Covered by This Rule
    C. Final Exhaust Emission Standards
    D. Changes to OB/PWC Test Procedures
    E. Additional Certification and Compliance Provisions
    F. Other Adjustments to Regulatory Provisions
    G. Small-Business Provisions
    H. Technological Feasibility
V. Small SI Engines
    A. Overview
    B. Engines Covered by This Rule
    C. Final Requirements
    D. Testing Provisions
    E. Certification and Compliance Provisions for Small SI Engines 
and Equipment
    F. Small-Business Provisions
    G. Technological Feasibility
VI. Evaporative Emissions
    A. Overview
    B. Fuel Systems Covered by This Rule
    C. Final Evaporative Emission Standards
    D. Emission Credit Programs
    E. Testing Requirements
    F. Certification and Compliance Provisions
    G. Small-Business Provisions
    H. Technological Feasibility
VII. Energy, Noise, and Safety
    A. Safety
    B. Noise
    C. Energy
VIII. Requirements Affecting Other Engine and Vehicle Categories
    A. State Preemption
    B. Certification Fees
    C. Amendments to General Compliance Provisions in 40 CFR Part 
1068
    D. Amendments Related to Large SI Engines (40 CFR Part 1048)
    E. Amendments Related to Recreational Vehicles (40 CFR Part 
1051)
    F. Amendments Related to Heavy-Duty Highway Engines (40 CFR Part 
85)
    G. Amendments Related to Stationary Spark-Ignition Engines (40 
CFR Part 60)
    H. Amendments Related to Locomotive, Marine, and Other Nonroad 
Compression-Ignition Engines (40 CFR Parts 89, 92, 94, 1033, 1039, 
and 1042)
IX. Projected Impacts
    A. Emissions from Small Nonroad and Marine Spark-Ignition 
Engines
    B. Estimated Costs
    C. Cost per Ton
    D. Air Quality Impact
    E. Benefits
    F. Economic Impact Analysis
X. Public Participation
XI. Statutory and Executive Order Reviews
    A. Executive Order 12866: Regulatory Planning and Review
    B. Paperwork Reduction Act
    C. Regulatory Flexibility Act
    D. Unfunded Mandates Reform Act
    E. Executive Order 13132: Federalism
    F. Executive Order 13175: Consultation and Coordination With 
Indian Tribal Governments
    G. Executive Order 13045: Protection of Children from 
Environmental Health and Safety Risks
    H. Executive Order 12898: Federal Actions to Address 
Environmental Justice in Minority Populations and Low-Income 
Populations.
    I. Executive Order 13211: Actions that Significantly Affect 
Energy Supply, Distribution, or Use
    J. National Technology Transfer Advancement Act
    K. Congressional Review Act

I. Introduction

A. Overview

    This rule will reduce the mobile-source contribution to air 
pollution in the United States. In particular, we are adopting 
standards that will require manufacturers to substantially reduce 
emissions from marine spark-ignition engines and from nonroad spark-
ignition engines below 19 kW that are generally used in lawn and garden 
applications.\1\ We refer to these as Marine SI engines and Small SI 
engines, respectively. The new emission standards are a continuation of 
the process of establishing standards for nonroad engines and vehicles 
as required by Clean Air Act section 213. All the nonroad engines 
subject to this rule are already regulated under existing emission 
standards, except sterndrive and inboard marine engines, which are 
subject to EPA emission standards for the first time.
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    \1\ Otto-cycle engines (referred to here as spark-ignition or SI 
engines) typically operate on gasoline, liquefied petroleum gas, or 
natural gas. Diesel-cycle engines, referred to simply as ``diesel 
engines'' in this document, may also be referred to as compression-
ignition or CI engines. These engines typically operate on diesel 
fuel, but other fuels may also be used.
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    Nationwide, emissions from Marine SI engines and Small SI engines 
contribute significantly to mobile source air pollution. By 2030 
without this final rule these engines would account for about 33 
percent (1,287,000 tons) of mobile source volatile organic hydrocarbon 
compounds (VOC) emissions, 31 percent (15,605,000 tons) of mobile 
source carbon monoxide (CO) emissions, 6 percent (311,300 tons) of 
mobile source oxides of nitrogen (NOX) emissions, and 12 
percent (44,000 tons) of mobile source particulate matter 
(PM2.5) emissions. The new standards will reduce exposure to 
these emissions and help avoid a range of adverse health effects 
associated with ambient ozone, CO, and PM levels. In addition, the new 
standards will help reduce acute exposure to CO, air toxics, and PM for 
persons who operate or who work with or are otherwise active in close 
proximity to these engines. They will also help address environmental 
problems associated with Marine SI engines and Small SI engines, such 
as injury to vegetation and ecosystems and visibility impairment. These 
effects are described in more detail later in this document.

B. Why Is EPA Taking This Action?

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

[[Page 59036]]

EPA's overall nonroad emission control program.
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    \2\ Public Law 108-199, Div G, Title IV, Sec.  428(b), 118 Stat. 
418 (January 23, 2004).
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    We are adopting this rule under the procedural authority of section 
307(d) of the Clean Air Act.

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

    EPA has been setting emission standards for nonroad engines and/or 
vehicles since Congress amended the Clean Air Act in 1990 and included 
section 213. These amendments have led to a series of rulemakings to 
reduce the air pollution from this widely varying set of products. In 
these rulemakings, we divided the broad group of nonroad engines and 
vehicles into several different categories for setting application-
specific requirements. Each category involves many unique 
characteristics related to the participating manufacturers, technology, 
operating characteristics, sales volumes, and market dynamics. 
Requirements for each category therefore take on many unique features 
regarding the stringency of standards, the underlying expectations 
regarding emission control technologies, the nature and extent of 
testing, and the myriad details that comprise the implementation of a 
compliance program.
    At the same time, the requirements and other regulatory provisions 
for each engine category share many characteristics. Each rulemaking 
under section 213 sets technology-based standards consistent with the 
Clean Air Act and requires annual certification based on measured 
emission levels from test engines or vehicles. As a result, the broader 
context of EPA's nonroad emission control programs demonstrates both 
strong similarities between this rulemaking and the requirements 
adopted for other types of engines or vehicles and distinct differences 
as we take into account the unique nature of these engines and the 
companies that produce them.
    We completed the Nonroad Engine and Vehicle Emission Study to 
satisfy Clean Air Act section 213(a)(1) in November 1991.\3\ On June 
17, 1994, we made an affirmative determination under section 213(a)(2) 
that nonroad emissions are significant contributors to ozone or CO in 
more than one nonattainment area (56 FR 31306). Since then we have 
undertaken several rulemakings to set emission standards for the 
various categories of nonroad engines. Table I-1 highlights the 
different engine or vehicle categories we have established and the 
corresponding cites for emission standards and other regulatory 
requirements. Table I-2 summarizes the series of EPA rulemakings that 
have set new or revised emission standards for any of these nonroad 
engines or vehicles. These actions are described in the following 
sections, with additional discussion to explain why we are not adopting 
more stringent standards for certain types of nonroad spark-ignition 
engines below 50 horsepower.
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    \3\ This study is available on EPA's Web site at http://
www.epa.gov/otaq/equip-ld.

     Table I-1: Nonroad Engine Categories for EPA Emission Standards
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                                     CFR Cite for
                                     regulations        Cross  reference
       Engine categories        establishing emission    to table  I-2
                                      standards
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1. Locomotives engines........  40 CFR Part 92 and     d, l.
                                 1033.
2. Marine diesel engines......  40 CFR Part 94 and     g, i, j, l.
                                 1042.
3. Other nonroad diesel         40 CFR Parts 89 and    a, e, k.
 engines.                        1039.
4. Marine SI engines \a\......  40 CFR Part 91.......  c.
5. Recreational vehicles......  40 CFR Part 1051.....  i.
6. Small SI engines \b\.......  40 CFR Part 90.......  b, f, h.
7. Large SI engines \b\.......  40 CFR Part 1048.....  i.
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\a\ The term ``Marine SI,'' used throughout this document, refers to all
  spark-ignition engines used to propel marine vessels. This includes
  outboard engines, personal watercraft engines, and sterndrive/inboard
  engines. See Section III for additional information.
\b\ The terms ``Small SI'' and ``Large SI'' are used throughout this
  document. All nonroad spark-ignition engines not covered by our
  programs for Marine SI engines or recreational vehicles are either
  Small SI engines or Large SI engines. Small SI engines include those
  engines with maximum power at or below 19 kW, and Large SI engines
  include engines with maximum power above 19 kW.


                                Table I-2: EPA's Rulemakings for Nonroad Engines
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  Nonroad engines (categories and sub-categories)       Final rulemaking                     Date
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a. Land-based diesel engines >= 37 kW--Tier 1.....  56 FR 31306.............  June 17, 1994.
b. Small SI engines--Phase 1......................  60 FR 34581.............  July 3, 1995.
c. Marine SI engines--outboard and personal         61 FR 52088.............  October 4, 1996.
 watercraft.
d. Locomotives....................................  63 FR 18978.............  April 16, 1998.
e. Land-based diesel engines--Tier 1 and Tier 2     63 FR 56968.............  October 23, 1998.
 for engines < 37 kW--Tier 2 and Tier 3 for
 engines >= 37 kW.
f. Small SI engines (Nonhandheld)--Phase 2........  64 FR 15208.............  March 30, 1999.
g. Commercial marine diesel < 30 liters per         64 FR 73300.............  December 29, 1999.
 cylinder.
h. Small SI engines (Handheld)--Phase 2...........  65 FR 24268.............  April 25, 2000.
i. Recreational vehicles, Industrial spark-         67 FR 68242.............  November 8, 2002.
 ignition engines > 19 kW, and Recreational marine
 diesel.
j. Marine diesel engines >= 2.5 liters/cylinder...  68 FR 9746..............  February 28, 2003.
k. Land-based diesel engines--Tier 4..............  69 FR 38958.............  June 29, 2004.
l. Locomotives and commercial marine diesel < 30    73 FR 37096.............  June 30, 2008.
 liters per cylinder.
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Small SI Engines
    We have previously adopted emission standards for nonroad spark-
ignition engines at or below 19 kW in two phases. The first phase of 
these standards introduced certification and an initial level of 
emission standards for both handheld and nonhandheld engines. On March 
30, 1999 we adopted a second phase of standards for nonhandheld 
engines, including both Class I and Class II engines (64 FR 15208).\4\ 
The Phase 2 regulations included a phase-in period that has recently 
been completed. These standards involved emission reductions based on 
improving engine calibrations to reduce exhaust emissions and added a 
requirement that emission standards must be met over the engines' 
entire useful life as defined in the regulations. We believe catalyst 
technology has now developed to the point that it can be applied to all 
nonhandheld Small SI engines to reduce exhaust emissions. Various 
emission control technologies are similarly available to address the 
different types of fuel evaporative emissions we have identified.
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    \4\ Handheld engines generally include those engines for which 
the operator holds or supports the equipment during operation; 
nonhandheld engines are Small SI engines that are not handheld 
engines (see Sec.  1054.801). Class I refers to nonhandheld engines 
with displacement below 225 cc; Class II refers to larger 
nonhandheld engines.
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    For handheld engines, we adopted Phase 2 exhaust emission standards 
in April 25, 2000 (65 FR 24268). These standards were based on the 
application of catalyst technology, with the expectation that 
manufacturers would have to make considerable investments to modify 
their engine designs and production processes. A technology review we 
completed in 2003 indicated that manufacturers were making progress 
toward compliance, but that additional implementation flexibility was 
needed if manufacturers were to fully comply with the regulations by 
2010. This finding and a change in the rule were published in the 
Federal Register on January 12, 2004 (69 FR 1824). At this point, we 
have no information to suggest that manufacturers can uniformly apply 
new technology or make design improvements to reduce exhaust emissions 
below the Phase 2 levels. We therefore believe the Phase 2 standards 
continue to represent the greatest degree of emission reduction 
achievable for these engines.\5\ However, we believe it is appropriate 
to apply evaporative emission standards to handheld engines similar to 
the standards we are adopting for the nonhandheld engines. 
Manufacturers can control evaporative emissions from handheld engines 
in a way that has little or no impact on exhaust emissions.
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    \5\ Note that we refer to the handheld exhaust emission 
standards in 40 CFR part 1054 as Phase 3 standards. This is intended 
to maintain consistent terminology with the comparable standards in 
California rather than indicating an increase in stringency.
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Marine SI Engines
    On October 4, 1996 we adopted emission standards for spark-ignition 
outboard and personal watercraft engines that have recently been fully 
phased in (61 FR 52088). We decided not to finalize emission standards 
for sterndrive or inboard marine engines at that time. Uncontrolled 
emission levels from sterndrive and inboard marine engines were already 
significantly lower than the outboard and personal watercraft engines. 
We did, however, leave open the possibility of revisiting the need for 
emission standards for sterndrive and inboard engines in the future. 
See Section III for further discussion of the scope and background of 
past and current rulemakings for these engines.
    We believe existing technology can be applied to all Marine SI 
engines to reduce emissions of harmful pollutants, including both 
exhaust and evaporative emissions. Manufacturers of outboard and 
personal watercraft engines can continue the trend of producing four-
stroke engines and advanced-technology two-stroke engines to further 
reduce emissions. For sterndrive/inboard engines, manufacturers can add 
technologies, such as fuel injection and aftertreatment, that can 
safely and substantially improve the engines' emission control 
capabilities.
Large SI Engines
    We adopted emission standards for Large SI engines on November 8, 
2002 (67 FR 68242). This includes Tier 1 standards for 2004 through 
2006 model years and Tier 2 standards starting with 2007 model year 
engines. Manufacturers are today facing a considerable challenge to 
comply with the Tier 2 standards, which are already substantially more 
stringent than any of the standards for the other engine categories 
subject to this final rule. The Tier 2 standards also include 
evaporative emission standards, new transient test procedures, 
additional exhaust emission standards to address off-cycle emissions, 
and diagnostic requirements. Stringent standards for this category of 
engines, and in particular engines between 25 and 50 horsepower (19 to 
37 kW), have been completed in the recent past, and are currently being 
implemented. We do not have information at this time on possible 
advances in technology beyond Tier 2. We therefore believe the evidence 
provided in the recently promulgated rulemaking continues to represent 
the best available information regarding the appropriate level of 
standards for these engines under section 213 at this time. The 
California Air Resources Board has adopted an additional level of 
emission control for Large SI engines starting with the 2010 model 
year. However, as described in Section I.D.1, their new standards do 
not increase overall stringency beyond that reflected in the federal 
standards. As a result, we believe it is inappropriate to adopt more 
stringent emission standards for these engines in this rulemaking.
    Note that the Large SI standards apply to nonroad spark-ignition 
engines above 19 kW. However, we adopted a special provision for engine 
families where production engines have total displacement at or below 
1000 cc and maximum power at or below 30 kW, allowing these engine 
families to instead certify to the applicable standards for Small SI 
engines. This rule preserves this approach.
 Recreational Vehicles
    We adopted exhaust and evaporative emission standards for 
recreational vehicles in our November 8, 2002 final rule (67 FR 68242). 
These standards apply to all-terrain vehicles, off-highway motorcycles, 
and snowmobiles.\6\ These exhaust emission standards were fully phased 
in starting with the 2007 model year. The evaporative emission 
standards apply starting with the 2008 model year.
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    \6\ Note that we treat certain high-speed off-road utility 
vehicles as all-terrain vehicles (see 40 CFR part 1051).
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    Recreational vehicles will soon be subject to permeation 
requirements that are very similar to the requirements included in this 
rulemaking. We have also learned more about controlling running losses 
and diffusion emissions that may eventually lead us to propose 
comparable standards for recreational vehicles. Considering these new 
requirements for recreational vehicles in a later rulemaking would give 
us additional time to collect information to better understand the 
feasibility, costs, and benefits of applying these requirements to 
recreational vehicles.
    The following sections describe the state of technology and 
regulatory requirements for the different types of recreational 
vehicles.

[[Page 59038]]

All-Terrain Vehicles
    EPA's initial round of exhaust emission standards was fully 
implemented starting with the 2007 model year. The regulations for all-
terrain vehicles (ATV) specify testing based on a chassis-based 
transient procedure. However, we permit manufacturers on an interim 
basis to optionally use a steady-state engine-based procedure. We 
recently completed a change in the regulations to extend this allowance 
from 2009 through 2014, after which manufacturers must certify all 
their ATVs based on the chassis-based transient test procedure that 
applies for off-highway motorcycles (72 FR 20730, April 26, 2007). This 
change does not represent an increase in stringency, but manufacturers 
will be taking time to make the transition to the different test 
procedure. We expect that there will be a good potential to apply 
further emission controls on these engines. However, we do not have 
information at this time on possible advances in technology beyond what 
is required for the current standards.
Off-Highway Motorcycles
    For off-highway motorcycles, manufacturers are in many cases making 
a substantial transition to move away from two-stroke engines in favor 
of four-stroke engines. This transition is now underway. While it may 
eventually be appropriate to apply aftertreatment or other additional 
emission control technologies to off-highway motorcycles, we need more 
time for this transition to be completed and to assess the success of 
aftertreatment technologies such as catalysts on similar applications 
such as highway motorcycles. As EPA and manufacturers learn more in 
implementing emission standards, we expect to be able to better judge 
the potential for broadly applying new technology to achieve further 
emission reductions from off-highway motorcycles.
Snowmobiles
    In our November 8, 2002 final rule we set three phases of exhaust 
emission standards for snowmobiles (67 FR 68242). Environmental and 
industry groups challenged the third phase of these standards. The 
court decision upheld much of EPA's reasoning for the standards, but 
vacated the NOX standard and remanded the CO and HC 
standards to clarify the analysis and evidence upon which the standards 
are based. See Bluewater Network, et al. v. EPA, 370 F 3d 1 (D.C. Cir. 
2004). A large majority of snowmobile engines are rated above 50 hp and 
there is still a fundamental need for time to pass to allow us to 
assess the success of four-stroke engine technology in the 
marketplace.\7\ This is an important aspect of the assessment we need 
to conduct with regard to the Phase 3 emission standards. We believe it 
is best to address this in a separate rulemaking and we have initiated 
that effort to evaluate the appropriate long-term emission standards 
for snowmobiles.
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    \7\ Only about 3 percent of snowmobiles are rated below 50 
horsepower.
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Nonroad Diesel Engines
    The 2004 Consolidated Appropriations Act providing the specific 
statutory direction for this rulemaking focuses on nonroad spark-
ignition engines. Nonroad diesel engines are therefore not included 
within the scope of that Congressional mandate. However, we have gone 
through several rulemakings to set standards for these engines under 
the broader authority of Clean Air Act section 213. In particular, we 
have divided nonroad diesel engines into three groups for setting 
emission standards. We adopted a series of standards for locomotives on 
April 16, 1998, including requirements to certify engines to emission 
standards when they are rebuilt (63 FR 18978). We also adopted emission 
standards for marine diesel engines over several different rulemakings, 
as described in Table I-2. These included separate actions for engines 
below 37 kW, engines installed in oceangoing vessels, engines installed 
in commercial vessels involved in inland and coastal waterways, and 
engines installed in recreational vessels. We recently adopted a new 
round of more stringent emission standards for both locomotives and 
marine diesel engines that will require widespread use of 
aftertreatment technology (73 FR 37096, June 30, 2008).
    Finally, all other nonroad diesel engines are grouped together for 
EPA's emission standards. We have adopted multiple tiers of 
increasingly stringent standards in three separate rulemakings, as 
described in Table I-2. We most recently adopted Tier 4 standards based 
on the use of ultra low-sulfur diesel fuel and the application of 
exhaust aftertreatment technology (69 FR 38958, June 29, 2004).

D. Putting This Rule into Perspective

    Most manufacturers that will be subject to this rulemaking are also 
affected by regulatory developments in California and in other 
countries. Each of these is described in more detail below.
State Initiatives
    Clean Air Act section 209 prohibits California and other states 
from setting emission standards for new motor vehicles and new motor 
vehicle engines, but authorizes EPA to waive this prohibition for 
California, in which case other states may adopt California's 
standards. Similar preemption and waiver provisions apply for emission 
standards for nonroad engines and vehicles, whether new or in-use. 
However for new locomotives, new engines used in locomotives, and new 
engines used in farm or construction equipment with maximum power below 
130 kW, California and other states are preempted and there is no 
provision for a waiver of preemption. In addition, in section 428 of 
the 2004 Consolidated Appropriations Act, Congress further precluded 
other states from adopting new California standards for nonroad spark-
ignition engines below 50 horsepower. In addition, the amendment 
required that we specifically address the safety implications of any 
California standards for these engines before approving a waiver of 
federal preemption. We are codifying these preemption changes in this 
rule.
    The California Air Resources Board (California ARB) has adopted 
requirements for five groups of nonroad engines: (1) Diesel- and Otto-
cycle small off-road engines rated under 19 kW; (2) spark-ignition 
engines used for marine propulsion; (3) land-based nonroad recreational 
engines, including those used in all-terrain vehicles, off-highway 
motorcycles, go-carts, and other similar vehicles; (4) new nonroad 
spark-ignition engines rated over 19 kW not used in recreational 
applications; and (5) new land-based nonroad diesel engines rated over 
130 kW. They have also approved a voluntary registration and control 
program for existing portable equipment.
    In the 1990s California ARB adopted Tier 1 and Tier 2 standards for 
Small SI engines consistent with the federal requirements. In 2003, 
they moved beyond the federal program by adopting exhaust 
HC+NOX emission standards of 10 g/kW-hr for Class I engines 
starting in the 2007 model year and 8 g/kW-hr for Class II engines 
starting in the 2008 model year. In the same rule they adopted 
evaporative emission standards for nonhandheld equipment, requiring 
control of fuel tank permeation, fuel line permeation, diurnal 
emissions, and running losses.

[[Page 59039]]

    California ARB has adopted two tiers of exhaust emission standards 
for outboard and personal watercraft engines beyond EPA's original 
standards. The most recent standards, which apply starting in 2008, 
require HC+NOX emission levels as low as 16 g/kW-hr. For 
sterndrive and inboard engines, California ARB has adopted a 5 g/kW-hr 
HC+NOX emission standard for 2008 and later model year 
engines, with testing underway to confirm the feasibility of standards. 
California ARB's marine programs include no standards for exhaust CO 
emissions or evaporative emissions.
    The California ARB emission standards for recreational vehicles 
have a different form than the comparable EPA standards but are roughly 
equivalent in stringency. The California standards include no standards 
for controlling evaporative emissions. Another important difference 
between the two programs is California ARB's reliance on a provision 
allowing noncompliant vehicles to be used in certain areas that are 
less environmentally sensitive as long as they have a specified red 
sticker for identifying their lack of emission controls to prevent them 
from operating in other areas.
    California ARB in 1998 adopted requirements that apply to new 
nonroad engines rated over 25 hp produced for California, with 
standards phasing in from 2001 through 2004. Texas has adopted these 
initial California ARB emission standards statewide starting in 2004. 
More recently, California ARB adopted exhaust emission standards and 
new evaporative emission standards for these engines, consistent with 
EPA's 2007 model year standards. Their new requirements also included 
an additional level of emission control for Large SI engines starting 
with the 2010 model year. However, their 2010 standards do not increase 
overall stringency beyond that reflected in the federal standards. 
Rather, they aim to achieve reductions in HC+NOX emissions 
by removing the flexibility incorporated into the federal standards 
allowing manufacturers to have higher HC+NOX emissions by 
certifying to a more stringent CO standard.
Actions in Other Countries
    While the new emission standards will apply only to engines sold in 
the United States, we are aware that manufacturers in many cases are 
selling the same products into other countries. To the extent that we 
have the same emission standards as other countries, manufacturers can 
contribute to reducing air emissions without being burdened by the 
costs associated with meeting differing or inconsistent regulatory 
requirements. The following discussion describes our understanding of 
the status of emission standards in countries outside the United 
States.
    Regulations for spark ignition engines in handheld and nonhandheld 
equipment are included in the ``Directive 97/68/EC of the European 
Parliament and of the Council of 16 December 1997 on the approximation 
of the laws of the Member States relating to measures against the 
emission of gaseous and particulate pollutants from internal combustion 
engines to be installed in non-road mobile machinery (OJ L 59, 
27.2.1998, p. 1)'', as amended by ``Directive 2002/88/EC of the 
European Parliament and of the Council of 9 December 2002.'' The Stage 
I emission standards are to be met by all handheld and nonhandheld 
engines by 24 months after entry into force of the Directive (as noted 
in a December 9, 2002 amendment to Directive 97/68/EC). The Stage I 
emission standards are similar to the U.S. EPA's Phase 1 emission 
standards for handheld and nonhandheld engines. The Stage II emission 
standards are implemented over time for the various handheld and 
nonhandheld engine classes from 2005 to 2009 with handheld engines at 
or above 50 cc on August 1, 2008. The Stage II emission standards are 
similar to EPA's Phase 2 emission standards for handheld and 
nonhandheld engines. Six months after these dates Member States must 
require that engines placed on the market meet the requirements of the 
Directive, whether or not they are already installed in machinery.
    The European Commission has adopted emission standards for 
recreational marine engines, including both diesel and gasoline 
engines. These requirements apply to all new engines sold in member 
countries and began in 2006 for four-stroke engines and in 2007 for 
two-stroke engines. Table I-3 presents the European standards for 
diesel and gasoline recreational marine engines. The numerical emission 
standards for NOX are based on the applicable standard from 
MARPOL Annex VI for marine diesel engines (See Table I-3). The European 
standards are roughly equivalent to the nonroad diesel Tier 1 emission 
standards for HC and CO. Emission measurements under the European 
standards rely on the ISO D2 duty cycle for constant-speed engines and 
the ISO E5 duty cycle for other engines.

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

E. What Requirements Are We Adopting?

    EPA's emission control provisions require engine, vessel and 
equipment manufacturers to design and produce their products to meet 
the emission standards we adopt. To ensure that engines and fuel 
systems meet the expected level of emission control, we also require 
compliance with a variety of additional requirements, such as 
certification, labeling engines, and meeting warranty requirements. The 
following sections provide a brief summary of the new requirements in 
this rulemaking. See the later sections for a full discussion of the 
rule.
Marine SI Engines and Vessels
    We are adopting a more stringent level of emission standards for 
outboard and personal watercraft engines starting with the 2010 model 
year. The HC+NOX emission standards are the same as those 
adopted by California ARB for 2008 and later model year engines. The CO 
emission standard is 300 g/kW-hr for engines with maximum engine power 
above 40 kW; the standard increases as a function of maximum engine 
power for smaller engines. We expect manufacturers to meet these 
standards with improved fueling systems and other in-cylinder controls. 
We are not pursuing catalyst-based emission standards for outboard and 
personal watercraft engines. As discussed below, the application of

[[Page 59040]]

catalyst-based standards to the marine environment creates special 
technology challenges that must be addressed. Unlike the sterndrive/
inboard engines discussed in the next paragraph, outboard and personal 
watercraft engines are not built from automotive engine blocks and it 
is not straightforward to apply the fundamental engine modifications, 
fuel system upgrades, and other engine control modifications needed to 
get acceptable catalyst performance. This rule is an appropriate next 
step in the evolution of technology-based standards for outboard and 
personal watercraft engines as they are likely to lead to the 
elimination of carbureted two-stroke engines in favor of four-stroke 
engines or direct-injection two-stroke engines and to encourage the 
fuel system upgrades and related engine modifications needed to achieve 
the required reductions and to potentially set the stage for more 
stringent controls in the future.
    We are adopting new exhaust emission standards for sterndrive and 
inboard marine engines. The standards are 5.0 g/kW-hr for 
HC+NOX and 75.0 g/kW-hr for CO starting with the 2010 model 
year. We expect manufacturers to meet these standards with three-way 
catalysts and closed-loop fuel injection. To ensure proper functioning 
of these emission control systems in use, we will require engines to 
have a diagnostic system for detecting a failure in the emission 
control system. For sterndrive and inboard marine engines above 373 kW 
with high-performance characteristics (generally referred to as ``SD/I 
high-performance engines''), we are adopting less stringent emission 
standards that reflect their limited ability to control emissions with 
catalysts. The HC+NOX standard is 16 g/kW-hr in for engines 
at or below 485 kW and 22 g/kW-hr for bigger engines. The CO standard 
for all SD/I high-performance engines is 350 g/kW-hr. Manufacturers of 
these engines must meet emission standards without generating or using 
emission credits. We also include a variety of other special provisions 
for these engines to reflect unique operating characteristics.
    The emission standards described above relate to engine operation 
over a prescribed duty cycle for testing in the laboratory. We are also 
adopting not-to-exceed (NTE) standards that establish emission limits 
when engines operate under normal speed-load combinations that are not 
included in the duty cycles for the other engine standards (the NTE 
standards do not apply to SD/I high-performance engines).
    We are adopting new standards to control evaporative emissions for 
all Marine SI vessels. The new standards include requirements to 
control fuel tank permeation, fuel line permeation, and diurnal 
emissions, including provisions to ensure that refueling emissions do 
not increase.
    We are including these new regulations for Marine SI engines in 40 
CFR part 1045 rather than in the current regulations in 40 CFR part 91. 
This new part allows us to improve the clarity of regulatory 
requirements and update our regulatory compliance program to be 
consistent with the provisions we have recently adopted for other 
nonroad programs. We are also making a variety of changes to 40 CFR 
part 91 to make minor adjustments to the current regulations and to 
prepare for the transition to 40 CFR part 1045.
Small SI Engines and Equipment
    We are adopting HC+NOX exhaust emission standards of 
10.0 g/kW-hr for Class I engines starting in the 2012 model year and 
8.0 g/kW-hr for Class II engines starting in the 2011 model year. For 
both classes of nonhandheld engines, we are maintaining the existing CO 
standard of 610 g/kW-hr. We expect manufacturers to meet these 
standards by improving engine combustion and adding catalysts. These 
standards are consistent with the requirements recently adopted by 
California ARB.
    For spark-ignition engines used in marine generators, we are 
adopting a more stringent Phase 3 CO emission standard of 5.0 g/kW-hr. 
This applies equally to all sizes of engines subject to the Small SI 
standards.
    We are adopting new evaporative emission standards for both 
handheld and nonhandheld engines. The new standards include 
requirements to control permeation from fuel tanks and fuel lines. For 
nonhandheld engines we will also require control of running loss 
emissions.
    We are drafting the new regulations for Small SI engines from 40 
CFR part 90 rather than changing the current regulations in 40 CFR part 
90. This new part will allow us to improve the clarity of regulatory 
requirements and update our regulatory compliance program to be 
consistent with the provisions we have recently adopted for other 
nonroad programs.

F. How Is This Document Organized?

    Many readers may be interested only in certain aspects of the rule 
since it covers a broad range of engines and equipment that vary in 
design and use. We have therefore attempted to organize this 
information in a way that allows each reader to focus on the material 
of particular interest. The Air Quality discussion in Section II, 
however, is general in nature and applies to all the categories subject 
to the rule.
    The next several sections describe the provisions that apply for 
Small SI engines and equipment and Marine SI engines and vessels. 
Sections III through V describe the new requirements related to exhaust 
emission standards for each of the affected engine categories, 
including standards, effective dates, testing information, and other 
specific requirements. Section VI details the new requirements related 
to evaporative emissions for all categories. Section VII discusses how 
we took energy, noise, and safety factors into consideration for the 
new standards.
    Section VIII describes a variety of provisions that affect other 
categories of engines besides those that are the primary subject of 
this rule. This includes the following changes:
     We are reorganizing the regulatory language related to 
preemption of state standards and to clarify certain provisions.
     We are incorporating new provisions related to 
certification fees for newly regulated products covered by this rule. 
This involves some restructuring of the regulatory language. We are 
also adopting various technical amendments, such as identifying an 
additional payment method, that apply broadly to our certification 
programs.
     We are modifying 40 CFR part 1068 to clarify when engines 
are subject to standards. This includes several new provisions to 
address special cases for partially complete engines.
     We are also modifying part 1068 to clarify how the 
provisions apply with respect to evaporative emission standards and we 
are adopting various technical amendments. These changes apply to all 
types of nonroad engines that are subject to the provisions of part 
1068.
     We are adopting several technical amendments for other 
categories of nonroad engines and vehicles, largely to maintain 
consistency across programs for different categories of engines and 
vehicles.
     We are amending provisions related to delegated assembly. 
The new approach is to adopt a universal set of requirements in Sec.  
1068.261 that applies uniformly to heavy-duty highway engines and 
nonroad engines.
     We are clarifying that the new exhaust and evaporative 
emission standards for Small SI engines also apply to the comparable 
stationary engines.

[[Page 59041]]

    Section IX summarizes the projected impacts and benefits of this 
rule. Finally, Sections X and XI summarize the primary public comments 
received and describe how we satisfy our various administrative 
requirements.

G. Judicial Review

    Under section 307(b)(1) of the Clean Air Act (CAA), judicial review 
of these final rules is available only by filing a petition for review 
in the U.S. Court of Appeals for the District of Columbia Circuit by 
December 8, 2008. Under section 307(b)(2) of the CAA, the requirements 
established by these final rules may not be challenged separately in 
any civil or criminal proceedings brought by EPA to enforce these 
requirements.
    Section 307(d)(7)(B) of the CAA further provides that ``[o]nly an 
objection to a rule or procedure which was raised with reasonable 
specificity during the period for public comment (including any public 
hearing) may be raised during judicial review.'' This section also 
provides a mechanism for us to convene a proceeding for 
reconsideration, ``[i]f the person raising an objection can demonstrate 
to the EPA that it was impracticable to raise such objection within 
[the period for public comment] or if the grounds for such objection 
arose after the period for public comment (but within the time 
specified for judicial review) and if such objection is of central 
relevance to the outcome of the rule.'' Any person seeking to make such 
a demonstration to us should submit a Petition for Reconsideration to 
the Office of the Administrator, U.S. EPA, Room 3000, Ariel Rios 
Building, 1200 Pennsylvania Ave., NW., Washington, DC 20460, with a 
copy to both the person(s) listed in the preceding FOR FURTHER 
INFORMATION CONTACT section and the Associate General Counsel for the 
Air and Radiation Law Office, Office of General Counsel (Mail Code 
2344A), U.S. EPA, 1200 Pennsylvania Ave., NW., Washington, DC 20460.

II. Public Health and Welfare Effects

    The engines and fuel systems subject to this rule generate 
emissions of hydrocarbons (HC), nitrogen oxides (NOX), particulate 
matter (PM) and carbon monoxide (CO) that contribute to nonattainment 
of the National Ambient Air Quality Standards (NAAQS) for ozone, PM and 
CO. These engines and fuel systems also emit hazardous air pollutants 
(air toxics) that are associated with a host of adverse health effects. 
Emissions from these engines and fuel systems also contribute to 
visibility impairment and other welfare and environmental effects.
    This section summarizes the general health and welfare effects of 
these emissions. Interested readers are encouraged to refer to the 
Final RIA for more in-depth discussions.

A. Public Health Impacts

Ozone
    The Small SI engine and Marine SI engine standards finalized in 
this action will result in reductions of volatile organic compounds 
(VOC), of which HC are a subset, and NOX emissions. VOC and NOX 
contribute to the formation of ground-level ozone pollution or smog. 
People in many areas across the U.S. continue to be exposed to 
unhealthy levels of ambient ozone.
Background
    Ground-level ozone pollution is typically formed by the reaction of 
VOC and NOX in the lower atmosphere in the presence of heat and 
sunlight. These pollutants, often referred to as ozone precursors, are 
emitted by many types of pollution sources, such as highway and nonroad 
motor vehicles and engines, power plants, chemical plants, refineries, 
makers of consumer and commercial products, industrial facilities, and 
smaller area sources.
    The science of ozone formation, transport, and accumulation is 
complex.\8\ Ground-level ozone is produced and destroyed in a cyclical 
set of chemical reactions, many of which are sensitive to temperature 
and sunlight. When ambient temperatures and sunlight levels remain high 
for several days and the air is relatively stagnant, ozone and its 
precursors can build up and result in more ozone than typically occurs 
on a single high-temperature day. Ozone can be transported hundreds of 
miles downwind of precursor emissions, resulting in elevated ozone 
levels even in areas with low local VOC or NOX emissions.
---------------------------------------------------------------------------

    \8\ U.S. EPA Air Quality Criteria for Ozone and Related 
Photochemical Oxidants (Final). U.S. Environmental Protection 
Agency, Washington, D.C., EPA 600/R-05/004aF-cF, 2006. This document 
is available in Docket EPA-HQ-OAR-2003-0190. This document may be 
accessed electronically at: http://www.epa.gov/ttn/naaqs/standards/
ozone/s_o3_cr_cd.html.
---------------------------------------------------------------------------

    EPA has recently amended the ozone NAAQS (73 FR 16436, March 27, 
2008). The final ozone NAAQS rule addresses revisions to the primary 
and secondary NAAQS for ozone to provide increased protection of public 
health and welfare, respectively. With regard to the primary standard 
for ozone, EPA has revised the level of the 8-hour standard to 0.075 
parts per million (ppm), expressed to three decimal places. With regard 
to the secondary standard for ozone, EPA has revised the current 8-hour 
standard by making it identical to the revised primary standard.
Health Effects of Ozone
    The health and welfare effects of ozone are well documented and are 
assessed in EPA's 2006 ozone Air Quality Criteria Document (ozone AQCD) 
and EPA Staff Paper.9, 10 Ozone can irritate the respiratory 
system, causing coughing, throat irritation, and/or uncomfortable 
sensation in the chest. Ozone can reduce lung function and make it more 
difficult to breathe deeply; breathing may also become more rapid and 
shallow than normal, thereby limiting a person's activity. Ozone can 
also aggravate asthma, leading to more asthma attacks that require 
medical attention and/or the use of additional medication. In addition, 
there is suggestive evidence of a contribution of ozone to 
cardiovascular-related morbidity and highly suggestive evidence that 
short-term ozone exposure directly or indirectly contributes to non-
accidental and cardiopulmonary-related mortality, but additional 
research is needed to clarify the underlying mechanisms causing these 
effects. In a recent report on the estimation of ozone-related 
premature mortality published by the National Research Council (NRC), a 
panel of experts and reviewers concluded that short-term exposure to 
ambient ozone is likely to contribute to premature deaths and that 
ozone-related mortality should be included in estimates of the health 
benefits of reducing ozone exposure.\11\ Animal toxicological evidence 
indicates that with repeated exposure, ozone can inflame and damage the 
lining of the lungs, which may lead to permanent changes in lung tissue 
and irreversible reductions in lung function. People who are more 
susceptible to effects

[[Page 59042]]

associated with exposure to ozone can include children, the elderly, 
and individuals with respiratory disease such as asthma. Those with 
greater exposures to ozone, for instance due to time spent outdoors 
(e.g., children and outdoor workers), are also of particular concern.
---------------------------------------------------------------------------

    \9\ U.S. EPA Air Quality Criteria for Ozone and Related 
Photochemical Oxidants (Final). U.S. Environmental Protection 
Agency, Washington, DC., EPA 600/R-05/004aF-cF, 2006. This document 
is available in Docket EPA-HQ-OAR-2003-0190. This document may be 
accessed electronically at: http://www.epa.gov/ttn/naaqs/standards/
ozone/s_o3_cr_cd.html.
    \10\ U.S. EPA (2007) Review of the National Ambient Air Quality 
Standards for Ozone, Policy Assessment of Scientific and Technical 
Information. OAQPS Staff Paper.EPA-452/R-07-003. This document is 
available in Docket EPA-HQ-OAR-2003-0190. This document is available 
electronically at: http:www.epa.gov/ttn/naaqs/standards/ozone/s_
o3_cr_sp.html.
    \11\ National Research Council (NRC), 2008. Estimating Mortality 
Risk Reduction and Economic Benefits from Controlling Ozone Air 
Pollution. The National Academies Press: Washington, DC.
---------------------------------------------------------------------------

    The recent ozone AQCD also examined relevant new scientific 
information that has emerged in the past decade, including the impact 
of ozone exposure on such health effects as changes in lung structure 
and biochemistry, inflammation of the lungs, exacerbation and causation 
of asthma, respiratory illness-related school absence, hospital 
admissions and premature mortality. Animal toxicological studies have 
suggested potential interactions between ozone and PM with increased 
responses observed to mixtures of the two pollutants compared to either 
ozone or PM alone. The respiratory morbidity observed in animal studies 
along with the evidence from epidemiologic studies supports a causal 
relationship between acute ambient ozone exposures and increased 
respiratory-related emergency room visits and hospitalizations in the 
warm season. In addition, there is suggestive evidence of a 
contribution of ozone to cardiovascular-related morbidity and non-
accidental and cardiopulmonary mortality.
Plant and Ecosystem Effects of Ozone
    Elevated ozone levels contribute to environmental effects, with 
impacts to plants and ecosystems being of most concern. Ozone can 
produce both acute and chronic injury in sensitive species depending on 
the concentration level and the duration of the exposure. Ozone effects 
also tend to accumulate over the growing season of the plant, so that 
even low concentrations experienced for a longer duration have the 
potential to create chronic stress on vegetation. Ozone damage to 
plants includes visible injury to leaves and a reduction in food 
production through impaired photosynthesis, both of which can lead to 
reduced crop yields, forestry production, and use of sensitive 
ornamentals in landscaping. In addition, the reduced food production in 
plants and subsequent reduced root growth and storage below ground, can 
result in other, more subtle plant and ecosystems impacts. These 
include increased susceptibility of plants to insect attack, disease, 
harsh weather, interspecies competition and overall decreased plant 
vigor. The adverse effects of ozone on forest and other natural 
vegetation can potentially lead to species shifts and loss from the 
affected ecosystems, resulting in a loss or reduction in associated 
ecosystem goods and services. Lastly, visible ozone injury to leaves 
can result in a loss of aesthetic value in areas of special scenic 
significance like national parks and wilderness areas. The final 2006 
Criteria Document presents more detailed information on ozone effects 
on vegetation and ecosystems.
Current and Projected Ozone Levels
    Ozone concentrations exceeding the level of the 1997 8-hour ozone 
NAAQS occur over wide geographic areas, including most of the nation's 
major population centers.\12\ As of March 12, 2008, there were 
approximately 140 million people living in 72 areas (which include all 
or part of 337 counties) designated as not in attainment with the 1997 
8-hour ozone NAAQS.\13\ These numbers do not include the people living 
in areas where there is a future risk of failing to maintain or attain 
the 8-hour ozone NAAQS. The 1997 ozone NAAQS was recently revised and 
the 2008 ozone NAAQS was final on March 12, 2008. Table II-1 presents 
the number of counties in areas currently designated as nonattainment 
for the 1997 ozone NAAQS as well as the number of additional counties 
that have design values greater than the 2008 ozone NAAQS.
---------------------------------------------------------------------------

    \12\ A listing of the 8-hour ozone nonattainment areas is 
included in the RIA for this rule.
    \13\ Population numbers are from 2000 census data.

   Table II-1--Counties With Design Values Greater Than the 2008 Ozone
                NAAQS Based on 2004-2006 Air Quality Data
------------------------------------------------------------------------
                                          Number of
                                          Counties       Population \a\
------------------------------------------------------------------------
 1997 Ozone Standard: Counties                     337       139,633,458
 within the 72 areas currently
 designated as nonattainment........
2008 Ozone Standard: Additional                     74        15,984,135
 counties that would not meet the
 2008 NAAQS \b\.....................
                                     -----------------------------------
    Total...........................               411       155,617,593
------------------------------------------------------------------------
Notes:
\a\ Population numbers are from 2000 census data.
\b\ Attainment designations for 2008 ozone NAAQS have not yet been made.
  Nonattainment for the 2008 Ozone NAAQS will be based on three years of
  air quality data from later years. Also, the county numbers in the
  table include only the counties with monitors violating the 2008 Ozone
  NAAQS. The numbers in this table may be an underestimate of the number
  of counties and populations that will eventually be included in areas
  with multiple counties designated nonattainment.

    States with 8-hour ozone nonattainment areas are required to take 
action to bring those areas into compliance in the future. Based on the 
final rule designating and classifying 8-hour ozone nonattainment areas 
(69 FR 23951, April 30, 2004), most 8-hour ozone nonattainment areas 
will be required to attain the 1997 ozone NAAQS in the 2007 to 2013 
time frame and then maintain the NAAQS thereafter.\14\ Many of these 
nonattainment areas will need to adopt additional emission reduction 
programs and the VOC and NOX reductions from this final action are 
particularly important for these states. The attainment dates 
associated with the potential new 2008 ozone nonattainment areas are 
likely to be in the 2013 to 2021 timeframe, depending on the severity 
of the problem.
---------------------------------------------------------------------------

    \14\ The Los Angeles South Coast Air Basin 8-hour ozone 
nonattainment area will have to attain before June 15, 2021.
---------------------------------------------------------------------------

    EPA has already adopted many emission control programs that are 
expected to reduce ambient ozone levels. Some of these control programs 
are described in Section I.C.1. As a result of existing programs, the 
number of areas that fail to meet the ozone NAAQS in the future is 
expected to decrease. Based on the air quality modeling performed for 
this rule, which does not include any additional local controls, we 
estimate eight counties (where 22 million people are projected to live) 
will exceed the 1997 8-hour

[[Page 59043]]

ozone NAAQS in 2020.\15\ An additional 37 counties (where 27 million 
people are projected to live) are expected to be within 10 percent of 
violating the 1997 8-hour ozone NAAQS in 2020.
---------------------------------------------------------------------------

    \15\ We expect many of the 8-hour ozone nonattainment areas to 
adopt additional emission reduction programs but we are unable to 
quantify or rely upon future reductions from additional state and 
local programs that have not yet been adopted.
---------------------------------------------------------------------------

    Results from the air quality modeling conducted for this final rule 
indicate that the Small SI and Marine SI engine emission reductions in 
2020 and 2030 will improve both the average and population-weighted 
average ozone concentrations for the U.S. In addition, the air quality 
modeling shows that on average this final rule will help bring counties 
closer to ozone attainment as well as assist counties whose ozone 
concentrations are within ten percent below the standard. For example, 
on a population-weighted basis, the average modeled future-year 8-hour 
ozone design values will decrease by 0.57 ppb in 2020 and 0.76 ppb in 
2030.\16\ The air quality modeling methodology and the projected 
reductions are discussed in more detail in Chapter 2 of the RIA.
---------------------------------------------------------------------------

    \16\ Ozone design values are reported in parts per million (ppm) 
as specified in 40 CFR Part 50. Due to the scale of the design value 
changes in this action, results have been presented in parts per 
billion (ppb) format.
---------------------------------------------------------------------------

Particulate Matter
    The Small SI engine and Marine SI engine standards detailed in this 
action will result in reductions in emissions of VOCs and NOX which 
contribute to the formation of secondary PM2.5. In addition, 
the standards finalized today will reduce primary (directly emitted) 
PM2.5 emissions.
Background
    PM represents a broad class of chemically and physically diverse 
substances. It can be principally characterized as discrete particles 
that exist in the condensed (liquid or solid) phase spanning several 
orders of magnitude in size. PM is further described by breaking it 
down into size fractions. PM10 refers to particles generally 
less than or equal to 10 micrometers (m) in aerodynamic diameter. 
PM2.5 refers to fine particles, generally less than or equal 
to 2.5 in aerodynamic diameter. Inhalable (or ``thoracic'') coarse 
particles refer to those particles generally greater than 2.5 [mu]m but 
less than or equal to 10 [mu]m in aerodynamic diameter. Ultrafine PM 
refers to particles less than 100 nanometers (0.1 [mu]m) in aerodynamic 
diameter. Larger particles tend to be removed by the respiratory 
clearance mechanisms (e.g. coughing), whereas smaller particles are 
deposited deeper in the lungs.
    Fine particles are produced primarily by combustion processes and 
by transformations of gaseous emissions (e.g., SOX, NOX and VOC) in the 
atmosphere. The chemical and physical properties of PM2.5 may vary 
greatly with time, region, meteorology, and source category. Thus, 
PM2.5 may include a complex mixture of different pollutants including 
sulfates, nitrates, organic compounds, elemental carbon and metal 
compounds. These particles can remain in the atmosphere for days to 
weeks and travel hundreds to thousands of kilometers.
    The primary PM2.5 NAAQS includes a short-term (24-hour) and a long-
term (annual) standard. The 1997 PM2.5 NAAQS established by EPA set the 
24-hour standard at a level of 65[mu]g/m\3\ based on the 98th 
percentile concentration averaged over three years. The annual standard 
specifies an expected annual arithmetic mean not to exceed 15[mu]g/m\3\ 
averaged over three years.
    In 2006, EPA amended the NAAQS for PM2.5 (71 FR 61144, October 17, 
2006). The final rule addressed revisions to the primary and secondary 
NAAQS for PM to provide increased protection of public health and 
welfare, respectively. The level of the 24-hour PM2.5 NAAQS was revised 
from 65[mu]g/m\3\ to 35 [mu]g/m\3\ and the level of the annual PM2.5 
NAAQS was retained at 15[mu]g/m\3\. With regard to the secondary 
standards for PM2.5, EPA has revised these standards to be identical in 
all respects to the revised primary standards.
Health Effects of PM2.5
    Scientific studies show ambient PM is associated with a series of 
adverse health effects. These health effects are discussed in detail in 
the 2004 EPA Particulate Matter Air Quality Criteria Document (PM 
AQCD), and the 2005 PM Staff Paper.17 18 Further discussion 
of health effects associated with PM can also be found in the RIA for 
this rule.
---------------------------------------------------------------------------

    \17\ U.S. EPA (2004) Air Quality Criteria for Particulate Matter 
(Oct 2004), Volume I Document No. EPA600/P-99/002aF and Volume II 
Document No. EPA600/P-99/002bF. This document is available in Docket 
EPA-HQ-OAR-2003-0190.
    \18\ U.S. EPA (2005) Review of the National Ambient Air Quality 
Standard for Particulate Matter: Policy Assessment of Scientific and 
Technical Information, OAQPS Staff Paper. EPA-452/R-05-005. This 
document is available in Docket EPA-HQ-OAR-2003-0190.
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    Health effects associated with short-term exposures (hours to days) 
to ambient PM include premature mortality, increased hospital 
admissions, heart and lung diseases, increased cough, adverse lower-
respiratory symptoms, decrements in lung function and changes in heart 
rate rhythm and other cardiac effects. Studies examining populations 
exposed to different levels of air pollution over a number of years, 
including the Harvard Six Cities Study and the American Cancer Society 
Study, show associations between long-term exposure to ambient PM2.5 
and both total and cardiovascular and respiratory mortality.\19\ In 
addition, a reanalysis of the American Cancer Society Study shows an 
association between fine particle and sulfate concentrations and lung 
cancer mortality.\20\
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    \19\ Dockery, DW; Pope, CA III: Xu, X; et al. 1993. An 
association between air pollution and mortality in six U.S. cities. 
N Engl J Med 329:1753-1759.
    \20\ Pope, C. A., III; Burnett, R. T.; Thun, M. J.; Calle, E. 
E.; Krewski, D.; Ito, K.; Thurston, G. D. (2002) Lung cancer, 
cardiopulmonary mortality, and long-term exposure to fine 
particulate air pollution. J. Am. Med. Assoc. 287:1132-1141.
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    Recently, several studies have highlighted the adverse effects of 
PM specifically from mobile sources.21 22 Studies have also 
focused on health effects due to PM exposures on or near roadways.\23\ 
Although these studies include all air pollution sources, including 
both spark-ignition (gasoline) and diesel powered vehicles, they 
indicate that exposure to PM emissions near roadways, thus dominated by 
mobile sources, are associated with health effects. The controls 
finalized in this action may help to reduce exposures, and specifically 
exposures near the source, to mobile source related PM2.5.
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    \21\ Laden, F.; Neas, L.M.; Dockery, D.W.; Schwartz, J. (2000) 
Association of Fine Particulate Matter from Different Sources with 
Daily Mortality in Six U.S. Cities. Environmental Health 
Perspectives 108: 941-947.
    \22\ Janssen, N.A.H.; Schwartz, J.; Zanobetti, A.; Suh, H.H. 
(2002) Air Conditioning and Source-Specific Particles as Modifiers 
of the Effect of PM10 on Hospital Admissions for Heart 
and Lung Disease. Environmental Health Perspectives 110: 43-49.
    \23\ Riediker, M.; Cascio, W.E.; Griggs, T.R..; Herbst, M.C.; 
Bromberg, P.A.; Neas, L.; Williams, R.W.; Devlin, R.B. (2003) 
Particulate Matter Exposures in Cars is Associated with 
Cardiovascular Effects in Healthy Young Men. Am. J. Respir. Crit. 
Care Med. 169: 934-940.
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Visibility

    Visibility can be defined as the degree to which the atmosphere is 
transparent to visible light. Airborne particles degrade visibility by 
scattering and absorbing light. Visibility is important because it has 
direct significance to people's enjoyment of daily activities in all 
parts of the country. Individuals value good visibility for the well-
being it provides them directly, where they live and work and in places 
where they enjoy recreational opportunities.

[[Page 59044]]

Visibility is also highly valued in significant natural areas such as 
national parks and wilderness areas and special emphasis is given to 
protecting visibility in these areas. For more information on 
visibility, see the final 2004 PM AQCD as well as the 2005 PM Staff 
Paper.24 25
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    \24\ U.S. EPA (2004) Air Quality Criteria for Particulate Matter 
(Oct 2004), Volume I Document No. EPA600/P-99/002aF and Volume II 
Document No. EPA600/P-99/002bF. This document is available in Docket 
EPA-HQ-OAR-2003-0190.
    \25\ U.S. EPA (2005) Review of the National Ambient Air Quality 
Standard for Particulate Matter: Policy Assessment of Scientific and 
Technical Information, OAQPS Staff Paper. EPA-452/R-05-005. This 
document is available in Docket EPA-HQ-OAR-2003-0190.
---------------------------------------------------------------------------

    EPA is pursuing a two-part strategy to address visibility. First, 
to address the welfare effects of PM on visibility, EPA has set 
secondary PM2.5 standards which act in conjunction with the 
establishment of a regional haze program. In setting this secondary 
standard, EPA has concluded that PM2.5 causes adverse effects on 
visibility in various locations, depending on PM concentrations and 
factors such as chemical composition and average relative humidity. 
Second, section 169 of the Clean Air Act provides additional authority 
to address existing visibility impairment and prevent future visibility 
impairment in the 156 national parks, forests and wilderness areas 
categorized as mandatory class I federal areas (62 FR 38680-81, July 
18, 1997).\26\ In July 1999, the regional haze rule (64 FR 35714) was 
put in place to protect the visibility in mandatory class I federal 
areas. Visibility can be said to be impaired in both PM2.5 
nonattainment areas and mandatory class I federal areas.
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    \26\ These areas are defined in section 162 of the Act as those 
national parks exceeding 6,000 acres, wilderness areas and memorial 
parks exceeding 5,000 acres, and all international parks which were 
in existence on August 7, 1977.
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Current Visibility Impairment

    As of March 12, 2008, over 88 million people live in nonattainment 
areas for the 1997 PM2.5 NAAQS.\27\ These populations, as well as large 
numbers of individuals who travel to these areas, are likely to 
experience visibility impairment. In addition, while visibility trends 
have improved in mandatory class I federal areas the most recent data 
show that these areas continue to suffer from visibility 
impairment.\28\ In summary, visibility impairment is experienced 
throughout the U.S., in multi-state regions, urban areas, and remote 
mandatory class I federal areas.29 30
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    \27\ Population numbers are from 2000 census data.
    \28\ U.S. EPA (2002) Latest Findings on National Air Quality--
2002 Status and Trends. EPA 454/K-03-001.
    \29\ U.S. EPA, Air Quality Designations and Classifications for 
the Fine Particles (PM2.5) National Ambient Air Quality 
Standards, December 17, 2004. (70 FR 943, Jan 5. 2005) This document 
is also available on the web at: http://www.epa.gov/pmdesignations/
 \30\ U.S. EPA. Regional Haze Regulations, July 1, 1999. (64 FR 
35714, July 1, 1999).
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Future Visibility Impairment
    Air quality modeling conducted for this final rule was used to 
project visibility conditions in 133 mandatory class I federal areas 
across the U.S. in 2020 and 2030. The results indicate that 
improvements in visibility will occur in the future, although all areas 
will continue to have annual average deciview levels above background 
in 2020 and 2030. Chapter 2 of the RIA contains more detail on the 
visibility portion of the air quality modeling.
Atmospheric Deposition
    Wet and dry deposition of ambient particulate matter delivers a 
complex mixture of metals (e.g., mercury, zinc, lead, nickel, aluminum, 
cadmium), organic compounds (e.g., POM, dioxins, furans) and inorganic 
compounds (e.g., nitrate, sulfate) to terrestrial and aquatic 
ecosystems. The chemical form of the compounds deposited is impacted by 
a variety of factors including ambient conditions (e.g., temperature, 
humidity, oxidant levels) and the sources of the material. Chemical and 
physical transformations of the particulate compounds occur in the 
atmosphere as well as the media onto which they deposit. These 
transformations in turn influence the fate, bioavailability and 
potential toxicity of these compounds. Atmospheric deposition has been 
identified as a key component of the environmental and human health 
hazard posed by several pollutants including mercury, dioxin and 
PCBs.\31\
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    \31\ U.S. EPA (2000) Deposition of Air Pollutants to the Great 
Waters: Third Report to Congress. Office of Air Quality Planning and 
Standards. EPA-453/R-00-0005. This document is available in Docket 
EPA-HQ-OAR-2003-0190.
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    Adverse impacts on water quality can occur when atmospheric 
contaminants deposit to the water surface or when material deposited on 
the land enters a water body through runoff. Potential impacts of 
atmospheric deposition to water bodies include those related to both 
nutrient and toxic inputs. Adverse effects to human health and welfare 
can occur from the addition of excess particulate nitrate nutrient 
enrichment, which contributes to toxic algae blooms and zones of 
depleted oxygen, which can lead to fish kills, frequently in coastal 
waters. Particles contaminated with heavy metals or other toxins may 
lead to the ingestion of contaminated fish, ingestion of contaminated 
water, damage to the marine ecology, and limited recreational uses. 
Several studies have been conducted in U.S. coastal waters and in the 
Great Lakes Region in which the role of ambient PM deposition and 
runoff is investigated.32 33 34 35 36
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    \32\ U.S. EPA (2004) National Coastal Condition Report II. 
Office of Research and Development/ Office of Water. EPA-620/R-03/
002. This document is available in Docket EPA-HQ-OAR-2003-0190.
    \33\ Gao, Y., E.D. Nelson, M.P. Field, et al. 2002. 
Characterization of atmospheric trace elements on PM2.5 
particulate matter over the New York-New Jersey harbor estuary. 
Atmos. Environ. 36: 1077-1086.
    \34\ Kim, G., N. Hussain, J.R. Scudlark, and T.M. Church. 2000. 
Factors influencing the atmospheric depositional fluxes of stable 
Pb, 210Pb, and 7Be into Chesapeake Bay. J. Atmos. Chem. 36: 65-79.
    \35\ Lu, R., R.P. Turco, K. Stolzenbach, et al. 2003. Dry 
deposition of airborne trace metals on the Los Angeles Basin and 
adjacent coastal waters. J. Geophys. Res. 108(D2, 4074): AAC 11-1 to 
11-24.
    \36\ Marvin, C.H., M.N. Charlton, E.J. Reiner, et al. 2002. 
Surficial sediment contamination in Lakes Erie and Ontario: A 
comparative analysis. J. Great Lakes Res. 28(3): 437-450.
---------------------------------------------------------------------------

    Adverse impacts on soil chemistry and plant life have been observed 
for areas heavily impacted by atmospheric deposition of nutrients, 
metals and acid species, resulting in species shifts, loss of 
biodiversity, forest decline and damage to forest productivity. 
Potential impacts also include adverse effects to human health through 
ingestion of contaminated vegetation or livestock (as in the case for 
dioxin deposition), reduction in crop yield, and limited use of land 
due to contamination.
Materials Damage and Soiling
    The deposition of airborne particles can reduce the aesthetic 
appeal of buildings and culturally important articles through soiling, 
and can contribute directly (or in conjunction with other pollutants) 
to structural damage by means of corrosion or erosion.\37\ Particles 
affect materials principally by promoting and accelerating the 
corrosion of metals, by degrading paints, and by deteriorating building 
materials such as concrete and limestone. Particles contribute to these 
effects because of their electrolytic, hygroscopic, and acidic 
properties, and their ability to adsorb corrosive gases (principally 
sulfur dioxide). The rate of metal corrosion depends on a number of 
factors, including the deposition rate and nature of the pollutant; the 
influence of the metal protective

[[Page 59045]]

corrosion film; the amount of moisture present; variability in the 
electrochemical reactions; the presence and concentration of other 
surface electrolytes; and the orientation of the metal surface.
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    \37\ U.S EPA (2005) Review of the National Ambient Air Quality 
Standards for Particulate Matter: Policy Assessment of Scientific 
and Technical Information, OAQPS Staff Paper. This document is 
available in Docket EPA-HQ-OAR-2003-0190.
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Current and Projected PM2.5 Levels
    PM2.5 concentrations exceeding the level of the 
PM2.5 NAAQS occur in many parts of the country.\38\ In 2005 
EPA designated 39 nonattainment areas for the 1997 PM2.5 
NAAQS (70 FR 943, January 5, 2005). These areas are comprised of 208 
full or partial counties with a total population exceeding 88 million. 
The 1997 PM2.5 NAAQS was revised and the 2006 
PM2.5 NAAQS became effective on December 18, 2006. Table II-
2 presents the number of counties in areas currently designated as 
nonattainment for the 1997 PM2.5 NAAQS as well as the number 
of additional counties that have design values greater than the 2006 
PM2.5 NAAQS.
---------------------------------------------------------------------------

    \38\ A listing of the PM2.5 nonattainment areas is 
included in the RIA for this rule.

   Table II-2--Counties With Design Values Greater Than the 2006 PM2.5
                NAAQS Based on 2003-2005 Air Quality Data
------------------------------------------------------------------------
 Nonattainment areas/other violating      Number of
              counties                    counties        Population a
------------------------------------------------------------------------
1997 PM2.5 Standards: Counties                     208        88,394,000
 within the 39 areas currently
 designated as nonattainment........
2006 PM2.5 Standards: Additional                    49        18,198,676
 counties that would not meet the
 2006 NAAQS b.......................
                                     -----------------------------------
    Total...........................               257       106,595,676
------------------------------------------------------------------------
Notes:
a Population numbers are from 2000 census data.
b Attainment designations for 2006 PM2.5 NAAQS have not yet been made.
  Nonattainment for the 2006 PM2.5 NAAQS will be based on 3 years of air
  quality data from later years. Also, the county numbers in the table
  includes only the counties with monitors violating the 2006 PM2.5
  NAAQS. The numbers in this table may be an underestimate of the number
  of counties and populations that will eventually be included in areas
  with multiple counties designated nonattainment.

    Areas designated as not attaining the 1997 PM2.5 NAAQS 
will need to attain the 1997 standards in the 2010 to 2015 time frame, 
and then maintain them thereafter. The attainment dates associated with 
the potential new 2006 PM2.5 nonattainment areas are likely 
to be in the 2014 to 2019 timeframe. The emission standards finalized 
in this action become effective as early as 2009 making the inventory 
reductions from this rulemaking useful to states in attaining or 
maintaining the PM2.5 NAAQS.
    EPA has already adopted many emission control programs that are 
expected to reduce ambient PM2.5 levels and which will 
assist in reducing the number of areas that fail to achieve the 
PM2.5 NAAQS. Even so, our air quality modeling for this 
final rule projects that in 2020, with all current controls but 
excluding the reductions achieved through this rule, up to 11 counties 
with a population of over 24 million may not attain the current annual 
PM2.5 standard of 15 [mu]g/m3. These numbers do 
not account for additional areas that have air quality measurements 
within 10 percent of the annual PM2.5 standard. These areas, 
although not violating the standards, will also benefit from the 
additional reductions from this rule ensuring long term maintenance of 
the PM2.5 NAAQS.
    Air quality modeling performed for this final rule shows the 
emissions reductions will improve both the average and population-
weighted average PM2.5 concentrations for the U.S. On a 
population-weighted basis, the average modeled future-year annual 
PM2.5 design value (DV) for all counties is expected to 
decrease by 0.02 [mu]g/m3 in 2020 and 2030. There are areas 
with larger decreases in their future-year annual PM2.5 DV, 
for instance the Chicago region will experience a 0.08 [mu] g/m\3\ 
reduction by 2030. The air quality modeling methodology and the 
projected reductions are discussed in more detail in Chapter 2 of the 
RIA.

B. Air Toxics

    Small SI and Marine SI emissions also contribute to ambient levels 
of air toxics known or suspected as human or animal carcinogens, or 
that have noncancer health effects. These air toxics include benzene, 
1, 3-butadiene, formaldehyde, acetaldehyde, acrolein, polycyclic 
organic matter (POM), and naphthalene. All of these compounds, except 
acetaldehyde, were identified as national or regional cancer risk or 
noncancer hazard drivers in the 1999 National-Scale Air Toxics 
Assessment (NATA) and have significant inventory contributions from 
mobile sources. That is, for a significant portion of the population, 
these compounds pose a significant portion of the total cancer and 
noncancer risk from breathing outdoor air toxics. In addition, human 
exposure to toxics from spark-ignition engines also occurs as a result 
of operating these engines and from intrusion of emissions in 
residential garages into attached indoor spaces.39 40 The 
emission reductions from Small SI and Marine SI engines that are 
finalized in this rulemaking will help reduce exposure to these harmful 
substances.
---------------------------------------------------------------------------

    \39\ Baldauf, R.; Fortune, C.; Weinstein, J.; Wheeler, M.; 
Blanchard, B. (2006) Air contaminant exposures during the operation 
of lawn and garden equipment. J Expos Sci Environ Epidmeiol 16: 362-
370.
    \40\ Isbell, M.; Ricker, J.; Gordian, M.E.; Duff, L.K. (1999) 
Use of biomarkers in an indoor air study: lack of correlation 
between aromatic VOCs with respective urinary biomarkers. Sci Total 
Environ 241: 151-159.
---------------------------------------------------------------------------

    Benzene: The EPA's IRIS database lists benzene as a known human 
carcinogen (causing leukemia) by all routes of exposure, and concludes 
that exposure is associated with additional health effects, including 
genetic changes in both humans and animals and increased proliferation 
of bone marrow cells in mice.41 42 43 EPA states in its IRIS 
database that data indicate a causal relationship between benzene 
exposure and acute lymphocytic leukemia and suggest a relationship 
between benzene exposure and chronic non-lymphocytic

[[Page 59046]]

leukemia and chronic lymphocytic leukemia. The International Agency for 
Research on Carcinogens (IARC) has determined that benzene is a human 
carcinogen and the U.S. Department of Health and Human Services (DHHS) 
has characterized benzene as a known human carcinogen.44 45
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    \41\ U.S. EPA. 2000. Integrated Risk Information System File for 
Benzene. This material is available electronically at http://
www.epa.gov/iris/subst/0276.htm.
    \42\ International Agency for Research on Cancer (IARC). 1982. 
Monographs on the evaluation of carcinogenic risk of chemicals to 
humans, Volume 29, Some industrial chemicals and dyestuffs, World 
Health Organization, Lyon, France, p. 345-389.
    \43\ Irons, R.D.; Stillman, W.S.; Colagiovanni, D.B.; Henry, 
V.A. 1992. Synergistic action of the benzene metabolite hydroquinone 
on myelopoietic stimulating activity of granulocyte/macrophage 
colony-stimulating factor in vitro, Proc. Natl. Acad. Sci. 89:3691-
3695.
    \44\ International Agency for Research on Cancer (IARC). 1987. 
Monographs on the evaluation of carcinogenic risk of chemicals to 
humans, Volume 29, Supplement 7, Some industrial chemicals and 
dyestuffs, World Health Organization, Lyon, France.
    \45\ U.S. Department of Health and Human Services National 
Toxicology Program 11th Report on Carcinogens available at: http://
ntp.niehs.nih.gov/go/16183.
---------------------------------------------------------------------------

    A number of adverse noncancer health effects including blood 
disorders, such as preleukemia and aplastic anemia, have also been 
associated with long-term exposure to benzene.46 47 The most 
sensitive noncancer effect observed in humans, based on current data, 
is the depression of the absolute lymphocyte count in 
blood.48 49 In addition, recent work, including studies 
sponsored by the Health Effects Institute (HEI), provides evidence that 
biochemical responses are occurring at lower levels of benzene exposure 
than previously known.50 51 52 53 EPA's IRIS program has not 
yet evaluated these new data.
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    \46\ Aksoy, M. (1989). Hematotoxicity and carcinogenicity of 
benzene. Environ. Health Perspect. 82: 193-197.
    \47\ Goldstein, B.D. (1988). Benzene toxicity. Occupational 
medicine. State of the Art Reviews. 3: 541-554.
    \48\ Rothman, N., G.L. Li, M. Dosemeci, W.E. Bechtold, G.E. 
Marti, Y.Z. Wang, M. Linet, L.Q. Xi, W. Lu, M.T. Smith, N. Titenko-
Holland, L.P. Zhang, W. Blot, S.N. Yin, and R.B. Hayes (1996) 
Hematotoxicity among Chinese workers heavily exposed to benzene. Am. 
J. Ind. Med. 29: 236-246.
    \49\ U.S. EPA (2002) Toxicological Review of Benzene (Noncancer 
Effects). Environmental Protection Agency, Integrated Risk 
Information System (IRIS), Research and Development, National Center 
for Environmental Assessment, Washington DC. This material is 
available electronically at http://www.epa.gov/iris/subst/0276.htm.
    \50\ Qu, O.; Shore, R.; Li, G.; Jin, X.; Chen, C.L.; Cohen, B.; 
Melikian, A.; Eastmond, D.; Rappaport, S.; Li, H.; Rupa, D.; 
Suramaya, R.; Songnian, W.; Huifant, Y.; Meng, M.; Winnik, M.; Kwok, 
E.; Li, Y.; Mu, R.; Xu, B.; Zhang, X.; Li, K. (2003) HEI Report 115, 
Validation & Evaluation of Biomarkers in Workers Exposed to Benzene 
in China.
    \51\ Qu, Q., R. Shore, G. Li, X. Jin, L.C. Chen, B. Cohen, et 
al. (2002) Hematological changes among Chinese workers with a broad 
range of benzene exposures. Am. J. Industr. Med. 42: 275-285.
    \52\ Lan, Qing, Zhang, L., Li, G., Vermeulen, R., et al. (2004) 
Hematotoxically in Workers Exposed to Low Levels of Benzene. Science 
306: 1774-1776.
    \53\ Turtletaub, K.W. and Mani, C. (2003) Benzene metabolism in 
rodents at doses relevant to human exposure from Urban Air. Research 
Reports Health Effect Inst. Report No.113.
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    1,3-Butadiene: EPA has characterized 1,3-butadiene as carcinogenic 
to humans by inhalation.54 55 The IARC has determined that 
1,3-butadiene is a human carcinogen and the U.S. DHHS has characterized 
1,3-butadiene as a known human carcinogen.56 57 There are 
numerous studies consistently demonstrating that 1,3-butadiene is 
metabolized into genotoxic metabolites by experimental animals and 
humans. The specific mechanisms of 1,3-butadiene-induced carcinogenesis 
are unknown; however, the scientific evidence strongly suggests that 
the carcinogenic effects are mediated by genotoxic metabolites. Animal 
data suggest that females may be more sensitive than males for cancer 
effects associated with 1,3-butadiene exposure; there are insufficient 
data in humans from which to draw conclusions about sensitive 
subpopulations. 1,3-butadiene also causes a variety of reproductive and 
developmental effects in mice; no human data on these effects are 
available. The most sensitive effect was ovarian atrophy observed in a 
lifetime bioassay of female mice.\58\
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    \54\ U.S. EPA (2002) Health Assessment of 1,3-Butadiene. Office 
of Research and Development, National Center for Environmental 
Assessment, Washington Office, Washington, DC. Report No. EPA600-P-
98-001F. This document is available electronically at http://
www.epa.gov/iris/supdocs/buta-sup.pdf.
    \55\ U.S. EPA (2002) Full IRIS Summary for 1,3-butadiene (CASRN 
106-99-0). Environmental Protection Agency, Integrated Risk 
Information System (IRIS), Research and Development, National Center 
for Environmental Assessment, Washington, DC http://www.epa.gov/
iris/subst/0139.htm.
    \56\ International Agency for Research on Cancer (IARC) (1999) 
Monographs on the evaluation of carcinogenic risk of chemicals to 
humans, Volume 71, Re-evaluation of some organic chemicals, 
hydrazine and hydrogen peroxide and Volume 97 (in preparation), 
World Health Organization, Lyon, France.
    \57\ U.S. Department of Health and Human Services (2005) 
National Toxicology Program 11th Report on Carcinogens available at: 
ntp.niehs.nih.gov/index.cfm?objectid=32BA9724-F1F6-975E-
7FCE50709CB4C932.
    \58\ Bevan, C.; Stadler, J.C.; Elliot, G.S.; et al. (1996) 
Subchronic toxicity of 4-vinylcyclohexene in rats and mice by 
inhalation. Fundam. Appl. Toxicol. 32:1-10.
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    Formaldehyde: Since 1987, EPA has classified formaldehyde as a 
probable human carcinogen based on evidence in humans and in rats, 
mice, hamsters, and monkeys.\59\ EPA is currently reviewing recently 
published epidemiological data. For instance, research conducted by the 
National Cancer Institute (NCI) found an increased risk of 
nasopharyngeal cancer and lymphohematopoietic malignancies such as 
leukemia among workers exposed to formaldehyde.60 61 NCI is 
currently performing an update of these studies. A recent National 
Institute of Occupational Safety and Health (NIOSH) study of garment 
workers also found increased risk of death due to leukemia among 
workers exposed to formaldehyde.\62\ Extended follow-up of a cohort of 
British chemical workers did not find evidence of an increase in 
nasopharyngeal or lymphohematopoietic cancers, but a continuing 
statistically significant excess in lung cancers was reported.\63\ 
Recently, the IARC re-classified formaldehyde as a human carcinogen 
(Group 1).\64\
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    \59\ U.S. EPA (1987) Assessment of Health Risks to Garment 
Workers and Certain Home Residents from Exposure to Formaldehyde, 
Office of Pesticides and Toxic Substances, April 1987.
    \60\ Hauptmann, M.; Lubin, J. H.; Stewart, P. A.; Hayes, R. B.; 
Blair, A. 2003. Mortality from lymphohematopoetic malignancies among 
workers in formaldehyde industries. Journal of the National Cancer 
Institute 95: 1615-1623.
    \61\ Hauptmann, M.; Lubin, J. H.; Stewart, P. A.; Hayes, R. B.; 
Blair, A. 2004. Mortality from solid cancers among workers in 
formaldehyde industries. American Journal of Epidemiology 159: 1117-
1130.
    \62\ Pinkerton, L. E. 2004. Mortality among a cohort of garment 
workers exposed to formaldehyde: an update. Occup. Environ. Med. 61: 
193-200.
    \63\ Coggon, D, EC Harris, J Poole, KT Palmer. 2003. Extended 
follow-up of a cohort of British chemical workers exposed to 
formaldehyde. J National Cancer Inst. 95:1608-1615.
    \64\ International Agency for Research on Cancer (IARC). 2006. 
Formaldehyde, 2-Butoxyethanol and 1-tert-Butoxypropan-2-ol. Volume 
88. (in preparation), World Health Organization, Lyon, France.
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    Formaldehyde exposure also causes a range of noncancer health 
effects, including irritation of the eyes (burning and watering of the 
eyes), nose and throat. Effects from repeated exposure in humans 
include respiratory tract irritation, chronic bronchitis and nasal 
epithelial lesions such as metaplasia and loss of cilia. Animal studies 
suggest that formaldehyde may also cause airway inflammation--including 
eosinophil infiltration into the airways. There are several studies 
that suggest that formaldehyde may increase the risk of asthma--
particularly in the young.65 66
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    \65\ Agency for Toxic Substances and Disease Registry (ATSDR). 
1999. Toxicological profile for Formaldehyde. Atlanta, GA: U.S. 
Department of Health and Human Services, Public Health Service. 
http://www.atsdr.cdc.gov/toxprofiles/tp111.html
    \66\ WHO (2002) Concise International Chemical Assessment 
Document 40: Formaldehyde. Published under the joint sponsorship of 
the United Nations Environment Programme, the International Labour 
Organization, and the World Health Organization, and produced within 
the framework of the Inter-Organization Programme for the Sound 
Management of Chemicals. Geneva.
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    Acetaldehyde: Acetaldehyde is classified in EPA's IRIS database as 
a probable human carcinogen, based on nasal tumors in rats, and is 
considered toxic by the inhalation, oral, and intravenous 
routes.67 Acetaldehyde is

[[Page 59047]]

reasonably anticipated to be a human carcinogen by the U.S. DHHS in the 
11th Report on Carcinogens and is classified as possibly carcinogenic 
to humans (Group 2B) by the IARC.68 69 EPA is currently 
conducting a reassessment of cancer risk from inhalation exposure to 
acetaldehyde.
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    \67\ U.S. EPA. 191. Integrated Risk Information System File of 
Acetaldehyde. Research and Development, National Center for 
Environmental Assessment, Washington, DC. This material is available 
electronically at http://www.epa.gov/iris/subst/0290.htm.
    \68\ U.S. Department of Health and Human Services National 
Toxicology Program 11th Report on Carcinogens available at: 
ntp.niehs.nih.gov/index.cfm?objectid=32BA9724-F1F6-975E-
7FCE50709CB4C932.
    \69\ International Agency for Research on Cancer (IARC). 1999. 
Re-evaluation of some organic chemicals, hydrazine, and hydrogen 
peroxide. IARC Monographs on the Evaluation of Carcinogenic Risk of 
Chemical to Humans, Vol 71. Lyon, France.
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    The primary noncancer effects of exposure to acetaldehyde vapors 
include irritation of the eyes, skin, and respiratory tract.\70\ In 
short-term (4 week) rat studies, degeneration of olfactory epithelium 
was observed at various concentration levels of acetaldehyde 
exposure.71 72 Data from these studies were used by EPA to 
develop an inhalation reference concentration. Some asthmatics have 
been shown to be a sensitive subpopulation to decrements in functional 
expiratory volume (FEV1 test) and bronchoconstriction upon acetaldehyde 
inhalation.\73\ The agency is currently conducting a reassessment of 
the health hazards from inhalation exposure to acetaldehyde.
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    \70\ U.S. EPA. 1991. Integrated Risk Information System File of 
Acetaldehyde. This material is available electronically at http://
www.epa.gov/iris/subst/0290.htm.
    \71\ Appleman, L. M., R. A. Woutersen, V. J. Feron, R. N. 
Hooftman, and W. R. F. Notten. 1986. Effects of the variable versus 
fixed exposure levels on the toxicity of acetaldehyde in rats. J. 
Appl. Toxicol. 6: 331-336.
    \72\ Appleman, L.M., R.A. Woutersen, and V.J. Feron. 1982. 
Inhalation toxicity of acetaldehyde in rats. I. Acute and subacute 
studies. Toxicology. 23: 293-297.
    \73\ Myou, S.; Fujimura, M.; Nishi K.; Ohka, T.; and Matsuda, T. 
1993. Aerosolized acetaldehyde induces histamine-mediated 
bronchoconstriction in asthmatics. Am. Rev. Respir.Dis.148(4 Pt 1): 
940-3.
---------------------------------------------------------------------------

    Acrolein: EPA determined in 2003 that the human carcinogenic 
potential of acrolein could not be determined because the available 
data were inadequate. No information was available on the carcinogenic 
effects of acrolein in humans and the animal data provided inadequate 
evidence of carcinogenicity.\74\ The IARC determined in 1995 that 
acrolein was not classifiable as to its carcinogenicity in humans.\75\
---------------------------------------------------------------------------

    \74\ U.S. EPA. 2003. Integrated Risk Information System File of 
Acrolein. Research and Development, National Center for 
Environmental Assessment, Washington, DC. This material is available 
at http://www.epa.gov/iris/subst/0364.htm.
    \75\ International Agency for Research on Cancer (IARC). 1995. 
Monographs on the evaluation of carcinogenic risk of chemicals to 
humans, Volume 63, Dry cleaning, some chlorinated solvents and other 
industrial chemicals, World Health Organization, Lyon, France.
---------------------------------------------------------------------------

    Acrolein is extremely acrid and irritating to humans when inhaled, 
with acute exposure resulting in upper respiratory tract irritation, 
mucus hypersecretion and congestion. Levels considerably lower than 1 
ppm (2.3 mg/m3) elicit subjective complaints of eye and 
nasal irritation and a decrease in the respiratory 
rate.76 77 Lesions to the lungs and upper respiratory tract 
of rats, rabbits, and hamsters have been observed after subchronic 
exposure to acrolein. Based on animal data, individuals with 
compromised respiratory function (e.g., emphysema, asthma) are expected 
to be at increased risk of developing adverse responses to strong 
respiratory irritants such as acrolein. This was demonstrated in mice 
with allergic airway-disease by comparison to non-diseased mice in a 
study of the acute respiratory irritant effects of acrolein.\78\
---------------------------------------------------------------------------

    \76\ Weber-Tschopp, A; Fischer, T; Gierer, R; et al. (1977) 
Experimentelle reizwirkungen von Acrolein auf den Menschen. Int Arch 
Occup Environ Hlth 40(2):117-130. In German.
    \77\ Sim, VM; Pattle, RE. (1957) Effect of possible smog 
irritants on human subjects. J Am Med Assoc 165(15):1908-1913.
    \78\ Morris JB, Symanowicz PT, Olsen JE, et al. 2003. Immediate 
sensory nerve-mediated respiratory responses to irritants in healthy 
and allergic airway-diseased mice. J Appl Physiol 94(4):1563-1571.
---------------------------------------------------------------------------

    EPA is currently in the process of conducting an assessment of 
acute exposure effects for acrolein. The intense irritancy of this 
carbonyl has been demonstrated during controlled tests in human 
subjects, who suffer intolerable eye and nasal mucosal sensory 
reactions within minutes of exposure.\79\
---------------------------------------------------------------------------

    \79\ Sim VM, Pattle RE. Effect of possible smog irritants on 
human subjects JAMA165: 1980-2010, 1957.
---------------------------------------------------------------------------

    Polycyclic Organic Matter (POM): POM is generally defined as a 
large class of organic compounds which have multiple benzene rings and 
a boiling point greater than 100 degrees Celsius. Many of the compounds 
included in the class of compounds known as POM are classified by EPA 
as probable human carcinogens based on animal data. One of these 
compounds, naphthalene, is discussed separately below. Polycyclic 
aromatic hydrocarbons (PAHs) are a subset of POM that contain only 
hydrogen and carbon atoms. A number of PAHs are known or suspected 
carcinogens. Recent studies have found that maternal exposures to PAHs 
(a subclass of POM) in a population of pregnant women were associated 
with several adverse birth outcomes, including low birth weight and 
reduced length at birth, as well as impaired cognitive development at 
age three.80 81 EPA has not yet evaluated these recent 
studies.
---------------------------------------------------------------------------

    \80\ Perera, F.P.; Rauh, V.; Tsai, W-Y.; et al. (2002) Effect of 
transplacental exposure to environmental pollutants on birth 
outcomes in a multiethnic population. Environ Health Perspect. 111: 
201-205.
    \81\ Perera, F.P.; Rauh, V.; Whyatt, R.M.; Tsai, W.Y.; Tang, D.; 
Diaz, D.; Hoepner, L.; Barr, D.; Tu, Y.H.; Camann, D.; Kinney, P. 
(2006) Effect of prenatal exposure to airborne polycyclic aromatic 
hydrocarbons on neurodevelopment in the first 3 years of life among 
inner-city children. Environ Health Perspect 114: 1287-1292.
---------------------------------------------------------------------------

    Naphthalene: Naphthalene is found in small quantities in gasoline 
and diesel fuels. Naphthalene emissions have been measured in larger 
quantities in both gasoline and diesel exhaust compared with 
evaporative emissions from mobile sources, indicating it is primarily a 
product of combustion. EPA recently released an external review draft 
of a reassessment of the inhalation carcinogenicity of naphthalene 
based on a number of recent animal carcinogenicity studies.\82\ The 
draft reassessment recently completed external peer review.\83\ Based 
on external peer review comments received to date, additional analyses 
are being undertaken. This external review draft does not represent 
official agency opinion and was released solely for the purposes of 
external peer review and public comment. Once EPA evaluates public and 
peer reviewer comments, the document will be revised. The National 
Toxicology Program listed naphthalene as ``reasonably anticipated to be 
a human carcinogen'' in 2004 on the basis of bioassays reporting clear 
evidence of carcinogenicity in rats and some evidence of 
carcinogenicity in mice.\84\ California EPA has released a new risk 
assessment for naphthalene, and the IARC has reevaluated naphthalene 
and re-classified it as Group 2B: possibly carcinogenic to humans.\85\ 
Naphthalene

[[Page 59048]]

also causes a number of chronic non-cancer effects in animals, 
including abnormal cell changes and growth in respiratory and nasal 
tissues.\86\
---------------------------------------------------------------------------

    \82\ U.S. EPA (2004) Toxicological Review of Naphthalene 
(Reassessment of the Inhalation Cancer Risk), Environmental 
Protection Agency, Integrated Risk Information System, Research and 
Development, National Center for Environmental Assessment, 
Washington, DC. This material is available electronically at http://
www.epa.gov/iris/subst/0436.htm.
    \83\ Oak Ridge Institute for Science and Education (2004) 
External Peer Review for the IRIS Reassessment of the Inhalation 
Carcinogenicity of Naphthalene. August 2004. http://cfpub.epa.gov/
ncea/cfm/recordisplay.cfm?deid=84403.
    \84\ National Toxicology Program (NTP). (2004). 11th Report on 
Carcinogens. Public Health Service, U.S. Department of Health and 
Human Services, Research Triangle Park, NC. Available from: http://
ntp-server.niehs.nih.gov.
    \85\ International Agency for Research on Cancer (IARC) (2002) 
Monographs on the Evaluation of the Carcinogenic Risk of Chemicals 
for Humans. Vol. 82. Lyon, France.
    \86\ U.S. EPA (1998) Toxicological Review of Naphthalene, 
Environmental Protection Agency, Integrated Risk Information System, 
Research and Development, National Center for Environmental 
Assessment, Washington, DC. This material is available 
electronically at http://www.epa.gov/iris/subst/0436.htm.
---------------------------------------------------------------------------

    The standards finalized in this action will reduce air toxics 
emitted from these engines, vessels and equipment. These emissions 
reductions will help to mitigate some of the adverse health effects 
associated with their operation.

C. Carbon Monoxide

    CO is a colorless, odorless gas produced through the incomplete 
combustion of carbon-based fuels. The current primary NAAQS for CO are 
35 ppm for the 1-hour average and nine ppm for the 8-hour average. 
These values are not to be exceeded more than once per year.
    We previously found that emissions from nonroad engines contribute 
significantly to CO concentrations in more than one nonattainment area 
(59 FR 31306, June 17, 1994). We have also previously found that 
emissions from Small SI engines contribute to CO concentrations in more 
than one nonattainment area. We are adopting a finding, based on the 
information in this section and in Chapters 2 and 3 of the Final RIA, 
that emissions from Marine SI engines and vessels likewise contribute 
to CO concentrations in more than one CO nonattainment area.
    Carbon monoxide enters the bloodstream through the lungs, forming 
carboxyhemoglobin and reducing the delivery of oxygen to the body's 
organs and tissues. The health threat from CO is most serious for those 
who suffer from cardiovascular disease, particularly those with angina 
or peripheral vascular disease. Healthy individuals also are affected, 
but only at higher CO levels. Exposure to elevated CO levels is 
associated with impairment of visual perception, work capacity, manual 
dexterity, learning ability and performance of complex tasks. Carbon 
monoxide also contributes to ozone nonattainment since carbon monoxide 
reacts photochemically in the atmosphere to form ozone.\87\ Additional 
information on CO related health effects can be found in the Carbon 
Monoxide Air Quality Criteria Document (CO AQCD).\88\
---------------------------------------------------------------------------

    \87\ U.S. EPA (2000). Air Quality Criteria for Carbon Monoxide, 
EPA/600/P-99/001F. This document is available in Docket EPA-HQ-OAR-
2004-0008.
    \88\ U.S. EPA (2000). Air Quality Criteria for Carbon Monoxide, 
EPA/600/P-99/001F. This document is available in Docket EPA-HQ-OAR-
2004-0008.
---------------------------------------------------------------------------

    In addition to health effects from chronic exposure to ambient CO 
levels, acute exposures to higher levels are also a problem, see the 
Final RIA for additional information. In recent years a substantial 
number of CO poisonings and deaths have occurred on and around 
recreational boats across the nation.\89\ The actual number of deaths 
attributable to CO poisoning while boating is difficult to estimate 
because CO-related deaths in the water may be labeled as drowning. An 
interagency team consisting of the National Park Service, the U.S. 
Department of the Interior, and the National Institute for Occupational 
Safety and Health maintains a record of published CO-related fatal and 
nonfatal poisonings.\90\ Between 1984 and 2004, 113 CO-related deaths 
and 458 non-fatal CO poisonings have been identified based on hospital 
records, press accounts and other information. Deaths have been 
attributed to exhaust from both onboard generators and propulsion 
engines. Houseboats, cabin cruisers, and ski boats are the most common 
types of boats associated with CO poisoning cases. These incidents have 
prompted other federal agencies, including the United States Coast 
Guard and National Park Service, to issue advisory statements and other 
interventions to boaters to avoid excessive CO exposure.\91\
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    \89\ Mott, J.S.; Wolfe, M.I.; Alverson, C.J.; Macdonald, S.C.; 
Bailey, C.R.; Ball, L.B.; Moorman, J.E.; Somers, J.H.; Mannino, 
D.M.; Redd, S.C. (2002) National Vehicle Emissions Policies and 
Practices and Declining US Carbon Monoxide-Related Mortality. JAMA 
288:988-995.
    \90\ National Park Service; Department of the Interior; National 
Institute for Occupational Safety and Health. (2004) Boat-related 
carbon monoxide poisonings. This document is available 
electronically at http://safetynet.smis.doi.gov/thelistbystate10-19-
04.pdf and in docket EPA-HQ-OAR-2004-0008.
    \91\ U.S Department of the Interior. (2004) Carbon monoxide 
dangers from generators and propulsion engines. On-board boats--
compilation of materials. This document is available online at 
http://safetynet.smis.doi.gov/COhouseboats.htm and in docket EPA-HQ-
OAR-2004-0008.
---------------------------------------------------------------------------

    As of March 12, 2008, there were approximately 850,000 people 
living in 4 areas (which include 5 counties) designated as 
nonattainment for CO.\92\ The CO nonattainment areas are presented in 
the Final RIA.
---------------------------------------------------------------------------

    \92\ Population numbers are from 2000 census data.
---------------------------------------------------------------------------

    EPA's NONROAD model indicates that Marine SI emissions are present 
in each of the CO nonattainment areas and thus contribute to CO 
concentrations in those nonattainment areas. The CO contribution from 
Marine SI engines in classified CO nonattainment areas is presented in 
Table II-3.

       Table II-3--CO Emissions From Marine SI Engines and Vessels in Classified CO Nonattainment Areas a
----------------------------------------------------------------------------------------------------------------
                                                                                                  CO (short tons
                  Area                              County                     Category              in 2005)
----------------------------------------------------------------------------------------------------------------
Las Vegas, NV...........................  Clark.....................  Marine SI.................           3,016
Reno, NV................................  Washoe....................  Marine SI.................           3,494
El Paso, TX.............................  El Paso...................  Marine SI.................              37
----------------------------------------------------------------------------------------------------------------
Source: U.S. EPA, NONROAD 2005 model.
\a\ This table does not include Salem, OR which is an unclassified CO nonattainment area.

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

III. Sterndrive and Inboard Marine Engines

A. Overview

    This section applies to sterndrive and inboard marine (SD/I) 
engines. Sterndrive and inboard engines are spark-ignition engines 
typically derived from automotive engine blocks for which a 
manufacturer will take steps to ``marinize'' the engine for use in 
marine applications. This marinization process includes choosing and 
optimizing the fuel management system, configuring a marine cooling 
system, adding intake and exhaust manifolds, and adding accessory 
drives and units. These engines typically have water-jacketed

[[Page 59049]]

exhaust systems to keep surface temperatures low. Ambient surface water 
(seawater or freshwater) is generally added to the exhaust gases before 
the mixture is expelled under water.
    As described in Section I, the initial rulemaking to set standards 
for Marine SI engines did not include final emission standards for SD/I 
engines. In that rulemaking, we finalized the finding under Clean Air 
Act section 213(a)(3) that all Marine SI engines cause or contribute to 
ozone concentrations in two or more ozone nonattainment areas in the 
United States. However, because uncontrolled SD/I engines appeared to 
be a low-emission alternative to outboard and personal watercraft 
engines in the marketplace, even after the emission standards for these 
engines were fully phased in, we decided to set emission standards only 
for outboard and personal watercraft engines. At that time, outboard 
and personal watercraft engines were almost all two-stroke engines with 
much higher emission rates compared to the SD/I engines, which were all 
four-stroke engines. We pointed out in that initial rulemaking that we 
wanted to avoid imposing costs on SD/I engines that could cause a 
market shift to increased use of the higher-emitting outboard engines, 
which will undermine the broader goal of achieving the greatest degree 
of emission control from the full set of Marine SI engines.
    We believe this is an appropriate time to set standards for SD/I 
engines, for several reasons. First, the available technology for SD/I 
engines has developed significantly, so we are now able to anticipate 
substantial emission reductions. With the simultaneous developments in 
technology for outboard and personal watercraft engines, we can set 
standards that achieve substantial emission reductions from all Marine 
SI engines. Second, now that California has adopted standards for SD/I 
engines, the cost impact of setting new standards for manufacturers 
serving the California market is generally limited to the hardware 
costs of adding emission control technology; these manufacturers will 
be undergoing a complete redesign effort for these engines to meet the 
California standards. Third, while an emission control program for SD/I 
engines will increase the price of these engines, we no longer think 
this will result in a market shift to higher-emitting outboard engines. 
The economic impact analysis performed for this final rule, summarized 
in Section XII, suggests that the prices will increase less than 1 
percent and sales will be impacted by less than 2 percent. It is also 
possible that SD/I engine manufacturers may promote higher fuel 
efficiency and other performance advantages of compliant engines which 
would allow them to promote these engines as having a greater value and 
justifying these small expected price increases. As a result, we 
believe we can achieve the maximum emission reductions from Marine SI 
engines by setting standards for SD/I engines based on the use of 
catalyst technology at the same time that we adopt more stringent 
standards for outboard and personal watercraft engines.
    As described in Section II, we are adopting the finding under Clean 
Air Act section 213(a)(3) that Marine SI engines cause or contribute to 
CO concentrations in two or more nonattainment areas of the United 
States. We believe the new CO standards will also reduce the exposure 
of individual boaters and bystanders to potentially dangerous CO 
levels.
    We believe catalyst technology is available for achieving the new 
standards. Catalysts have been used for decades in automotive 
applications to reduce emissions, and catalyst manufacturers have 
continued to develop and improve this technology. Design issues for 
using catalysts in marine applications are primarily centered on 
packaging catalysts in the water-jacketed, wet exhaust systems seen on 
most SD/I engines. Section III.G discusses recent development work that 
has shown success in packaging catalysts in SD/I applications. In 
addition, there are ongoing efforts in evaluating catalyst technology 
in SD/I engines being sponsored by the marine industry, U.S. Coast 
Guard, and California ARB.
    We are adopting the regulatory requirements for marine spark-
ignition engines in 40 CFR part 1045. These requirements are similar to 
the regulations that have been in place for outboard and personal 
watercraft engines for several years, but include updated certification 
procedures, as described in Section IV.A. Engines and vessels subject 
to part 1045 are also subject to the general compliance provisions in 
40 CFR part 1068. These include prohibited acts and penalties, 
exemptions and importation provisions, selective enforcement audits, 
defect reporting and recall, and hearing procedures. See Section VIII 
of the preamble to the proposed rule for further discussion of these 
general compliance provisions.

B. Engines Covered by This Rule

(1) Definition of Sterndrive and Inboard Engines
    For the purpose of this regulation, SD/I engines encompass all 
spark-ignition marine propulsion engines that are not outboard or 
personal watercraft engines. A discussion of the revised definitions 
for outboard and personal watercraft engines is in Section IV.B. We 
consider all the following to be SD/I engines: inboard, sterndrive 
(also known as inboard/outboard), airboat engines, and jet boat 
engines.
    The definitions for sterndrive and inboard engines at 40 CFR part 
91 are presented below:
     Sterndrive engine means a four stroke Marine SI engine 
that is designed such that the drive unit is external to the hull of 
the marine vessel, while the engine is internal to the hull of the 
marine vessel.
     Inboard engine means a four stroke Marine SI engine that 
is designed such that the propeller shaft penetrates the hull of the 
marine vessel while the engine and the remainder of the drive unit is 
internal to the hull of the marine vessel.
    We are amending the above definitions for determining which exhaust 
emission standards apply to spark-ignition marine engines in 2010. The 
new definition establishes a single term to include sterndrive and 
inboard engines together as a single engine category. The new 
definition for sterndrive/inboard also is drafted to include all 
engines not otherwise classified as outboard or personal watercraft 
engines.
    The new definition has several noteworthy impacts. First, it 
removes a requirement that only four-stroke engines can qualify as 
sterndrive/inboard engines. We believe limiting the definition to 
include only four-stroke engines is unnecessarily restrictive and could 
create an incentive to use two-stroke (or rotary) engines to avoid 
catalyst-based standards. Second, it removes limitations caused by 
reference to propellers. The definition should not refer specifically 
to propellers, because there are other propulsion drives on marine 
vessels, such as jet drives, that could be used with SD/I engines. 
Third, as explained in the section on the OB/PWC definitions, the new 
definitions treat engines installed in open-bay vessels (e.g. jet 
boats) and in vessels over 4 meters long as SD/I engines. Finally, the 
definition in part 91 does not clearly specify how to treat specialty 
vessels such as airboats or hovercraft that use engines similar to 
those in conventional SD/I applications. The

[[Page 59050]]

definition of personal watercraft grants EPA the discretion to classify 
engines as SD/I engines if the engine is comparable in technology and 
emissions to an inboard or sterndrive engine. EPA has used this 
discretion to classify airboats as SD/I engines. See 40 CFR 91.3 for 
the existing definitions of the marine engine classes. We continue to 
believe these engines share fundamental characteristics with 
traditional SD/I engines and should therefore be treated the same way. 
However, we believe the definitions should address these applications 
expressly to make clear which standards apply. We are adopting the 
following definition:
     Sterndrive/inboard engine means a spark-ignition engine 
that is used to propel a vessel, but is not an outboard engine or a 
personal watercraft engine. A sterndrive/inboard engine may be either a 
conventional sterndrive/inboard engine or a high-performance engine. 
Engines on propeller-driven vessels, jet boats, air boats, and 
hovercraft are all sterndrive/inboard engines.
    SD/I high-performance engines are generally characterized by high-
speed operation, supercharged air intake, customized parts, very high 
power densities, and a short time until rebuild (50 to 200 hours). 
Based on current SD/I product offerings, we are defining a high-
performance engine as an SD/I engine with maximum power above 373 kW 
(500 hp) that has design features to enhance power output such that the 
expected operating time until rebuild is substantially shorter than 480 
hours.
(2) Exclusions and Exemptions
    We are extending our basic nonroad exemptions to the SD/I engines 
and vessels covered by this rule. These include the testing exemption, 
the manufacturer-owned exemption, the display exemption, and the 
national-security exemption. If the conditions for an exemption are 
met, then the engine is not subject to the exhaust emission standards.
    In the rulemaking for recreational vehicles, we chose not to apply 
standards to hobby products by exempting all reduced-scale models of 
vehicles that are not capable of transporting a person (67 FR 68242, 
November 8, 2002). We are extending that same provision to SD/I marine 
engines (see Sec.  1045.5).
    The Clean Air Act provides for different treatment of engines used 
solely for competition. Rather than relying on engine design features 
that serve as inherent indicators of dedicated competitive use, as 
specified in the current regulations, we have taken the approach in 
more recent programs of more carefully differentiating competition and 
noncompetition models in ways that reflect the nature of the particular 
products. In the case of Marine SI engines, we do not believe there are 
engine design features that allow us to differentiate between engines 
that are used in high-performance recreational applications and those 
that are used solely for competition. Starting January 1, 2009, Marine 
SI engines meeting all the following criteria will therefore be 
considered to be used solely for competition:
     The engine (or a vessel in which the engine is installed) 
may not be displayed for sale in any public dealership or otherwise 
offered for sale to the general public.
     Sale of the vessel in which the engine is installed must 
be limited to professional racers or other qualified racers.
     The engine must have performance characteristics that are 
substantially superior to noncompetitive models (e.g. higher power-to-
weight ratio).
     The engines must be intended for use only in racing events 
sanctioned (with applicable permits) by the Coast Guard or other public 
organization, with operation limited to racing events, speed record 
attempts, and official time trials.
    We are also including a provision allowing us to approve an 
exemption for cases in which an engine manufacturer can provide clear 
and convincing evidence that an engine will be used solely for 
competition even though not all the above criteria apply for a given 
situation. This may occur, for example, if a racing association 
specifies a particular engine model in their competition rules, where 
that engine has design features that prevent it from being certified or 
from being used for purposes other than competition.
    Engine manufacturers will make their request for each new model 
year. We will deny a request for future production if there are 
indications that some engines covered by previous requests are not 
being used solely for competition. Competition engines are generally 
produced and sold in very small quantities, so manufacturers should be 
able to identify which engines qualify for this exemption. We are 
applying the same criteria to outboard and personal watercraft engines 
and vessels. See Sec.  1045.620.
    We are adopting a new exemption to address individuals who 
manufacture recreational marine vessels for personal use (see Sec.  
1045.630). Under this exemption, someone may install a used engine in a 
new vessel where that engine is exempt from standards, subject to 
certain limitations. For example, an individual may produce one such 
vessel over a five-year period, the vessel may not be used for 
commercial purposes, and any exempt engines may not be sold for at 
least five years. The vessel must generally be built from unassembled 
components, rather than simply completing assembly of a vessel that is 
otherwise similar to one that will be certified to meet emission 
standards. This exemption does not apply for freshly manufactured 
engines. This exemption addresses the concern that hobbyists who make 
their own vessels could otherwise be a manufacturer subject to the full 
set of emission standards by introducing these vessels into commerce. 
We expect this exemption to involve a very small number of vessels. We 
revised the provisions of the personal-use exemption since the proposal 
to allow people to build a vessel with an exempted engine once every 
five years instead of ten years. We believe this is more reflective of 
a hobbyists interest in building a boat and using it before moving on 
to the next building project.

C. Exhaust Emission Standards

    We are adopting technology-based exhaust emission standards for new 
SD/I engines. These standards are similar to the exhaust emission 
standards that California ARB recently adopted (see Section I). This 
section describes the provisions related to controlling exhaust 
emissions from SD/I engines. See Section VI for a description of the 
new requirements related to evaporative emissions.
(1) Standards and Dates
    We are adopting exhaust emission standards of 5.0 g/kW-hr 
HC+NOX and 75 g/kW-hr CO for SD/I engines, starting with the 
2010 model year (see Sec.  1045.105). On average, this represents about 
a 70 percent reduction in HC+NOX and a 50 percent reduction 
in CO from baseline engine configurations. Due to the challenges of 
controlling CO emissions at high load, the expected reduction in CO 
emissions from low-to mid-power operation is expected to be more than 
80 percent. We are providing additional lead time for small businesses 
as discussed in Section III.F.2. The new standards are based on the 
same duty cycle that currently is in place for outboard and personal 
watercraft engines, as described in Section III.D. Section III.G 
discusses the technological feasibility of these standards in more 
detail.
    The new standards are largely based on the use of small catalytic 
converters

[[Page 59051]]

that can be packaged in the water-cooled exhaust systems typical for 
these applications. California ARB also adopted an HC+NOX 
standard of 5 g/kW-hr, starting with 2008 model year engines, but they 
did not adopt a standard for CO emissions. We believe the type of 
catalyst used to achieve the HC+NOX standard will also be 
effective in reducing CO emissions enough to meet the new standard with 
the proper calibrations, so no additional hardware will be needed to 
control CO emissions.
    Manufacturers have expressed concern that the implementation dates 
may be difficult to meet, for certain engines, due to anticipated 
changes in engine block designs produced by General Motors. As 
described in the Final RIA and in the docket, the vast majority of SD/I 
engines are based on automotive engine blocks sold by General 
Motors.\93\ There are five basic engine blocks used, and recently GM 
announced that it plans to discontinue production of the 4.3L and 8.1L 
engine blocks. GM anticipates that it will offer a 4.1L engine block 
and a 6.0L supercharged engine block to the marine industry as 
replacements. Full-run production of these new blocks is anticipated 
around the time that manufacturers will be making the transition to 
meeting new EPA emission standards. SD/I engine manufacturers have 
expressed concern that they will not be able to begin the engineering 
processes related to marinizing these engines, including the 
development of catalyst-equipped exhaust manifolds, until they see the 
first prototypes of the two replacement engine models. In addition, 
they are concerned that they do not have enough remaining years of 
sales of the 4.3L and 8.1L engines to justify the cost of developing 
catalyst-equipped exhaust manifolds for these engines and amortizing 
the costs of the required tooling while also developing the two new 
engine models.
---------------------------------------------------------------------------

    \93\ ``GM Product Changes Affecting SD/I Engine Marinizers,'' 
memo from Mike Samulski, EPA, to Docket EPA-HQ-OAR-2004-0008-0528.
---------------------------------------------------------------------------

    These are unique circumstances because the SD/I engine 
manufacturers' plans and products depend on the manufacture of the base 
engine by a company not directly involved in marine engine 
manufacturing. The SD/I sales represent only a small fraction of GM's 
total engine sales and thus did not weigh heavily in their decision to 
replace the existing engine blocks with two comparable versions during 
the timeframe when the SD/I manufacturers are facing new emission 
standards. SD/I manufacturers have stated that alternative engine 
blocks that meet their needs are not available in the interim, and that 
it will be cost-prohibitive for them to produce their own engine 
blocks.
    EPA's SD/I standards start to take effect with the 2010 model year, 
two years after the same standards apply in California. We believe a 
requirement to extend the California standards nationwide after a two-
year delay allows manufacturers adequate time to incorporate catalysts 
across their product lines as they are doing in California. Once the 
technology is developed for use in California, it will be available for 
use nationwide soon thereafter. In fact, one company currently 
certified to the California standards is already offering catalyst-
equipped SD/I engines nationwide. To address the challenge related to 
the transition away from the current 4.3 and 8.1 liter GM engines, we 
are including in the final rule a direct approval for a hardship 
exemption allowing manufacturers to produce these engines for one 
additional year without certifying them (see Sec.  1045.145). Starting 
in the 2011 model year, we would expect manufacturers to have worked 
things out such that they could certify their full product lineup to 
the applicable standards.
    Engines used on jet boats may have been classified under the 
original definitions as personal watercraft engines. As described in 
Section IV, engines used in jet boats or personal watercraft-like 
vessels that are four meters or longer will be classified as SD/I 
engines under the new definitions. Such engines subject to part 91 
today will therefore need to continue meeting EPA emission standards as 
personal watercraft engines through the 2009 model year under part 91, 
after which they will need to meet the new SD/I standards under part 
1045. This is another situation where the transition period discussed 
above may be helpful. In contrast, as discussed above, air boats have 
been classified as SD/I engines under EPA's discretionary authority and 
are not required to comply with part 91, but must meet the new emission 
standards for SD/I engines under part 1045.
    As described above, engines used solely for competition are not 
subject to emission standards, but many SD/I high-performance engines 
are sold for recreational use. SD/I high-performance engines have very 
high power outputs, large exhaust gas flow rates, and relatively high 
concentrations of hydrocarbons and carbon monoxide in the exhaust 
gases. As described in the Final Regulatory Impact Analysis, applying 
catalyst technology to these engines is not practical. California ARB 
initially adopted the same HC+NOX standards that apply for 
other SD/I engines with the expectation that manufacturers would simply 
rely on emission credits from other SD/I engines. We believe a credit-
based solution is not viable for small business manufacturers that do 
not have other products with which to exchange emission credits and 
California ARB has modified their rule to also address this concern.
    We are adopting standards for SD/I high-performance engines based 
on the level of control that can be expected from recalibration with 
electronically controlled fuel injection. These standards are phased in 
over a two-year transition period. In the 2010 model year, the 
HC+NOX emission standards are 20.0 g/kW-hr for engines at or 
below 485 kW and 25.0 g/kW-hr for bigger engines. In 2011 and later 
model years, the HC+NOX emission standards drop to 16.0 g/
kW-hr for engines at or below 485 kW and 22.0 g/kW-hr for bigger 
engines. The CO standard is 350 g/kW-hr for all SD/I high-performance 
engines. We believe this is achievable with more careful control of 
fueling rates, especially under idle conditions. Control of air-fuel 
ratios should result in improved emission control even after multiple 
rebuilds. Note that small-volume manufacturers may delay complying with 
the high-performance standards until 2013. In that year, the standard 
will be the same as the 2011 standards for larger manufacturers.
    We are adopting a variety of provisions to simplify the 
requirements for exhaust emission certification and compliance for SD/I 
high-performance engines, as described in Section IV.F. We have also 
chosen not to apply the Not-to-Exceed emission standards to these 
engines because we have very limited information on their detailed 
emission characteristics and we are concerned about extent of testing 
that would be required by the large number of affected engine 
manufacturers that are small businesses.
    We are also aware that there are some very small sterndrive or 
inboard engines. In particular, sailboats may have small propulsion 
engines for backup power. These engines will fall under the new 
definition of sterndrive/inboard engines, even though they are much 
smaller and may experience very different in-use operation. These 
engines generally have more in common with marine auxiliary engines or 
lawn and garden engines that are subject to land-based standards. We 
are therefore allowing manufacturers to use engines that have been 
certified to current land-

[[Page 59052]]

based emission standards for sterndrive and inboard installation, much 
like we are adopting for outboard and personal watercraft engines (see 
Sec.  1045.610).
    The emission standards apply at the range of atmospheric pressures 
represented by the test conditions specified in part 1065. This 
includes operation at elevated altitudes. Since we expect most or all 
SD/I engines to have three-way catalysts with closed-loop fuel control, 
these engines should be able to include the ability to automatically 
compensate for varying altitude. Manufacturers may choose to use an 
altitude kit for demonstrating compliance with emission standards at 
high altitudes as described for OB/PWC engines in Section IV.C.1. 
Manufacturers using altitude kits would need to take a variety of steps 
to describe their approach and ensure that such altitude kits are in 
fact being used with in-use engines operating at high altitudes, as 
described in Section IV.E.8.
(2) Not-to-Exceed Standards
    We are adopting emission standards that apply over an NTE zone. The 
NTE standards are in the form of a multiplier times the duty-cycle 
standard for HC+NOX and for CO (see Sec.  1045.105. Section 
III.D.2 gives an overview of the NTE standards and compliance 
provisions and describes the NTE test procedures.
    Manufacturers commented that certification to the NTE standards 
requires additional testing for engine models that are already 
certified to the new emission standards for California. In addition, 
they expressed concern that they may need to recalibrate existing 
engine models to meet the NTE standards. Manufacturers commented that 
this would not be possible by the date of the duty cycle standard. For 
engines already certified in California, manufacturers carry over 
preexisting certification test data from year to year. Manufacturers 
commented that additional time would be necessary to retest, and 
potentially recalibrate, these engines for certification to the NTE 
standards. To address these issues regarding lead time needed to retest 
these engines, we are not applying the NTE standards for 2010-2012 
model year engines that are certified using preexisting data (i.e., 
carryover engine families). For new engine models, manufacturers 
indicated that they will be able to perform the NTE testing and duty-
cycle testing as part of their efforts to certify to the new standards. 
Therefore the primary implementation date of 2010 applies to these 
engines. Beginning in the 2013 model year, all conventional SD/I 
engines must be certified to meet the NTE standards.
    This NTE approach complements the weighted modal emission tests 
included in this rule. These steady-state duty cycles and standards are 
intended to establish average emission levels over several discrete 
modes of engine operation. Because it is an average, manufacturers 
design their engines with emission levels at individual points varying 
as needed to maintain maximum engine performance and still meet the 
engine standard. The NTE limit will be an additional requirement. It is 
intended to ensure that emission controls function with relative 
consistency across the full range of expected operating conditions.
(3) Emission Credit Programs
(a) Averaging, Banking, and Trading
    We are adopting provisions for averaging, banking, and trading of 
emission credits for conventional SD/I engines to meet the new 
HC+NOX and CO standards (see Sec.  1045.105 and part 1045, 
subpart H). See Section VII.C.5 of the preamble to the proposed rule 
for a description of general provisions related to averaging, banking, 
and trading programs. A description of the ABT provisions for the new 
SD/I standards is provided in this section.
    EPA proposed that manufacturers would not be able to earn credits 
for one pollutant while using credits to comply with the emissions 
standard for another pollutant. The proposed restriction was modeled on 
similar requirements in other ABT programs where there was concern that 
a manufacturer could use technologies to reduce one pollutant while 
increasing another pollutant. Manufacturers are expected to comply with 
the new SD/I standards by using a combination of improved engine 
designs and catalysts. This should result in reductions in both 
HC+NOX emissions and CO emissions compared to current 
designs. While the technology is expected to reduce both 
HC+NOX emissions and CO emissions, there could be situations 
where the engines are capable of meeting one of the emission standards 
but not the other. EPA does not want to preclude such engines from 
being able to certify using the provisions of the ABT program and is 
therefore dropping the proposed restriction from the final rule.
    Credit generation and use is calculated based on the FEL of the 
engine family and the standard. We are adopting FEL caps to prevent the 
sale of very high-emitting engines. The HC+NOX FEL cap for 
conventional SD/I engines is 16 g/kW-hr while the CO FEL cap is 150 g/
kW-hr and applies starting in 2010, except as noted below. These FEL 
caps represent the average baseline emission levels of SD/I engines, 
based on data described in the Final RIA. However, through the 2013 
model year we are separately allowing small-volume engine manufacturers 
to certify their four-stroke conventional SD/I engines without testing 
by assuming an HC+NOX FEL of 22.0 g/kW-hr and a CO FEL of 
150 g/kW-hr. Manufacturers using this provision would not be subject to 
the FEL cap for those engine families.
    We are specifying that SD/I engines are in a separate averaging set 
from OB/PWC engines, with a limited exception for certain jet boat 
engines as described below. This means that credits earned by SD/I 
engines may be used only to offset higher emissions from other SD/I 
engines. Likewise, credits earned by OB/PWC engines may be used only to 
offset higher emissions from other OB/PWC engines (except where we 
allow those credits to be used for certain jet boat engines).
    Emission credits earned for SD/I engines will have an indefinite 
credit life with no discounting. We consider these emission credits to 
be part of the overall program for complying with the new standards. 
Given that we may consider further reductions beyond these standards in 
the future, we believe it will be important to assess the ABT credit 
situation that exists at the time any further standards are considered. 
Emission credit balances will be part of the analysis for determining 
the appropriate level and timing of new standards, consistent with the 
statutory requirement to establish standards that represent the 
greatest degree of emission reduction achievable, considering cost, 
safety, lead time, and other factors. If we were to allow the use of 
credits generated under the standards adopted in this rule to meet more 
stringent standards adopted in a future rulemaking, we may need to 
adopt emission standards at more stringent levels or with an earlier 
start date than we would absent the continued use of existing emission 
credits, depending on the level of emission credit banks. 
Alternatively, we may adopt future standards without allowing the use 
of existing emission credits.
    Finally, manufacturers may include as part of their federal credit 
calculation the sales of engines in California as long as they don't 
separately account for those emission credits under the California 
regulations. We originally proposed to exclude engines sold in 
California that are subject to the California ABR standards. However, 
we

[[Page 59053]]

consider California's current HC+NOX standards to be 
equivalent to those we are adopting in this rulemaking, so we would 
expect a widespread practice of producing and marketing 50-state 
products. Therefore, as long as a manufacturer is not generating 
credits under California's regulations for SD/I engines, we would allow 
manufacturers to count those engines when calculating credits under 
EPA's program. This is consistent with how EPA allows credits to be 
calculated in other nonroad sectors, such as recreational vehicles.
(b) Early-Credit Approaches
    We are adopting an early-credit program in which a manufacturer 
could earn emission credits before 2010 with early introduction of 
emission controls designed to meet the new standards (see Sec.  
1045.145). For engines produced by small-volume SD/I manufacturers that 
are eligible for the one-year delay described in Section III.F.2, early 
credits could be earned before 2011. As proposed, use of these early 
credits would be limited to the first three years that the new 
standards apply. While we believe adequate lead time is provided to 
meet the new standards, we recognize that flexibility in timing could 
help some manufacturers--particularly small manufacturers--to meet the 
new standards. Other manufacturers that are able to comply early on 
certain models will be better able to transition their full product 
line to the new standards by spreading out the transition over two 
years or more. Under this approach, we anticipate that manufacturers 
will generate credits through the use of catalysts.
    Manufacturers will generate these early credits based on the 
difference between the measured emission level of the clean engines and 
an assigned baseline level (16 g/kW-hr HC+NOX and 150 g/kW-
hr CO). These assigned baseline levels are based on data presented in 
Chapter 4 of the Final RIA representing the average level observed for 
uncontrolled engines. We also provide bonus credits for any small-
volume SD/I engine manufacturer that certifies early to the new 
standards to provide a further incentive for introducing catalysts in 
SD/I engines. The bonus credits will take the form of a multiplier 
times the earned credits. The multipliers are 1.25 for being one year 
early, 1.5 for being two years early, and 2.0 for being three years 
early. For example, a small-volume manufacturer certifying an engine to 
5.0 g/kW-hr HC+NOX in 2009 (two years early) will get a 
bonus multiplier of 1.5. Early HC+NOX credits will therefore 
be calculated using the following equation: credits [grams] = (16-5) mu 
Power [kW] x Useful Life [hours] x Load Factor x 1.5. The specified 
load factor is 0.207, which is currently used in the OB/PWC 
calculations.
    To earn these early credits, the engine must meet both the new 
HC+NOX standard and the new CO standard. These early credits 
will be treated the same as emission credits generated after the 
emission standards start to apply. This approach provides an incentive 
for manufacturers to pull ahead significantly cleaner technologies. We 
believe such an incentive will lead to early introduction of catalysts 
on SD/I engines and help promote earlier market acceptance of this 
technology. We believe this early credit program will allow 
manufactures to comply with the new standards in an earlier time frame 
because it allows them to spread out their development resources over 
multiple years. To ensure that manufacturers do not generate credits 
for meeting standards that already apply, no EPA credits will be 
generated for engines that are produced for sale in California.
(c) Jet Boats
    Sterndrive and inboard vessels are typically propelled by 
traditional SD/I engines based on automotive engine blocks. As 
explained in Section IV, we are changing the definition of personal 
watercraft to ensure that engines used on jet boats will no longer be 
classified as personal watercraft engines but instead as SD/I engines 
because jet boats are more like SD/I vessels. However, manufacturers in 
many cases make these jet boats by installing an engine also used in 
outboard or personal watercraft applications (less than 4 meters in 
length) and coupling the engine to a jet drive for propelling the jet 
boat. Thus, manufacturers of outboard or personal watercraft engines 
may also manufacture the same or a similar engine for use on what we 
consider to be a jet boat.
    Engines used in jet boats will be subject to SD/I emission 
standards. However, we are providing some flexibility in meeting the 
new emission standards for jet boat engines because they are currently 
designed to use engines derived from OB/PWC applications and because of 
their relatively low sales volumes. We will allow manufacturers to use 
emission credits generated from OB/PWC engines to demonstrate that 
their jet boat engines meet the new HC+NOX and CO standards 
for SD/I engines if the same or similar engine is certified as an 
outboard or personal watercraft engine, and if the majority of units 
sold in the United States from those related engine families are sold 
for use as outboard or personal watercraft engines (see Sec.  1045.660 
and Sec.  1045.701). Manufacturers will need to group SD/I engines used 
for jet boats in a separate engine family from the outboard or personal 
watercraft engines to ensure proper labeling and calculation of 
emission credits, but manufacturers could rely on emission data from 
the same prototype engine for certifying both engine families.
    Finally, manufacturers of jet boat engines subject to SD/I 
standards and using credits from outboard or personal watercraft 
engines must certify these jet boat engines to an FEL that meets or 
exceeds the newly adopted standards for outboard and personal 
watercraft engines. This limits the degree to which manufacturers may 
take advantage of emission credits to produce engines that are emitting 
at higher levels than competitive engines.
(d) SD/I High-Performance Engines
    For the reasons described in Section III.C.1, the standards being 
adopted for SD/I high-performance engines are less stringent than 
originally proposed. As a result, we are not including the SD/I high-
performance engines in the ABT program. Manufacturers are required to 
meet the emission standards for SD/I high-performance engines without 
using emission credits.
(4) Crankcase Emissions
    Due to blowby of combustion gases and the reciprocating action of 
the piston, exhaust emissions can accumulate in the crankcase. 
Uncontrolled engine designs route these vapors directly to the 
atmosphere. Closed crankcases have become standard technology for 
automotive engines and for outboard and personal watercraft engines. 
Manufacturers generally do this by routing crankcase vapors through a 
valve into the engine's air intake system. We are requiring 
manufacturers to prevent crankcase emissions from SD/I marine engines 
(see Sec.  1045.115). Because automotive engine blocks are already 
tooled for closed crankcases, the cost of adding a valve for positive 
crankcase ventilation is small for SD/I engines. Even with non-
automotive blocks, the tooling changes necessary for closing the 
crankcase are straightforward.
(5) Durability Provisions
    We rely on pre-production certification, and other programs, to 
ensure that engines control emissions throughout their intended 
lifetime of operation. Section VII of the preamble to

[[Page 59054]]

the proposed rule describes how we require manufacturers to incorporate 
laboratory aging in the certification process, how we limit the extent 
of maintenance that manufacturers may specify to keep engines operating 
as designed, and other general provisions related to certification. The 
following sections describe additional provisions that are specific to 
SD/I engines.
(a) Useful Life
    We are specifying a useful life period of ten years or 480 hours of 
engine operation, whichever comes first (see Sec.  1045.105). 
Manufacturers are responsible for meeting emission standards during 
this useful life period. This is consistent with the requirements 
adopted by California ARB. We are further requiring that the 480-hour 
useful life period is a baseline value, which may be extended if data 
show that the average service life for engines in the family is longer. 
For example, we may require that the manufacturer certify the engine 
over a longer useful life period that more accurately represents the 
engines' expected operating life if we find that in-use engines are 
typically operating substantially more than 480 hours. This approach is 
similar to what we adopted for recreational vehicles.
    For SD/I high-performance engines, we are specifying a useful life 
of 150 hours or 3 years for engines at or below 485 kW and a useful 
life of 50 hours or 1 year for engines above 485 kW. Due to the high 
power and high speed of these engines, mechanical parts are often 
expected to wear out quickly. For instance, one manufacturer indicated 
that some engines above 485 kW have scheduled head rebuilds between 50 
and 75 hours of operation. These useful life values are consistent with 
the California ARB regulations for SD/I high-performance engines.
    Some SD/I engines below 373 kW may be designed for high power 
output even though they do not reach the power threshold to qualify as 
SD/I high-performance engines. Because they do not qualify for the 
shorter useful life that applies to SD/I high-performance engines, they 
will be subject to the default value of 480 hours for other SD/I 
engines. However, to address the limited operating life for engines 
that are designed for especially high power output, we are allowing 
manufacturers to request a shorter useful life for such an engine 
family based on information showing that engines in the family rarely 
operate beyond the requested shorter period. For example, if engines 
designed for extremely high-performance are typically rebuilt after 250 
hours of operation, this will form the basis for establishing a shorter 
useful life period for those engines. See Sec.  1045.105 for additional 
detail in establishing a shorter useful life.
    Jet boat engines that are certified in conjunction with outboard or 
personal watercraft engine families are subject to the shorter useful 
life period that applies for outboard or personal watercraft engines. 
This is necessary to prevent a situation where the original 
certification data is insufficient for certifying the jet boat engines 
without some further testing or analysis to show that the engines meet 
emission standards over a longer period.
(b) Warranty Periods
    We are requiring that manufacturers provide an emission-related 
warranty during the first three years or 480 hours of engine operation, 
whichever comes first (see Sec.  1045.120). This warranty period 
applies equally to emission-related electronic components on SD/I high-
performance engines. However, we are allowing shorter warranty periods 
(in hours) for emission-related mechanical components on SD/I high-
performance engines because these parts are expected to wear out more 
rapidly than comparable parts on traditional SD/I engines. 
Specifically, we are specifying a warranty period for emission-related 
mechanical components of 3 years or 150 hours for high-performance 
engines between 373 and 485 kW, and 1 year or 50 hours for high-
performance engines above 485 kW. These warranty periods are the same 
as those adopted by the California ARB.
    If the manufacturer offers a longer warranty for the engine or any 
of its components at no additional charge, we require that the 
emission-related warranty for the respective engine or component must 
be extended by the same amount. The emission-related warranty includes 
components related to controlling exhaust, evaporative, and crankcase 
emissions from the engine. These warranty requirements are consistent 
with provisions that apply in most other programs for nonroad engines.
(6) Engine Diagnostics
    We are requiring that manufacturers design their catalyst-equipped 
SD/I engines to diagnose malfunctioning emission control systems 
starting with the introduction of the final standards (see Sec.  
1045.110). As discussed in the Final RIA, three-way catalyst systems 
with closed-loop fueling control work well only when the air-fuel 
ratios are controlled to stay within a narrow range around 
stoichiometry. Worn or broken components or drifting calibrations over 
time can prevent an engine from operating within the specified range. 
This increases emissions and can lead to significantly increased fuel 
consumption and engine wear. The operator may or may not notice the 
change in the way the engine operates. We are not requiring similar 
diagnostic controls for OB/PWC engines because the anticipated emission 
control technologies for these other applications are generally less 
susceptible to drift and gradual deterioration. We have adopted similar 
diagnostic requirements for Large SI engines operating in forklifts and 
other industrial equipment that also use three-way catalysts to meet 
emission standards.
    This diagnostic requirement focuses solely on maintaining 
stoichiometric control of air-fuel ratios. This kind of design detects 
problems such as broken oxygen sensors, leaking exhaust pipes (upstream 
of sensors and catalysts), fuel deposits, and other things that require 
maintenance to keep the engine at the proper air-fuel ratio.
    Diagnostic monitoring provides a mechanism to help keep engines 
tuned to operate properly, with benefits for both controlling emissions 
and maintaining optimal performance. There are currently no inspection 
and maintenance programs for marine engines, so the most important 
variable in making the emission control and diagnostic systems 
effective is getting operators to repair the engine when the diagnostic 
light comes on. This calls for a relatively simple design to avoid 
signaling false failures as much as possible. The diagnostic 
requirements in this final rule, therefore, focus on detecting 
inappropriate air-fuel ratios, which is the most likely failure mode 
for three-way catalyst systems. The malfunction indicator must go on 
when an engine runs for a full minute under closed-loop operation 
without reaching a stoichiometric air-fuel ratio.
    California ARB has adopted diagnostic requirements for SD/I engines 
that involve a more extensive system for monitoring catalyst 
performance and other parameters. We will accept a California-approved 
system as meeting EPA requirements. The final regulations direct 
manufacturers to follow standard practices defined in documents adopted 
recently by the Society of Automotive Engineers in SAE J1939-5. See 
Sec.  1045.110 for detailed information.

[[Page 59055]]

D. Test Procedures for Certification

(1) General Provisions
    The marine engine test procedures are generally the same for both 
SD/I and OB/PWC engines. This involves laboratory measurement of 
emissions while the engine operates over the ISO E4 duty cycle. This is 
a five-mode steady-state duty cycle including an idle mode and four 
modes lying on a propeller curve with an exponent of 2.5, as shown in 
Appendix II to part 1045. The International Organization for 
Standardization (ISO) intended for this cycle to be used for 
recreational spark-ignition marine engines installed in vessels up to 
24 m in length. Because most or all vessels over 24 m have diesel 
engines, we believe the E4 duty cycle is most appropriate for SD/I 
engines covered by this rule. There may be some spark-ignition engines 
installed in vessels somewhat longer than 24 m, but we believe the E4 
duty cycle is no less appropriate in these cases. See Section IV.D for 
a discussion of adjustments to the test procedures related to the 
migration to 40 CFR part 1065, testing with a ramped-modal cycle, 
determining maximum test speed for denormalizing the duty cycle, and 
testing at high altitude.
    The E4 duty cycle includes a weighting of 40 percent for idle. For 
SD/I high-performance engines, commenters suggested that these engines 
typically have substantial auxiliary loads and parasitic losses even 
when the vessel does not need propulsion power. While the specified 
duty cycle for SD/I high-performance engines is identical to that for 
other Marine SI engines, we would expect manufacturers to use the 
provisions of Sec.  1065.510(b)(3) to target a reference torque of 15 
percent instead of zero at idle.
(2) Not-to-Exceed Test Procedures and Standards
    We are adopting not-to-exceed (NTE) requirements similar to those 
established for marine diesel engines. Engines will be required to meet 
the NTE standards during normal in-use operation.
(a) Concept
    Our goal is to achieve control of emissions over a wide range of 
ambient conditions and over the broad range of in-use speed and load 
combinations that can occur on a marine engine. This will ensure real-
world emission control, rather than just controlling emissions under 
certain laboratory conditions. This allows us to evaluate an engine's 
compliance during in-use testing without removing the engine from the 
vessel because the NTE requirements establish an objective standard and 
an easily implemented test procedure. Our traditional approach has been 
to set a numerical standard on a specified test procedure and rely on 
the additional prohibition of defeat devices to ensure in-use control 
over a broad range of operation not included in the test procedure. We 
are establishing the same prohibition on defeat devices for OB/PWC and 
SD/I engines (see Sec.  1045.115).
    No single test procedure or test cycle can cover all real-world 
applications, operations, or conditions. Yet to ensure that emission 
standards are providing the intended benefits in use, we must have a 
reasonable expectation that emissions under real-world conditions 
reflect those measured on the test procedure. The defeat device 
prohibition is designed to ensure that emission controls are employed 
during real-world operation, not just under laboratory testing 
conditions. However, the defeat device prohibition is not a quantified 
standard and does not have an associated test procedure, so it does not 
have the clear objectivity and ready enforceability of a numerical 
standard and test procedure. We believe using the traditional approach, 
i.e., using only a standardized laboratory test procedure and test 
cycle, makes it difficult to ensure that engines will operate with the 
same level of emission control in use as in the laboratory.
    Because the duty cycle we have adopted uses only five modes on an 
average propeller curve to characterize marine engine operation, we are 
concerned that an engine designed to that duty cycle will not 
necessarily perform the same way over the range of speed and load 
combinations seen on a boat. This duty cycle is based on an average 
propeller curve, but a marine propulsion engine may never be fitted 
with an ``average propeller.'' For instance, an engine installed in a 
specific boat with a particular propeller may operate differently based 
on the design of the boat and how heavily the boat is loaded, among 
other factors.
    To ensure that engines control emissions over a wide range of speed 
and load combinations normally seen on boats, we are including a zone 
under the engine's power curve where the engine may not exceed a 
specified emission limit (see Sec.  1045.105 and Sec.  1045.515). This 
limit will apply to all regulated pollutants during steady-state 
operation. In addition, we are requiring that a wide range of real 
ambient conditions be included in testing with this NTE zone. The NTE 
zone, limit, and ambient conditions are described below.
    We believe there are significant advantages to establishing NTE 
standards. The final NTE test procedure is flexible, so it can 
represent the majority of in-use engine operation and ambient 
conditions. The NTE approach thus takes all the benefits of a numerical 
standard and test procedure and expands it to cover a broad range of 
conditions. Also, laboratory testing makes it harder to perform in-use 
testing because either the engines will have to be removed from the 
vessel or care will have to be taken to achieve laboratory-type 
conditions on the vessel. With the NTE approach, in-use testing and 
compliance become much easier since emissions may be sampled during 
normal boating. By establishing an objective measurement, this approach 
makes enforcement of defeat device provisions easier and provides more 
certainty to the industry.
    Even with the NTE requirements, we believe it is still appropriate 
to retain standards based on the steady-state duty cycle. This is the 
standard that we expect the certified marine engines to meet on average 
in use. The NTE testing is focused more on maximum emissions for 
segments of operation and, in most cases, will not require additional 
technology beyond what is used to meet the final standards. In some 
cases, the calibration of the engine may need to be adjusted. We 
believe that basing the emission standards on a distinct cycle and 
using the NTE zone to ensure in-use control creates a comprehensive 
program.
    We believe the technology used to meet the standards over the five-
mode duty cycle, when properly calibrated, will meet the caps that 
apply across the NTE zone. We therefore do not expect the final NTE 
standards to cause manufacturers to need additional hardware. We 
believe the NTE standard will not result in a large amount of 
additional testing, because these engines should be designed to perform 
as well in use as they do over the five-mode test. However, our cost 
analysis in the Final RIA accounts for some additional testing, 
especially in the early years, to provide manufacturers with assurance 
that their engines will meet the NTE requirements.
(b) Shape of NTE Zone
    We developed the NTE zone based on the range of conditions that 
these engines typically see in use. Manufacturers collected data on 
several engines installed on vessels and operated under light and heavy 
load. Chapter 4 of the Final RIA presents this data and describes the 
development of the boundaries and conditions

[[Page 59056]]

associated with the NTE zone. Although significant in-use engine 
operation occurs at low speeds, we are excluding operation below 40 
percent of maximum test speed because brake-specific emissions increase 
dramatically as power approaches zero. An NTE limit for low-speed or 
low-power operation will be very hard for manufacturers and EPA to 
implement in a meaningful way.
    We anticipate that most, if not all SD/I engines subject to the NTE 
standards will use three-way catalytic controls to meet the exhaust 
emission standards. For that reason, this discussion focuses on the NTE 
zone and subzones for catalyst-equipped engines. Catalysts are most 
effective when the fuel-air ratio in the exhaust is near stoichiometry, 
and engine manufacturers use closed-loop electronic control to monitor 
and maintain the proper fuel-air ratio in the exhaust for optimum 
catalyst efficiency. However, at high power, engine manufacturers must 
increase the fueling rate to reduce the exhaust temperatures. 
Otherwise, if the exhaust temperature becomes too high, exhaust valves 
and catalysts may be damaged. During rich, open-loop operation at high 
power, the catalyst is oxygen-limited and less effective at oxidizing 
HC and CO. To address the issue of open-loop catalyst efficiency, we 
created a high power subzone for catalyst-equipped engines. The shape 
of this subzone is based on data presented in the RIA on engine 
protection strategies.
    Figure III-1 illustrates the final NTE zone for engines equipped 
with catalysts. Section IV.D.5 discusses the NTE test procedures and 
limits for non-catalyzed engines. The NTE zones and standards apply 
depending on whether the engine has a catalyst or not, so outboard or 
personal watercraft engines may be subject to the NTE approach 
described in this section and sterndrive/inboard engines may be subject 
to the NTE provisions described in Section IV.D.5. However, we expect 
these situations to be rather uncommon.
[GRAPHIC] [TIFF OMITTED] TR08OC08.061

    The final regulations allow manufacturers to request approval for 
adjustments to the size and shape of the NTE zone for certain engines 
if they can show that the engine will not normally operate outside the 
revised NTE zone in use (see Sec.  1045.515). We do not want 
manufacturers to go to extra lengths to design and test their engines 
to control emissions for operation that will not occur in use. However, 
manufacturers will still be responsible for all operation of an engine 
on a vessel that will reasonably be expected to be seen in use, and 
they will be responsible for ensuring that their specified operation is 
indicative of real-world operation. EPA testing may include any normal 
operation observed on in-use vessels, consistent with the applicable 
regulatory provisions. In addition, if a manufacturer designs an engine 
for operation at speeds and loads outside of the NTE zone, the 
manufacturer is required to notify us so the NTE zone used to comply 
with the applicable standards can be modified appropriately to include 
this operation for that engine family.
(c) NTE Emission Limits
    We are establishing NTE limits for the individual subzones shown in 
Figure III-1 above based on data collected from several SD/I engines 
equipped with catalysts. These data and our analysis are presented in 
Chapter 4 of the Final RIA. See Section IV.D.5 for a discussion

[[Page 59057]]

of NTE limits for engines not equipped with catalysts.
    For catalyst-equipped engines, the largest contribution of 
emissions over the 5-mode duty cycle comes from open-loop operation at 
Mode 1. In addition, the idle point (Mode 5) is weighted 40 percent in 
the 5-mode duty cycle, but not included in the NTE zone. For this 
reason, brake-specific emissions throughout most of the NTE zone are 
less than the weighted average from the steady-state testing. For most 
of the NTE zone, we are therefore establishing a limit equal to the 
duty-cycle standard (i.e., NTE multiplier = 1.0). This means that these 
engines may not have steady-state emissions at any point inside the NTE 
zone, except in the subzone around full-load operation, that exceed the 
HC+NOX or CO emission standards.
    Emission data on catalyst-equipped engines also show higher 
emissions near full-power operation. As discussed above, this is due to 
the need for richer fuel-air ratios under high-power operation to 
protect the engines from overheating. Under rich conditions, a three-
way catalyst does not effectively oxidize CO emissions. Therefore, we 
are not setting an NTE limit in Subzone 1 for CO. Some 
HC+NOX control is expected in Subzone 1 because a three-way 
catalyst will efficiently reduce NOX emissions under rich 
conditions. Similar to CO, HC emissions are not effectively oxidized in 
a catalyst during rich operation. We are therefore establishing a 
higher NTE limit of 1.5 for HC+NOX in Subzone 1. This limit 
is based on emission control performance during open-loop operation.
(d) Excluded Operation
    As with marine diesel engines, only steady-state operation is 
included for NTE testing (see Sec.  1045.515). Steady-state operation 
will generally mean setting the throttle (or speed control) in a fixed 
position. We believe most operation with Marine SI engines involves 
nominally steady-state operator demand. It is true that boats often 
experience rapid accelerations, such as with water skiing. However, 
boats are typically designed for planing operation at relatively high 
speeds. This limits the degree to which we would expect engines to 
experience frequent accelerations during extended operation. Also, 
because most of the transient events involve acceleration from idle to 
reach a planing condition, most transient engine operation is outside 
the NTE zone and will therefore not be covered by NTE testing anyway. 
Moreover, we believe OB/PWC and SD/I engines designed to comply with 
steady-state NTE requirements will be using technologies that also work 
effectively under the changing speed and load conditions that may 
occur. If we find there is substantial transient operation within the 
NTE zone that causes significantly increased emissions from installed 
engines, we will revisit this provision in the future.
    We are aware that engines may not be able to meet emission 
standards under all conditions, such as times when emission control 
must be compromised for startability or safety. As with outboard and 
personal watercraft engines, NTE testing excludes engine starting and 
warm-up. We are allowing manufacturers to design their engines to 
utilize engine protection strategies that will not be covered by defeat 
device provisions or NTE standards. This is analogous to the tampering 
exemptions incorporated into 40 CFR 1068.101(b)(1) to address 
emergencies. We believe it is appropriate to allow manufacturers to 
design their engines with ``limp-home'' capabilities to prevent a 
scenario where an engine fails to function, leaving an operator on the 
water without any means of propulsion.
(e) Ambient Conditions
    Variations in ambient conditions can affect emissions. Such 
conditions include air temperature, water temperature, barometric 
pressure, and humidity. We are applying the comparable ranges for these 
variables as for marine diesel engines (see Sec.  1045.515). Within the 
specified ranges, there is no provision to correct emission levels to 
standard conditions. Outside of the specified ranges, emissions may be 
corrected back to the nearest end of the range using good engineering 
practice. The specified ranges are 13 to 35 [deg]C (55 to 95 [deg]F) 
for ambient air temperature, 5 to 27 [deg]C (41 to 80 [deg]F) for 
ambient water temperature, and 94.0 to 103.325 kPa for atmospheric 
pressure. NTE testing may take place at any humidity level, but 
manufacturers may correct for humidity effects as described in Sec.  
1065.670.
(f) Measurement Methods
    While it may be easier to test outboard engines in the laboratory, 
there is a strong advantage to using portable measurement equipment to 
test SD/I engines and personal watercraft without removing the engine 
from the vessel. Field testing will also provide a much better means of 
measuring emissions to establish compliance with the NTE standards, 
because it is intended to ensure control of emissions during normal in-
use operation that may not occur during laboratory testing over the 
specified duty cycle. We are adopting field-testing provisions for all 
SD/I engines. These field-testing procedures are described further in 
Section IV.E.2.
    A parameter to consider is the minimum sampling time for field 
testing. A longer period allows for greater accuracy, due mainly to the 
smoothing effect of measuring over several transient events. On the 
other hand, an overly long sampling period can mask areas of engine 
operation with poor emission control characteristics. To balance these 
concerns, we are applying a minimum sampling period of 30 seconds. This 
is consistent with the requirement for marine diesel engines. Spark-
ignition engines generally don't have turbochargers and they control 
emissions largely by maintaining air-fuel ratio. Spark-ignition engines 
are therefore much less prone to consistent emission spikes from off-
cycle or unusual engine operation. We believe the minimum 30 second 
sampling time will ensure sufficient measurement accuracy and will 
allow for meaningful measurements.
    We do not specify a maximum sampling time. We expect manufacturers 
testing in-use engines to select an approximate sampling time before 
measuring emissions. However, for any sampling period, each 30-second 
period of operation would be subject to the NTE standards. For example, 
manufacturers may measure emissions for ten minutes. The engine's 
emissions over the ten-minute period would need to meet the applicable 
NTE standards, but each 30-second period of operation during the ten-
minute period should also be evaluated to determine that the engine 
complies.
(g) Certification
    We are requiring that manufacturers state in their application for 
certification that their engines will comply with the NTE standards 
under any nominally steady-state combination of speeds and loads within 
the new NTE zone (see Sec.  1045.205). The manufacturer must also 
provide a detailed description of all testing, engineering analysis, 
and other information that forms the basis for the statement. This 
statement will be based on testing and, if applicable, other research 
that supports such a statement, consistent with good engineering 
judgment. We will review the basis for this statement during the 
certification process. For marine diesel engines, we have provided 
guidance that manufacturers may demonstrate compliance with NTE 
standards by testing their engines at a number of standard points 
throughout the NTE zone. In addition, manufacturers must test at a few 
random points chosen by EPA prior to the testing.

[[Page 59058]]

E. Additional Certification and Compliance Provisions

(1) Production-Line Testing
    There are several factors that have led us to conclude that we 
should not finalize production-line testing requirements for SD/I 
engines in this rulemaking. First, California ARB has not yet adopted 
production-line testing requirements for these engines. Second, the 
companies producing these engines are predominantly small businesses. 
Third, the relatively short useful life and small sales volumes limit 
the overall emissions effect from these engines. Fourth, we are aware 
that marine engines may need additional setup time for testing to 
simulate the marine configuration. We do not consider any of these 
issues to be fundamental, but we believe it is best to defer further 
consideration of a requirement for production-line testing until a 
later rulemaking. This would allow us to better understand the degree 
of compliance with emission standards, the effectiveness of diagnostic 
controls, and California ARB's interest in requiring production-line 
testing. However, we may require the manufacturer to conduct a 
reasonable degree of testing under Clean Air Act section 208 if we have 
reason to believe that an engine family does not conform to the 
regulations. This testing may take the form of a Selective Enforcement 
Audit.
(2) In-Use Testing
    Manufacturers of OB/PWC engines have been required to test in-use 
engines to show that they continue to meet emission standards. We 
contemplated a similar requirement for SD/I engines, but have decided 
not to adopt a requirement for a manufacturer-run in-use testing 
program at this time. Manufacturers have pointed out that it would be 
very difficult to identify a commercial fleet of boats that could be 
set up to operate for hundreds of hours because it is very uncommon for 
commercial operators to have significant numbers of SD/I vessels. Where 
there are commercial fleets of vessels that may be conducive to 
accelerated in-use service accumulation, these vessels generally use 
outboard engines. Manufacturers could instead hire drivers to operate 
the boats, but this may be cost-prohibitive. There is also a question 
about access to the engines for testing. If engines need to be removed 
from vessels for testing in the laboratory for some reason, it is 
unlikely that owners will cooperate.
    While we are not establishing a program to require manufacturers to 
routinely test in-use engines, the Clean Air Act allows us to perform 
our own testing at any time with in-use engines to evaluate whether 
they continue to meet emission standards throughout the useful life. 
This may involve either laboratory testing or in-field testing with 
portable measurement equipment. For laboratory tests, we could evaluate 
compliance with either the duty-cycle standards or the not-to-exceed 
standards. For testing with engines that remain installed on marine 
vessels, we will evaluate compliance with the not-to-exceed standards. 
In addition, as described above for production-line testing, we may 
require manufacturers to perform a reasonable degree of testing. This 
may include testing in-use engines.
(3) Certification Fees
    Under our current certification program, manufacturers pay a fee to 
cover the costs for various certification and other compliance 
activities associated with implementing the emission standards. As 
explained below, we are assessing EPA's compliance costs associated 
with SD/I engines based on EPA's existing fees regulation. Section VI 
describes a new fees category we are adopting, based on the cost study 
methodology used in establishing EPA's original fees regulation, for 
costs related to the final evaporative emission standards for both 
vessels and equipment that are subject to this final rule.
    EPA established a fee structure by grouping together various 
manufacturers and industries into fee categories, with an explanation 
that separation of industries into groups was appropriate to tailor the 
applicable fee to the level of effort expected for EPA to oversee the 
range of certification and compliance responsibilities (69 FR 26222, 
May 11, 2004). As part of this process, EPA conducted a cost analysis 
to determine the various compliance activities associated with each fee 
category and EPA's associated annual cost burden. Once the total EPA 
costs were determined for each fee category, the total number of 
certificates involved within a fee category was added together and 
divided into the total costs to determine the appropriate assessment 
for each anticipated certificate.\94\ One of the fee categories created 
was for ``Other Engines and Vehicles,'' which includes marine engines 
(both compression-ignition and spark-ignition), nonroad spark-ignition 
engines (above and below 19 kW), locomotive engines, recreational 
vehicles, heavy-duty evaporative systems, and heavy-duty engines 
certified only for sale in California. These engine and vehicle types 
were grouped together because EPA planned a more basic certification 
review than, for example, for light-duty motor vehicles.
---------------------------------------------------------------------------

    \94\ See Cost Analysis Document at p. 21 associated with the 
proposed fees rule (http://www.epa.gov/otaq/fees.htm).
---------------------------------------------------------------------------

    EPA determined in the final fees rulemaking that it was premature 
to assess fees for SD/I engines since they were not yet subject to 
emission standards. The fee calculation nevertheless includes a 
projection that there will eventually be 25 certificates of conformity 
annually for SD/I engines. We are now formally including SD/I engines 
in the ``Other Engines and Vehicles'' category such that the baseline 
fee is $839 for each certificate of conformity. Note that we will 
continue to update assessed fees each year, so the actual fee in 2010 
and later model years will depend on these annual calculations (see 
Sec.  1027.105).
(4) Special Provisions Related to Partially Complete Engines
    It is common practice for one company to produce engine blocks that 
a second company modifies for use as a marine engine. Since our 
regulations prohibit the sale of uncertified engines, we are 
establishing provisions to clarify the status of these engines and 
defining a path by which these engines can be handled without violating 
the regulations. See Section VIII.C.1 for more information.
(5) Use of Engines Already Certified to Other Programs
    In some cases, manufacturers may want to use engines already 
certified under our other programs. Engines certified to the emission 
standards for highway applications in part 86 or Large SI applications 
in part 1048 are meeting more stringent standards. We are therefore 
allowing the pre-existing certification to be valid for engines used in 
marine applications, on the condition that the engine is not changed 
from its certified configuration in any way (see Sec.  1045.605). 
Manufacturers will need to demonstrate that fewer than five percent of 
the total sales of the engine model are for marine applications. There 
are also a few minor notification and labeling requirements to allow 
for EPA oversight of this provision. We are adopting similar provisions 
for engines below 19 kW that are certified to Small SI standards as 
described in Section III.C.1.

[[Page 59059]]

(6) Import-specific Information at Certification
    We are requiring additional information to improve our ability to 
oversee compliance related to imported engines (see Sec.  1045.205). In 
the application for certification, we require the following additional 
information: (1) The port or ports at which the manufacturer has 
imported engines over the previous 12 months, (2) the names and 
addresses of the agents the manufacturer has authorized to import the 
engines, and (3) the location of the test facilities in the United 
States where the manufacturer will test the engines if we select them 
for testing under a selective enforcement audit. See Section 1.3 of the 
Summary and Analysis of Comments for further discussion related to 
naming test facilities in the United States.
(7) Alternate Fuels
    See Section IV.E.7 for a discussion of requirements that apply to 
spark-ignition SD/I engines that operate on fuels other than gasoline.

F. Small-Business Provisions

(1) Small Business Advocacy Review Panel
    On June 7, 1999, we convened a Small Business Advocacy Review Panel 
under section 609(b) of the Regulatory Flexibility Act as amended by 
the Small Business Regulatory Enforcement Fairness Act of 1996 (RFA). 
The purpose of the Panel was to collect the advice and recommendations 
of representatives of small entities that could be affected by the 
proposal and to report on those comments and the Panel's findings and 
recommendations as to issues related to the key elements of the Initial 
Regulatory Flexibility Analysis under section 603 of the Regulatory 
Flexibility Act. We re-convened the Panel on August 17, 2006 to update 
our review for the proposal. The Panel reports have been placed in the 
rulemaking record for this final rule. Section 609(b) of the Regulatory 
Flexibility Act directs the review Panel to report on the comments of 
small entity representatives and make findings as to issues related to 
certain elements of an initial regulatory flexibility analysis (IRFA) 
under RFA section 603. Those elements of an IRFA are:
     A description of, and where feasible, an estimate of the 
number of small entities to which the rule will apply;
     A description of projected reporting, recordkeeping, and 
other compliance requirements of the rule, including an estimate of the 
classes of small entities that will be subject to the requirements and 
the type of professional skills necessary for preparation of the report 
or record;
     An identification, to the extent practicable, of all 
relevant Federal rules that may duplicate, overlap, or conflict with 
the rule; and
     A description of any significant alternative to the rule 
that accomplishes the stated objectives of applicable statutes and that 
minimizes any significant economic impact of the rule on small 
entities.
    In addition to the EPA's Small Business Advocacy Chairperson, the 
Panel consisted of the Director of the Assessment and Standards 
Division of the Office of Transportation and Air Quality, the 
Administrator of the Office of Information and Regulatory Affairs 
within the Office of Management and Budget, and the Chief Counsel for 
Advocacy of the Small Business Administration.
    EPA used the size standards provided by the Small Business 
Administration (SBA) at 13 CFR part 121 to identify small entities for 
the purposes of its regulatory flexibility analysis. Companies that 
manufacture internal-combustion engines and that employ fewer than 1000 
employees are considered small businesses for the purpose of the RFA 
analysis for this rule. Equipment manufacturers, boat builders, and 
fuel system component manufacturers that employ fewer than 500 people 
are considered small businesses for the purpose of the RFA analysis for 
this rule. Based on this information, we asked 25 companies that met 
the SBA small business thresholds to serve as small entity 
representatives for the duration of the Panel process. Of these 25 
companies, 13 were involved in the marine industry. These companies 
represented a cross-section of SD/I engine manufacturers, boat 
builders, and fuel system component manufacturers.
    With input from small entity representatives, the Panel reports 
provide findings and recommendations on how to reduce potential burden 
on small businesses that may occur as a result of the proposed rule. 
The Panel reports are included in the rulemaking record for this 
action. In light of the Panel report, and where appropriate, we 
proposed a number of provisions for small business SD/I engine 
manufacturers. With this final rule we are adopting many of the 
flexibility options proposed with some changes due to the different 
standards we are adopting for SD/I high-performance engines. In 
addition, we are making a change to the criteria for determining which 
companies are eligible for the flexibility options. The following 
section describes the flexibility options being adopted as part of this 
final rule and the criteria for determining which manufacturers are 
eligible.
(2) Final Burden Reduction Approaches for Small-Volume SD/I Engine 
Manufacturers
    We are establishing several options for small-volume SD/I engine 
manufacturers. For purposes of determining which engine manufacturers 
are eligible for the small business provisions described below for SD/I 
engine manufacturers, we are adopting a 250 employee limit. EPA 
believes this limit will cover all the existing small business SD/I 
engine manufacturers (as defined by SBA), but places a reasonable limit 
on how large a company could grow before they are no longer eligible 
for EPA's flexibilities for small volume engine manufacturers.
(a) Additional Lead Time
    As recommended in the SBAR Panel report and as proposed, EPA is 
establishing an implementation date of 2011 for conventional SD/I 
engines produced by small volume engine manufacturers. In addition, EPA 
is establishing an implementation date of 2013 for SD/I high-
performance engines produced by small volume engine manufacturers (see 
Sec.  1045.145).
(b) Exhaust Emission ABT
    In the proposal, EPA cited concerns raised by small businesses that 
ABT could give a competitive advantage to large businesses and 
requested comment on the desirability of credit trading between high-
performance and conventional SD/I marine engines. As described earlier 
in Section III.C.1, EPA is adopting different standards for SD/I high-
performance engines than originally proposed. While we are adopting an 
averaging, banking, and trading (ABT) credit program for conventional 
SD/I marine engines (see part 1045, subpart H), SD/I high-performance 
engines are required to meet the new standards without an ABT program.
(c) Early Credit Generation for ABT
    As recommended in the SBAR Panel report and as proposed, we are 
adopting an early banking program in which small volume engine 
manufacturers can earn bonus credits for certifying earlier than 
required (see Sec.  1045.145). This program, combined with the 
additional lead time for small businesses, will give small-volume SD/I 
engine manufacturers ample opportunity to

[[Page 59060]]

bank emission credits prior to the implementation date of the standards 
and will provide greater incentive for more small business engine 
manufacturers to introduce advanced technology earlier across the 
nation than will otherwise occur. The ABT program applies only to 
conventional SD/I engines so the early credit provisions will not apply 
to SD/I high-performance engines.
(d) Assigned Emission Rates for SD/I High-Performance Engines
    In the proposal, EPA noted that engine manufacturers using emission 
credits to comply with the standard will still need to test engines to 
calculate how many emission credits are needed. To minimize this 
testing burden, we proposed to allow manufacturers to use assigned 
baseline emission rates for certification based on previously generated 
emission data. As discussed above, we are adopting less stringent 
standards for SD/I high-performance engines that do not allow for the 
use of the ABT program for demonstrating compliance with the standards. 
We are not adopting baseline HC+NOX and CO emission rates 
for SD/I high-performance engines since the proposed levels were higher 
than the standards being adopted and therefore are of no use without an 
ABT program.
(e) Alternative Standards for SD/I High-Performance Engines
    In the proposal, EPA cited concerns raised by small businesses that 
catalysts had not been demonstrated on high-performance engines and 
that they may not be practicable for this application and therefore 
requested comment on the need for and level of alternative standards 
for SD/I high-performance engines. As described in Section III.C.1, we 
are adopting a less stringent set of exhaust emission standards for SD/
I high-performance engines than originally proposed.
    In addition, as described in Section III.C.2, we are not adopting 
NTE standards for SD/I high-performance engines (See Sec.  1045.105). 
This is consistent with the SBAR Panel recommendation that NTE 
standards not apply to SD/I high-performance engines.
(f) Broad Engine Families for SD/I High-Performance Engines
    In the proposal, EPA noted that the testing burden could be reduced 
by using broader definitions of engine families. As proposed, we are 
adopting provisions to allow small businesses to group all their SD/I 
high-performance engines into a single engine family for certification 
(see Sec.  1045.230). A manufacturer will need to perform emission 
tests only on the engine in that family that is most likely to exceed 
an emission standard.
(g) Simplified Test Procedures for SD/I High-Performance Engines
    Existing testing requirements include detailed specifications for 
the calibration and maintenance of testing equipment and tolerances for 
performing the actual tests. For laboratory equipment and testing, 
these specifications and tolerances are intended to achieve the most 
repeatable results feasible given testing hardware capabilities. For 
SD/I high-performance engines, EPA is adopting a provision that allows 
for different equipment than is specified for the laboratory and with 
less restrictive specifications and tolerances more typical of in-use 
testing (see Sec.  1045.501(h)). These less restrictive specifications 
will facilitate less expensive testing for businesses, with little or 
no negative effect on the environment. The relaxation on these 
specifications is especially helpful for testing high-performance 
engines due to their high exhaust flow rates, temperatures, and 
emission concentrations. This provision is available to all SD/I high-
performance engine manufacturers, regardless of business size.
(h) Reduced Testing Requirements for SD/I Engines
    We are adopting provisions to allow small-volume engine 
manufacturers to use an assigned deterioration factor to demonstrate 
compliance with the standards for certification rather than doing 
service accumulation and additional testing to measure deteriorated 
emission levels at the end of the regulatory useful life (see Sec.  
1045.240). EPA is not specifying actual levels for the assigned 
deterioration factors in this final rule. EPA intends to analyze 
available emission deterioration information to determine appropriate 
deterioration factors for SD/I engines. The data will likely include 
durability information from engines certified to California ARB's 
standards and may also include engines certified early to EPA's 
standards. Prior to the implementation date for the SD/I standards, EPA 
will provide guidance to engine manufacturers specifying the levels of 
the assigned deterioration factors for small-volume engine 
manufacturers.
    We proposed to exempt small-volume manufacturers of SD/I engines 
from the production-line testing requirements. However, we are dropping 
the production-line testing requirements for all SD/I engine 
manufacturers. Therefore, no production-line testing will be required 
of any SD/I engine manufacturer, whether large or small (see Sec.  
1045.301).
(i) Hardship Provisions
    We are adopting two types of hardship provisions for SD/I engine 
manufacturers, consistent with the Panel recommendations. EPA used the 
SBA size standards for purposes of defining ``small businesses'' for 
its regulatory flexibility analysis. The eligibility criteria for the 
hardship provisions described below reflect EPA's consideration of the 
Panel's recommendations and a reasonable application of existing 
hardship provisions. As has been our experience with similar provisions 
already adopted, we anticipate that hardship mechanisms will be used 
sparingly. First, under the unusual circumstances hardship provision, 
any manufacturer subject to the new standards may apply for hardship 
relief if circumstances outside their control cause the failure to 
comply and if failure to sell the subject engines or equipment or fuel 
system component would have a major impact on the company's solvency 
(see Sec.  1068.245). An example of an unusual circumstance outside a 
manufacturer's control may be an ``Act of God,'' a fire at the 
manufacturing plant, or the unforeseen shutdown of a supplier with no 
alternative available. The terms and time frame of the relief will 
depend on the specific circumstances of the company and the situation 
involved. As part of its application for hardship, a company will be 
required to provide a compliance plan detailing when and how it will 
achieve compliance with the standards. This hardship provision will be 
available to all manufacturers of engines, equipment, boats, and fuel 
system components subject to the new standards, regardless of business 
size.
    Second, an economic hardship provision allows small businesses 
subject to the new standards to petition EPA for limited additional 
lead time to comply with the standards (see Sec.  1068.250). A small 
business must make the case that it has taken all possible business, 
technical, and economic steps to comply, but the burden of compliance 
costs would jeopardize the company's solvency. Hardship relief could 
include requirements for interim emission reductions and/or the 
purchase and use of emission credits. The length of the hardship relief 
decided during review of the hardship application will be up to one 
year, with the potential to extend the relief as needed. We anticipate 
that

[[Page 59061]]

one to two years will normally be sufficient. As part of its 
application for hardship, a company will be required to provide a 
compliance plan detailing when and how it will achieve compliance with 
the standards. This hardship provision will be available only to 
qualifying small businesses.
    Because boat builders in many cases will depend on engine 
manufacturers to supply certified engines in time to produce complying 
boats, we are also providing a hardship provision for all boat 
builders, regardless of size, that will allow the builder to request 
more time if they are unable to obtain a certified engine and they are 
not at fault and will face serious economic hardship without an 
extension (see Sec.  1068.255).

G. Technological Feasibility

(1) Level of Standards
    Over the past few years, developmental programs have demonstrated 
the capabilities of achieving significant reductions in exhaust 
emissions from SD/I engines. California ARB has acted on this 
information to set an HC+NOX emission standard of 5 g/kW-hr 
for SD/I engines, starting in 2008. At this time, three engine 
manufacturers have certified SD/I engines to these standards. Chapter 4 
of the Final RIA presents data from these engines as well as detailed 
data on several developmental SD/I engines with catalysts packaged 
within water-cooled exhaust manifolds. Four of these developmental 
engines were operated with catalysts in vessels for 480 hours. The 
remaining developmental engines were tested with catalysts that had 
been subjected to a rapid-aging cycle in the laboratory. Data from 
these catalyst-equipped engines support the level of the standards.
    SD/I high-performance engines have very high power outputs, large 
exhaust gas flow rates, and relatively high concentrations of 
hydrocarbons and carbon monoxide in the exhaust gases. As a result, we 
believe it is not practical to apply catalyst technology to these 
engines. We are therefore adopting standards for SD/I high-performance 
engines based on the level of control that can be expected from 
recalibration with electronically controlled fuel injection.
(2) Implementation Dates
    We anticipate that manufacturers will use the same catalyst designs 
to meet the final standards that they will use to meet the California 
ARB standards for SD/I engines in 2008. We believe a requirement to 
extend the California standards nationwide after a two-year delay 
allows manufacturers adequate time to incorporate catalysts across 
their product lines. Once the technology is developed for use in 
California, it will be available for use nationwide. In fact, several 
engine models currently certified to the California standards are 
already available with catalysts nationwide. As discussed above, we are 
accommodating the transition to new base engines by agreeing to one 
year of hardship relief for companies that would otherwise need to 
design and certify an engine for that one year before it becomes 
obsolete.
(3) Technological Approaches
    Engine manufacturers can adapt readily available technologies to 
control emissions from SD/I engines. Electronically controlled fuel 
injection gives manufacturers more precise control of the air/fuel 
ratio in each cylinder, thereby giving them greater flexibility in how 
they calibrate their engines. With the addition of an oxygen sensor, 
electronic controls give manufacturers the ability to use closed-loop 
control, which is especially valuable when using a catalyst. In 
addition, manufacturers can achieve HC+NOX reductions 
through the use of exhaust gas recirculation. However, the most 
effective technology for controlling emissions is a three-way catalyst 
in the exhaust stream.
    In SD/I engines, the exhaust manifolds are water-jacketed and the 
water mixes with the exhaust stream before exiting the vessel. 
Manufacturers add a water jacket to the exhaust manifold to meet 
temperature-safety protocol. They route this cooling water into the 
exhaust to protect the exhaust couplings and to reduce engine noise. 
Catalysts must therefore be placed upstream of the point where the 
exhaust and water mix-this ensures the effectiveness and durability of 
the catalyst. Because the catalyst must be small enough to fit in the 
exhaust manifold, potential emission reductions are not likely to 
exceed 90 percent, as is common in land-based applications. However, as 
discussed in Chapter 4 of the Final RIA, data on catalyst-equipped SD/I 
engines show that emissions may be reduced by 70 to 80 percent for 
HC+NOX and 30 to 50 percent for CO over the test cycle. 
Larger reductions, especially for CO, have been achieved at lower-speed 
operation.
    There have been concerns that aspects of the marine environment 
could result in unique durability problems for catalysts. The primary 
aspects that could affect catalyst durability are sustained operation 
at high load, saltwater effects on catalyst efficiency, and thermal 
shock from cold water coming into contact with a hot catalyst. Modern 
catalysts perform well at temperatures up to 1100 [deg]C, which is much 
higher than expected in a marine exhaust manifold. These catalysts have 
also been shown to withstand the thermal shock of being immersed in 
water. More detail on catalyst durability is presented in the Final 
RIA. In addition, use of catalysts in automotive, motorcycle, and 
handheld equipment has shown that catalysts can be packaged to 
withstand vibration in the exhaust manifold.
    Manufacturers already strive to design their exhaust systems to 
prevent water from reaching the exhaust ports. If too much water 
reaches the exhaust ports, significant durability problems will result 
from corrosion or hydraulic lock. As discussed in the Final RIA, 
industry and government worked on a number of cooperative test programs 
in which several SD/I engines were equipped with catalysts and 
installed in vessels to prove out the technology. Early in the 
development work, a study was performed on an SD/I engine operating in 
a boat to see if water was entering the part of the manifold where 
catalysts will be installed. Although some water was collected in the 
exhaust manifold, it was found that this water came from water vapor 
that condensed out of the combustion products. This was easily 
corrected using a thermostat to prevent overcooling from the water 
jacket.
    Four SD/I engines equipped with catalysts were operated in vessels 
for 480 hours in fresh water. This time period was intended to 
represent the full expected operating life of a typical SD/I engine. No 
significant deterioration was observed on any of these catalysts, nor 
was there any evidence of water reaching the catalysts. In addition, 
the catalysts were packaged such that the exhaust system met industry 
standards for maximum surface temperatures.
    Testing has been performed on one engine in a vessel on both fresh 
water and saltwater over a test protocol designed by industry to 
simulate the worst-case operation for water reversion. No evidence was 
found of water reaching the catalysts. After the testing, the engine 
had emission rates below the HC+NOX standard. We later 
engaged in a test program to evaluate three additional engines with 
catalysts in vessels operating on saltwater for extended periods. Early 
in the program, two of the three manifolds experienced corrosion in the 
salt-water environment resulting in water leaks and damage to the 
catalyst. These manifolds were rebuilt with guidance from experts in 
the marine industry and additional

[[Page 59062]]

hours were accumulated on the boats. Although the accumulated hours are 
well below the 480 hours performed on fresh water, the operation 
completed showed no visible evidence of water reversion or damage to 
the catalysts.
    Three SD/I engine manufacturers have certified SD/I engines to the 
California ARB standards, and some catalyst-equipped engines are 
available for purchase nationwide. Manufacturers have indicated that 
they have successfully completed durability testing, including extended 
in-use testing on saltwater.
(4) Regulatory Alternatives
    In developing the final emission standards, we considered both what 
was achievable without catalysts and what could be achieved with 
larger, more efficient catalysts than those used in our test programs. 
Chapter 4 of the Final RIA presents data on SD/I engines equipped with 
exhaust gas recirculation (EGR). HC+NOX emission levels 
below 10 g/kW-hr were achieved for each of the engines. CO emissions 
ranged from 25 to 185 g/kW-hr. We believe EGR will be a technologically 
feasible and cost-effective approach to reducing emissions from SD/I 
marine engines. However, we believe greater reductions could be 
achieved through the use of catalysts. We considered basing an interim 
standard on EGR, but were concerned that this will divert 
manufacturers' resources away from catalyst development and could have 
the effect of delaying emission reductions from this sector.
    Several of the marine engines with catalysts that were tested as 
part of the development of the standards had HC+NOX emission 
rates appreciably lower that 5 g/kW-hr, even with consideration of 
expected in-use emissions deterioration associated with catalyst aging. 
However, we believe a standard of 5 g/kW-hr is still appropriate given 
the potential variability in in-use performance and in test data. The 
test programs described in Chapter 4 of the Final RIA did not 
investigate larger catalysts for SD/I applications. The goal of the 
testing was to demonstrate catalysts that will work within the 
packaging constraints associated with water jacketing the exhaust and 
fitting the engines into engine compartments on boats. However, we did 
perform testing on engines equipped with both catalysts and EGR. These 
engines showed emission results in the 2-3 g/kW-hr range. We expect 
that these same reductions could be achieved more simply through the 
use of larger catalysts or catalysts with higher precious metal 
loading. Past experience indicates that most manufacturers will strive 
to achieve emission reductions well below the final standards to give 
them certainty that they will pass the standards in-use, especially as 
catalysts on SD/I engines are a new technology. Therefore, we do not 
believe it is necessary at this time to set a lower standard for these 
engines.
    For SD/I high-performance engines, we originally proposed a 
standard based on the use of catalysts and then considered a less 
stringent alternative based on engine fuel system upgrades, 
calibration, or other minor changes such as an air injection pump 
rather than catalytic control. However, manufacturers commented that 
catalysts are not practical for these engines due to the high exhaust 
flow rates, high emission rates, and short time between rebuilds. In 
the final rule, we are establishing standards that can be met through 
the use of engine controls, similar to the alternative standard that 
was analyzed in the proposal. Because we do not consider catalyst-based 
standards to be feasible for high-performance engines at this time, we 
did not model a more stringent alternative for these engines.
(5) Our Conclusions
    We believe the final 2010 exhaust emission standards for SD/I 
engines represent the greatest degree of emission reduction achievable 
in this time frame. Manufacturers of conventional SD/I engines can meet 
the standards through the use of three-way catalysts packaged in the 
exhaust systems upstream of where the water and exhaust mix. 
Manufacturers are already selling engines with this technology. By 2010 
there will be widespread experience in applying emission controls to a 
large number of engine models.
    As discussed in Section VII, we do not believe the final standards 
will have negative effects on energy, noise, or safety and may lead to 
some positive effects.

IV. Outboard and Personal Watercraft Engines

A. Overview

    This section applies to spark-ignition outboard and personal 
watercraft (OB/PWC) marine engines and vessels. OB/PWC engines are 
currently required to meet the HC+NOX exhaust emissions and 
other related requirements under 40 CFR part 91. As a result of these 
standards, manufacturers have spent the last several years developing 
new technologies to replace traditional carbureted two-stroke engine 
designs. Many of these technologies are capable of emission levels well 
below the current standards. We are adopting new HC+NOX and 
CO exhaust emission standards for OB/PWC marine engines reflecting the 
capabilities of these new technologies.
    For outboard and personal watercraft engines, the current emission 
standards regulate only HC+NOX emissions. As described in 
Section II, we are making the finding under Clean Air Act section 
213(a)(3) that Marine SI engines cause or contribute to CO 
nonattainment in two or more areas of the United States.
    We believe manufacturers can use readily available technological 
approaches to design their engines to meet the new standards. In fact, 
as discussed in Chapter 4 of the Final RIA, manufacturers are already 
producing several models of four-stroke engines and direction-injection 
two-stroke engines that meet the new standards. The most important 
compliance step for the standards will be to retire high-emitting 
designs that are still available and replace them with these cleaner 
engines. We are not establishing standards based on the use of 
catalytic converters in OB/PWC engines. While this may be an attractive 
technology in the future, we do not believe there has been sufficient 
development work on the application of catalysts to OB/PWC engines to 
use as a basis for standards at this time.
    Note that we are migrating the regulatory requirements for marine 
spark-ignition engines from 40 CFR part 91 to 40 CFR part 1045. 
Manufacturers must comply with the provisions in part 1045 for an 
engine once the exhaust emission standards begin to apply in 2010. This 
gives us the opportunity to update the details of our certification and 
compliance program to be consistent with the comparable provisions that 
apply to other engine categories and describe regulatory requirements 
in plain language. Most of the change in regulatory text provides 
improved clarity without substantially changing procedures or 
compliance obligations. Where there is a change that warrants further 
attention, we describe the need for the change below.
    Engines and vessels subject to part 1045 are also subject to the 
general compliance provisions in 40 CFR part 1068. These include 
prohibited acts and penalties, exemptions and importation provisions, 
selective enforcement audits, defect reporting and recall, and hearing 
procedures. See Section VIII of the preamble to the proposed rule for 
further discussion of these general compliance provisions.

[[Page 59063]]

B. Engines Covered by This Rule

(1) Definition of Outboard and Personal Watercraft Engines and Vessels
    The final standards are intended to apply to outboard marine 
engines and engines used to propel personal watercraft. We are changing 
the definitions of outboard and personal watercraft to reflect this 
intent. The original definitions of outboard engine and personal 
watercraft marine engine adopted in 40 CFR part 91 are presented below:
     Outboard engine is a Marine SI engine that, when properly 
mounted on a marine vessel in the position to operate, houses the 
engine and drive unit external to the hull of the marine vessel.
     Personal watercraft engine (PWC) is a Marine SI engine 
that does not meet the definition of outboard engine, inboard engine, 
or sterndrive engine, except that the Administrator in his or her 
discretion may classify a PWC as an inboard or sterndrive engine if it 
is comparable in technology and emissions to an inboard or sterndrive 
engine.
    With the implementation of catalyst-based standards for sterndrive 
and inboard marine engines, we believe the above definitions could be 
problematic. Certain applications using SD/I engines and able to apply 
catalyst control will not be categorized as SD/I under the original 
definitions in at least two cases. First, an airboat engine, which is 
often mounted well above the hull of the engine and used to drive an 
aircraft-like propeller could be misconstrued as an outboard engine. 
However, like traditional sterndrive and inboard engines, airboat 
engines are typically derived from automotive-based engines without 
substantial modifications for marine application. Airboat engines can 
use the same technologies that are available to sterndrive and inboard 
engines, so we believe they should be subject to the same standards. To 
address the concerns about classifying airboats, we are changing the 
outboard definition to specify that the engine and drive unit be a 
single, self-contained unit that is designed to be lifted out of the 
water. This clarifies that air boats are not outboard engines; air 
boats do not have engines and drive units that are designed to be 
lifted out of the water. We are adopting the following definition:
     Outboard engine means an assembly of a spark-ignition 
engine and drive unit used to propel a marine vessel from a properly 
mounted position external to the hull of the marine vessel. An outboard 
drive unit is partially submerged during operation and can be tilted 
out of the water when not in use.
    Second, engines used on jet boats (with an open bay for passengers) 
have size, power, and usage characteristics that are very similar to 
sterndrive and inboard applications, but these engines may be the same 
as OB/PWC engines, rather than the marinized automotive engines 
traditionally used on sterndrive vessels. Because jet boat engines may 
be the same as OB/PWC engines, the regulations classified them as OB/
PWC engines unless the Agency classified them as SD/I due to comparable 
technology and emissions as SD/I engines. However, as explained in the 
proposed rule, we believe classifying such engines as personal 
watercraft engines is inappropriate because it will subject the jet 
boats to less stringent emission standards than other boats with 
similar size, power, and usage characteristics, and thus potentially 
lead to increased use of high-emitting engines in these vessels. 
Because the current regulations authorize engines powering jet boats to 
be treated as SD/I engines at the discretion of the Agency, but do not 
compel such classification, we are finalizing amendments to the 
definition to explicitly exclude jet boats and their engines from being 
treated as personal watercraft engines or vessels. Instead, we are 
classifying jet boat engines as SD/I engines.
    The new definition conforms to the definition of personal 
watercraft established by the International Organization for 
Standardization (ISO 13590). This ISO standard excludes open-bay 
vessels and specifies a maximum vessel length of 4 meters. The ISO 
standard for personal watercraft therefore excludes personal 
watercraft-like vessels 4 meters or greater and jet boats. Thus, 
engines powering such vessels will be classified as sterndrive/inboard 
engines. We believe this definition effectively serves to differentiate 
vessels in a way that groups propulsion engines into categories that 
are appropriate for meeting different emission standards. This approach 
is shown below with the corresponding definition of personal watercraft 
engine. We are making one change to the ISO definition for domestic 
regulatory purposes; we are removing the word ``inboard'' to prevent 
confusion between PWC and inboard engines and state specifically that a 
vessel powered by an outboard marine engine is not a PWC. We are 
revising the definitions as follows:
     Personal watercraft means a vessel less than 4.0 meters 
(13 feet) in length that uses an installed spark-ignition engine 
powering a water jet pump as its primary source of propulsion and is 
designed with no open load carrying area that would retain water. The 
vessel is designed to be operated by a person or persons positioned on, 
rather than within the confines of the hull. A vessel using an outboard 
engine as its primary source of propulsion is not a personal 
watercraft.
     Personal watercraft engine means a spark-ignition engine 
used to propel a personal watercraft.
    Section III.C.3 describes special provisions that will allow 
manufacturers extra flexibility with emission credits if they want to 
continue using outboard or personal watercraft engines in jet boats. 
These engines will need to meet the standards for sterndrive/inboard 
engines, but we believe it is appropriate for them to make this 
demonstration using emission credits generated by other outboard and 
personal watercraft engines because these vessels are currently using 
these engine types.
(2) Exclusions and Exemptions
    We are maintaining the current exemptions for OB/PWC engines. These 
include the testing exemption, the manufacturer-owned exemption, the 
display exemption, and the national-security exemption. If the 
conditions for an exemption are met, the engine is not subject to the 
exhaust emission standards. These exemptions are described in more 
detail in Section VIII of the preamble to the proposed rule.
    The Clean Air Act provides for different treatment of engines used 
solely for competition. In the initial rulemaking to set standards for 
OB/PWC engines, we adopted the conventional definitions that excluded 
engines from the regulations if they had features that were difficult 
to remove and that made it unsafe, impractical, or unlikely to be used 
for noncompetitive purposes. We have more recently taken the approach 
in other programs of more carefully differentiating competition and 
noncompetition models, and are adopting these kinds of changes in this 
rule. The changes to the provisions relating to competition engines 
apply equally to all types of Marine SI engines. See Section III.B and 
Sec.  1045.620 of the regulations for a full discussion of the new 
approach.
    We are incorporating a new exemption to address individuals who 
manufacture recreational marine vessels for personal use as described 
in Section III.B.2.
    In the rulemaking for recreational vehicles, we chose not to apply 
standards to hobby products by

[[Page 59064]]

exempting all reduced-scale models of vehicles that are not capable of 
transporting a person (67 FR 68242, November 8, 2002). We are extending 
that same provision to OB/PWC marine engines (see Sec.  1045.5).

C. Final Exhaust Emission Standards

    We are requiring more stringent exhaust emission standards for new 
OB/PWC marine engines. These standards can be met through expanded 
reliance on four-stroke engines and two-stroke direct-injection 
engines. This section describes the new requirements for OB/PWC engines 
for controlling exhaust emissions. See Section VI for a description of 
the final requirements related to evaporative emissions.
(1) Standards and Dates
    We are requiring new HC+NOX standards for OB/PWC engines 
starting in model year 2010 that will achieve more than a 60 percent 
reduction from the 2006 standards (see Sec.  1045.103). We are also 
establishing new CO emission standards. These standards will result in 
meaningful CO reductions from many engines and prevent CO from 
increasing for engines that already use technologies with lower CO 
emissions. The new emission standards are largely based on 
certification data from cleaner-burning four-stroke engines and two-
stroke direct-injection engines that are certified under part 91. 
Section IV.H discusses the technological feasibility of these standards 
in more detail. Table IV-1 presents the exhaust emission standards for 
OB/PWC. The HC+NOX emission standards are the same as those 
adopted by California ARB for 2008 and later model years. We are also 
applying not-to-exceed emission standards over a range of engine 
operating conditions, as described in Section IV.C.2.

                             Table IV-1: OB/PWC Exhaust Emission Standards [g/kW-hr]
----------------------------------------------------------------------------------------------------------------
             Pollutant                    Power                           Emission standard
----------------------------------------------------------------------------------------------------------------
HC+NOX.............................     P <= 4.3 kW  30.0
                                         P > 4.3 kW  2.1 + 0.09 x (151 + 557/P\0.9\))
CO.................................      P <= 40 kW  500--5.0 x P
                                           P> 40 kW  300
----------------------------------------------------------------------------------------------------------------
Note: P = maximum engine power in kilowatts (kW).

    Our implementation date allows two additional years beyond the 
implementation date of the same standards in California. Manufacturers 
generally sell their lower-emission engines, which are already meeting 
the 2008 California standards, nationwide. However, the additional time 
will give manufacturers time to address any models that may not meet 
the upcoming California standards or are not sold in California. This 
also accommodates the lead time concerns with the timing of this final 
rule as expressed by the commenters.
    The emission standards apply at the range of atmospheric pressures 
represented by the test conditions specified in part 1065. This 
includes operation at elevated altitudes. Since not all engines have 
electronic engines with feedback controls to incorporate altitude 
compensation, we are taking the same approach here as for Small SI 
engines where a similar dynamic is in place. Specifically, we are 
requiring that all engines must comply with emission standards in the 
standard configuration (i.e., without an altitude kit) at barometric 
pressures above 94.0 kPa, which corresponds to altitudes up to about 
2,000 feet above sea level (see Sec.  1045.115). This will ensure that 
all areas east of the Rocky Mountains and most of the populated areas 
in Pacific Coast states will have compliant engines without depending 
on engine adjustments. This becomes more important as we anticipate 
manufacturers increasingly relying on technologies that are sensitive 
to controlling air-fuel ratio for reducing emissions. For operation at 
higher altitudes, manufacturers may rely on an altitude kit that allows 
their engines to meet emission standards at higher elevations. In this 
case, engine manufacturers must describe the kit specifications in 
their application for certification and identify in the owner's manual 
the altitude ranges for proper engine performance and emission control 
that are expected with and without the altitude kit. The owner's manual 
must also state that operating the engine with the wrong engine 
configuration at a given altitude may increase its emissions and 
decrease fuel efficiency and performance. The regulations specify that 
owners may follow the manufacturer's instructions to modify their 
engines with altitude kits without violating the tampering prohibition. 
See Section IV.E.8 for further discussion related to the deployment of 
altitude kits where the manufacturers rely on them for operation at 
higher altitudes.
    The new standards include the same general provisions that apply 
today. For example, engines must control crankcase emissions. The 
regulations also require compliance over the full range of adjustable 
parameters and prohibit the use of defeat devices. (See Sec.  
1045.115.)
(2) Not-to-Exceed Standards
    We are adopting emission standards that apply over an NTE zone. The 
NTE standards are in the form of a multiplier times the duty-cycle 
standard for HC+NOX and for CO (see Sec.  1045.105). Section 
IV.D.5 gives an overview of the NTE standards and compliance provisions 
and describes the NTE test procedures.
    Manufacturers commented that certification to the NTE standards 
requires additional testing even for engine models that are currently 
certified to emission levels below the new duty-cycle based standards. 
In addition, they expressed concern that they may need to recalibrate 
existing engine models to meet the NTE standards. Manufacturers 
commented that this would not be possible by 2010 because of the large 
number of engine models. For most engines, manufacturers carry over 
preexisting certification test data from year to year. Manufacturers 
commented that additional time would be necessary to retest, and 
potentially recalibrate, all these engines for certification to the NTE 
standards. To address these issues regarding lead time needed to retest 
these engines, we are not applying the NTE standards for 2010-2012 
model year engines that are certified using preexisting data (i.e., 
carryover engine families). For new engine models, manufacturers 
indicated that they will be able to perform the NTE testing and duty-
cycle testing as part of their efforts to certify to the new standards. 
Therefore the primary implementation date of 2010 applies to these 
engines. Beginning in the 2013 model year, all conventional OB/PWC 
engines must be certified to meet the NTE standards.

[[Page 59065]]

    This NTE approach complements the weighted modal emission tests 
included in this rule. These steady-state duty cycles and standards are 
intended to establish average emission levels over several discrete 
modes of engine operation. Because it is an average, manufacturers 
design their engines with emission levels at individual points varying 
as needed to maintain maximum engine performance and still meet the 
engine standard. The NTE limit will be an additional requirement. It is 
intended to ensure that emission controls function with relative 
consistency across the full range of expected operating conditions.
(3) Emission Credit Programs
    Engine manufacturers may use emission credits to meet OB/PWC 
standards under part 91. We are adopting an ABT program for the new 
HC+NOX emission standards that is similar to the previous 
program (see part 1045, subpart H). A description of the ABT provisions 
for the new OB/PWC standards is described below.
    OB/PWC engine manufacturers that have generated HC+NOX 
credits under the 2006 standards will be able to use those credits to 
demonstrate compliance with the new HC+NOX standards being 
adopted in this final rule. The credits generated under the 2006 
standards are subject to a three-year credit life. Therefore, a 
manufacturer will be able to use those credits for demonstrating 
compliance with the new standards as long as the credits have not 
expired.
    We are allowing an indefinite life for emission credits earned 
under the new standards for OB/PWC engines. We consider these emission 
credits to be part of the overall program for complying with standards. 
Given that we may consider further reductions beyond these standards in 
the future, we believe it will be important to assess the ABT credit 
situation that exists at the time any further standards are considered. 
Emission credit balances will be part of the analysis for determining 
the appropriate level and timing of new standards, consistent with the 
statutory requirement to establish standards that represent the 
greatest degree of emission reduction achievable, considering cost, 
safety, lead time, and other factors. If we were to allow the use of 
credits generated under the standards adopted in this rule to meet more 
stringent standards adopt in a future rulemaking, we may need to adopt 
emission standards at more stringent levels or with an earlier start 
date than we would absent the continued use of existing emission 
credits, depending on the level of emission credit banks. 
Alternatively, we may adopt future standards without allowing the use 
of existing emission credits.
    We are adopting the equation for calculating emission credits for 
OB/PWC engines as proposed. This equation represents a simpler 
calculation than is currently used for OB/PWC engines and is based on 
the equation that is common in many of our other ABT programs. The 
primary difference is that the regulatory useful life will be used in 
the credit calculation rather than a discounted useful life function 
based on engine type and power rating. In addition, the emission 
credits will be reported in units of kilograms rather than grams.
    We are also adopting an averaging program for CO emissions. Under 
this program, manufacturers can generate credits with engine families 
that have FELs below the CO emission standard to be used for engine 
families in their product line in the same model year that are above 
the CO standard. However, we are not establishing a banking program for 
CO emissions. As noted in the proposal, we are concerned that a banking 
program could result in a large accumulation of credits based on a 
given company's mix of engine technologies. Furthermore, because we 
generally allow trading only with banked credits, we are not allowing 
trading of CO emission credits.
    EPA proposed that manufacturers would not be able to earn credits 
for one pollutant while using credits to comply with the emissions 
standard for another pollutant. We are dropping that provision for the 
final rule. The proposed restriction was modeled on similar 
requirements in other ABT programs where there was concern that a 
manufacturer could use technologies to reduce one pollutant while 
increasing another pollutant. The types of technologies manufacturers 
are expected to use to comply with the new standards include direct-
injection two-stroke engines or four-stroke engines. Both of these 
technologies should result in reductions in both HC+NOX 
emissions and CO emissions compared to current designs. While the 
technologies are expected to reduce both HC+NOX emissions 
and CO emissions, there could be situations where these technologies 
are capable of meeting one of the emission standards but not the other. 
EPA does not want to preclude such engines from being able to certify 
using the provisions of the ABT program and is therefore dropping the 
proposed restriction from the final rule.
    For OB/PWC engines subject to the new emission standards, we are 
adopting FEL caps to prevent the sale of very high-emitting engines. 
For HC+NOX, the FEL cap will be the applicable 2006 and 
later model year HC+NOX standard, which is dependent on the 
average power of an engine family. For CO, the FEL cap will be 150 g/
kW-hr above the newly adopted CO standard, which is also dependent on 
the average power of an engine family. We believe these FEL caps will 
allow a great deal of flexibility for manufacturers using credits, but 
will require manufacturers to stop producing engines that emit 
pollutants at essentially uncontrolled levels.
    We are specifying that OB/PWC engines are in a separate averaging 
set from SD/I engines, with an exception for certain jet boat engines. 
This means that credits earned by OB/PWC engines may be used only to 
offset higher emissions from other OB/PWC engines. Likewise, credits 
earned by SD/I engines may be used only to offset higher emissions from 
other SD/I engines. As described in Section III.C.2, manufacturers will 
be able to use credits generated from OB/PWC engines to demonstrate 
that their jet boat engines meet the HC+NOX and CO standards 
for SD/I engines if the majority of units sold in the United States 
from those related OB/PWC engine families are sold for use as OB/PWC 
engines.
    Finally, manufacturers may include as part of their federal credit 
calculation the sales of engines in California as long as they don't 
separately account for those emission credits under the California 
regulations. We originally proposed to exclude engines sold in 
California that are subject to the California ARB standards. However, 
we consider California's current HC+NOX standards to be 
equivalent to those we are adopting in this rulemaking, so we would 
expect a widespread practice of producing and marketing 50-state 
products. Therefore, as long as a manufacturer is not generating 
credits under California's averaging program for OB/PWC engines, we 
would allow manufacturers to count those engines when calculating 
credits under EPA's program. This is consistent with how EPA allows 
credits to be calculated in other nonroad sectors, such as recreational 
vehicles.
(4) Durability Provisions
    We are keeping the useful life periods from 40 CFR part 91. The 
specified useful life for outboard engines is 10 years or 350 hours of 
operation, whichever comes first. The useful life for personal 
watercraft engines is 5

[[Page 59066]]

years or 350 hours of operation, whichever comes first. (See Sec.  
1045.103.)
    We are updating the specified emissions warranty periods for 
outboard and personal watercraft engines to align with our other 
emission control programs (see Sec.  1045.120). Most nonroad engines 
have emissions warranty periods that are half of the total useful life 
period. Accordingly, the new warranty period for outboard engines is 
five years or 175 hours of operation, whichever comes first. The new 
warranty period for personal watercraft engines is 30 months or 175 
hours, whichever comes first. This contrasts somewhat with the 
currently specified warranty period of 200 hours or two years (or three 
years for specified major emission control components). The new 
approach will slightly decrease the warranty period in terms of hours, 
but will somewhat increase the period in terms of calendar years (or 
months).
    If the manufacturer offers a longer mechanical warranty for the 
engine or any of its components at no additional charge, we are 
requiring that the emission-related warranty for the respective engine 
or component must be extended by the same amount. The emission-related 
warranty includes components related to controlling exhaust, 
evaporative, and crankcase emissions from the engine. This approach to 
setting warranty requirements is consistent with provisions that apply 
in most other programs for nonroad engines.
    We are keeping the requirements related to demonstrating the 
durability of emission controls for purposes of certification (see 
Sec.  1045.235, Sec.  1045.240, and Sec.  1045.245). Manufacturers must 
run engines long enough to develop and justify full-life deterioration 
factors. This allows manufacturers to generate a deterioration factor 
that helps ensure that the engines will continue to control emissions 
over a lifetime of operation. The new requirement to generate 
deterioration factors for CO emissions is the same as that for 
HC+NOX emissions. For the HC+NOX standard, we are 
requiring that manufacturers use a single deterioration factor for the 
sum of HC and NOX emissions. However, if manufacturers get 
our approval to establish a deterioration factor on an engine that is 
tested with service accumulation representing less than the full useful 
life for any reason, we will require separate deterioration factors for 
HC and NOX emissions. The advantage of a combined 
deterioration factor is that it can account for an improvement in 
emission levels with aging. However, for engines that have service 
accumulation representing less than the full useful life, we believe it 
is not appropriate to extrapolate measured values indicating that 
emission levels for a particular pollutant will decrease.
    Under the current regulations, emission-related maintenance is not 
allowed during service accumulation to establish deterioration factors. 
The only maintenance that may be done must be (1) regularly scheduled, 
(2) unrelated to emissions, and (3) technologically necessary. This 
typically includes changing engine oil, oil filter, fuel filter, and 
air filter. In addition, we are specifying that manufacturers may not 
schedule critical emission-related maintenance during the useful life 
period (see Sec.  1045.125). This will prevent manufacturers from 
designing engines with emission controls that depend on scheduled 
maintenance that is not likely to occur with in-use engines.

D. Changes to OB/PWC Test Procedures

    We are making a number of minor changes to the test procedures for 
OB/PWC to make them more consistent with the test procedures for other 
nonroad spark-ignition engines. These test provisions will apply to SD/
I marine engines as well.
(1) Duty Cycle
    A duty cycle is the set of modes (engine speed and load) over which 
an engine is operated during a test. For purposes of exhaust emission 
testing, we are keeping the duty cycle specified for OB/PWC engines, 
with two adjustments (see Sec.  1045.505). First, we are requiring that 
manufacturers may choose to run the specified duty cycle as a ramped-
modal cycle. Second, we are changing the low-power test mode from a 
specified 25 percent load condition to 25.3 percent load, which will 
complete the intended alignment with the E4 duty cycle adopted by the 
International Organization for Standardization.
(2) Maximum Test Speed
    The definition of maximum test speed, where speed is the angular 
velocity of an engine's crankshaft (usually expressed in revolutions 
per minute, or rpm), is an important aspect of the duty cycles for 
testing. Engine manufacturers currently declare the rated speeds for 
their engines and then used the rated speed as the maximum speed for 
testing. However, we have established an objective procedure for 
measuring this engine parameter to have a clearer reference point for 
an engine's maximum test speed. This is important to ensure that 
engines are tested at operating points that correspond with in-use 
operation. This also helps ensure that the NTE zone is appropriately 
matched to in-use operating conditions.
    We are defining the maximum test speed for any engine to be the 
single point on an engine's maximum-power versus speed curve that lies 
farthest away from the zero-power, zero-speed point on a normalized 
maximum-power versus speed plot. In other words, consider straight 
lines drawn between the origin (speed = 0, load = 0) and each point on 
an engine's normalized maximum-power versus speed curve. The nominal 
value of maximum test speed is defined at that point where the length 
of this line reaches its maximum value.
    The engine mapping procedures in part 1065 that we referenced in 
the proposal allow manufacturers to declare a value for maximum test 
speed that is within 2.5 percent of the calculated (or measured) 
nominal value. Based on the manufacturers' descriptions of the way they 
instruct boat builders to match propellers to their engines, we have 
included in the final rule a special allowance for manufacturers to 
declare a value for maximum test speed that is up to 500 rpm below the 
calculated value. This equates to about 8 percent of the calculated 
value for most engines; however, we would never expect manufacturers to 
select a value for maximum test speed that is above the nominal value, 
so the total allowable range is not much greater than for other 
engines. We also note that the maximum test speed for a four-stroke 
engine that remains installed in a vessel is the highest engine speed 
that can occur. As long as the propeller matching and other vessel 
characteristics do not take the engine outside of the manufacturer's 
specified range, the engine would need to meet the Not-to-Exceed 
standards based on the in-use value for maximum test speed. These 
provisions related to maximum test speed apply equally to OB/PWC 
engines and SD/I engines.
(3) 40 CFR Part 1065
    We are requiring that OB/PWC engines certified to the new exhaust 
emission standards use the test procedures in 40 CFR part 1065 instead 
of those in 40 CFR part 91.\95\ Part 1065 includes detailed laboratory 
and equipment specifications and procedures for equipment calibration 
and emission measurements. These new procedures will apply starting 
with the introduction of new exhaust standards,

[[Page 59067]]

though we will allow manufacturers to start using these new procedures 
earlier as an alternative procedure. The procedures in part 1065 
include updated provisions to account for newer measurement 
technologies and improved calculation and corrections procedures. Part 
1065 also specifies more detailed provisions related to alternate 
procedures, including a requirement to conduct testing representative 
of in-use operation. In many cases, we allow carryover of emission test 
data from one year to another. After the implementation of the new 
standards, we will allow the carryover of any test data generated prior 
to 2009 under the test procedures in 40 CFR part 91.
---------------------------------------------------------------------------

    \95\ See our previous rulemakings related to 40 CFR part 1065 
for more information about the changes in test provisions (70 FR 
40420, July 13, 2005 and 67 FR 68242, November 8, 2002).
---------------------------------------------------------------------------

(4) Engine Break-in
    Testing new engines requires a period of engine operation to 
stabilize emission levels. The regulations specify two separate figures 
for break-in periods. First, for certification, we establish a limit on 
how much an engine may operate and still be considered a ``low-hour'' 
engine. The results of testing with the low-hour engine are compared 
with a deteriorated value after some degree of service accumulation to 
establish a deterioration factor. For Large SI engines, we require that 
low-hour test engines have no more than 300 hours of engine operation. 
However, given the shorter useful life for marine engines, this will 
not make for a meaningful process for establishing deterioration 
factors, even if there is a degree of commonality between the two types 
of engines. We are requiring that low-hour marine spark-ignition 
engines generally have no more than 30 hours of engine operation (see 
Sec.  1045.801). This allows some substantial time for break-in, 
stabilization, and running multiple tests, without approaching a 
significant fraction of the useful life. The current regulation in part 
91 specifies that manufacturers perform the low-hour measurement after 
no more than 12 hours of engine operation (see Sec.  91.408(a)(1)). The 
new allowance for up to 30 hours of engine operation is consistent with 
what we have done for recreational vehicles and will give manufacturers 
more time to complete a valid low-hour test.
    For production-line testing there is also a concern about how long 
an engine should operate to reach a stabilized emission level. We are 
keeping the provision in part 91 that allows for a presumed 
stabilization period of 12 hours (see Sec.  90.117(a)). We believe 12 
hours is sufficient to stabilize the emissions from the engine.
(5) Not-to-Exceed Test Procedures and Standards
    Section III.D.2 discusses the general concept and approach behind 
NTE standards for Marine SI engines. In addition, Section III.D.2 
presents specific zones and limits for catalyst-equipped marine 
engines. We are applying the same general NTE testing provisions to OB/
PWC engines, including the same broad NTE zone and ambient conditions 
(see Sec.  1045.515).
    We anticipate that most OB/PWC engines subject to the NTE standards 
will use engine-based controls to meet the exhaust emission standards. 
For that reason, this discussion focuses on the NTE zone and subzones 
for engines not equipped with catalysts. Data presented in Chapter 4 of 
the RIA suggests that the emissions characteristics of marine engines 
are largely dependent on technology type. Four-stroke engines tend to 
have relatively constant emission levels throughout the NTE zone. In 
contrast, two-stroke engines tend to have high variability in 
emissions, not only within the NTE zone but between different engine 
designs as well. Therefore, we developed separate NTE approaches and 
standards for four-stroke and two-stroke engines. These approaches and 
standards are discussed below.
(a) Four-Stroke Marine Engines
    The NTE approach for four-stroke marine engines without catalysts 
is similar to that for catalyst-equipped engines as described in 
Section III. We are applying the same NTE zone; however, we are 
establishing different subzones and emission limits based on data 
presented in the Final RIA. Emission data for four-stroke marine 
engines suggest that brake-specific emission rates are relatively 
constant throughout the NTE zone. One exception is slightly higher 
HC+NOX emissions at low power. To account for this, we are 
subdividing the NTE zone to have a low-power subzone below 50 percent 
of maximum test speed. In this low-power subzone, the HC+NOX 
NTE limit is 1.6, while it is 1.4 for the remainder of the NTE zone. 
The CO NTE limit is 1.5 throughout the NTE zone. Figure IV-1 presents 
the NTE zone and subzones. These limits would apply to all non-
catalyzed four-stroke engines. See Section III.D.2 for a detailed 
discussion of NTE requirements that apply for catalyst-equipped engines 
(including OB/PWC engines).
    As discussed above in Section IV.C.2, we are providing extra lead 
time for 2010-2012 model year engines certified using preexisting data. 
The purpose of this provision is to allow testing and calibration work 
to better fit into product development cycles. We have received an 
indication that a small subset of existing outboard engines may need 
additional time to meet the 1.4 NTE limit at mid-range speeds due to 
technological challenges associated with high-power supercharging. 
Manufacturers have indicated that a slightly higher limit of 1.6 would 
be feasible in the 2013 time frame, but additional time would be needed 
for hardware changes to meet the 1.4 limit. To address this issue, we 
are temporarily expanding Subzone 2 to include mid-range speeds up to 
70 percent of maximum test speed for supercharged outboard engines 
greater than 150 kW. Beginning with the 2015 model year, these engines 
would be subject to the same NTE zone and standards as other four-
stroke engines.

[[Page 59068]]

[GRAPHIC] [TIFF OMITTED] TR08OC08.062

(b) Two-Stroke Marine Engines
    The emission data presented in Chapter 4 of the Final RIA for two-
stroke direct-injection marine engines suggest that these engines have 
high variability in emissions, not only within the NTE zone but between 
different engine designs as well. Due to this variability, we do not 
believe that a flat (or stepped) limit in the NTE zone could be 
effectively used to establish meaningful standards for these engines. 
At the same time, we continue to believe that NTE standards are 
valuable for facilitating in-use testing. We therefore developed a 
weighted NTE approach specifically for these engines. In the long term, 
we may consider further emission reductions based on catalytic control 
applied to OB/PWC engines. In this case, we would revisit the 
appropriateness of the weighted NTE approach in the context of those 
standards.
    Under the weighted NTE approach, emission data is collected at five 
test points. These test points are idle, full power, and the speeds 
specified in Modes 2 through 4 of the 5-mode duty cycle. Similar to the 
5-mode duty cycle, the five test points are weighted to achieve a 
composite value. This composite value must be no higher than 1.2 times 
the FEL for that engine family.
    The difference in this approach from the 5-mode duty cycle is that 
the test torque is not specified. During an in-use test, the engine 
would be set to the target speed and the torque value would be allowed 
to float. The actual torque would depend on the propeller design, the 
weight and condition of the boat, and other factors. In addition, the 
engine speed at wide open throttle would be based on actual performance 
on the boat. Because in-use engines installed in boats do not generally 
operate on the theoretical propeller curve used to define the 5-mode 
duty cycle, this approach helps facilitate NTE testing.
    At each test mode, limits are placed on allowable engine operation. 
These limits are generally based on the NTE zone presented above for 
four-stroke engines, but there are two exceptions. First, the lower 
torque limit at 40 percent speed is lowered slightly to better ensure 
that an engine on an in-use boat is capable of operating within the NTE 
zone. Second, the speed range is extended at wide-open throttle for the 
same reason. Figure IV-3 presents the NTE zone and subzones. These 
limits would apply to all non-catalyzed two-stroke engines. See Section 
III.D.2 for a detailed discussion of NTE requirements that apply to 
catalyst-equipped engines (including OB/PWC engines).

[[Page 59069]]

[GRAPHIC] [TIFF OMITTED] TR08OC08.063

    During laboratory testing, any point within each of the four non-
idle subzones may be chosen as test points. These test points do not 
necessarily need to lie on a propeller curve. Note that measured power 
should be used in the calculation of the weighted brake-specific 
emissions.
(6) Test Fuel
    As described below in Section V.D.3, we are adopting provisions 
that will allow manufacturers to use a 10 percent ethanol blend for 
certification testing of exhaust emissions from Small SI engines as an 
alternative to the standard gasoline test fuel. We are adopting similar 
provisions for Marine SI engines in this rule. This option to use a 10 
percent ethanol blend will begin with the implementation date of the 
new exhaust standards for both OB/PWC engines and SD/I engines. The 
option to use a 10 percent ethanol blend would apply to PLT testing as 
well if the manufacturer based their certification on the 10 percent 
ethanol blend. The test fuel specifications are based on using the 
current gasoline test fuel and adding ethanol until the blended fuel 
has 10 percent ethanol by volume. While we will allow use of a 10 
percent ethanol blend for certification, we expect to use our test fuel 
without oxygenates for all confirmatory testing for exhaust emissions. 
Therefore, an engine manufacturer will want to consider the impacts of 
ethanol on emissions in evaluating the compliance margin for the 
standard, or in setting the FEL for the engine family if it is 
participating in the ABT program. We could decide at our own discretion 
to do exhaust emissions testing using a 10 percent ethanol blend if the 
manufacturer certified on that fuel.
    Ethanol has been blended into in-use gasoline for many years and 
its use has been increasing in recent years. Under provisions of the 
Energy Independence and Security Act of 2007, ethanol is required to be 
used in significantly greater quantities. We project that potentially 
80 percent of the national gasoline pool will contain ethanol by 2010, 
making ethanol blends (up to 10 percent) the de facto in-use fuel. As 
ethanol blends become the main in-use fuel, we believe it makes sense 
for manufacturers to optimize their engine designs with regard to 
emissions, performance, and durability on such a fuel. While limited 
data on Marine SI engines operated on a 10 percent ethanol blend 
suggests the HC emissions will decrease and NOX emission 
will increase or stay the same, these effects result in small decreases 
in total HC+NOX emission levels, with the difference 
generally being around 10 percent. CARB is currently running a test 
program to look at the emission impacts of ethanol blends on a range of 
Marine SI engines. Based on the results of that test program, we may 
consider changes to the provisions allowing the use of a 10 percent 
ethanol blend for certification and production-line testing.

E. Additional Certification and Compliance Provisions

(1) Production-Line Testing
    We are continuing to require that manufacturers routinely test 
engines at the point of production to ensure that production 
variability does not affect the engine family's compliance with 
emission standards. The final rule includes a variety of amendments and 
adjustments as described in the proposal. We may also require 
manufacturers to perform production line testing under the selective 
enforcement auditing provisions of 40 CFR part 1068, subpart E.
(2) In-Use Testing
    We are also continuing the requirements related to the

[[Page 59070]]

manufacturer-run in-use testing program. Under this program, 
manufacturers test field-aged engines to determine whether they 
continue to meet emission standards (see part 1045, subpart E). We are, 
however, making a variety of changes and clarifications to the current 
requirements, as described in the following sections.
(a) Adjustments Related to Engine Selection
    Both EPA and manufacturers have gained insights from implementing 
the current program. Manufacturers have expressed a concern that engine 
families are selected rather late in the model year, which makes it 
harder to prepare a test fleet for fulfilling testing obligations. On 
the other hand, we have seen that manufacturers certify some of their 
engine families well into the model year. By making selections early in 
the model year, we will generally be foregoing the opportunity to 
select engine families for which manufacturers don't apply for 
certification until after the selections occur.
    To address these competing interests, we are adopting an approach 
that allows for early selection of engine families, while preserving 
the potential to require testing for engines that are certified later 
in the model year. For complete applications we receive by December 31 
of a given calendar year for the following model year, we expect to 
select engine families for testing by the end of February of the 
following year. If we have not made a complete selection of engine 
families by the end of February, manufacturers have the option of 
making their own selections for in-use testing. The regulations include 
criteria to serve as guidance for manufacturers to make appropriate 
selections. For example, we expect manufacturers to most strongly 
consider those engine families with the highest projected sales volume 
and the smallest compliance margins. Manufacturers may also take into 
account past experience with engine families if they have already 
passed an in-use testing regimen and have not undergone significant 
design changes since that time.
    We will treat engine families differently for in-use testing if we 
receive the application after December 31. This applies, for example, 
if we receive a complete application for a 2010 engine family in 
February 2010. In these cases, the engine family will automatically be 
subject to in-use testing, without regard to the 25 percent limitation 
that will otherwise dictate our selections. This may appear to increase 
the potential test burden, but the clear majority of applications for 
certification are completed before the end of the calendar year for the 
following model year. This provision will eliminate the manufacturers' 
ability to game the testing system by delaying a family of potential 
concern until the next calendar year. We expect to receive few new 
applications after the end of the calendar year. This will be 
consistent with the manufacturers' interest in early family selections, 
without jeopardizing EPA's interest in being able to select from a 
manufacturer's full product lineup.
(b) Crankcase Emissions
    Because the crankcase requirements are based on a design 
specification rather than emission measurements, the anticipated 
crankcase technologies are best evaluated simply by checking whether or 
not they continue to function as designed. As a result, we intend for 
an inspection of in-use engines to show whether these systems continue 
to function properly throughout the useful life, but we are not 
requiring manufacturers to include crankcase emission measurements as 
part of the in-use testing program described in this section. This is 
consistent with the approach we have taken in other programs.
(c) In-Use Emission Credits
    Clean Air Act section 213 requires engines to comply with emission 
standards throughout the regulatory useful life, and section 207 
requires a manufacturer to remedy in-use nonconformity when we 
determine that a substantial number of properly maintained and used 
engines fail to conform with the applicable emission standards (42 
U.S.C. 7541). As described in the original rulemaking, a potential 
option to address a nonconformity is that manufacturers could use a 
calculation of emission credits generated under the in-use testing 
program to avoid a recall determination if an engine family's in-use 
testing results exceeded emission standards (61 FR 52095, October 4, 
1996).
    We are adopting a more general approach to addressing potential 
noncompliance under the in-use testing program than is specified in 40 
CFR part 91. The final regulations do not specify how manufacturers 
could generate emission credits to offset a nonconforming engine 
family. This new approach is preferred for two primary reasons. First, 
manufacturers will be able to use emission data generated from field 
testing to characterize an engine family's average emission level. This 
becomes necessarily more subjective, but allows us to consider a wider 
range of information in evaluating the degree to which manufacturers 
are complying with emission standards across their product line. 
Second, this approach makes clearer the role of the emission credits in 
our consideration to recall failing engines. We plan to consider, among 
other information, average emission levels from multiple engine 
families in deciding whether to recall engines from a failing engine 
family. We therefore believe it is not appropriate to have a detailed 
emission credit program defining precisely how and when to calculate, 
generate, and use credits that do not necessarily have value elsewhere.
    Not specifying how manufacturers generate emission credits under 
the in-use testing program gives us the ability to consider any 
appropriate test data in deciding what action to take. In generating 
this kind of information, some general guidelines will apply. For 
example, we expect manufacturers to share test data from all engines 
and all engine families tested under the in-use testing program, 
including nonstandard tests that might be used to screen engines for 
later measurement. This allows us to understand the manufacturers' 
overall level of performance in controlling emissions to meet emission 
standards. Average emission levels should be calculated over a running 
three-year period to include a broad range of testing without skewing 
the results based on old designs. Emission values from engines 
certified to different tiers of emission standards or tested using 
different measurement procedures should not be combined to calculate a 
single average emission level. Average emission levels should be 
calculated according to the following equation, rounding the results to 
0.1 g/kW-hr:

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

Where:

Average EL = Average emission level in g/kW-hr.
Salesi = The number of eligible sales, tracked to the point of first 
retail sale in the U.S., for the given engine family during the 
model year.
(STD-CL)i = The difference between the emission standard (or Family 
Emission Limit) and the average emission level for an in-use testing 
family in g/kW-hr.
ULi = Useful life in hours.
Poweri = The sales-weighted average maximum engine power for an 
engine family in kW.
LFi = Load factor or fraction of maximum engine power utilized in 
use; use 0.50 for engine families used only in constant-

[[Page 59071]]

speed applications and 0.32 for all other engine families.

    We have adopted this same approach for the in-use testing program 
that applies for Large SI engines in 40 CFR part 1048.
(3) Optional Procedures for Field Testing
    Outboard engines are inherently portable, so it may be easier to 
test them in the laboratory than in the field. However, there is a 
strong advantage to using portable measurement equipment to test 
personal watercraft and SD/I engines while the engine remains installed 
to avoid the effort of taking the engine out and setting it up in a 
laboratory. Field testing will also provide a much better means of 
measuring emissions to establish compliance with the NTE standards, 
because it is intended to ensure control of emissions during normal in-
use operation that may not occur during laboratory testing over the 
specified duty cycle. We are adopting the field testing provisions 
described below as an option for all OB/PWC and SD/I engines.
    The regulations at 40 CFR part 1065, subpart J, specify how to 
measure emissions using portable measurement equipment. To test engines 
while they remain installed, analyzers are connected to the engine's 
exhaust to detect emission concentrations during normal operation. 
Exhaust volumetric flow rate and continuous power output are also 
needed to convert the analyzer responses to units of g/kW-hr for 
comparing to emission standards. These values can be calculated from 
measurements of the engine intake flow rate, the exhaust air-fuel ratio 
and the engine speed, and from torque information.
    Available small analyzers and other equipment may be adapted for 
measuring emissions in the field. A portable flame ionization detector 
can measure total hydrocarbon concentrations. A portable analyzer based 
on zirconia technology can measure NOX emissions. A 
nondispersive infrared (NDIR) unit can measure CO. We are requiring 
manufacturers to specify how they will intend to draw emission samples 
from in-use engines for testing installed engines. For example, 
emission samples can be drawn from the exhaust flow directly upstream 
of the point at which water is mixed into the exhaust flow. This should 
minimize collection of water in the extracted sample, though a water 
separator may be needed to maintain a sufficiently dry sample. Mass 
flow rates also factor into the torque calculation; this may be 
measured either in the intake or exhaust manifold.
    Calculating brake-specific emissions depends on determining 
instantaneous engine speed and torque levels. We are therefore 
requiring manufacturers to design their engine control systems to be 
able to continuously monitor engine speed and torque. We have already 
adopted this requirement for other mobile source programs where 
electronic engine control is used. Monitoring speed values is 
straightforward. For torque, the onboard computer needs to convert 
measured engine parameters into useful units. Manufacturers generally 
will need to monitor a surrogate value such as intake manifold pressure 
or throttle position (or both), then rely on a look-up table programmed 
into the onboard computer to convert these torque indicators into 
Newton-meters. Manufacturers may also want to program look-up tables 
for torque conversion into a remote scan tool. Part 1065 specifies the 
performance requirements for accuracy, repeatability, and noise related 
to speed and torque measurements. These tolerances are taken into 
account in the selection of the new NTE standards. We are adopting the 
requirement to meet the torque-broadcasting requirements in the 2013 
model year, which aligns with the final implementation of the NTE 
standards.
(4) Other Changes for In-Use Testing
    A question has been raised regarding the extent of liability if an 
engine family is found to be noncompliant during in-use testing. 
Because it can take up to two years to complete the in-use testing 
regimen for an engine family, we want to clarify the status of engines 
produced under that engine family's certificate, and under the 
certificates of earlier and later engine families that were effectively 
of the same design. For example, manufacturers in many cases use 
carryover data to continue certifying new engine families for a 
subsequent model year; this avoids the need to produce new test data 
for engines whose design does not change from year to year. For these 
cases, absent any contrary information from the manufacturer, we will 
maintain the discretion to include other applicable engine families in 
the scope of any eventual recall, as allowed by the Act.
    In response to comments received from manufacturers, we have agreed 
to adopt a provision allowing manufacturers to request hardship relief 
under the in-use testing program if conditions outside their control 
prevent them from completing the required testing. We would expect this 
to be a rare occurrence, but this provision will allow us to 
accommodate manufacturers if extreme unforeseen circumstances prevent a 
manufacturer from completing a test program.
    There are a variety of smaller changes to the in-use testing 
provisions as a result of updating the regulatory language to reflect 
the language changes that we adopted for similar testing with Large SI 
engines. First, we are removing the requirement to select engines that 
have had service accumulation representing less than 75 percent of the 
useful life. This gives manufacturers the flexibility to test somewhat 
older engines if they want to. Second, we are slightly adjusting the 
description of the timing of the test program, specifying that the 
manufacturer must submit a test plan within 12 months of EPA selecting 
the family for testing, with a requirement to complete all testing 
within 24 months. This contrasts with the current requirement to 
complete testing within 12 months after the start of testing, which in 
turn must occur within 12 months of family selection. We believe the 
modified approach allows additional flexibility without delaying the 
conclusion of testing. Third, we are requiring that manufacturers 
explain why they excluded any particular engines from testing. Finally, 
we are requiring manufacturers to report any noncompliance within 15 
days after completion of testing for a family, rather than 15 days 
after an individual engine fails. This has the advantage for 
manufacturers and the Agency of a more unified reporting after testing 
is complete, rather than piecemeal reporting before conclusions can be 
drawn.
(5) Use of Engines Already Certified to Other Programs
    In some cases, manufacturers may want to use engines already 
certified under our other programs. Engines certified to the emission 
standards for highway applications in part 86 or Large SI applications 
in part 1048 are meeting more stringent standards. We are therefore 
accepting the pre-existing certification for these engines used in 
marine applications, on the condition that the engine is not changed 
from its certified configuration in any way (see Sec.  1045.605). We 
allow this in a similar way for a limited number of engines certified 
to the Small SI emission standards (see Sec.  1045.610). The number of 
installed marine engines must generally be less then five percent of 
the total U.S. sales of that engine model in all applications.

[[Page 59072]]

(6) Import-Specific Information at Certification
    We are requiring additional information to improve our ability to 
oversee compliance related to imported engines (see Sec.  1045.205). In 
the application for certification, the following additional information 
is necessary: (1) The port or ports at which the manufacturer has 
imported engines over the previous 12 months, (2) the names and 
addresses of the agents the manufacturer has authorized to import the 
engines, and (3) the location of the test facilities in the United 
States where the manufacturer will test the engines if we select them 
for testing under a selective enforcement audit. See Section 1.3 of the 
Summary and Analysis of Comments for further discussion related to 
naming test facilities in the United States.
(7) Alternate Fuels
    The emission standards apply to all spark-ignition engines 
regardless of the fuel they use. Almost all Marine SI engines operate 
on gasoline, but these engines may also operate on other fuels, such as 
natural gas, liquefied petroleum gas, ethanol, or methanol. The test 
procedures in 40 CFR part 1065 describe adjustments needed for 
operating test engines with oxygenated fuels.
    In some special cases, a single engine is designed to alternately 
run on different fuels. For example, some engines can switch back and 
forth between natural gas and LPG. We are adding a clarification to the 
regulations to describe how manufacturers would submit certification 
data and divide such engines into engine families. We would expect a 
manufacturer to submit test data on each fuel type. If manufacturers 
produce engines that run only on one fuel where that dedicated-fuel 
engine is identical to a dual-fuel engine with respect to that fuel, 
those engines could be included in the same family. This is also true 
for the second fuel. For example, if a manufacturer produces an engine 
that can run on both gasoline and LPG and also produces that engine 
model in gasoline-only and LPG-only versions without adjusting the 
calibration or other aspects of that configuration, those engines may 
all be included in the same engine family.
    Once an engine is placed into service, someone might want to 
convert it to operate on a different fuel. This would take the engine 
out of its certified configuration, so we are requiring that someone 
performing such a fuel conversion to go through a certification 
process. We will allow certification of the complete engine using 
normal certification procedures, or the aftermarket conversion kit 
could be certified using the provisions of 40 CFR part 85, subpart V. 
This contrasts with the provisions in part 91 that allow for fuel 
conversions that can be demonstrated not to increase emission levels 
above the applicable standard. We propose to apply this requirement 
starting January 1, 2010. (See Sec.  91.1103 and Sec.  1045.645.)
(8) Special Provisions Related to Altitude
    As described in Section IV.C.1, we are allowing manufacturers to 
comply with emission standards at high altitudes using an altitude kit. 
Manufacturers using altitude kits to comply at altitude must take steps 
to describe their altitude kits in the application for certification 
and explain their basis for believing that engines with these altitude 
kits will comply with emission standards at high altitude. 
Manufacturers must also describe a plan for making information and 
parts available such that the widespread use of altitude kits will 
reasonably be expected in high-altitude areas. For a more thorough 
description of these compliance provisions, see the discussion in 
Section V.E.5 for nonhandheld Small SI engines.

F. Other Adjustments to Regulatory Provisions

    We are moving the regulatory requirements for marine spark-ignition 
engines from 40 CFR part 91 to 40 CFR part 1045. This gives us the 
opportunity to update the details of our certification and compliance 
program to be consistent with the comparable provisions that apply to 
other engine categories. The following paragraphs highlight some of the 
provisions in the new language that may involve noteworthy changes from 
the current regulations in part 91. All these provisions apply equally 
to SD/I engines, except that they are not subject to the current 
requirements in 40 CFR part 91.
    We are making some adjustments to the criteria for defining engine 
families (see Sec.  1045.230). The fundamental principle behind engine 
families is to group together engines that will have similar emission 
characteristics over the useful life. As a result, all engines within 
an engine family must have the same approximate bore diameter and use 
the same method of air aspiration (for example, naturally aspirated vs. 
turbocharged). Under the previous regulation, manufacturers were 
allowed the discretion to consider bore and stroke dimensions and 
aspiration method for subdividing engine families beyond what was 
required under the primary criteria in Sec.  91.115. We believe engines 
with substantially different bore diameters will have combustion and 
operating characteristics that must be taken into account with unique 
engineering. Similarly, adding a turbocharger or supercharger changes 
the engine's combustion and emission control in important ways. We are 
also requiring that all the engines in an engine family use the same 
type of fuel. This may have been a simple oversight in the current 
regulations, since all OB/PWC engines operate on gasoline. However, if 
a manufacturer were to produce an engine model that runs on natural gas 
or another alternative fuel, that engine model should be in its own 
engine family. See Section IV.E.7 for a discussion of dual-fuel 
engines. Finally we are removing the provision currently in part 91 
related to the engine-cooling mechanism. Manufacturers pointed out that 
raw-water cooling and separate-circuit cooling do not have a 
significant effect on an engine's emission characteristics.
    The new regulatory language related to engine labels remains 
largely unchanged from the previous requirements (see Sec.  1045.135). 
We are including a provision to allow manufacturers to print labels 
that have a different company's trademark. Some manufacturers in other 
programs have requested this flexibility for marketing purposes.
    The warranty provisions are described above. We are adding an 
administrative requirement to describe the provisions of the emission-
related warranty in the owners manual (see Sec.  1045.120). We expect 
that many manufacturers already do this, but believe it is appropriate 
to require this as a routine practice.
    Certification procedures depend on establishing deterioration 
factors to predict the degradation in emission controls that occurs 
over the course of an engine's useful life. This typically involves 
service accumulation in the laboratory to simulate in-use operation. 
Since manufacturers do in-use testing to further characterize this 
deterioration rate, we are specifying that deterioration factors for 
certification must take into account any available data from in-use 
testing with similar engines. This provision applies in most of our 
emission control programs that involve routine in-use testing. To the 
extent this information is available, it should be factored into the 
certification process. For example, if in-use testing shows that 
emission deterioration is substantially higher than that characterized 
by the deterioration factor, we expect the manufacturer to factor the 
in-use data

[[Page 59073]]

into a new deterioration factor, or to revise durability testing 
procedures to better represent the observed in-use degradation.
    Maximum engine power for an engine family is an important 
parameter. For example, maximum engine power determines the applicable 
CO standard for engines at or below 40 kW. For bigger engines, emission 
credits are calculated based on total power output. As a result, we are 
specifying that manufacturers determine their engines' maximum engine 
power as the point of maximum engine power on the engine's nominal 
power curve (see Sec.  1045.140). This value may be established as a 
design value, but must be determined consistent with the engine mapping 
procedures in Sec.  1065.510. The manufacturer must adjust the declared 
value for maximum engine power if it does not fall within the range of 
values from production engines.
    The new requirements related to the application for certification 
will involve some new information, most of which is described above, 
such as installation instructions and a description of how engines 
comply with not-to-exceed standards (see Sec.  1045.205). In addition, 
we are requiring that manufacturers submit projected sales volumes for 
each family, rather than allowing manufacturers to keep these records 
and make them available upon request. Manufacturers already do this 
routinely and it is helpful to have ready access to this information to 
maintain compliance oversight for such things as emission credit 
calculations. We are also requiring that each manufacturer identify an 
agent for service in the United States. For companies based outside the 
United States, this ensures that we will be able to maintain contact 
regarding any official communication that may be required. We have 
adopted these same requirements for other nonroad programs.
    We are requiring that manufacturers use good engineering judgment 
in all aspects of their effort to comply with regulatory requirements. 
The regulations at Sec.  1068.5 describe how we will apply this 
provision and what we will require of manufacturers where we disagree 
with a manufacturer's judgment.
    We are also establishing new defect-reporting requirements. These 
requirements are described in Section VIII of the preamble to the 
proposed rule.
    It is common practice for one company to produce engine blocks that 
a second company modifies for use as a marine engine. Since our 
regulations prohibit the sale of uncertified engines, we are 
establishing provisions to clarify the status of these engines and 
defining a path by which these engines can be handled without violating 
the regulations. See Section VIII.C.1 for more information.

G. Small-Business Provisions

    The OB/PWC market has traditionally been made up of large 
businesses. We anticipate that the OB/PWC standards will be met through 
the expanded use of existing cleaner engine technologies. Small 
businesses certifying to standards today are already using technologies 
that could be used to meet the new standards. As a result, we are 
adopting only three small business regulatory relief provisions for 
small business manufacturers of OB/PWC engines. We are allowing small 
business OB/PWC engine manufacturers to be exempt from PLT testing and 
to use assigned deterioration factors for certification. (EPA will 
provide guidance to engine manufacturers on the assigned deterioration 
factors prior to implementation of the new OB/PWC standards.) We are 
also extending the economic hardship relief to OB/PWC engine 
manufacturers that qualify as small businesses (see Sec.  1068.250). We 
are defining small business eligibility criteria for OB/PWC engine 
manufacturers based on an employee cut-off of 250 employees.
    In addition to the flexibilities noted above, all OB/PWC engine 
manufacturers, regardless of size, will be able to apply for the 
unusual circumstances hardship in Sec.  1068.245. Finally, all OB/PWC 
vessel manufacturers that rely on other companies to provide certified 
engines or fuel system components for their product will be able to 
apply for the hardship provisions in Sec.  1068.255.

H. Technological Feasibility

(1) Level of Standards
    Over the past several years, manufacturers have demonstrated their 
ability to achieve significant HC+NOX emission reductions 
from outboard and personal watercraft engines. This has largely been 
accomplished through the introduction of two-stroke direct injection 
engines and conversion to four-stroke engines. Recent certification 
data for these types of engines show that these technologies may be 
used to achieve emission levels significantly below the current exhaust 
emission standards. In fact, California standards require a 65 percent 
reduction beyond the current federal standards.
    Our own analysis of recent certification data shows that most four-
stroke outboard engines and many two-stroke direct injection outboard 
engines can meet the final HC+NOX standard. Similarly, 
although PWC engines tend to have higher HC+NOX emissions, 
presumably due to their higher power densities, many of these engines 
can also meet the new HC+NOX standard. Although there is 
currently no CO standard for OB/PWC engines, OB/PWC manufacturers are 
required to report CO emissions from their engines (see Sec.  
91.107(d)(9)). These emissions are based on test data from new engines 
and do not consider deterioration or compliance margins. Based on this 
data, all the two-stroke direct injection engines show emissions well 
below the new standards. In addition, the majority of four-stroke 
engines meet the new CO standards as well.
    We therefore believe the HC+NOX and CO emission 
standards will be achieved by phasing out conventional carbureted two-
stroke engines and replacing them with four-stroke engines or two-
stroke direct injection engines. This has been the market-driven trend 
over the last five years. Chapter 4 of the Final RIA presents charts 
that compare certification data to the new standards.
(2) Implementation Dates
    We are implementing the new emission standards beginning with the 
2010 model year. This gives two additional years beyond the 
implementation date of the same standards in California. This 
additional time may be necessary for manufacturers that do not sell 
engine models in California or that sell less than their full product 
lineup into the California market. We believe the same technology used 
to meet the 2008 standards in California could be used nationwide with 
the additional year allowed for any engine models not sold in 
California. Low-emission engines sold in California are generally sold 
nationwide as part of manufacturer compliance strategies for EPA's 2006 
standards. Manufacturers have indicated that they are calibrating their 
four-stroke and direct-injection two-stroke engines to meet the 
California requirements. To meet the new standards, manufacturers' 
efforts will primarily center on phasing out their higher-emission 
carbureted two-stroke engines and producing more of their lower 
emission engines.
(3) Technological Approaches
    Conventional two-stroke engines add a fuel-oil mixture to the 
intake air with a carburetor, and use the crankcase to force this mixed 
charge air into the combustion chamber. In the two-stroke

[[Page 59074]]

design, the exhaust gases must be purged from the cylinder while the 
fresh charge enters the cylinder. With traditional two-stroke designs, 
the fresh charge, with unburned fuel and oil, will push the exhaust 
gases out of the combustion chamber as the combustion event concludes. 
As a result, 25 percent or more of the fresh fuel-oil could pass 
through the engine unburned. This is known as scavenging losses. 
Manufacturers have phased out sales of the majority of their 
traditional two-stroke engines to meet the federal 2006 OB/PWC exhaust 
emission standards. However, many of these engines still remain in the 
product mix as a result of emission credits.
    One approach to minimizing scavenging losses in a two-stroke engine 
is through the use of direct fuel injection into the combustion 
chamber. The primary advantage of direct injection for a two-stroke 
engine is that the exhaust gases can be scavenged with fresh air and 
fuel can be injected into the combustion chamber after the exhaust port 
closes. As a result, hydrocarbon emissions, fuel economy, and oil 
consumption are greatly improved. Some users prefer two-stroke direct 
injection engines over four-stroke engines due to the higher power-to-
weight ratio. Most of the two-stroke direct injection engines certified 
to the current OB/PWC emission standards have HC+NOX 
emissions levels somewhat higher than certified four-stroke engines. 
However, these engines also typically have lower CO emissions due to 
the nature of a heterogeneous charge. By injecting the fuel directly 
into a charge of air in the combustion chamber, localized areas of lean 
air/fuel mixtures are created where CO is efficiently oxidized.
    OB/PWC manufacturers are also achieving lower emissions through the 
use of four-stroke engine designs. Because a single combustion event 
takes place over two revolutions of the crankshaft, the fresh fuel-air 
charge can enter the combustion chamber after the exhaust valve is 
closed. This minimizes scavenging losses. Manufacturers currently offer 
four-stroke marine engines with maximum engine power ranging from 1.5 
to more than 250 kW. These engines are available with carburetion, 
throttle-body fuel injection, or multi-point fuel injection. Based on 
the certification data, whether the engine is carbureted or fuel-
injected does not have a significant effect on combined 
HC+NOX emissions. For PWC engines, the HC+NOX 
levels are somewhat higher, primarily due to their higher power-to-
weight ratio. CO emissions from PWC engines are similar to those for 
four-stroke outboard engines.
    One manufacturer has certified two PWC engine models with oxidation 
catalysts. One engine model uses the oxidation catalyst in conjunction 
with a carburetor while the other uses throttle-body fuel injection. In 
this application, the exhaust system is shaped in such a way to protect 
the catalyst from water. The exhaust system is relatively large 
compared to the size of the engine. We are not aware of any efforts to 
develop a three-way catalyst system for PWC engines. We are also not 
aware of any development efforts to package a catalyst into the exhaust 
system of an outboard marine engine. In current designs, water and 
exhaust are mixed in the exhaust system to help cool the exhaust and 
tune the engine. Water can work its way up through the exhaust system 
because the lower end is under water and varying pressures in the 
exhaust stream can draw water against the prevailing gas flow. As 
discussed in Chapter 4 of the Final RIA, saltwater can be detrimental 
to catalyst performance and durability. In addition, outboard engines 
are designed with lower units that are designed to be as thin as 
possible to improve the ability to turn the engine on the back of the 
boat and to reduce drag on the lowest part of the unit. This raises 
concerns about the placement and packaging of catalysts in the exhaust 
stream. Certainly, the success of packaging catalysts in sterndrive and 
inboard boats in recent development efforts (see Section III) suggests 
that catalysts may be feasible for outboards with additional effort. 
However, this has not yet been demonstrated and significant development 
efforts will be necessary.
(4) Regulatory Alternatives
    We considered a level of 10 g/kW-hr HC+NOX for OB/PWC 
engines above 40 kW with an equivalent percent reduction below the new 
standards for engines at or below 40 kW. This second tier of standards 
could apply in the 2012 or later time frame. Such a standard would be 
consistent with currently certified emission levels from a significant 
number of four-stroke outboard engines. We had three concerns with 
adopting this second tier of OB/PWC standards. First, while some four-
stroke engines may be able to meet a 10 g/kW-hr standard with improved 
calibrations, it is not clear that all engines could meet this standard 
without applying catalyst technology. As described in Section IV.H.3, 
we believe it is not appropriate to base standards in this rule on the 
use of catalysts for OB/PWC engines. Second, certification data for 
personal watercraft engines show somewhat higher exhaust emission 
levels, so setting the standard at 10 g/kW-hr would likely require 
catalysts for many models. Third, it is not clear that two-stroke 
engines would be able to meet the more stringent standard, even with 
direct injection and catalysts. These engines operate with lean air-
fuel ratios, so reducing NOX emissions with any kind of 
aftertreatment is especially challenging.
    Therefore, unlike the new standards for sterndrive and inboard 
engines, we are not adopting OB/PWC standards that require the use of 
catalysts. Catalyst technology would be necessary for significant 
additional control of HC+NOX and CO emissions for these 
engines. While there is good potential for eventual application of 
catalyst technology to outboard and personal watercraft engines, we 
believe the technology is not adequately demonstrated at this point. 
Much laboratory and in-water work is needed.
(5) Our Conclusions
    We believe the final emission standards can be achieved by phasing 
out conventional carbureted two-stroke engines in favor of four-stroke 
engines or two-stroke direct injection engines. The four-stroke engines 
or two-stroke direct injection engines are already widely available 
from marine engine manufacturers. One or both of these technologies are 
currently in place for the whole range of outboard and personal 
watercraft engines.
    The new exhaust emission standards represent the greatest degree of 
emission control achievable in the contemplated time frame. While 
manufacturers can meet the standards with their full product line in 
2010, requiring full compliance with a nationwide program earlier, such 
as in the same year that California introduces new emission standards, 
will pose an unreasonable requirement. Allowing two years beyond 
California's requirements is necessary to allow manufacturers to 
certify their full product line to the new standards, not only those 
products they will make available in California. Also, as described 
above, we believe the catalyst technology that will be required to meet 
emission standards substantially more stringent than we are adopting 
has not been adequately demonstrated for outboard or personal 
watercraft engines. As such, we believe the new standards for 
HC+NOX and CO emissions are the most stringent possible in 
this rulemaking. More time to gain experience with catalysts on 
sterndrive and inboard engines and a substantial engineering effort to 
apply that learning

[[Page 59075]]

to outboard and personal watercraft engines may allow us to pursue more 
stringent standards in a future rulemaking.
    As discussed in Section VII, we do not believe the final standards 
will have negative effects on energy, noise, or safety and may lead to 
some positive effects.

V. Small SI Engines

A. Overview

    This section applies to new nonroad spark-ignition engines with 
rated power at or below 19 kW (``Small SI engines''). These engines are 
most often used in lawn and garden applications, typically by 
individual consumers; they are many times also used by commercial 
operators and they provide power for a wide range of other home, 
industrial, farm, and construction applications. The engines are 
typically air-cooled single-cylinder models, though Class II engines 
(with displacement over 225 cc) may have two or three cylinders, and 
premium models with higher power may be water-cooled.
    We have already adopted two phases of exhaust standards for Small 
SI engines. The first phase of standards for nonhandheld engines 
generally led manufacturers to convert any two-stroke engines to four-
stroke engines. These standards applied only at the time of sale. The 
second phase of standards for nonhandheld engines generally led 
manufacturers to apply emission control technologies, such as in-
cylinder controls and improved carburetion, with the additional 
requirement that manufacturers needed to meet emission standards over a 
useful life period.
    As described in Section I, this final rule is the result of a 
Congressional mandate that springs from the new California ARB 
standards. In 2003, California ARB adopted more stringent standards for 
nonhandheld engines. These standards target emission reductions of 
approximately 35 percent below EPA's Phase 2 standards and are based on 
the expectation that manufacturers will use relatively low-efficiency 
three-way catalysts to control HC+NOX emissions. California 
ARB did not change the applicable CO emission standard.\96\
---------------------------------------------------------------------------

    \96\ California ARB also adopted new fuel evaporative emission 
standards for equipment using handheld and nonhandheld engines. 
These included tank permeation standards for both types of equipment 
and hose permeation, running loss, and diurnal emission standards 
for nonhandheld equipment. See Section VI for additional information 
related to evaporative emissions.
---------------------------------------------------------------------------

    We are adding these new regulations for Small SI engines in 40 CFR 
part 1054 rather than changing the current regulations in 40 CFR part 
90. This gives us the opportunity to update the details of our 
certification and compliance program that are consistent with the 
comparable provisions that apply to other engine categories and 
describe regulatory requirements in plain language. Most of the change 
in regulatory text provides improved clarity without changing 
procedures or compliance obligations. Where there is a change that 
warrants further attention, we describe the need for the change below. 
For nonhandheld engines, manufacturers must comply with all the 
provisions in part 1054 once the Phase 3 standards begin to apply in 
2011 or 2012. For handheld engines, manufacturers must comply with the 
provisions in part 1054 starting in 2010. Note, however, that part 1054 
specifies that certain provisions do not apply for handheld engines 
until sometime after 2010.
    Engines and equipment subject to part 1054 are also subject to the 
general compliance provisions in 40 CFR part 1068. These include 
prohibited acts and penalties, exemptions and importation provisions, 
selective enforcement audits, defect reporting and recall, and hearing 
procedures. See Section VIII of the preamble to the proposed rule for 
further discussion of these general compliance provisions.

B. Engines Covered by This Rule

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

[[Page 59076]]

above 25 kW if engine displacement is at or below 1000 cc).
    Similarly, the regulations depend on engine displacement to 
differentiate engines for the applicability of different standards. The 
regulations currently provide no objective direction or restriction 
regarding the determination of engine displacement. We are defining 
displacement as the intended swept volume of the engine to the nearest 
cubic centimeter, where the engine's swept volume is the product of the 
internal cross-sectional area of the cylinders, the stroke length, and 
the number of cylinders.
    For both maximum engine power and displacement, the declared values 
must be within the range of the values from production engines 
considering normal production variability. This does not imply that 
production engines need to be routinely tested or measured to verify 
the declared values, but it serves to define a range of appropriate 
values and provides a mechanism by which we can ensure that the 
declared values conform to the production engines in question. If 
production engines are found to have different values for maximum 
engine power or displacement, this should be noted in a change to the 
application for certification.
(3) Exempted or Excluded Engines
    Under the Clean Air Act, engines that are used in stationary 
applications are not nonroad engines. States are generally preempted 
from setting emission standards for nonroad engines but this preemption 
does not apply to stationary engines. EPA has adopted emission 
standards for stationary compression-ignition engines sold or used in 
the United States (71 FR 39154, July 11, 2006). EPA also recently 
adopted emission standards for stationary spark-ignition engines in a 
separate action (73 FR 3568, January 18, 2008). In pursuing emission 
standards for stationary engines, we have attempted to maintain 
consistency between stationary and nonroad requirements as much as 
possible. As explained in the stationary rule, stationary spark-
ignition engines below 19 kW are almost all sold into residential 
applications so we believe it is not appropriate to include 
requirements for owners or operators that will normally be part of a 
program for implementing standards for stationary engines. As a result, 
we indicated in the stationary rule that it is most appropriate to set 
exhaust and evaporative emission standards for stationary spark-
ignition engines and equipment below 19 kW as if they were used in 
nonroad applications. This will allow manufacturers to make a single 
product that meets all applicable EPA standards for both stationary and 
nonroad applications.
    The Clean Air Act provides for a different regulatory approach for 
engines used solely in competition. Rather than relying on engine 
design features that serve as inherent indicators of dedicated 
competitive use, we have taken the approach in other programs of more 
carefully differentiating competition and noncompetition models in ways 
that reflect the nature of the particular products. In the case of 
Small SI engines, we believe there are no particular engine design 
features that allow us to differentiate between engines that are used 
solely for competition from those with racing-type features that are 
not used solely for competition. We are requiring that handheld and 
nonhandheld equipment with engines meeting all the following criteria 
will be considered as being used solely for competition:
     The engine (or equipment in which the engine is installed) 
may not be displayed for sale in any public dealership;
     Sale of the equipment in which the engine is installed 
must be limited to professional competitors or other qualified 
competitors;
     The engine must have performance characteristics that are 
substantially superior to noncompetitive models;
     The engines must be intended for use only in competition 
events sanctioned (with applicable permits) by a state or federal 
government agency or other widely recognized public organization, with 
operation limited to competition events, performance-record attempts, 
and official time trials.
    We are also including a provision allowing us to approve an 
exemption for cases in which an engine manufacturer can provide clear 
and convincing evidence that an engine will be used solely for 
competition even though not all the above criteria apply for a given 
situation. This may occur, for example, if a racing association 
specifies a particular engine model in the competition rules, where 
that engine has design features that prevent it from being certified, 
or from being used for purposes other than competition.
    Engine manufacturers will make their request for each new model 
year and we will deny a request for future production if there are 
indications that some engines covered by previous requests are not 
being used solely for competition. Competition engines are produced and 
sold in very small quantities so manufacturers should be able to 
identify which engines qualify for this exemption.
    In the rulemaking for recreational vehicles, we chose not to apply 
standards to hobby products by exempting all reduced-scale models of 
vehicles that were not capable of transporting a person (67 FR 68242, 
November 8, 2002). We are extending that same provision to handheld and 
nonhandheld Small SI engines. (See Sec.  1054.5.)
    In the rulemaking to establish Phase 2 emission standards, we 
adopted an exemption for handheld and nonhandheld engines used in 
rescue equipment. The regulation does not require any request, 
approval, or recordkeeping related to the exemption. We discovered 
while conducting the SBAR Panel described in Section VI.G that some 
companies are producing noncompliant engines under this exemption. As a 
result, we are keeping this exemption but are adding several provisions 
to allow us to better monitor how it is used (see Sec.  1054.660). We 
are also keeping the requirement that equipment manufacturers use 
certified engines if they are available. We are updating this provision 
by adding a requirement that equipment manufacturers use an engine that 
has been certified to less stringent Phase 1 or Phase 2 standards if 
such an engine is available. We are explicitly allowing engine 
manufacturers to produce engines for this exemption (with permanent 
labels identifying the particular exemption), but only if they have a 
written request for each equipment model from the equipment 
manufacturer. We are further requiring that the equipment manufacturer 
notify EPA of the intent to produce emergency equipment with exempted 
engines. Also, to clarify the scope of this provision, we are defining 
``emergency rescue situations'' as firefighting or other situations in 
which a person is retrieved from imminent danger. Finally, we are 
clarifying that EPA may discontinue the exemption on a case-by-case 
basis if we find that such engines are not used solely for emergency 
and rescue equipment or if we find that a certified engine is available 
to power the equipment safely and practically. We are applying the 
provisions of this section for new equipment built on or after January 
1, 2010.
    The current regulations also specify an exemption allowing 
individuals to import up to three nonconforming handheld or nonhandheld 
engines one time. We are keeping this exemption with three adjustments 
(see Sec.  1054.630). First, we are allowing this exemption only for 
used equipment. Allowing

[[Page 59077]]

importation of new equipment under this exemption is not consistent 
with the intent of the provision, which is to allow people to move to 
the United States from another country and continue to use lawn and 
garden equipment that may already be in their possession. Second, we 
are allowing such an importation once every five years but are 
requiring a statement that the person importing the exempted equipment 
has not used this provision in the preceding five years. The current 
regulations allow only one importation in a person's lifetime without 
including any way of making that enforceable. We believe the new 
combination of provisions represents an appropriate balance between 
preserving the enforceability of the exemption within the normal flow 
of personal property for people coming into the country. Third, we are 
no longer requiring submission of the taxpayer identification number 
since this is not essential for ensuring compliance. We are applying 
these changes starting January 1, 2010.

C. Final Requirements

    A key element of the new requirements for Small SI engines is the 
more stringent exhaust emission standards for nonhandheld engines. We 
are also finalizing several changes to the certification program that 
will apply to both handheld and nonhandheld engines. For example, we 
are clarifying the process for selecting an engine family's useful 
life, which defines the length of time over which manufacturers are 
responsible for meeting emission standards. We are also adding several 
provisions to update the program for allowing manufacturers to use 
emission credits to show that they meet emission standards. The 
following sections describe the elements of this rule.
    The timing for implementation of the new exhaust emission standards 
is described below. Unless we specify otherwise, all the additional 
regulatory changes will apply when engines are subject to the emission 
standards and the other provisions under 40 CFR part 1054. This will be 
model year 2012 for Class I engines and model year 2011 for Class II 
engines. For handheld engines, we are generally requiring that 
manufacturers comply with the provisions of part 1054, including the 
certification provisions, starting in the 2010 model year. These new 
requirements apply to handheld engines unless stated otherwise. For 
convenience we refer to the handheld emission standards in part 1054 as 
Phase 3 standards even though the numerical values remain unchanged 
from the Phase 2 standards.
(1) Emission Standards
    Extensive testing and dialogue with manufacturers and other 
interested parties has led us to a much better understanding of the 
capabilities and limitations of applying emission control technologies 
to nonhandheld Small SI engines. As described in the Final RIA, we have 
collected a wealth of information related to the feasibility, 
performance characteristics, and safety implications of applying 
catalyst technology to these engines. We have concluded within the 
context of Clean Air Act section 213 that it is appropriate to 
establish emission standards that are consistent with those adopted by 
California ARB. We are finalizing HC+NOX emission standards 
of 10.0 g/kW-hr for Class I engines starting in the 2012 model year, 
and 8.0 g/kW-hr for Class II engines starting in the 2011 model year 
(see Sec.  1054.105). For both classes of nonhandheld engines we are 
maintaining the existing CO standard of 610 g/kW-hr.
    We are eliminating the defined subclasses for the smallest sizes of 
nonhandheld engines starting with implementation of the Phase 3 
standards. Under the current regulations in part 90, Class I-A is 
designated for engines with displacement below 66 cc that may be used 
in nonhandheld applications. To address the technological constraints 
of these engines, all the current requirements for these engines are 
the same as for handheld engines. Class I-B is similarly designated for 
engines with displacement between 66 and 100 cc that may be used in 
nonhandheld applications. These engines are currently subject to a mix 
of provisions that result in an overall stringency that lies between 
handheld and nonhandheld engines. We are revising the regulations such 
that engines at or below 80 cc are subject to the Phase 3 standards for 
handheld engines and equipment in part 1054 starting in the 2010 model 
year. We are allowing engines at or below 80 cc to be used without 
restriction in nonhandheld equipment. The 80 cc threshold aligns with 
the California ARB program. For nonhandheld engines above 80 cc, we are 
treating them in every way as Class I engines. Based on the fact that 
it is more difficult for smaller displacement engines to achieve the 
same g/kW-hr emission level as larger displacement engines, it will be 
more of a challenge for manufacturers to achieve a 10.0 g/kW-hr 
HC+NOX level on these smallest Class I engines. However, for 
those engines unable to achieve the level of the new standards (either 
with or without a catalyst), manufacturers may elect to rely on 
emission credits to comply with emission standards. We believe all 
manufacturers producing engines formerly included in Class I-B also 
have a wide enough range of engine models that they will be able to 
generate sufficient credits to meet standards across the full product 
line. (See Sec.  1054.101 and Sec.  1054.801.)
    We are making another slight change to the definition of handheld 
engines that may affect whether an engine is subject to handheld or 
nonhandheld standards. The handheld definition relies on a weight 
threshold for certain engines. As recently as 1999, we affirmed that 
the regulation should allow for the fact that switching to a heavier 
four-stroke engine to meet emission standards might inappropriately 
cause an engine to no longer qualify as a handheld engine (64 FR 5252, 
February 3, 1999). The regulation accordingly specifies that the weight 
limit is 20 kilograms for one-person augers and 14 kilograms for other 
types of equipment, based on the weight of the engine that was in place 
before applying emission control technologies. We believe it is 
impractical to base a weight limit on product specifications that have 
become difficult to establish. We are therefore increasing each of the 
specified weight limits by two kilograms, representing the approximate 
additional weight related to switching to a four-stroke engine, and 
applying the new weight limit to all engines and equipment (see Sec.  
1054.801).
    Finally, we are revising the list of applications identified in the 
handheld definition as being subject to the handheld standards. We are 
specifically adding hand-supported jackhammers or rammer/compactor to 
the handheld definition as we have approved these types of applications 
in the past as meeting the attributes laid out in the definition. We 
are removing the ``one-person'' term from the auger description in the 
handheld definition because some augers can be operated by two people, 
but still have other attributes that would lead to the equipment being 
considered handheld. We are also removing the specific mention of pumps 
and generators from the handheld definition if they are below the 
specified weight limit. With the change noted earlier that allows 
manufacturers to use engines below 80cc in either handheld or 
nonhandheld applications, we believe these applications no longer need 
to be cited for special treatment in the handheld definition.

[[Page 59078]]

    The regulations in part 90 allow manufacturers to rely on altitude 
kits to comply with emission requirements at high altitude. We are 
continuing this approach but are clarifying that all nonhandheld 
engines must comply with Phase 3 standards without altitude kits at 
barometric pressures above 94.0 kPa, which corresponds to altitudes up 
to about 2,000 feet above sea level (see Sec.  1054.115). This will 
ensure that all areas east of the Rocky Mountains and most of the 
populated areas in Pacific Coast states will have compliant engines 
without depending on engine modifications. This becomes increasingly 
important as we anticipate manufacturers relying on technologies that 
are sensitive to controlling air-fuel ratio for reducing emissions. 
Engine manufacturers must identify in the owner's manual the altitude 
ranges for proper engine performance and emission control that are 
expected with and without the altitude kit. The owner's manual must 
also state that operating the engine with the wrong engine 
configuration at a given altitude may increase its emissions and 
decrease fuel efficiency and performance. See Section V.E.5 for further 
discussion related to the deployment of altitude kits where the 
manufacturers rely on them for operation at higher altitudes.
    We are adopting a slightly different approach for handheld engines 
with respect to altitude. Since we are not adopting more stringent 
exhaust emission standards, we believe it is appropriate to adopt 
provisions that are consistent with current practice at this time. We 
are therefore requiring handheld engines to comply with the current 
standards without altitude kits at barometric pressures above 96.0 kPa, 
which will allow for testing in most weather conditions at all 
altitudes up to about 1,100 feet above sea level.
    Spark-ignition engines used for marine auxiliary power (i.e., 
marine generator engines) are covered by the same regulations as land-
based engines of the same size. However, the marine generator versions 
of Small SI engines are able to make use of ambient water for enhanced 
cooling of the engine and exhaust system. Exhaust systems for these 
engines are water-jacketed to maintain low surface temperatures to 
minimize the risk of fires on boats, where the generator is often 
installed in small compartments within the boat. Manufacturers of 
marine generator engines have recently developed advanced technology in 
an effort to improve fuel consumption and CO emission controls for 
marine generators. This advanced technology includes the use of 
electronic fuel injection and three-way catalysts. As a result, 
manufacturers are offering new products with more than a 99 percent 
reduction in CO and have expressed their intent to offer only these 
advanced-technology engines in the near future. They have stated that 
these low-CO engines are responsive to market demand. We are 
establishing a CO standard of 5.0 g/kW-hr CO for marine generator 
engines to reflect the recent trend in marine generator engine designs 
(see Sec.  1054.105). We believe this standard is necessary to prevent 
backsliding in CO emissions that could occur if new manufacturers were 
to attempt to enter the market with less expensive, high-CO designs. 
See Section II for a discussion of air quality concerns related to CO 
emissions.
    At this time, we are continuing the current regulatory approach for 
wintertime engines (e.g., engines used exclusively to power equipment 
such as snowthrowers and ice augers). Under this final rule, the 
HC+NOX exhaust emission standards will be optional for 
wintertime engines. However, if a manufacturer chooses to certify its 
wintertime engines to such standards, those engines will be subject to 
all the requirements as if the optional standards were mandatory. We 
are adopting a definition of wintertime engines to clarify which 
engines qualify for these special provisions.
    All engines subject to standards must continue to control crankcase 
emissions. In the case of snowthrower engines, crankcase emissions may 
be vented to the ambient air as long as manufacturers take crankcase 
emissions into account in demonstrating compliance with exhaust 
emission standards.
(2) Useful Life
    The Phase 2 standards for Small SI engines included the concept 
that manufacturers are responsible for meeting emission standards over 
a useful life period. The useful life defines the design target for 
ensuring the durability of emission controls under normal in-use 
operation for properly maintained engines. Given the very wide range of 
engine applications, from very low-cost consumer products to commercial 
models designed for long-term continuous operation, we determined that 
a single useful life value for all products, which is typical for other 
engine programs, was not appropriate for Small SI engines. We proposed 
at that time to determine the useful life for an engine family based on 
specific criteria, but commenters suggested that such a requirement was 
overly rigid and unnecessary. The final rule instead specified three 
alternative useful life values, giving manufacturers the responsibility 
to select the useful life that was most appropriate for their engines 
and the corresponding types of equipment. The preamble to the Phase 2 
final rule expressed a remaining concern that manufacturers might not 
select the most appropriate useful life value. This concern related to 
both ensuring effective in-use emission control and maintaining the 
integrity of emission-credit calculations. The preamble also stated our 
intent to periodically review the manufacturers' decisions to determine 
whether modifications to these rules would be appropriate.
    The regulations in Sec.  90.105 provide a benchmark for determining 
the appropriate useful life value for an engine family. The regulations 
direct manufacturers to select the useful life value that ``most 
closely approximates the expected useful lives of the equipment into 
which the engines are anticipated to be installed.'' To maintain a 
measure of accountability, we included a requirement that manufacturers 
document the basis for their selected useful life values. The suggested 
data included, among other things: (1) Surveys of the life spans of the 
equipment in which the subject engines are installed; (2) engineering 
evaluations of field-aged engines to ascertain when engine performance 
deteriorates to the point where utility and/or reliability is impacted 
to a degree sufficient to necessitate overhaul or replacement; and (3) 
failure reports from engine customers. These regulatory provisions 
identify the median time to retirement for in-use equipment as the 
marker for defining the useful life period. This allows manufacturers 
to consider that equipment models may fail before the engine has 
reached the point of failure and that engines may be installed in 
different types of equipment with varying usage patterns. Engines used 
in different types of equipment, or even engines used in the same 
equipment models used by different operators, may experience widely 
varying usage rates. The manufacturer is expected to make judgments 
that take this variability into account when estimating the median life 
of in-use engines and equipment.
    Several manufacturers have made a good faith effort to select 
appropriate useful life values for their engine families, either by 
selecting only the highest value, or by selecting higher values for 
families that appear more likely to be used in commercial applications. 
At the same time, we have observed several instances in which engine 
models are installed in

[[Page 59079]]

commercial equipment and marketed as long-life products but are 
certified to the minimum allowable useful life period.
    After assessing several ideas, we chose to adopt an approach that 
preserves the fundamental elements of the current provisions related to 
useful life but clarifies and enhances its implementation (see Sec.  
1054.107). Manufacturers will continue to select the most appropriate 
useful life from the same nominal values to best match the expected in-
use lifetime of the equipment into which the engines in the engine 
family will be installed. Manufacturers must continue to document the 
information supporting their selected useful life. We are adopting 
three provisions to address remaining concerns with the process of 
selecting useful life values.
    First, for manufacturers not selecting the highest available 
nominal value for useful life, we expect to routinely review the 
information to confirm that it complies with the regulation. Where our 
review indicates that the selected useful life may not be appropriate 
for an engine family, we may request further justification. If we 
determine from available information that a longer useful life is 
appropriate, the manufacturer must either provide additional 
justification or select a longer useful life for that engine family. We 
will encourage manufacturers to use the new provisions related to 
preliminary approval in Sec.  1054.210 if there is any uncertainty 
related to the useful life selection. We would rather work together 
early to establish this in the certification process rather than 
reviewing a completed application for certification to evaluate whether 
the completed durability demonstration is sufficient.
    Second, we are modifying the regulations to allow nonhandheld 
engine manufacturers to select a useful life value that is longer than 
the three specified nominal values. Manufacturers may choose to do this 
for the marketing advantage of selling a long-life product or they may 
want to generate emission credits that correspond to an expected 
lifetime that is substantially longer than we would otherwise allow. We 
are allowing manufacturers to select longer useful life values in 100-
hour increments, up to 3,000 hours for Class I engines and up to 5,000 
hours for Class II engines. Durability testing for certification will 
need to correspond to the selected useful life period. We have 
considered the possibility that a manufacturer might overstate an 
engine family's useful life to generate emission credits while knowing 
that engines may not operate that long. We believe the inherent testing 
burden and compliance liability is enough to avoid such a problem, but 
we are including the specified maximum values corresponding with the 
applicable useful life for comparable diesel engines or Large SI 
engines. We are not allowing for longer useful life values for handheld 
engines.
    Third, we are requiring that engines and equipment be labeled to 
identify the applicable useful life period. The current requirement 
allows manufacturers to identify the useful life with code letters on 
the engine's emission control information label, with the numerical 
value of the useful life spelled out in the owner's manual. We believe 
it is important for equipment manufacturers and consumers to be able to 
find an unambiguous designation showing the engine manufacturer's 
expectations about the useful life of the engine. Comments on the 
proposed rule also indicated an interest in using descriptive terms to 
identify the useful life on the label. We believe any terminology will 
communicate less effectively than the numerical value of the useful 
life, but we will allow manufacturers to use specified descriptive 
terms in addition to the number of hours.
    We are also including a provision in the final rule stating that 
the useful life is defined as a five-year period if the engine has not 
yet exceeded the specified number of operating hours during that time. 
This is consistent with our other engine programs. This does not affect 
the certification process. If we test an in-use engine within the five-
year useful life period and there is no clear indication that it has 
not yet exceeded the specified number of operating hours, it would need 
to meet applicable emission standards. Conversely, if an engine has not 
yet exceeded the number of operating hours but the engine is six years 
old, it is no longer required to meet emission standards.
(3) Averaging, Banking, and Trading
    EPA has included averaging, banking, and trading (ABT) programs in 
most of the emission control programs for highway and nonroad engines. 
EPA's existing Phase 2 regulations for Small SI engines include an 
exhaust ABT program (see 40 CFR 90.201 through 90.211). We are adopting 
an ABT program for the Phase 3 HC+NOX exhaust emission 
standards that is similar to the existing program (see part 1054, 
subpart H). The new exhaust ABT program is intended to enhance the 
ability of engine manufacturers to meet more stringent emission 
standards. The exhaust ABT program is also structured to avoid delay of 
the transition to the new exhaust emission controls. As described in 
Section VI.D, we are establishing a separate evaporative ABT program 
for fuel tanks used in Small SI equipment. Credits may not be exchanged 
between the exhaust ABT program and the evaporative ABT program.
    The exhaust ABT program has three main components. Averaging means 
the exchange of emission credits between engine families within a given 
engine manufacturer's product line for a specific model year. Engine 
manufacturers divide their product line into ``engine families'' that 
are comprised of engines expected to have similar emission 
characteristics throughout their useful life. Averaging allows a 
manufacturer to certify one or more engine families at levels above the 
applicable emission standard, but below a set upper limit. This level 
then becomes the applicable standard for all the engines in that engine 
family, for purposes of certification, in-use testing, and the like. 
However, the increased emissions must be offset by one or more engine 
families within that manufacturer's product line that are certified 
below the same emission standard, such that the average standard from 
all the manufacturer's engine families, weighted by engine power, 
regulatory useful life, and production volume, is at or below the level 
of the emission standard. Banking means the retention of emission 
credits by the engine manufacturer for use in averaging or trading for 
future model years. Trading means the exchange of emission credits 
between engine manufacturers which can then be used for averaging 
purposes, banked for future use, or traded to another engine 
manufacturer.
    Because we are not adopting any change in the general equation 
under which emission credits are calculated, EPA is allowing 
manufacturers to use Phase 2 credits generated under the part 90 ABT 
program for engines that are certified in the Phase 3 program under 
part 1054, within the limits described below. Furthermore, even though 
we are not establishing new exhaust emission standards for handheld 
engines, the handheld engine regulations are migrating to part 1054. 
Therefore, handheld engines will be included in the new ABT program 
under part 1054 with one change in the overall program as described 
below.
    Under an ABT program, averaging is allowed only between engine 
families in the same averaging set, as defined in the

[[Page 59080]]

regulations. For the exhaust ABT program, we are separating handheld 
engines and nonhandheld engines into two distinct averaging sets 
starting with the 2011 model year. Under the new program, credits may 
generally be used interchangeably between Class I and Class II engine 
families, with a limited restriction on Phase 3 credits during model 
years 2011 and 2012 as noted below. Likewise, credits can be used 
interchangeably between all three handheld engine classes (Classes III, 
IV, and V). Because the Phase 2 exhaust ABT program allowed exchange 
across all engine classes (i.e., allowing exchanges between handheld 
engines and nonhandheld engines), manufacturers using credits beginning 
with the 2011 model year will need to show that the credits were 
generated within the allowed category of engines. For many companies, 
especially those in the handheld market, this will potentially be 
straightforward since they are primarily in the handheld market. For 
companies that have a commingled pool of emission credits generated by 
both handheld engines and nonhandheld engines, this will take more 
careful accounting. Because manufacturers have been aware of this new 
requirement since the proposal, keeping records to distinguish handheld 
credits and nonhandheld credits will be relatively straightforward for 
2006 and later model years.
    We are making two exceptions to the provision restricting credit 
exchanges between handheld engines and nonhandheld engines. Currently, 
some companies that are primarily nonhandheld engine manufacturers also 
sell a limited number of handheld engines. Under the Phase 2 program, 
these engine manufacturers can use credits from nonhandheld engines to 
offset the higher emissions of their handheld engines. Because we are 
not adopting new exhaust requirements for handheld engines, we are 
addressing this existing practice by specifying that an engine 
manufacturer may use emission credits from their nonhandheld engines 
for their handheld engines under certain conditions. Specifically, a 
manufacturer may use credits from their nonhandheld engines for their 
handheld engines only where the handheld engine family is certified in 
2008 and later model years without any design changes from the 2007 
model year and the FEL of the handheld engine family does not increase 
above the level that applied in the 2007 model year, unless such an 
increase is based on emission data from production engines. 
Furthermore, we are limiting the number of handheld engines for which a 
manufacturer can use emission credits from their nonhandheld engines to 
30,000 per year. We believe these provisions allow for engine 
manufacturers to continue producing these handheld engines for use in 
existing handheld models of low-volume equipment applications while 
preventing new high-emitting handheld engine families from entering the 
market through the use of nonhandheld engine credits. (See Sec.  
1054.740.)
    A second exception to the provision restricting credit exchanges 
between handheld engines and nonhandheld engines arises because of our 
handling of engines below 80cc. Under the new Phase 3 program, all 
engines below 80cc are considered handheld engines for the purposes of 
the emission standards. However, a few of these engines are used in 
nonhandheld applications. Therefore, EPA will allow a manufacturer to 
generate nonhandheld ABT credits from engines below 80cc for those 
engines a manufacturer has determined are used in nonhandheld 
applications. (The credits will be generated against the applicable 
handheld engine standard.) These nonhandheld credits could be used 
within the Class I and Class II engine classes to demonstrate 
compliance with the Phase 3 exhaust standards (subject to applicable 
restrictions). The credits generated by engines below 80cc used in 
handheld applications could only be used for other handheld engines. 
(See Sec.  1054.701.)
    Under an ABT program, a manufacturer establishes a ``family 
emission limit'' (FEL) for each participating engine family. This FEL 
may be above or below the standard. The FEL becomes the enforceable 
emission limit for all the engines in that family for purposes of 
compliance testing. FELs that are established above the standard may 
not exceed an upper limit specified in the ABT regulations. For 
nonhandheld engines we are establishing FEL caps to prevent the sale of 
very high-emitting engines. Under the new FEL caps, manufacturers will 
need to establish FELs at or below the levels of the Phase 2 
HC+NOX emission standards of 16.1 g/kW-hr for Class I 
engines and 12.1 g/kW-hr for Class II engines. (The Phase 3 FEL cap for 
Class I engines with a displacement between 80 cc and 100 cc will be 
40.0 g/kW-hr since these engines were Class I-B engines under the Phase 
2 regulations and subject to this higher level.) For handheld engines, 
where we are not adopting new exhaust emission standards, we are 
maintaining the FEL caps as currently specified in the part 90 ABT 
regulations.
    For nonhandheld engines we are adding two special provisions 
related to the transition from Phase 2 to Phase 3 standards in Sec.  
1054.740. First, we are providing incentives for manufacturers to 
produce and sell engines certified at or below the Phase 3 standards 
before the standards are scheduled to be implemented. Second, we are 
establishing provisions to allow the use of Phase 2 credits for a 
limited time under specific conditions. The following discussions 
describe each of these provisions in more detail for Class I engines 
and Class II engines separately.
    For Class I engines, engine manufacturers can generate early Phase 
3 credits by producing engines with an FEL at or below 10.0 g/kW-hr 
prior to 2012. These early Phase 3 credits will be calculated and 
categorized into two distinct types of credits, Transitional Phase 3 
credits and Enduring Phase 3 credits. For engines certified with an FEL 
at or below 10.0 g/kW-hr, the manufacturer will earn Transitional Phase 
3 credits. The Transitional Phase 3 credits will be calculated based on 
the difference between 10.0 g/kW-hr and 15.0 g/kW-hr. (The 15.0 g/kW-hr 
level is the production-weighted average of Class I FEL values under 
the Phase 2 program.) Manufacturers could use the Transitional Phase 3 
credits from Class I engines in 2012 through 2014 model years. For 
engines certified with an FEL below 10.0 g/kW-hr, manufacturers will 
earn Enduring Phase 3 credits in addition to the Transitional Phase 3 
credits described above. The Enduring Phase 3 credits will be 
calculated based on the difference between the FEL for the engine 
family and 10.0 g/kW-hr (i.e., the applicable Phase 3 standard). The 
Enduring Phase 3 credits could be used once the Phase 3 standards are 
implemented without the model year restriction noted above for 
Transitional Phase 3 credits.
    Engine manufacturers may certify their Class I engines using Phase 
2 credits generated by Class I or Class II engines for the first two 
years of the Phase 3 standards (i.e., model years 2012 and 2013) under 
certain conditions. The manufacturer must first use all of its 
available transitional Phase 3 credits to demonstrate compliance with 
the Phase 3 standards, subject to the cross-class credit restriction 
noted below which applies prior to model year 2013. If these 
Transitional Phase 3 credits are sufficient to demonstrate compliance, 
the manufacturer may not use Phase 2 credits. If these Transitional 
Phase 3 credits are insufficient to

[[Page 59081]]

demonstrate compliance, the manufacturer could use Phase 2 credits to a 
limited degree (under the conditions described below) to cover the 
remaining amount of credits needed to demonstrate compliance. If 
manufacturers still need credits to demonstrate compliance, they may 
then use their remaining Phase 3 credits (i.e., their Enduring Phase 3 
credits or any other Phase 3 credits generated in 2012 or 2013, subject 
to the cross-class credit restriction noted below which applies prior 
to model year 2013).
    The maximum number of Phase 2 HC+NOX exhaust emission 
credits that manufacturers could use for their Class I engines will be 
calculated based on the characteristics of Class I engines produced 
during the 2007, 2008, and 2009 model years. For each of those years, 
the manufacturer will calculate a Phase 2 credit allowance using the 
ABT credit equation and inserting 1.6 g/kW-hr for the ``Standard--FEL'' 
term, and basing the rest of the values on the total production of 
Class I engines, the production-weighted power for all Class I engines, 
and production-weighted useful life value for all Class I engines 
produced in each of those years. Manufacturers will not include their 
wintertime engines in the calculations unless the engines are certified 
to meet the otherwise applicable HC+NOX emission standard. 
The maximum number of Phase 2 HC+NOX exhaust emission 
credits a manufacturer could use for their Class I engines (calculated 
in kilograms) will be the average of the three values calculated for 
model years 2007, 2008, and 2009. The calculation described above 
allows a manufacturer to use Phase 2 credits to cover a cumulative 
shortfall over the first two years for their Class I engines of 1.6 g/
kW-hr above the Phase 3 standard.
    The Phase 2 credit allowance for Class I engines could be used all 
in 2012, all in 2013, or partially in either or both model year's ABT 
compliance calculations. Because ABT compliance calculations must be 
done annually, the manufacturer will know its 2013 remaining allowance 
based on its 2012 calculation. For example, if a manufacturer uses all 
of its Phase 2 credit allowance in 2012, it will have no use of Phase 2 
credits for 2013. Conversely, if a manufacturer doesn't use any Phase 2 
credits in 2012, it will have all of its Phase 2 credit allowance 
available for use in 2013. If a manufacturer uses less than its 
calculated total credits based on the 1.6 g/kW-hr limit in 2012, the 
remainder will be available for use in 2013. This provision allows for 
limited use of Phase 2 emission credits to address the possibility of 
unanticipated challenges in reaching the Phase 3 emission levels in 
some cases or selling Phase 3 compliant engines early nationwide, 
without creating a situation that will allow manufacturers to 
substantially delay the introduction of Phase 3 emission controls.
    For Class II engines, engine manufacturers could generate early 
Phase 3 credits by producing engines with an FEL at or below 8.0 g/kW-
hr prior to 2011. These early Phase 3 credits will be calculated and 
categorized as Transitional Phase 3 credits and Enduring Phase 3 
credits. For engines certified with an FEL at or below 8.0 g/kW-hr, the 
manufacturer will earn Transitional Phase 3 credits. The Transitional 
Phase 3 credits will be calculated based on the difference between 8.0 
g/kW-hr and 11.0 g/kW-hr. (The 11.0 g/kW-hr level is the production-
weighted average of Class II FEL values under the Phase 2 program.) 
Manufacturers could use the Transitional Phase 3 credits from Class II 
engines in 2011 through 2013 model years. For engines certified with an 
FEL below 8.0 g/kW-hr, manufacturers will earn Enduring Phase 3 credits 
in addition to the Transitional Phase 3 credits described above. The 
Enduring Phase 3 credits will be calculated based on the difference 
between the FEL for the engine family and 8.0 g/kW-hr (i.e., the 
applicable Phase 3 standard). The Enduring Phase 3 credits could be 
used once the Phase 3 standards are implemented without the model year 
restriction noted above for Transitional Phase 3 credits.
    Engine manufacturers may certify their Class II engines using Phase 
2 credits generated by Class I or Class II engines for the first three 
years of the Phase 3 standards (i.e., model years 2011, 2012 and 2013) 
under certain conditions. The manufacturer must first use all of its 
transitional Phase 3 credits to demonstrate compliance with the Phase 3 
standards, subject to the cross-class credit restriction noted below 
which applies prior to model year 2013. If these Transitional credits 
are sufficient to demonstrate compliance, the manufacturer may not use 
Phase 2 credits. If these Transitional Phase 3 credits are insufficient 
to demonstrate compliance, the manufacturer could use Phase 2 credits 
to a limited degree (under the conditions described below) to cover the 
remaining amount of credits needed to demonstrate compliance. If the 
manufacturer still needs credits to demonstrate compliance, they may 
then use their remaining Phase 3 credits (i.e., their Enduring Phase 3 
credits or any other Phase 3 credits generated in 2011, 2012, or 2013, 
subject to the cross-class credit restriction noted below which applies 
prior to model year 2013).
    The maximum number of Phase 2 HC+NOX exhaust emission 
credits a manufacturer could use for their Class II engines will be 
calculated based on the characteristics of Class II engines produced 
during the 2007, 2008, and 2009 model years. For each of those years, 
the manufacturer will calculate a Phase 2 credit allowance using the 
ABT credit equation and inserting 2.1 g/kW-hr for the ``Standard--FEL'' 
term, and basing the rest of the values on the total production of 
Class II engines, the production-weighted power for all Class II 
engines, and production-weighted useful life value for all Class II 
engines produced in each of those years. Manufacturers will not include 
their wintertime engines in the calculations unless the engines are 
certified to meet the otherwise applicable HC+NOX emission 
standard. The maximum number of Phase 2 HC+NOX exhaust 
emission credits a manufacturer could use for their Class II engines 
(calculated in kilograms) will be the average of the three values 
calculated for model years 2007, 2008, and 2009. The calculation 
described above allows a manufacturer to use Phase 2 credits to cover a 
cumulative shortfall over the first three years for their Class II 
engines of 2.1 g/kW-hr above the Phase 3 standard.
    The Phase 2 credit allowance for Class II engines could be used all 
in 2011, all in 2012, all in 2013, or partially in any or all three 
model year's ABT compliance calculations. Because ABT compliance 
calculations must be done annually, the manufacturer will know its 
remaining allowance based on its previous calculations. For example, if 
a manufacturer uses all of its Phase 2 credit allowance in 2011, it 
will have no Phase 2 credits for 2012 or 2013. However, if a 
manufacturer uses less than its calculated total credits based on the 
2.1 g/kW-hr limit in 2011, it will have the remainder of its allowance 
available for use in 2012 and 2013. This provision allows for some use 
of Phase 2 emission credits to address the possibility of unanticipated 
challenges in reaching the Phase 3 emission levels in some cases or 
selling Phase 3 engines nationwide, without creating a situation that 
will allow manufacturers to substantially delay the introduction of 
Phase 3 emission controls.
    To avoid the use of credits to delay the introduction of Phase 3 
technologies, we are also not allowing manufacturers to use Phase 3 
credits from Class I engines to demonstrate compliance with Class II 
engines in the 2011 and 2012 model years. Similarly,

[[Page 59082]]

we are not allowing manufacturers to use Phase 3 credits from Class II 
engines to demonstrate compliance with Class I engines in the 2012 
model year. The 1.6 kW-hr and 2.1 g/kW-hr allowances discussed above 
may not be exchanged across engine classes or traded among 
manufacturers.
    We are making one additional adjustment related to the exhaust ABT 
program for engines subject to the new emission standards. We are 
adopting a requirement that lowering an FEL after the start of 
production may occur only if the manufacturer has emission data from 
production engines justifying the lower FEL (see Sec.  1054.225). This 
prevents manufacturers from making FEL changes late in the model year 
to generate more emission credits (or use fewer emission credits) when 
there is little or no opportunity to verify whether the revised FEL is 
appropriate for the engine family. This provision is common in EPA's 
emission control programs for other engine categories. We are also 
requiring that any revised FEL can apply only for engines produced 
after the FEL change. This is necessary to prevent manufacturers from 
recalculating emission credits in a way that leaves no way of verifying 
that the engines produced prior to the FEL change met the applicable 
requirements.
    As described below in Section V.E.3, we are allowing equipment 
manufacturers to install a limited number of Class II engines, 
certified by engine manufacturers with a catalyst as Phase 3 engines, 
into equipment without the catalyst. (This is only allowed when the 
engine is shipped separately from the exhaust system under the 
provisions described in Section V.E.2.) Because engine manufacturers 
may be generating emission credits from these engines based on the use 
of a catalyst, EPA is concerned that engine manufacturers could be 
earning exhaust ABT credits for engines that are sold but never have 
the catalyst installed. Therefore, EPA believes it is appropriate to 
adjust such credits to account for the fact that equipment 
manufacturers may in many cases legally install a non-catalyzed muffler 
on an engine that is part of a family whose certification depends on 
the use of a catalyst. Therefore, EPA is adopting a 0.9 adjustment 
factor for calculating credits for engine families that are available 
under the delegated assembly provisions and are also participating in 
the TPEM program. In addition, EPA is including an option that will 
allow engine manufacturers to track the final configuration of the 
engines to determine the actual number of engines that were downgraded 
under the TPEM program. A manufacturer would need to track sales for 
all the equipment manufacturers purchasing the given engine family. The 
engine manufacturer could use the resulting number of engines that were 
not downgraded in its calculation of ABT credits for that specific 
engine family. Engine manufacturers may specifically direct equipment 
manufacturers not to participate in the TPEM program for certain engine 
models, which would allow for a more straightforward accounting of the 
number of engines that are downgraded under the TPEM program.
    For all emission credits generated by engines under the Phase 3 
exhaust ABT program, we are allowing an indefinite credit life. We 
consider these emission credits to be part of the overall program for 
complying with Phase 3 standards. Given that we may consider further 
reductions beyond these standards in the future, we believe it will be 
important to assess the ABT credit situation that exists at the time 
any further standards are considered. Emission credit balances will be 
part of the analysis for determining the appropriate level and timing 
of new standards, consistent with the statutory requirement to 
establish standards that represent the greatest degree of emission 
reduction achievable, considering cost, safety, lead time, and other 
factors. If we were to allow the use of Phase 3 credits to meet future 
standards, we may need to adopt emission standards at more stringent 
levels or with an earlier start date than we would absent the continued 
(or limited) use of Phase 3 credits, depending on the level of Phase 3 
credit banks. Alternatively, we could adopt future standards without 
allowing the use of Phase 3 credits. The final requirements in this 
rulemaking describe a middle path in which we allow the use of Phase 2 
credits to meet the Phase 3 standards, with provisions that limit the 
extent and timing of using these credits.
    Finally, manufacturers may include as part of their federal credit 
calculation the sales of engines in California as long as they don't 
separately account for those emission credits under the California 
regulations. We originally proposed to exclude engines sold in 
California which are subject to the California ABR standards. However, 
we consider California's current HC+NOX standards to be 
equivalent to those we are adopting in this rulemaking, so we would 
expect a widespread practice of producing and marketing 50-state 
products. Therefore, as long as a manufacturer is not generating 
credits under California's averaging program for small engines, we 
would allow manufacturers to count those engines when calculating 
credits under EPA's program. This is consistent with how EPA allows 
credits to be calculated in other nonroad sectors, such as recreational 
vehicles.

D. Testing Provisions

    The test procedures provide an objective measurement for 
establishing whether engines comply with emission standards. The 
following sections describe a variety of changes to the current test 
procedures. Except as identified in the following sections, we are 
preserving the testing-related regulatory provisions that currently 
apply under 40 CFR part 90 for Phase 2 engines. Note that there is no 
presumption that any previous approvals, guidance, or judgments related 
to alternatives, deviations, or interpretations of the testing 
requirements under the Phase 1 or Phase 2 program will continue to 
apply; any decisions on such issues will be handled going forward on a 
case-by-case basis.
(1) Migrating Procedures to 40 CFR Part 1065
    Manufacturers have been using the procedures in 40 CFR part 90 to 
test their engines for certification of Phase 1 and Phase 2 engines. As 
part of a much broader effort, we have adopted comprehensive testing 
specifications in 40 CFR part 1065 that are intended to serve as the 
basis for testing all types of engines. The procedures in part 1065 
include updated information reflecting the current state of available 
technology. We are applying the procedures in part 1065 to nonhandheld 
engines starting with new certification testing in 2013 and later model 
years as specified in 40 CFR part 1054, subpart F. The procedures in 
part 1065 identify new types of analyzers and update a wide range of 
testing specifications, but leave intact the fundamental approach for 
measuring exhaust emissions. There is no need to shift to the part 1065 
procedures for nonhandheld engines before 2013. This allows 
manufacturers time to make any necessary adjustments or upgrades in 
their lab equipment and procedures. While any new certification testing 
for nonhandheld engines will be subject to the part 1065 procedures 
starting in model year 2013, manufacturers will be allowed to continue 
certifying nonhandheld engines using carryover data generated under the 
part 90 procedures.
    We are not setting new exhaust emission standards for handheld 
engines so there is no natural point in

[[Page 59083]]

time for shifting to the part 1065 procedures. We nevertheless believe 
handheld engines should also use the part 1065 procedures for measuring 
exhaust emissions. We are requiring manufacturers to start using the 
part 1065 procedures in the 2013 model year as described above for 
nonhandheld engines. Manufacturers will be allowed to continue 
certifying handheld engines using carryover data generated under the 
part 90 procedures, but any new certification testing will be subject 
to the part 1065 procedures starting with the 2013 model year.
    We have taken several steps to address the concerns raised by 
engine manufacturers related to the specified test procedures in part 
1065. First, we have confirmed that the calculations in part 1065 yield 
the same emission results for a given set of raw data from testing. The 
two calculation methods resulted in differences that were less than 1 
percent for both handheld and nonhandheld engines. We have identified a 
variety of clarifications and adjustments that we need to make to the 
equations in Sec.  1065.655 to ensure accurate calculations for engines 
operating with rich air-fuel mixtures. Second, we have modified the 
cycle-validation criteria in Sec.  1054.505 to more carefully reflect 
achievable torque control for small engines. The new criteria are based 
on a combination of specifications for continuous measurements and mean 
values, including specification of absolute thresholds where a 
percentage approach would not work for very small torque values. Third, 
we are adjusting the fueling instructions in part 1065 to allow for 
fuel-oil mixtures with two-stroke engines.
    We also acknowledge that handheld engines that depend on special 
fixtures for proper testing should be tested under the provisions of 
Sec.  1065.10(c) for special test procedures. This would require that 
manufacturers describe their test fixtures and make them available upon 
request. Further effort may be required to incorporate more specific 
requirements or specifications related to these test fixtures. We 
expect to cooperate with government agencies from California and from 
other countries in an effort to harmonize Small SI test procedures, for 
part 1065 procedures generally and for these special test procedures in 
particular.
(2) Duty Cycle
    The regulations under part 90 currently specify duty cycles for 
testing engines for exhaust emissions. The current requirements specify 
how to control speeds and loads and describe the situations in which 
the installed engine governor controls engine speed. We are extending 
these provisions to testing under the new standards with a few 
adjustments described below. For engines equipped with an engine speed 
governor, the current regulations at 40 CFR 90.409(a)(3) state:
    For Class I, Class I-B, and Class II engines subject to Phase 2 
standards that are equipped with an engine speed governor, the governor 
must be used to control engine speed during all test cycle modes except 
for Mode 1 or Mode 6, and no external throttle control may be used that 
interferes with the function of the engine's governor; a controller may 
be used to adjust the governor setting for the desired engine speed in 
Modes 2-5 or Modes 7-10; and during Mode 1 or Mode 6 fixed throttle 
operation may be used to determine the 100 percent torque value.
    In addition, the current regulations at 40 CFR 90.410(b) state:

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

    Manufacturers have raised questions about the interpretation of 
these provisions. Our intent is that the current requirements specify 
that testing be conducted as follows:
     Full-load testing occurs at wide-open throttle to maintain 
engines at rated speed, which is defined as the speed at which the 
engine's maximum power occurs (as declared by the manufacturer).
     Idle testing occurs at the manufacturer's specified idle 
speed with a maximum load of five percent of maximum torque. The 
regulation allows adjustment to control speeds that are different than 
will be maintained by the installed governor.
     The installed governor must be used to control engine 
speed for testing at all modes with torque values between idle and 
full-load modes. The regulation allows adjustments for nominal speed 
settings that are different than will be maintained by the installed 
governor without modification.
    We are adopting the Phase 3 standards with adjustments to the 
regulatory requirements currently described in 40 CFR part 90 (see 
Sec.  1054.505). Since each of these adjustments may have some effect 
on measured emission levels, we believe it is appropriate to implement 
these changes concurrent with the Phase 3 standards. To the extent the 
adjustments apply to handheld engines, we believe it is appropriate to 
apply the changes for new testing with 2013 and later model year 
engines for the reasons described above for adopting the test 
procedures in part 1065.
    First, for engines with installed governors we are requiring the 
engine speed during the idle mode to be controlled by the governor. We 
believe there is no testing limitation that will call for engine 
operation at idle to depart from the engine's governed speed. Allowing 
manufacturers to arbitrarily declare an idle speed only allows 
manufacturers to select an idle speed that gives them an advantage in 
achieving lower measured emission results but not in a way that 
corresponds to in-use emission control. We are also aware that some 
production engines have a user-selectable control for selecting high-
speed or low-speed idle (commonly identified as ``rabbit/turtle'' 
settings). We believe this parameter adjustment may have a significant 
effect on emissions that should be captured in the certification test 
procedure. As a result, we are requiring that manufacturers conduct 
testing with user-selectable controls set to keep the engine operating 
at low-speed idle if any production engines in the engine family have 
such an option. For engines with no installed governor, part 1065 
specifies that the engine should operate at the idle speed declared by 
the manufacturer.
    Second, we are allowing an option in which manufacturers will test 
their nonhandheld engines using a ramped-modal version of the specified 
duty cycle. We expect this testing to be equivalent to the modal 
testing described above but it will have advantages for streamlining 
test efforts by allowing for a single result for the full cycle instead 
of relying on a calculation from separate modal results. Under the new 
requirement we will allow manufacturers the option to select this type 
of testing. Manufacturers must use the same test method for production-
line testing that they use for certifying the engine family. 
Manufacturers may include results from both types of testing in their 
application for certification, in which case they could use either 
method for production-line testing. EPA's confirmatory testing will 
involve the same type of testing

[[Page 59084]]

performed by the manufacturers for certification.
    Third, the part 90 regulations currently specify two duty cycles 
for nonhandheld engines: (1) Testing at rated speed; and (2) testing at 
85 percent of rated speed. The regulations direct manufacturers simply 
to select the most appropriate cycle and declare the rated speed for 
their engines. We are making this more objective by stating that rated 
speed is 3,600 rpm and intermediate speed is 3,060 rpm, unless the 
manufacturer demonstrates that a different speed better represents the 
in-use operation for their engines. This is consistent with the most 
common in-use settings and most manufacturers' current practice.
    In addition, we are adding regulatory provisions to clarify how 
nonhandheld engines are operated to follow the prescribed duty cycle. 
As described in part 90, we are requiring that the engines operate 
ungoverned at wide-open throttle for the full-power mode. This test 
mode is used to denormalize the rest of the duty cycle. This operation 
is intentionally not representative of in-use operation, but disabling 
the governor allows for more uniform testing that is not dependent on 
the various governing strategies that manufacturers might use. To avoid 
a situation where engines are designed to control emissions over the 
test cycle, with less effective controls under similar modes of 
operation that engines experience in use, we are adding a requirement 
for manufacturers to provide an explanation in the application for 
certification if air-fuel ratios are significantly different for 
governed and ungoverned operation at wide-open throttle, especially for 
fuel-injected engines. Manufacturers would need to explain why this 
emission control strategy is not a defeat device. If we test engines 
governed and ungoverned at wide open throttle, we would expect to see 
little or no difference in emission rates. If we would observe higher 
emission rates with governed engine operation, manufacturers would 
again need to justify why this discrepancy is not a defeat device. 
Engines with conventional carburetors offer a limited ability to 
manipulate air-fuel ratios at different operating points, so in these 
cases manufacturers would simply state that air-fuel ratios do not vary 
significantly at governed and ungoverned points of full-load operation.
    Testing at other modes occurs with the governor controlling engine 
speed. Before each test mode, manufacturers may adjust the governor to 
target the same nominal speed used for the full-power mode, with a 
tolerance limiting the variation in engine speed at each mode. 
Alternatively, testing may be done by letting the installed governor 
control engine speed, in which case only the torque value will need to 
be controlled within an established range. Any EPA testing will be done 
only with installed governors controlling engine speed in the standard 
configuration, regardless of the method used by manufacturers for their 
own testing. Any such engine with test results that exceed applicable 
emission standards would be considered to fail, without regard to 
emission results that might be different with testing in which the 
governor is adjusted to target a given nominal speed.
    A different duty cycle applies to handheld engines, which are 
generally not equipped with governors to control engine speed. The 
current regulations allow manufacturers to name their operating speed 
for testing at each of the test modes. However, we are concerned that 
this approach allows manufacturers too much discretion for selecting a 
rated speed for high-load testing. We are revising this approach to 
specify that manufacturers must select a speed that best represents in-
use operation for the engine family if the in-use applications involve 
operation centered on a given nominal speed (350 rpm). 
Engine manufacturers generally also make their own equipment, so this 
can often be established for engines in an engine family. For engine 
families without such a predominant operating speed, we require that 
engine manufacturers test their engines within 350 rpm of the speed at 
which the engine produces maximum power. Some engine families may have 
a dominant engine speed, but also include a variety of applications 
that operate at different in-use speeds. We specify for these cases 
that engine manufacturers must test at both of the test speeds 
identified above, in which case EPA testing might also involve emission 
measurements using either (or both) test speeds. We are further 
requiring manufacturers to describe in their application for 
certification how they select the value for rated speed.
(3) Test Fuel
    We are requiring Phase 3 exhaust emission testing with a standard 
test fuel consistent with the existing requirements under 40 CFR part 
90 (see 40 CFR part 1065, subpart H). The existing regulatory 
specifications allow for no oxygenates in the test fuel. Because 
California ARB specifies a test fuel which contains the oxygenate MTBE 
(but also allows for the use of EPA's test fuel), we understand that 
some engine manufacturers will have emission data from engines that 
meet EPA's Phase 3 standards based on testing to meet California's Tier 
3 Small Off-Road Engine requirements for 2007 and later model years. In 
some cases the test data will be based on California's oxygenated test 
fuel, although manufacturers have the option to certify using a test 
fuel such as that specified by EPA in 40 CFR part 90. To allow for a 
quicker transition to the new EPA standards, we will allow for use of 
this pre-existing exhaust emission test data (based on California's 
oxygenated test fuel) for EPA certification purposes through the 2012 
model year. Manufacturers could also use the California ARB test fuel 
for their PLT testing, if they based their certification on that fuel. 
The use of the California ARB data would be subject to the provisions 
for carryover data for demonstrating compliance with the standards in 
effect. (The carryover provisions for Phase 3 are specified in Sec.  
1054.235.) While we will allow use of California ARB data for 
certification through the 2012 model year, we will use our test fuel 
without oxygenates for all confirmatory testing we perform for exhaust 
emissions. We are limiting the timeframe for such a provision because 
we ultimately want the exhaust emission test results to be performed 
using the EPA specified test fuel.
    In the proposal we noted our concerns about testing with oxygenated 
fuels since this could affect an engine's air-fuel ratio, which in turn 
could affect the engine's combustion and emission characteristics. 
Because of the relatively recent dramatic increase in the use of 
ethanol (another oxygenate) in the broad motor gasoline pool, we have 
reexamined our position (as discussed below) and are adopting 
provisions that will allow manufacturers to use a 10 percent ethanol 
blend for certification testing for exhaust emissions from nonhandheld 
engines, as an alternative to the standard test fuel. This option to 
use a 10 percent ethanol blend will begin with the implementation date 
of the Phase 3 exhaust standards. The use of the ethanol blend would 
apply to production-line testing as well if the manufacturer based 
their certification on the 10 percent ethanol blend. We are also 
committing to using a 10 percent ethanol blend for all confirmatory 
testing we perform for exhaust emissions under the provisions described 
below.
    Ethanol has been blended into in-use gasoline for many years, and 
until as recently as 2005, was used in less than one-third of the 
national gasoline pool.

[[Page 59085]]

However, ethanol use has been increasing in recent years and, under 
provisions of the Energy Independence and Security Act of 2007, ethanol 
will be required in significantly greater quantities. We project that 
potentially 80 percent of the national gasoline pool will contain 
ethanol by 2010, making ethanol blends up to 10 percent the de facto 
in-use fuel. As ethanol blends become the primary in-use fuel, we 
believe it makes sense for manufacturers to optimize their engine 
designs with regard to emissions, performance, and durability on such a 
fuel. We also believe manufacturers need to know that any confirmatory 
testing we do on their engines will be performed on the same fuel the 
manufacturer used for certification since the fuel can impact the 
ability to demonstrate compliance with the emission standards.
    Limited data of nonhandheld engine emissions tested on 10 percent 
ethanol blends suggests the HC emissions will decrease and 
NOX emissions will increase compared to emissions from the 
same engine operated on current certification fuel without oxygenates. 
Depending on the relative HC and NOX levels of the engines, 
these offsetting effects can result in small increases or decreases in 
total HC+NOX emission levels. Because the impact on 
HC+NOX emissions can vary slightly from engine family to 
engine family, we do not want manufacturers varying their certification 
fuel from one family to another to gain advantage with regard to 
emissions certification.
    Therefore, if a manufacturer wishes to use a 10 percent ethanol 
blend for certification, they should use the 10 percent ethanol blend 
for all their Phase 3 nonhandheld engines for a given engine class by 
the third year of the Phase 3 standard (i.e., by the 2014 model year 
for Class I engines and by the 2013 model year for Class II engines). 
During the transition period, we will perform any confirmatory testing 
on the 10 percent ethanol blend if that is the fuel used by the 
manufacturer for certification. At the end of the transition period, we 
will perform any confirmatory testing on the 10 percent ethanol blend 
if that is the fuel used by the manufacturer for certification, but 
only if the manufacturer has certified all their nonhandheld engines in 
that engine class on the 10 percent ethanol blend. If the manufacturer 
has not certified all its engines in a given engine class on the 10 
percent ethanol blend, we may decide to test the engine on our current 
test fuel without oxygenates. (See Sec.  1054.145 and Sec.  1054.501.)
    For handheld engines, where we do not have sufficient data on the 
impact of ethanol blends on emissions, we are adopting a slightly 
different approach. Manufacturers will have the option to use a 10 
percent ethanol blend for certification beginning with the 2010 model 
year. The option to use a 10 percent ethanol blend would apply to PLT 
testing as well if the manufacturer based their certification on the 10 
percent ethanol blend. While we will allow use of a 10 percent ethanol 
blend for certification, we expect to use our test fuel without 
oxygenates for all confirmatory testing for exhaust emissions. 
Therefore, an engine manufacturer will want to consider the impacts of 
ethanol on emissions in evaluating the compliance margin for the 
standard, or in setting the FEL for the engine family if it is 
participating in the ABT program. We could decide at our own discretion 
to do exhaust emissions testing using a 10 percent ethanol blend if the 
manufacturer certified on that fuel. It should be noted that both EPA 
and the California ARB are currently running test programs to assess 
the emission impacts of a 10 percent ethanol blend on a range of Small 
SI engines, including handheld engines. Based on the results of that 
test program, we may want to consider changes to the provisions 
allowing the use of a 10 percent ethanol blend for certification and 
PLT testing for handheld engines. If the results of the handheld engine 
testing show that emissions are comparable on both fuels, we would 
expect to revise the provisions for handheld engines and take a similar 
approach to that described above for nonhandheld engines. (See Sec.  
1054.501.)
    The test fuel specifications for the 10 percent ethanol blend are 
based on using the current gasoline test fuel and adding fuel-grade 
ethanol until the blended fuel contains 10 percent ethanol by volume. 
In addition, we recognize that in some cases using fuel-grade ethanol 
may be less practical than using other grades and so we will allow the 
use of other grades, provided they do not affect a manufacturer's 
ability to demonstrate compliance with the emission standards. To 
understand this allowance, it is helpful to remember that one of the 
main purposes of certification is for the manufacturer to use test data 
to show that the engines produced will conform to the regulations. 
Implicit in this is the concept that if EPA were to test an engine in 
the family according to the specified procedures, its measured 
emissions would be below the standards. Allowing a manufacturer to 
deviate from the specified test procedures could potentially hinder our 
ability to determine whether the engines would meet the standards when 
tested according to the specified procedures. Nevertheless, it is 
possible to overcome this concern based on the expected impact of the 
deviation on measured emissions and on the manufacturer's compliance 
margin (that is, the degree to which the measured certification 
emissions are below the standard). For example, we would conclude that 
a deviation that was expected to change measured emission rates by less 
than 0.1 g/kW-hr would clearly not affect a manufacturer's ``ability to 
demonstrate compliance with the emission standards'' if the certified 
emission level was 1.0 g/kW-hr below the standard (or below the Family 
Emission Limit). On the other hand, a deviation that was expected to 
change measured emission rates by 0.1 to 0.5 g/kW-hr would affect a 
manufacturer's ``ability to demonstrate compliance with the emission 
standards'' if the compliance margin was only 0.5 g/kW-hr. Another way 
to show that a deviation will not affect a manufacturer's ``ability to 
demonstrate compliance with the emission standards'' is to show through 
engineering analysis that a deviation will actually cause measured 
emissions to increase relative to the specified procedures.
    It should be noted that this is the first time EPA regulations 
specify the use of an ethanol test fuel for exhaust emissions testing 
for certification purposes. It is likely that EPA will consider similar 
test fuel changes in the future for other vehicle and engine categories 
including those addressed in this final rule. As part of those 
deliberations, it is possible that EPA could decide that the test fuel 
specifications for the ethanol blend should be different than those 
adopted in this rule. Should that occur, EPA would need to consider 
whether changes to the test fuel specifications adopted in this rule 
for the 10 percent ethanol blend are appropriate for Small SI engine 
testing.

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

(1) Deterioration Factors
    As part of the certification process, manufacturers generate 
deterioration factors to demonstrate that their engines meet emission 
standards over the full useful life. We are adopting some changes from 
the procedures currently included in part 90 (see Sec.  1054.240 and 
Sec.  1054.245). Much of the basis for these

[[Page 59086]]

changes comes from the experience gained in testing many different 
engines in preparation for this final rule. First, we are discontinuing 
bench aging of emission components. Testing has shown that operating 
and testing the complete engine is necessary to get accurate 
deterioration factors. Second, we are allowing assigned deterioration 
factors for a limited number of small-volume nonhandheld engine 
families. Manufacturers could use assigned deterioration factors for 
multiple small-volume nonhandheld engine families as long as the total 
production for all the nonhandheld engine families for which the 
manufacturer is using assigned deterioration factors is estimated at 
the time of certification to be no more than 10,000 units per year. 
Third, we are allowing assigned deterioration factors for all engines 
produced by small-volume nonhandheld engine manufacturers.
    For the HC+NOX standard, we are specifying that 
manufacturers use a single deterioration factor for the sum of HC and 
NOX emissions. However, if manufacturers get approval to 
establish a deterioration factor on an engine that is tested with 
service accumulation representing less than the full useful life for 
any reason, we will require separate deterioration factors for HC and 
NOX emissions. The advantage of a combined deterioration 
factor is that it can account for an improvement in emission levels for 
a given pollutant with aging. However, for engines that have service 
accumulation representing less than the full useful life, we believe it 
is not appropriate to extrapolate measured values indicating that 
emission levels for a particular pollutant will decrease. This is the 
same approach we adopted for recreational vehicles.
    EPA is not establishing the values for the assigned deterioration 
factors for small-volume nonhandheld engine manufacturers in this final 
rule. In an effort to develop deterioration factors that are 
appropriate for Small SI engines, we plan to evaluate certification 
data from Phase 3 engines certified early with EPA and from engines 
certified under California ARB's Tier 3 standards (which began in 2007 
and 2008). Because we are not promulgating new exhaust standards for 
handheld engines, the assigned deterioration factor provisions adopted 
for Phase 2 handheld engines are being retained.
    Although we are not establishing new exhaust standards for handheld 
engines, handheld engine manufacturers noted that California ARB has 
approved certain durability cycles for accumulating hours on engines 
for the purpose of demonstrating the durability of emission controls. 
The durability cycles approved by California ARB vary from a 30-second 
cycle for chainsaws to a 20-minute cycle for blowers, with 85 percent 
of the time operated at wide open throttle and 15 percent of the time 
operated at idle. Engine manufacturers can run the durability cycles 
repeatedly until they accumulate the hours of operation equivalent to 
the useful life for the engine family. Our current regulations state 
that ``service accumulation is to be performed in a manner using good 
judgment to ensure that emissions are representative of production 
engines.'' While we are not changing the regulatory language regarding 
service accumulation, the California ARB-approved durability cycles are 
appropriate and acceptable to EPA for accumulating hours on handheld 
engines for demonstrating the durability of emission controls.
(2) Delegated Final Assembly
    The current practice of attaching exhaust systems to engines 
varies. Class I engines are typically designed and produced by the 
engine manufacturer with complete emission control systems. Equipment 
manufacturers generally buy these engines and install them in their 
equipment, adjusting equipment designs if necessary to accommodate the 
mufflers and the rest of the exhaust system from the engine 
manufacturer.
    Engine manufacturers generally produce Class II engines without 
exhaust systems, relying instead on installation instructions to ensure 
that equipment manufacturers get mufflers that fall within a specified 
range of backpressures that is appropriate for a given engine model. 
Equipment manufacturers are free to work with muffler manufacturers to 
design mufflers that fit into the space available for a given equipment 
model, paying attention to the need to stay within the design 
specifications from the engine manufacturers. A similar situation 
applies for air filters, where equipment manufacturers in some cases 
work with component manufacturers to use air filters that are tailored 
to the individual equipment model while staying within the design 
specifications defined by the engine manufacturer.
    The existing regulations require that certified engines be in their 
certified configuration when they are introduced into commerce. We 
therefore need special provisions to address the possibility that 
engines will need to be produced and shipped without exhaust systems or 
air intake systems that are part of the certified configuration. We 
have adopted such provisions for heavy-duty highway engines and for 
other nonroad engines in 40 CFR 85.1713 and 40 CFR 1068.260, 
respectively. These provisions generally require that engine 
manufacturers establish a contractual arrangement with equipment 
manufacturers and take additional steps to ensure that engines are in 
their certified configuration before reaching the ultimate purchaser.
    We are applying delegated-assembly provisions for nonhandheld 
engines that are similar to those adopted for heavy-duty highway 
engines. In fact, we have modified the proposed requirements and the 
requirements that apply to heavy-duty highway engines (and to other 
nonroad engines) such that a single set of requirements in part 1068 
will simultaneously apply to all these engine categories. This combined 
approach incorporates substantial elements of the program we proposed 
for Small SI engines.
    This approach generally requires that engine manufacturers apply 
for certification in the normal way, identifying all the engine parts 
that make up the engine configurations covered by the certification. 
Equipment manufacturers will be able to work with muffler manufacturers 
to get mufflers with installed catalysts as specified in the engine 
manufacturer's application for certification. If equipment 
manufacturers need a muffler or catalyst that is not covered by the 
engine manufacturer's certification, the engine manufacturer will need 
to amend the application for certification. This may require new 
testing if the data from the original emission-data engine are not 
appropriate for showing that the new configuration will meet emission 
standards, as described in Sec.  1054.225. (Alternatively, the 
equipment manufacturer may take on the responsibility for certifying 
the new configuration, as described in Sec.  1054.612.) Engine 
manufacturers will also identify in the application for certification 
their plans to sell engines without emission-related components. We are 
adopting several provisions to ensure that engines will eventually be 
in their certified configuration. For example, engine manufacturers 
will establish contracts with affected equipment manufacturers, include 
installation instructions to make clear how engine assembly should be 
completed, keep records of the number of engines produced under these 
provisions, and obtain annual affidavits from affected equipment 
manufacturers to confirm that they are installing the proper emission-
related components on the engines and that they have ordered

[[Page 59087]]

the number of components that corresponds to the number of engines 
involved.
    While the delegated-assembly provisions are designed for direct 
shipment of engines from engine manufacturers to equipment 
manufacturers, we are aware that distributors play an important role in 
providing engines to large numbers of equipment manufacturers. We are 
requiring that these provisions apply to distributors in one of two 
ways. First, engine manufacturers may have an especially close working 
relationship with primary distributors. In such a case, the engine 
manufacturer can establish a contractual arrangement allowing the 
distributor to act as the engine manufacturer's agent for all matters 
related to compliance with the delegated-assembly provisions. This 
allows the distributor to make arrangements with equipment 
manufacturers to address design needs and perform oversight functions. 
We will hold the engine manufacturer directly responsible if the 
distributor fails to meet the regulatory obligations that will 
otherwise apply to the engine manufacturer. However, starting in 2015, 
we are allowing this approach only with our specific approval for 
individual manufacturers and distributors. While this arrangement is 
necessary to facilitate making engines available under the Transition 
Program for Equipment Manufacturers, we are concerned that it will be 
difficult for EPA and for manufacturers to properly ensure that all 
engines are built up to a certified configuration when assembly 
responsibilities are so far removed from the engine manufacturer. This 
is underscored by a recent finding that an equipment manufacturer was 
intentionally not following an engine manufacturer's instructions when 
installing Small SI engines such that the final installation involved 
an engine that was not in a certified configuration. In the years 
before 2015, we expect that EPA and manufacturers will learn a lot 
about delegated assembly, including the extent to which there are cases 
in which engines are improperly assembled, whether those problems 
represent intentional violations or mistakes as part of a good-faith 
effort to meet applicable requirements. We will be prepared to judge 
individual requests based on the experience gained under the initial 
years of the Phase 3 standards. However, given the challenges 
associated with engine manufacturers allowing distributors to act as 
their agents with respect to delegated assembly, we expect 
manufacturers to ask us to allow this only in unusual circumstances 
when the standard approach would be very impractical. Also, depending 
on the broader experience with this provision before 2015, we may 
consider changing the regulation to allow this to continue without our 
specific approval, for Small SI engines or for all types of engines. If 
we find that there are substantial problems in implementing this 
provision, we may also consider removing the allowance to continue 
using distributors this way for delegated assembly past 2014.
    Second, other distributors may receive shipment of engines without 
exhaust systems, but they will add any aftertreatment components before 
sending the engines on to equipment manufacturers. Engine manufacturers 
will treat these distributors as equipment manufacturers for the 
purposes of delegated assembly. Equipment manufacturers buying engines 
from such a distributor will not have the option of separately 
obtaining mufflers from muffler manufacturers. However, we would expect 
distributors to cooperate with small equipment manufacturers to work 
out any necessary arrangements to specify and design their components 
and equipment. This second situation involves a more straightforward 
compliance scenario so this provision does not expire. In both of these 
scenarios, the engine manufacturer continues to be responsible for the 
in-use compliance of all their engines.
    Engine manufacturers will need to affix a label to the engine to 
clarify that it needs certain emission-related components before it is 
in its certified configuration. This labeling information is important 
for alerting assembly personnel to select mufflers with installed 
catalysts; the label will also give in-house inspectors or others with 
responsibility for quality control a tool for confirming that all 
engines have been properly assembled and installed. Given the large 
numbers of engine and equipment models and the interchangeability of 
mufflers with and without catalysts, we believe proper labeling will 
reduce the possibility that engines will be misbuilt. This labeling can 
be done with either of two approaches. First, a temporary label may be 
applied such that it could not be removed without a deliberate action 
on the part of the equipment manufacturer. We believe it is not 
difficult to create a label that will stay on the engine until it is 
deliberately removed. Second, manufacturers may add the words 
``delegated assembly'' to the engine's permanent emission control 
information label (or ``DEL ASSY'' where limited space requires an 
abbreviation).
    In addition, engine manufacturers will need to perform or arrange 
for audits to verify that equipment manufacturers are properly 
assembling engines. Engine manufacturers may rely on third-party agents 
to perform auditing functions. Since the purpose of the audit is to 
verify that equipment manufacturers are properly assembling products, 
they may not perform audits on behalf of engine manufacturers. We are 
requiring that audits involve at a minimum reviewing the equipment 
manufacturer's production records and procedures, inspecting the 
equipment manufacturer's production operations, and inspecting the 
final assembled products. Inspection of final assembled products may 
occur at any point in the product distribution system. For example, 
products may be inspected at the equipment manufacturer's assembly or 
storage facilities, at regional distribution centers, or at retail 
locations. The audit must also include confirmation that the number of 
aftertreatment devices shipped was sufficient for the number of engines 
involved. Engine manufacturers would keep records of the audit results 
and make these records available to us upon request. These auditing 
specifications represent a minimum level of oversight. In certain 
circumstances we may expect engine manufacturers to take additional 
steps to ensure that engines are assembled and installed in their 
certified configuration. For example, equipment manufacturers with very 
low order volumes, an unclear history of compliance, or other 
characteristics that will cause some concern may prompt us to require a 
more extensive audit to ensure effective oversight in confirming that 
engines are always built properly. Engine manufacturers must describe 
in the application for certification their plan for taking steps to 
ensure that all engines will be in their certified configuration when 
installed by the equipment manufacturer. EPA approval of a 
manufacturer's plan for delegated assembly will be handled as part of 
the overall certification process.
    We are requiring that engine manufacturers annually audit twelve 
equipment manufacturers, or fewer if they are able to audit all 
participating equipment manufacturers on average once every four years. 
These audits will be divided over different equipment manufacturers 
based on the number of engines sold to each equipment manufacturer. We 
specify that these auditing rates are reduced to a maximum of four 
equipment manufacturers per year starting in 2015.

[[Page 59088]]

In 2019 and later, manufacturers would continue to perform a maximum of 
four audits annually, but we specify that audits may be divided evenly 
to cover all equipment manufacturers over a ten-year period.
    We are not adopting the proposed requirement for engine 
manufacturers to establish an alphanumeric designation to identify each 
unique catalyst design and instruct equipment manufacturers to stamp 
this code on the external surface of the exhaust system. However, 
manufacturers may choose to do this voluntarily as a means of more 
readily assessing whether engines have been properly assembled.
    We are requiring that all the same provisions apply for separate 
shipment related to air filters if they are part of an engine's 
certified configuration, except for the auditing. However, this does 
not apply if manufacturers identify intake systems, including air 
filters, by simply instructing equipment manufacturers to maintain the 
pressure drop within a certain range. This is typical of the way many 
exhaust systems are handled today. We will require auditing related to 
air filters that are specifically identified in the application for 
certification only if engine manufacturers are already performing 
audits related to catalysts. We believe there is much less incentive or 
potential for problems with equipment manufacturers producing engines 
with noncompliant air filters so we believe a separate auditing 
requirement for air filters is unnecessary.
    The final regulation specifies that the exemption expires when the 
equipment manufacturer takes possession of the engine and the engine 
reaches the point of final equipment assembly. The point of final 
equipment assembly for purposes of delegated assembly for 
aftertreatment components is the point at which the equipment 
manufacturer attaches a muffler to the engine. Engines observed in 
production or inventory assembled with improper mufflers will be 
considered to have been built contrary to the engine manufacturer's 
installation instructions. Catalysts are invariably designed as part of 
the muffler, so no reason exists for installing a different muffler 
once a given muffler has been installed using normal production 
procedures. If equipment manufacturers sell equipment without following 
these instructions, they will be considered in violation of the 
prohibited acts i.e., selling uncertified engines). If there is a 
problem with any given equipment manufacturer, we will disallow 
continued use of the delegated-assembly provisions for that equipment 
manufacturer until the engine manufacturer has taken sufficient steps 
to remedy the problem.
    We are aware that the new approach of allowing equipment 
manufacturers to make their own arrangements to order mufflers results 
in a situation in which the equipment manufacturer must spend time and 
money to fulfill their responsibilities under the regulations. This 
introduces a financial incentive to install mufflers with inferior 
catalysts, or to omit the catalyst altogether. To address this concern, 
we are requiring that engine manufacturers get written confirmation 
from each equipment manufacturer before an initial shipment of engines 
for a given engine model. This confirmation will document the equipment 
manufacturer's understanding that they are using the appropriate 
aftertreatment components. The written confirmation will be due within 
30 days after shipping the engines and will be required before shipping 
any additional engines from that engine family to that equipment 
manufacturer.
    The shipping confirmation included in the rule for heavy-duty 
highway engines is a very substantial provision to address the fact 
that vehicle manufacturers will gain a competitive advantage by 
producing noncompliant products, and that engines in commerce will be 
labeled as if they were fully compliant even though they are not yet in 
their certified configuration. This is especially problematic when a 
muffler with no catalyst can easily be installed and can perform 
without indicating a problem. To address this concern we are requiring 
that equipment manufacturers include in their annual affidavits an 
accounting for the number of aftertreatment components they have 
ordered relative to the number of engines shipped without the catalysts 
that the mufflers will otherwise require.
    Production-line testing normally involves building production 
engines using normal assembly procedures. For engines shipped without 
catalysts under the delegated-assembly provisions, it is not normally 
possible to do this at the engine manufacturer's facility, where such 
testing will normally occur. To address this, we are specifying that 
engine manufacturers must arrange to get a randomly selected catalyst 
that will be used with the engine. The catalyst must come from any 
point in the normal distribution from the aftertreatment component 
manufacturer to the equipment manufacturer. The catalyst may come from 
the engine manufacturer's own inventory as long as it is randomly 
procured. Engine manufacturers are required to keep records showing how 
they randomly selected catalysts.
    See Section 2.8 of the Summary and Analysis of Comments for further 
discussion of issues related to delegated assembly.
(3) Transition Program for Equipment Manufacturers
    Given the level of the new Phase 3 exhaust emission standards for 
Class II engines, we believe there may be situations where the use of a 
catalyzed muffler could require equipment manufacturers to modify their 
equipment. We are therefore establishing a set of provisions to provide 
equipment manufacturers with reasonable lead time for transitioning to 
the new standards. These provisions are similar to the program we 
adopted for nonroad diesel engines (69 FR 38958, June 29, 2004).
    Equipment manufacturers will not be obligated to use any of these 
provisions, but all equipment manufacturers that produce Class II 
equipment are eligible to do so. We are also requiring that all 
companies under the control of a common entity will be considered 
together for the purposes of applying these allowances. Manufacturers 
will be eligible for the allowances described below only if they have 
primary responsibility for designing and manufacturing equipment, and 
if their manufacturing procedures include installing engines in the 
equipment.
(a) General Provisions
    Under the final rule, beginning in the 2011 model year and lasting 
through the 2014 model year, each equipment manufacturer may install 
Class II engines not certified to the Phase 3 emission standards in a 
limited number of equipment applications produced for the U.S. market 
(see Sec.  1054.625). We refer to these here as ``flex engines.'' These 
flex engines will need to meet the Phase 2 standards. The maximum 
number of ``allowances'' each manufacturer can use are based on 30 
percent of an average year's production of Class II equipment. The 
number of allowances is calculated by determining the average annual 
U.S.-directed production of equipment using Class II engines produced 
from January 1, 2007 through December 31, 2009. Thirty percent of this 
average annual production level is the total number of allowances an 
equipment manufacturer may use under this transition program over four 
years. Manufacturers can use these allowances for their Class II 
equipment over four model years from 2011 through 2014, with the usage 
spread over these model years as

[[Page 59089]]

determined by the equipment manufacturer. Equipment produced under 
these provisions can use engines that meet the Phase 2 emission 
standards instead of the Phase 3 standards. If an equipment 
manufacturer newly enters the Class II equipment market during 2007, 
2008 or 2009, the manufacturer will calculate its average annual 
production level based only on the years during which it actually 
produced Class II equipment. Equipment manufacturers newly entering the 
Class II equipment market after 2009 will not receive any allowances 
under the transition program and will need to incorporate Phase 3 
compliant engines into the Class II equipment beginning in 2011.
    Equipment using engines built before the effective date of the 
Phase 3 standards will not count toward an equipment manufacturer's 
allowances. Equipment using engines that are exempted from the Phase 3 
standards for any reason will also not count toward an equipment 
manufacturer's allowances. For example, we are allowing small-volume 
engine manufacturers to continue producing Phase 2 engines for two 
model years after the Phase 3 standards apply. All engines subject to 
the Phase 3 standards, including those engines that are certified to 
FELs at higher levels than the standard, but for which an engine 
manufacturer uses exhaust ABT credits to demonstrate compliance, will 
count as Phase 3 complying engines and will not be included in an 
equipment manufacturer's count of allowances.
    The choice of the allowances based on 30 percent of one year's 
production is based on our best estimate of the degree of reasonable 
lead time needed by the largest equipment manufacturers to modify their 
equipment designs as needed to accommodate engines and exhaust systems 
that have changed as a result of more stringent emission standards. We 
believe this level of allowances responds to the need for lead time to 
accommodate the workload related to redesigning equipment models to 
incorporate catalyzed mufflers while ensuring a significant level of 
emission reductions in the early years of the new program.
    As described in Section VI, technologies for controlling running 
losses may involve a significant degree of integration between engine 
and equipment designs. In particular, routing a vapor line from the 
fuel tank to the engine's intake system depends on engine modifications 
that will allow for this connection. As a result, any equipment using 
flex engines will not need to meet running loss standards.
(b) Coordination Between Engine and Equipment Manufacturers
    We are establishing two separate paths for complying with 
administrative requirements related to the new transition program, 
depending on how the engine manufacturer chooses to make flex engines 
available. Engine manufacturers choosing to use the delegated-assembly 
provisions described above will be enabling equipment manufacturers to 
make the decision whether to complete the engine assembly in the Phase 
3 configuration or to use a non-catalyzed muffler such that the engine 
will meet Phase 2 standards and will therefore need to be counted as a 
flex engine. If engine manufacturers do not use the delegated-assembly 
provisions, equipment manufacturers will need to depend on engine 
manufacturers to produce and ship flex engines that are already in a 
configuration meeting Phase 2 standards and labeled accordingly. Each 
of these scenarios involves a different set of compliance provisions, 
which we describe below. Note that in no case may an equipment 
manufacturer remove a catalyzed muffler from an engine and replace it 
with a noncatalyzed muffler; this would be a violation of the 
prohibition against tampering.
(i) Compliance Based on Engine Manufacturers
    Engine manufacturers will in many cases produce complete engines. 
This will be the case if the engine does not require a catalyst or if 
the engine manufacturer chooses to design their own exhaust systems and 
ship complete engine assemblies to equipment manufacturers.
    Under this scenario, we are requiring that equipment manufacturers 
request a certain number of flex engines from the engine manufacturer. 
The regulatory provisions specifically allow engine manufacturers to 
continue to build and sell Phase 2 engines needed to meet the market 
demand created by the transition program for equipment manufacturers, 
provided they receive the written assurance from the equipment 
manufacturer that such engines are being procured for this purpose. We 
are requiring that engine manufacturers keep copies of the written 
assurance from equipment manufacturers for at least five years after 
the final year in which allowances are available.
    Engine manufacturers are currently required to label their 
certified engines with a variety of information. We are requiring that 
engine manufacturers producing complete flex engines under this program 
identify on the engine label that they are flex engines. In addition, 
equipment manufacturers are required to apply an Equipment Flexibility 
Label to the engine or piece of equipment that identifies the equipment 
as using an engine produced under the Phase 3 transition program for 
equipment manufacturers. These labeling requirements allow EPA to 
easily identify flex engines and equipment, verify which equipment 
manufacturers are using these flex engines, and more easily monitor 
compliance with the transition provisions. Labeling of the equipment 
could also help U.S. Customs to quickly identify equipment being 
imported lawfully using the Transition Program for Equipment 
Manufacturers.
    While manufacturers will need to meet Phase 2 standards with their 
flex engines, they will not need to certify them for the current model 
year. We are instead applying the provisions of 40 CFR 1068.265, which 
require manufacturers to keep records showing that they meet emission 
standards without requiring submission of an application for 
certification.
(ii) Compliance Based on Equipment Manufacturers
    We are adopting a different set of compliance provisions for engine 
manufacturers that make arrangements to ship engines separately from 
exhaust-system components. Under this scenario, as discussed above, the 
engine manufacturers must establish a relationship with the equipment 
manufacturers allowing the equipment manufacturer to install catalysts 
to complete engine assembly in compliance with Phase 3 standards.
    In this case, engine manufacturers will design and produce their 
Phase 3 engines and label them accordingly. The normal path for these 
engines covered by the delegated-assembly provisions will involve 
shipment of the engine without an exhaust system to the equipment 
manufacturer. The equipment manufacturer will then follow the engine 
manufacturer's instructions to add the exhaust system including the 
catalyst to bring the engine into a certified Phase 3 configuration. 
Under the transition program, equipment manufacturers will choose for 
each of these engines to either follow the engine manufacturer's 
instructions to install a catalyst to make it compliant with Phase 3 
standards or install a non-catalyzed muffler to make it compliant with 
Phase 2 standards. Any such engines downgraded to Phase 2 standards 
will count toward the equipment manufacturer's total number

[[Page 59090]]

of allowances under the transition program.
    To make this work, engine manufacturers will need to take certain 
steps to ensure overall compliance. First, engine manufacturers will 
need to include emission data in the application for certification 
showing that the engine meets Phase 2 standards without any 
modification other than installing a non-catalyzed exhaust system. This 
may include a specified range of backpressures that equipment 
manufacturers must meet in procuring a non-catalyst muffler. If the 
Phase 3 engine without a catalyst will otherwise still be covered by 
the emission data from engines produced in earlier model years under 
the Phase 2 standards, manufacturers could rely on carryover emission 
data to make this showing. Second, the installation instructions we 
specify under the delegated-assembly provisions will need to describe 
the steps equipment manufacturers must take to make either Phase 3 
engines or Phase 2 flex engines. Third, for engine families that 
generate positive emission credits under the exhaust ABT program, 
engine manufacturers must generally decrease the number of ABT credits 
generated by the engine family by 10 percent. We believe the 10 percent 
decrease should provide an emission adjustment commensurate with the 
potential use of the equipment manufacturer flexibility provisions. (As 
described earlier in Section V.C.3, EPA is including an option that 
will allow engine manufacturers to track the final configuration of the 
engines to determine the actual number of engines that were downgraded 
for the TPEM program.)
    Equipment manufacturers using allowances under these provisions 
must keep records that allow EPA or engine manufacturers to confirm 
that equipment manufacturers followed appropriate procedures and 
produced an appropriate number of engines without catalysts. In 
addition, we are requiring that equipment manufacturers place a label 
on the engine as close as possible to the engine manufacturer's 
emission control information label to identify it as a flex engine. The 
location of this label is important since it effectively serves as an 
extension of the engine manufacturer's label, clarifying that the 
engine meets Phase 2 standards, not the Phase 3 standards referenced on 
the original label. This avoids the problematic situation of changing 
or replacing labels, or requiring engine manufacturers to send 
different labels.
    Engine manufacturers might choose to produce Class II engines that 
are compliant with the Phase 3 standards before the 2011 model year and 
set up arrangements for separate shipment of catalyzed mufflers as 
described in Section V.E.2. We expect any engine manufacturers 
producing these early Phase 3 engines to continue production of 
comparable engine models that meet Phase 2 standards rather than 
forcing all equipment manufacturers to accommodate the new engine 
design early. We believe it will not be appropriate for equipment 
manufacturers to buy Phase 3 engines in 2010 or earlier model years and 
downgrade them to meet Phase 2 emission standards as described above. 
We are therefore allowing the downgrading of Phase 3 engines only for 
2011 and later model years.
    Because equipment manufacturers in many cases depend on engine 
manufacturers to supply certified engines in time to produce complying 
equipment, we are also adopting a hardship provision for all equipment 
manufacturers (see Sec.  1068.255). An equipment manufacturer will be 
required to use all its allowances under the transition program 
described above before being eligible to use this hardship.
(iii) Reporting and Recordkeeping Requirements
    Equipment manufacturers choosing to participate in the transition 
program will be required to keep records of the U.S-directed production 
volumes of Class II equipment in 2007 through 2009 broken down by 
equipment model and calendar year. Equipment manufacturers will also 
need to keep records of the number of flex engines they use under this 
program.
    We are also establishing certain notification requirements for 
equipment manufacturers. Any manufacturer wishing to participate in the 
new transition provisions need to notify EPA before producing equipment 
with flex engines. They must submit information on production of Class 
II equipment over the three-year period from 2007 through 2009, 
calculate the number of allowances available, and provide basic 
business information about the company. For example, we will want to 
know the names of related companies operating under the same parent 
company that are required to count engines together under this program. 
This early notification will not be a significant burden to the 
equipment manufacturer and will greatly enhance our ability to ensure 
compliance. Indeed, equipment manufacturers will need to have the 
information required in the notification to know how to use the 
allowances.
    We are establishing an ongoing reporting requirement for equipment 
manufacturers participating in the Phase 3 transition program. Under 
the program, participating equipment manufacturers will be required to 
submit an annual report to EPA that shows its annual number of 
equipment produced with flex engines under the transition provisions in 
the previous year. Each report must include a cumulative count of the 
number of equipment produced with flex engines for all years. To ease 
the reporting burden on equipment manufacturers, EPA intends to work 
with the manufacturers to develop an electronic means for submitting 
information to EPA.
(c) Additional Allowances for Small and Medium-Sized Companies
    We believe small-volume equipment manufacturers will need a greater 
degree of lead time than manufacturers that sell large volumes of 
equipment. The small companies are less likely to have access to 
prototype engines from engine manufacturers and generally have smaller 
engineering departments for making the necessary design changes. 
Allowances representing thirty percent of annual U.S.-directed 
production provide larger companies with substantial lead time to plan 
their product development for compliance but smaller companies may have 
a product mix that requires extensive work to redesign products in a 
short amount of time. We are therefore specifying that small-volume 
equipment manufacturers may use this same transition program with 
allowances totaling 200 percent of the average annual U.S.-directed 
production of equipment using Class II engines from 2007 through 2009. 
For purposes of this program, a small-volume equipment manufacturer is 
defined as a manufacturer that produces fewer than 5,000 pieces of 
nonhandheld equipment per year subject to EPA regulations in each of 
the three years from 2007 through 2009 or meets the SBA definition of 
small business equipment manufacturer (i.e., generally fewer than 500 
employees for manufacturers of most types of equipment). These 
allowances are spread over the same four-year period between 2011 and 
2014. For example, a small-volume equipment manufacturer could 
potentially use Phase 2 engines on all their Class II equipment for two 
years or they might sell half their Class II equipment with Phase 2 
engines for four years assuming production stayed constant over the 
four years.

[[Page 59091]]

    Medium-sized equipment manufacturers, i.e., companies that produce 
too much equipment to be considered a small-volume equipment 
manufacturer but produce fewer than 50,000 pieces of Class II equipment 
annually, may also face difficulties similar to that of small-volume 
equipment manufacturers. These companies may be like small-volume 
manufacturers if they have numerous product lines with varied 
approaches to installing engines and mufflers. Other companies may be 
more like bigger companies if they produce most of their equipment in a 
small number of high-volume models or have consistent designs related 
to engine and muffler installations. We are therefore creating special 
provisions that will enable us to increase the number of transition 
allowances that are available to these medium-sized companies that have 
annual U.S.-directed production of Class II equipment of between 5,000 
and 50,000 in each of the three years from 2007 through 2009. To obtain 
allowances greater than 30 percent of average annual production, a 
medium-sized manufacturer will need to notify us before they produce 
equipment with flex engines by January 31, 2010 if they believe the 
standard allowances based on 30 percent of average annual production of 
Class II equipment do not provide adequate lead time starting in the 
2011 model year. Additional allowances may be requested only if the 
equipment manufacturer can show they are on track to produce a number 
of equipment models representing at least half of their total U.S.-
directed production volume of Class II equipment in the 2011 model year 
compliant with all exhaust and evaporative emission standards. As part 
of their request, the equipment manufacturer will need to describe why 
more allowances are needed to accommodate anticipated changes in engine 
designs resulting from engine manufacturers' compliance with changing 
exhaust emission standards. The equipment manufacturer will also need 
to request a specific number of additional allowances needed with 
supporting information to show why that many allowances are needed. We 
may approve additional allowances up to 70 percent of the average 
annual U.S.-directed production of Class II equipment from 2007 through 
2009. If a medium-sized company were granted the full amount of 
additional allowances, they will have allowances equivalent to 100 
percent of the average annual production volume of Class II equipment.
    As noted above, the determination of whether a company is a small- 
or medium-sized manufacturer will be based primarily on production data 
over the 2007 through 2009 period submitted to EPA before 2011. After a 
company's status as a small- or medium-sized company has been 
established based on the data, EPA is requiring that manufactures keep 
that status even if a company's production volume grows during the next 
few years, such that the company will no longer qualify as a small- or 
medium-sized company. EPA believes equipment manufacturers need to know 
at the beginning of the transition program (i.e., 2011) how many 
allowances they will receive under the program. Changing a company's 
size determination during the program, which could affect the number of 
allowances available, will make it difficult for companies to plan and 
could lead to situations where a company is in violation of the 
provisions based on the use of allowances that were previously allowed. 
Likewise, if a company is purchased by another company or merges with 
another company after the determination of small- or medium-size status 
is established in 2010, the combined company could, at its option, keep 
the preexisting status for the individual portions of the combined 
company. If the combined company chooses to keep the individual 
designations, the combined company must submit the annual reports on 
the use of allowances broken down for each of the previously separate 
companies.
(d) Requirements for Importers and Imported Equipment
    Under this final rule, only companies that manufacture equipment 
can qualify for the relief provided under the Phase 3 transition 
provisions. Equipment manufacturers producing equipment outside the 
United States that comply with the provisions discussed below can enjoy 
the same transition provisions as domestic manufacturers. Such 
equipment manufacturers that do not comply with the compliance-related 
provisions discussed below will not receive allowances. Importers that 
do not manufacture equipment will not receive any transition relief 
directly, but could import equipment with a flex engine if it is 
covered by an allowance or transition provision associated with a 
foreign equipment manufacturer. This will allow transition provisions 
to be used by equipment manufacturers producing equipment outside the 
United States in the same way as equipment manufacturers producing 
equipment domestically, at the option of the overseas manufacturer, 
while avoiding the potential for importers to inappropriately use 
allowances. These regulations apply equally to foreign equipment 
manufacturers and to domestic equipment manufacturers that build 
equipment outside the country that is eventually sold in the United 
States.
    All equipment manufacturers wishing to use the transition 
provisions for equipment produced outside the United States must comply 
with all the requirements discussed above. Along with the equipment 
manufacturer's notification described earlier, an overseas equipment 
manufacturer will have to comply with various compliance related 
provisions (see Sec.  1054.626). These provisions are similar to those 
adopted for nonroad diesel engines. As part of the notification, such 
an equipment manufacturer will have to:
     Agree to provide EPA with full, complete and immediate 
access to conduct inspections and audits;
     Name an agent in the United States for service;
     Agree that any enforcement action related to these 
provisions will be governed by the Clean Air Act;
     Submit to the substantive and procedural laws of the 
United States;
     Agree to additional jurisdictional provisions;
     Agree that the equipment manufacturer will not seek to 
detain or to impose civil or criminal remedies against EPA inspectors 
or auditors for actions performed within the scope of EPA employment 
related to the provisions of this program;
     Agree that the equipment manufacturer becomes subject to 
the full operation of the administrative and judicial enforcement 
powers and provisions of the United States without limitation based on 
sovereign immunity; and
     Submit all reports or other documents in the English 
language, or include an English language translation.
    In addition to these provisions, we are requiring equipment 
manufacturers producing equipment for importation under the transition 
program to comply with a bond requirement for equipment imported into 
the United States. We believe a bond program is an important tool for 
ensuring that importing equipment manufacturers are subject to the same 
level of enforcement as equipment manufacturers producing equipment 
domestically. Specifically, we believe a bonding requirement for these 
equipment manufacturers is an important enforcement tool for ensuring 
that EPA has the ability to collect any

[[Page 59092]]

judgments assessed against an overseas equipment manufacturer for 
violations of these transition provisions.
    Under a bond program, the participating equipment manufacturer will 
have to maintain a bond in the proper amount that is payable to satisfy 
judgments that result from U.S. administrative or judicial enforcement 
actions for conduct in violation of the Clean Air Act. The equipment 
manufacturer will generally obtain a bond in the proper amount from a 
third party surety agent that has been listed with the Department of 
the Treasury. As discussed in Sections V.E.6, EPA is establishing other 
bond requirements as well. An equipment manufacturer that is required 
to post a bond under any of these provisions will be required to obtain 
only one bond of the amount specified for those sections. Equipment 
manufacturers may avoid the bond requirements based on the level of 
assets in the United States, as described in Section V.E.6.
    In addition to the equipment manufacturer requirements discussed 
above, EPA is also requiring importers of equipment with flex engines 
from a complying equipment manufacturer to comply with certain 
provisions. EPA believes these importer provisions are essential to 
EPA's ability to monitor compliance with the transition provisions. 
Therefore, the regulations require each importer to notify EPA prior to 
their initial importation of equipment with flex engines. Importers 
will be required to submit their notification before importing 
equipment with flex engines from a complying equipment manufacturer. 
The importer's notification will need to include the following 
information:
     The name and address of importer (and any parent company);
     The name and address of the manufacturers of the equipment 
and engines the importer expects to import; and
     Number of units of equipment with flex engines the 
importer expects to import for each year broken down by equipment 
manufacturer.
    In addition, EPA is requiring that any importer electing to import 
to the United States equipment with flex engines from a complying 
equipment manufacturer must submit annual reports to EPA. The annual 
report will include the number of units of equipment with flex engines 
the importer actually imported to the United States in the previous 
calendar year; and identify the equipment manufacturers and engine 
manufacturers whose equipment and engines were imported.
(e) Provisions for Rotation-Molded Fuel Tanks
    Equipment manufacturers may face challenges in transitioning to 
rotation-molded fuel tanks that meet the new permeation standards. 
These modified fuel tanks may require equipment manufacturers to adjust 
the designs of their equipment to ensure that the new fuel tanks can be 
incorporated without problems. We are therefore allowing equipment 
manufacturers to use noncompliant rotational-molded fuel tanks for two 
additional years on limited numbers of 2011 and 2012 model year 
equipment using Class II engines. Equipment manufacturers may use 
noncompliant rotational-molded fuel tanks if the production volume of 
the fuel tank design used in Class II equipment models is collectively 
no more than 5,000 units in the 2011 model year. In the 2012 model 
year, equipment manufacturers may use noncompliant rotational-molded 
fuel tanks if the production volume of the fuel tank design used in 
Class II equipment models is collectively no more than 5,000 units in 
the 2012 model year, but the total number of exempted rotational-molded 
fuel tanks across the manufacturer's Class II equipment is limited to 
10,000 units. If production volumes are greater than 5,000 for a given 
fuel tank design (or greater than 10,000 corporate-wide in 2012), all 
those tanks must comply with emission standards. Tank designs would be 
considered identical if they are produced under a single part number to 
conform to a single design or blueprint. In addition, tank designs 
would be considered identical if they differ only with respect to 
production variability, post-production changes (such as different 
fittings or grommets), supplier, color, or other extraneous design 
variables. We originally proposed to allow noncompliant rotation-molded 
fuel tanks for any equipment that was counted under the allowances 
described in this section which used flex engines meeting Phase 2 
exhaust emission standards. However, the approach being finalized today 
could be applied to any equipment using Class II engines (subject to 
the constraints noted above), whether or not the equipment uses a flex 
engine.
(4) Equipment Manufacturer Recertification
    It has generally been engine manufacturers that certify with EPA 
for exhaust emissions because the standards are engine-based. However, 
because the Phase 3 nonhandheld standards are expected to result in the 
use of catalysts, a number of equipment manufacturers, especially those 
that make low-volume models, believe it may be necessary to produce 
their own unique engine/muffler designs, but using the same catalyst 
substrate already used in a muffler that is part of an engine 
manufacturers certified configuration. In this situation, the engine 
will not be covered by the engine manufacturer's certificate, as the 
engine/muffler design is not within the specifications for the 
certified engine. The equipment manufacturer is therefore producing a 
new distinct engine which is not covered by a certificate and therefore 
needs to be certified with EPA.
    To allow the possibility of an equipment manufacturer certifying 
such an engine/muffler design with EPA, we are establishing a 
simplified engine certification process for nonhandheld equipment 
manufacturers (see Sec.  1054.612). Under the simplified certification 
process, the nonhandheld equipment manufacturer will need to 
demonstrate that it is using the same catalyst substrate as the 
approved engine manufacturer's engine family, provide information on 
the differences between their engine/exhaust system and the engine/
exhaust system certified by the engine manufacturer, and explain why 
the emissions deterioration data generated by the engine manufacturer 
will be representative for the equipment manufacturer's configuration. 
The equipment manufacturer will need to perform low-hour emission 
testing on an engine equipped with their modified exhaust system and 
demonstrate that it meets the emission standards after applying the 
engine manufacturer's deterioration factors for the certified engine 
family. We will not require production-line testing for these engines. 
The equipment manufacturer will be responsible to meet all the other 
requirements of an engine manufacturer under the regulations, including 
labeling, warranty, defect reporting, payment of certification fees, 
and other things. The useful life period selected for the original 
certification will also apply for the equipment manufacturer's 
streamlined certification. This provision is primarily intended for 
easing the transition to new standards. Starting in the 2015 model 
year, we are therefore limiting these recertification provisions to 
small-volume emission families (sales below 5,000 units).
(5) Special Provisions Related to Altitude
    For nonhandheld engines we are requiring compliance with our 
standards at all altitudes, consistent

[[Page 59093]]

with other engine categories.\97\ However, since spark-ignition engines 
without electronic control of air/fuel ratio cannot compensate for 
changing air density, their emissions generally change with changing 
altitude. In recognition of this technological limit, we are adopting 
special testing and compliance provisions related to altitude. As 
described in Section V.C.1, we are requiring that nonhandheld engines 
meet emission standards without an altitude kit, but will allow, in 
certain cases, testing at barometric pressures below 94.0 kPa (which is 
roughly equivalent to an elevation of 2,000 feet above sea level) using 
an altitude kit. (An altitude kit may be as simple as a single 
replacement part for the carburetor that allows a greater volumetric 
flow of air into the carburetor to make the engine operate as it would 
at low altitudes.) Such kits were allowed under part 90 and we are 
keeping the provisions that already apply in part 90 related to 
descriptions of these altitude kits in the application for 
certification. This includes a description of how engines comply with 
emission standards at varying atmospheric pressures, a description of 
the altitude kits, and the associated part numbers.
---------------------------------------------------------------------------

    \97\ Note that we are not changing exhaust standards for 
handheld engines and are therefore codifying altitude provisions in 
the new part 1054 that are consistent with those that apply under 
part 90.
---------------------------------------------------------------------------

    During certification, manufacturers will have two choices regarding 
testing and compliance at barometric pressures below 94.0 kPa: (1) Test 
engines for demonstrating compliance with the standards without an 
altitude kit; or (2) test engines for demonstrating compliance with the 
standards using an altitude kit. Those manufacturers choosing Option 2 
will be required to identify the altitude range for which it expects 
proper engine performance and emission control will occur with and 
without the altitude kit, state that engines will comply with 
applicable emission standards throughout the useful life with the 
altitude kit installed according to instructions, and include any 
supporting information. Manufacturers choosing Option 2 will also need 
to describe a plan for making information and parts available to 
consumers such that widespread use of altitude kits will reasonably be 
expected in high-altitude areas. For nonhandheld engines, this will 
involve all counties with elevations substantially above 4,000 feet 
(see Appendix III to part 1068). This includes all U.S. counties where 
75 percent of the land mass and 75 percent of the population are above 
4,000 feet (see 45 FR 5988, January 24, 1980 and 45 FR 14079, March 4, 
1980).
    Assuming we grant a certificate that includes a manufacturer's 
reliance on an altitude kit during testing, any compliance testing at 
higher altitudes (more precisely, lower barometric pressures) would be 
conducted with the altitude kit installed on the engine according to 
the manufacturer's instructions. Note that manufacturers would not be 
required to submit test data from high-altitude testing in their 
applications, provided they could demonstrate through engineering 
analysis the basis for knowing the altitude kits will allow the engines 
to meet the emission standards at high altitude. Any high-altitude 
testing of an engine family that does not use these high altitude 
provisions will be tested without an altitude kit installed.
    We considered requiring manufacturers relying on altitude kits to 
ensure that all engines sold in high-altitude areas were sold with 
altitude kits installed, but determined that such a requirement would 
have been burdensome to the manufacturers, impractical, and very 
disruptive to the market, and may not work in practice. Certificate 
holders will be the engine manufacturers, which generally have little 
or no control over the location at which the sale to the ultimate 
purchaser is made. In most cases, the engines will be sold to equipment 
manufacturers and/or through distributors or large retailers. However, 
even in cases when a manufacturer might have control over the location 
at which the sale to the ultimate purchaser is made, it is not clear 
that the manufacturer could ensure that every piece of equipment sold 
in a high-altitude area has an engine with an altitude kit installed. 
In light of these potential problems, we believe the approach being 
finalized will be effective and is the most appropriate approach. It is 
not tampering for a consumer not to install the altitude kit. We expect 
it will be common practice for consumers to install altitude kits 
because they are inexpensive, easy to install, and improve performance 
at higher altitudes. Manufacturers have also emphasized that retailers 
and consumers are well aware of the need to modify engines for proper 
operation in high-altitude areas. Toward that end, we are requiring 
manufacturers to make the information and parts sufficiently easy for 
the consumer to obtain so that the manufacturer ``would reasonably 
expect that altitude kits would be widely used in the high-altitude 
counties.'' This approach should result in effective control of 
emissions in high-altitude areas while still addressing the 
manufacturers' concerns regarding control over distribution practices 
and point of sale. In fact, it is worth noting that we expect this 
overall approach to be more effective in achieving emission reductions 
than the current regulations under Phase 2. Nevertheless, should we 
determine that operation of engines in high-altitude areas without 
altitude kits installed is widespread, we would reconsider the need for 
additional requirements.
(6) Special Provisions for Compliance Assurance
    EPA's experiences in recent years have highlighted the need for 
more effective tools for preventing the introduction of noncompliant 
engines into U.S. commerce. These include noncompliant engines sold 
without engine labels or with counterfeit engine labels. We are 
adopting the special provisions in the following sections to help us 
address these problems.
(a) Importation Form
    Importation of engines is regulated both by EPA and by U.S. Customs 
and Border Protection. Current Customs regulations specify that anyone 
importing a nonroad engine (or equipment containing a nonroad engine) 
must complete a declaration form before importation. EPA has created 
Declaration Form 3520-21 for this purpose. Customs requires this in 
many cases, but there are times when they allow engines to be imported 
without the proper form. It will be an important advantage for EPA's 
own compliance efforts to be able to enforce this requirement. We are 
therefore modifying part 90 to mirror the existing Customs requirement 
(and the EPA requirement in Sec.  1068.301) for importers to complete 
and retain the declaration form before importing engines (see Sec.  
90.601). This will facilitate a more straightforward processing of 
cases in which noncompliant products are brought to a U.S. port for 
importation because currently no requirement exists for measuring 
emissions or otherwise proving that engines are noncompliant at the 
port facility. Since this is already a federal requirement, we are 
making this effective immediately with the final rule.
(b) Assurance of Warranty Coverage
    Manufacturers of Small SI engines subject to the standards are 
required to provide an emission-related warranty so owners are able to 
have repairs done at no expense for emission-related defects during an 
initial warranty period. Established companies are able to do

[[Page 59094]]

this with a network of authorized repair facilities that can access 
replacement parts and properly correct any defects. In contrast, we are 
aware that some manufacturers are selling certified engines in the 
United States without any such network for processing warranty claims. 
As such, owners who find that their engines have an emission-related 
defect are unable to properly file a warranty claim or get repairs that 
should be covered by the warranty. In effect, this allows companies to 
certify their engines and agree to provide warranty coverage without 
ever paying for legitimate repairs that should be covered by the 
warranty. We are therefore requiring that all manufacturers demonstrate 
several things before we will approve certification for their engines 
(see Sec.  90.1103 and Sec.  1054.120). The following provisions apply 
to manufacturers who certify engines, and include importers who certify 
engines. First, we are requiring manufacturers to provide and monitor a 
toll-free telephone number and an e-mail address for owners to receive 
information about how to make a warranty claim and how to make 
arrangements for authorized repairs. Second, we are requiring 
manufacturers to provide a source of replacement parts within the 
United States. For imported parts, this will require at least one 
distributor within the United States.
    Finally, we are requiring manufacturers to have a network of 
authorized repair facilities or to take one of multiple alternate 
approaches to ensure that owners will be able to get free repair work 
done under warranty. In the proposal we specified that warranty-related 
repairs may be limited to authorized repair facilities as long as 
owners did not have to travel more than 100 miles for repairs (or 
further in remote areas of the country). For companies without a 
nationwide repair network, we proposed alternative methods for meeting 
warranty obligations, including free shipping, free service calls, or 
reimbursement of costs through local nonauthorized service centers. 
Manufacturers suggested a different metric for demonstrating a 
readiness to meet warranty obligations, focusing on maintaining 
authorized service centers in every metropolitan area with a population 
of 100,000 or greater (according to the 2000 census). We agree that the 
suggested approach would provide an effective demonstration of a valid 
warranty network and are including that in the regulation; however, we 
believe it is still appropriate to include the proposed provisions 
related to the 100-mile specification in the final rule. For example, 
there may be some companies with a regional market that have an 
effective network of repair facilities in that region, but not in other 
parts of the country. In this circumstance, it is appropriate to allow 
the manufacturer multiple paths for showing that it will be able to 
respond effectively to all warranty claims nationwide. We are therefore 
including the 100-mile approach as an additional alternative in the 
regulations, as well as including a variety of adjustments to address 
the concerns raised in the comments.
    We believe these requirements are both necessary and effective for 
ensuring proper warranty coverage for all owners. At the same time, we 
are adopting a flexible approach that allows companies to choose from a 
variety of alternatives for providing warranty service. We therefore 
believe these requirements are readily achievable for any company. We 
are therefore implementing these requirements starting with the 2010 
model year. This should allow time for the administrative steps 
necessary to arrange for any of the allowable compliance options 
described above.
(c) Bond Requirements Related to Enforcement and Compliance Assurance
    Certification initially involves a variety of requirements to 
demonstrate that engines and equipment are designed to meet applicable 
emission standards. After certification is complete, however, several 
important obligations apply to the certifying manufacturer or importer. 
For example, we require ongoing testing of production engines, as well 
as reporting of recurring defects. Manufacturers may also need to pay 
penalties if there is a violation and may need to perform a recall if 
their products are found to be noncompliant. For companies operating 
within the United States, we are generally able to take steps to 
communicate clearly and insist on compliance with applicable 
regulations. For example, in certain circumstances we may meet with 
specific company representatives, halt production, or seize assets. For 
companies without staff or assets in the United States, these 
alternatives are not available. Accordingly, we have limited ability to 
enforce our requirements or recover any appropriate penalties, which 
increases the risk of environmental problems as well as problems for 
owners. This creates the potential for a company to gain a competitive 
advantage if they do not have substantial assets or operations in the 
United States by avoiding some of the costs of complying with EPA 
regulations.
    To address this concern, we are adopting a requirement for 
manufacturers of certified engines and equipment (including importers) 
to post a bond to cover any potential compliance or enforcement actions 
under the Clean Air Act. Manufacturers and importers will be exempt 
from the bond requirement if they are able to sufficiently demonstrate 
an assurance that they will meet any compliance- or enforcement-related 
obligations. The bonding requirements apply for companies that do not 
have fixed assets in the United States meeting the smallest applicable 
thresholds from the following:
     A threshold of $3 million applies for manufacturers that 
have been certificate holders in each of the preceding ten years 
without failing a test conducted by EPA officials or having been found 
by EPA to be noncompliant under applicable regulations.
     A threshold of $6 million applies for secondary engine 
manufacturers or for equipment manufacturers that certify no engines 
with respect to exhaust emission standards. A secondary engine 
manufacturer is generally a certifying company that buys partially 
complete engines for final assembly from another engine manufacturer.
     A threshold of $10 million applies for companies that do 
not qualify for the smaller specified bond thresholds.
    The value of the bond must be at least $500,000, though a higher 
bond value may apply based on multiplying the annual volume of 
shipments by a per-engine rate. The per-engine bond amount is $25 for 
handheld engines and Class I engines. Class II engines cover a much 
wider range of applications, so we further differentiate the bond for 
those engines. The proposed per-engine bond amounts for Class II 
engines is $50 for engines between 225 and 740 cc, $100 for engines 
between 740 and 1,000 cc, and $200 for engines above 1,000 cc. These 
values are generally scaled to be approximately 10 to 15 percent of the 
retail value. In the case of handheld engines, this is based on the 
retail value of equipment with installed engines, since these products 
are generally marketed that way. Class II engines are very often sold 
as loose engines to equipment manufacturers, so the corresponding per-
engine bond values are based on the retail value of the engine alone. 
This approach is similar to the bond requirements that apply for 
nonroad diesel engines (see Sec.  1039.626).
    The total bond amount will be based on the value of imported 
products over

[[Page 59095]]

a one-year period. If a bond is used to satisfy a judgment, the company 
will then be required to increase the amount of the bond within 90 days 
of the date the bond is used to cover the amount that was used. Also, 
we will require the bond to remain in place for five years after the 
company no longer imports Small SI engines.
    These bonding requirements apply for 2010 and later model year 
engines and are enforceable for all products introduced into U.S. 
commerce starting January 1, 2010.
(d) Bond Requirements Related to Warranty
    Warranty is an additional potential compliance obligation. Engine 
manufacturers must service warranty claims for emission-related defects 
that occur during the prescribed warranty period. We have experience 
with companies that have faced compliance-related problems where it was 
clear that they did not have the resources to make warranty repairs if 
that were necessary. Such companies benefit from certification without 
bearing the full range of associated obligations. We believe it is 
appropriate to add a requirement to post a bond to ensure that a 
company can meet their warranty obligations. The concern for being able 
to meet these obligations applies equally to domestic and foreign 
manufacturers. The biggest indicator of a manufacturer's ability to 
make warranty repairs relates to the presence of repair facilities in 
the United States. We are therefore adopting a bond requirement 
starting with the 2010 model year for all manufacturers (including 
importers) that do not have a repair network in the United States that 
is available for processing warranty repairs (see Sec.  90.1007 and 
Sec.  1054.120). Such a repair network will need to involve at least 
100 authorized repair facilities in the United States, or at least one 
such facility for each 5,000 engines sold in the United States, 
whichever is less. Companies not meeting these criteria will need to 
post a bond as described above for compliance assurance. We will allow 
companies that must post bond to arrange for warranty repairs to be 
done at independent facilities. Note that a single bond payment will be 
required for companies that must post bond for compliance-related 
obligations, as described above, in addition to the bond for warranty-
related obligations.
(e) Restrictions Related to Naming Model Years
    We are adopting the proposed provisions that restrict what model 
years can be assigned to imported products. Importers can only declare 
a model year up to one year before the calendar year of importation in 
cases where new emission standards start to apply. We are adopting this 
requirement for all engine categories subject to part 1068. See the 
detailed discussion of this issue in Section VIII.C.
(f) Import-Specific Information at Certification
    We are requiring additional information to improve our ability to 
oversee compliance related to imported engines (see Sec.  90.107 and 
Sec.  1054.205). In the application for certification, we are requiring 
the following additional information starting with the 2010 model year: 
(1) The port or ports at which the manufacturer has imported engines 
over the previous 12 months, (2) the names and addresses of the agents 
the manufacturer has authorized to import the engines, and (3) the 
location of the test facilities in the United States where the 
manufacturer will test the engines if we select them for testing under 
a selective enforcement audit. See Section 1.3 of the Summary and 
Analysis of Comments for further discussion related to naming test 
facilities in the United States. The current regulations in part 90 do 
not include these specific requirements; however, we do specify already 
that we may select imported engines at a port of entry. In such a case, 
we will generally direct the manufacturer to do testing at a facility 
in the United States. The new provision allows the manufacturers to 
make these arrangements ahead of time rather than relying on EPA's 
selection of a test lab. Also, the current regulations state in Sec.  
90.119 that EPA may conduct testing at any facility to determine 
whether engines meet emission standards.
(g) Counterfeit Emission Labels
    We have observed that some importers attempt to import noncompliant 
products by creating an emission control information label that is an 
imitation of a valid label from another company. We are not requiring 
that certifying manufacturers take steps to prevent this, but we are 
including a provision that specifically allows manufacturers to add 
appropriate features to prevent counterfeit labels. This may include 
the engine's serial number, a hologram, or some other unique 
identifying feature. This provision is effective immediately upon 
completion of the final rule since it is an allowance and not a 
requirement (see Sec.  90.114 and Sec.  1054.135).
(h) Partially Complete Engines
    As described in Section VIII, we are clarifying the engine 
manufacturers' responsibilities for certification with respect to 
partially complete engines. While this is intended to establish a path 
for secondary engine manufacturers to get their engines from the 
original engine manufacturer, we are aware that this will also prevent 
manufacturers from selling partially complete engines as a strategy to 
circumvent certification requirements. If long blocks or engines 
without fuel systems are introduced into U.S. commerce, either the 
original manufacturer or the company completing engine assembly will 
need to hold a certificate for that engine.
(7) Using Certified Small SI Engines in Marine Applications
    Manufacturers have described situations in which Small SI engines 
are used in marine applications. As described in Section III.E.5, we 
are allowing limited numbers of certified Small SI engines to be used 
as marine propulsion engines without certifying to the Marine SI 
emission standards in part 1045 (see Sec.  1045.610).
(8) Alternate Fuels
    The emission standards apply to all spark-ignition engines 
regardless of the fuel they use. Almost all Small SI engines operate on 
gasoline, but these engines may also operate on other fuels, such as 
natural gas, liquefied petroleum gas, ethanol, or methanol. The test 
procedures in 40 CFR part 1065 describe adjustments needed for 
operating test engines with oxygenated fuels.
    In some special cases, a single engine is designed to alternately 
run on different fuels. For example, some engines can switch back and 
forth between natural gas and LPG. We are adding a clarification to the 
regulations to describe how manufacturers would submit certification 
data and divide such engines into engine families. Manufacturers would 
submit test data for each type of fuel. If a manufacturer certifies a 
dual-fuel engine family, but produces engines that run only on one fuel 
where that dedicated-fuel engine is identical to the certified dual-
fuel engine with respect to that fuel, those engines could be included 
in the same family. This is also true for the second fuel. For example, 
if a manufacturer produces an engine that can run on both gasoline and 
LPG, and also produces that engine model in gasoline-only and LPG-only 
versions, without adjusting the calibration or other aspects of each 
respective configuration, those engines

[[Page 59096]]

may all be included in the same engine family. In effect, these engines 
are covered by the original certificate because they are made to 
conform to the description included in the original application for 
certification except that they do not have the full functionality of 
the dual-fuel engines.
    Once an engine is placed into service, someone might want to 
convert it to operate on a different fuel. This would take the engine 
out of its certified configuration, so we are requiring that someone 
performing such a fuel conversion go through a certification process. 
We will allow certification of the complete engine using normal 
certification procedures, or the aftermarket conversion kit could be 
certified using the provisions of 40 CFR part 85, subpart V. This 
contrasts with the existing provisions that allow for fuel conversions 
that can be demonstrated not to increase emission levels above the 
applicable standard. We are applying this requirement starting January 
1, 2010. (See Sec.  90.1003 and Sec.  1054.635.)
(9) Other Provisions
    We are also making a variety of changes in the provisions that make 
up the certification and compliance program. Most of these changes 
serve primarily to align with the regulations we have started to apply 
to other types of engines.
    The new warranty provisions are based on the requirements that 
already apply under 40 CFR part 90. We are adding an administrative 
requirement to describe the provisions of the emission-related warranty 
in the owners manual. We expect that many manufacturers already do this 
but believe it is appropriate to require this as a routine practice. 
(See Sec.  1054.120.)
    Testing new engines requires a period of engine operation to 
stabilize emission levels. The regulations specify two separate figures 
for break-in periods for purposes of certification testing. First, 
engines are generally operated long enough to stabilize emission 
levels. Second, we establish a limit on how much an engine may operate 
and still be considered a ``low-hour'' engine. The results of testing 
with the low-hour engine are compared with a deteriorated value after 
some degree of service accumulation to establish a deterioration 
factor. For Marine SI engines, we are requiring that the engine can be 
presumed to have stabilized emission levels after 12 hours of engine 
operation, with a provision allowing approval for more time if needed, 
and we generally require that low-hour test engines have no more than 
30 hours of engine operation. However, given the shorter useful life 
for many Small SI engines, this will not make for a meaningful process 
for establishing deterioration factors. For example, emission levels in 
Small SI engines may not stabilize before deterioration begins to 
affect emission levels, which will prevent the engine from ever truly 
having stabilized emission levels. Also, the low-hour emission test 
should occur early enough for the deterioration factor to adequately 
represent the deterioration over the engine's lifetime.
    We are requiring that Small SI engines with a useful life above 300 
hours can be presumed stable after 12 hours with low-hour testing 
generally occurring after no more than 24 hours of engine operation. 
For Small SI engines with useful life below 300 hours, we are requiring 
a combination of provisions to address this concern. First, we are 
allowing manufacturers to establish a stabilization period that is less 
than 12 hours without showing that emission levels have fully 
stabilized (see Sec.  1054.501). Second, we are specifying that low-
hour testing must generally occur after no more than 15 hours of engine 
operation (see Sec.  1054.801). This allows some substantial time for 
break-in, stabilization, and running multiple tests, without 
approaching a significant fraction of the useful life. Third, we are 
requiring that manufacturers consistently test low-hour production-line 
engines (and emission-data engines in the case of carryover 
deterioration factors for certification) using the same degree of 
service accumulation to avoid inaccurate application of deterioration 
factors (see Sec.  1054.240 and Sec.  1054.305).
    We are clarifying the maintenance that manufacturers may perform 
during service accumulation as part of the certification process. The 
general approach is to allow any amount of maintenance that is not 
emission-related, but to allow emission-related maintenance only if it 
is a routine practice with in-use engines. In most of our emission 
control programs we specify that 80 percent of in-use engines should 
undergo a particular maintenance step before manufacturers can do that 
maintenance during service accumulation for certification testing. We 
are aware that Small SI engines are predominantly operated by 
homeowners with widely varying practices in servicing their lawn and 
garden equipment. As such, achieving a rate of 80 percent may be 
possible only for the most obvious maintenance steps. We are therefore 
adopting a more accommodating approach for Small SI engines. In 
particular, we are allowing manufacturers to perform a maintenance step 
during certification based on information showing that 60 to 80 percent 
of in-use engines get the specified maintenance at the recommended 
interval. We will approve the use of such maintenance based on the 
relative effect on performance and emissions. For example, we may allow 
scheduled fuel-injector replacement if survey data show this is done at 
the recommended interval for 65 percent of engines and performance 
degradation is shown to be roughly proportional to the degradation in 
emission control for engines that do not have their fuel injectors 
replaced.
    One maintenance step of particular interest is replacement of air 
filters. In larger spark-ignition engines, we do not treat replacement 
of air filters as critical emission-related maintenance, largely 
because those engines have feedback controls to compensate for changes 
in varying pressure drop across the air filter. However, for Small SI 
engines varying air flow through the air filter has a direct effect on 
the engine's air-fuel ratio, which in turn directly affects the 
engine's emission rates for each of the regulated pollutants. Service 
accumulation generally takes place in laboratory conditions with far 
less debris, dust, or other ambient particles that will cause filter 
loading, so filter changes should be unnecessary to address this 
conventional concern. We are concerned that the greater effect is from 
fuel and oil that may deposit on the back side of the filter, 
especially from crankcase ventilation into the intake. This effect will 
go undetected if there are no measurements with filters that have 
experienced significant engine operation. We believe it would be 
appropriate for this rulemaking to allow manufacturers to clean or 
change air filters as long as manufacturers perform emission 
measurements before and after these maintenance steps. It would be best 
to perform testing with each air filter change; however, we would find 
it acceptable if manufacturers tested engines before and after every 
other air filter change. This approach allows for continued air filter 
changes, consistent with our testing to establish the feasibility of 
the Phase 3 emission standards, but properly identifies the effect on 
emissions. We are taking a similar approach for maintenance with spark 
plugs, except that tests must occur before and after each step to clean 
or replace the spark plugs. We will be interested in a future 
rulemaking to set emission standards based on less optimistic 
assumptions regarding the degree of air filter and spark plug 
maintenance with in-use equipment.

[[Page 59097]]

See Section 2.4 of the Summary and Analysis of Comments for a more 
detailed discussion related to maintenance.
    We are defining criteria for establishing engine families that are 
very similar to what is currently specified in 40 CFR part 90. We are 
requiring that engines with turbochargers be in a different family than 
naturally aspirated engines since that will be likely to substantially 
change the engine's emission characteristics. Very few if any Small SI 
engines are turbocharged today so this change will not be disruptive 
for any manufacturer. We are also specifying that engines must have the 
same number and arrangement of cylinders and approximately the same 
total displacement. This will help us avoid the situation where 
manufacturers argue that engines with substantially different engine 
blocks should be in the same engine family. We will implement this 
provision consistent with the approach adopted by California ARB in 
which they limit engine families to include no more than 15 percent 
variation in total engine displacement. Similarly, the current 
regulations in part 90 do not provide a clear way of distinguishing 
engine families by cylinder dimensions (bore and stroke) so we are also 
changing part 90 to limit the variation in displacement within an 
engine family to 15 percent. (See Sec.  1054.230 and Sec.  90.116.)
    The test procedures for Small SI engines are designed for engines 
operating in constant-speed applications. This covers the large 
majority of affected equipment; however, we are aware that engines 
installed in some types of equipment, such as small utility vehicles or 
go carts, are not governed to operate only at a single rated speed. 
These engines will be certified based on their emission control over 
the constant-speed duty cycle even though they do not experience 
constant-speed operation in use. We are not prepared to establish a new 
duty cycle for these engines but we are requiring engine manufacturers 
to explain how their emission control strategy is not a defeat device 
in the application for certification. For example, if engines will 
routinely experience in-use operation that differs from the specified 
duty cycle for certification, the manufacturer should describe how the 
fuel-metering system responds to varying speeds and loads not 
represented by the duty cycle. We are also requiring that engine 
distributors and equipment manufacturers that replace installed 
governors must get a new certificate of conformity for those engines to 
avoid a tampering violation.

F. Small-Business Provisions

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

[[Page 59098]]

companies. EPA believes it can avoid these potential complications and 
still provide relief to nearly all small businesses by continuing to 
use the annual sales criteria for determining which entities qualify as 
a small volume engine manufacturer under the Phase 3 program. For these 
reasons, EPA is retaining the current production-based criteria for 
determining who is a small-volume engine manufacturer and, as a result, 
eligible for the Phase 3 flexibilities described below (see Sec.  
1054.801).
    Based on confidential sales data provided to EPA by engine 
manufacturers, the 10,000 unit cut-off for engine manufacturers will 
include all the small business engine manufacturers currently 
identified using SBA's employee-based definition. To ensure all small 
businesses have access to the flexibilities described below, EPA is 
also allowing engine manufacturers exceeding the production cut-off 
level noted above but having fewer than 1,000 employees to request 
treatment as a small-volume engine manufacturer (see Sec.  1054.635). 
In such a case, the manufacturer will need to provide information to 
EPA demonstrating that the manufacturer has fewer employees than the 
1,000 cut-off level to be approved as a small-volume engine 
manufacturer.
    If a small-volume engine manufacturer grows over time and exceeds 
the production volume limit of 10,000 nonhandheld engines per year, the 
engine manufacturer will no longer be eligible for the small-volume 
flexibilities. However, because some of the flexibilities described 
below provide manufacturers with the ability to avoid certain testing 
such as durability testing or production line testing, it may be 
difficult for a manufacturer to fully comply with all the testing 
requirements immediately upon losing its small-volume status. In such 
cases, the engine manufacturer can contact EPA and request additional 
time, subject to EPA approval, before they would be required to meet 
the testing requirements that generally apply to engine manufacturers.
(a) Assigned Deterioration Factors
    We are allowing small-volume engine manufacturers to rely on an 
assigned deterioration factor to demonstrate compliance with the 
standards for the purposes of certification rather than doing service 
accumulation and additional testing to measure deteriorated emission 
levels at the end of the regulatory useful life (see Sec.  1054.240). 
EPA is not establishing actual levels for the assigned deterioration 
factors with this final rule. EPA intends to analyze emissions 
deterioration information that becomes available over the next few 
years to determine what deterioration factors will be appropriate for 
nonhandheld engines. This is likely to include deterioration data for 
engines certified to comply with California ARB's Tier 3 standards and 
engines certified early to EPA's Phase 3 standards. Prior to the 
implementation date for the Phase 3 standards, EPA will provide 
guidance to engine manufacturers specifying the levels of the assigned 
deterioration factors for small-volume engine manufacturers.
(b) Exemption From Production-Line Testing
    We are exempting small-volume engine manufacturers from the 
production-line testing requirements (see Sec.  1054.301). Therefore, 
small-volume engine manufacturers will not be required to perform 
production-line testing on any of their engine families.
(c) Additional Lead Time
    We are allowing small-volume engine manufacturers to delay 
implementation of the Phase 3 exhaust emission standards for two years 
(see Sec.  1054.145). Small-volume engine manufacturers will be 
required to comply with the Phase 3 exhaust emission standards 
beginning in model year 2014 for Class I engines and model year 2013 
for Class II engines. Under this approach, manufacturers will be able 
to apply this delay to all their nonhandheld engines or to just a 
portion of their production. For those engine families that are 
certified to meet the Phase 3 standards prior to these delayed dates by 
selecting an FEL at or below the Phase 3 standards, small volume engine 
manufacturers can generate early Phase 3 credits (as discussed in 
Section V.C.3) through the 2013 model year for Class I engines and 
through the 2012 model years for Class II engines. This option provides 
more lead time for small-volume engine manufacturers to redesign their 
products. They will also be able to learn from some of the hurdles 
overcome by larger manufacturers.
(d) Broad Engine Families
    We are also allowing small-volume engine manufacturers to use a 
broader definition of engine family for certification purposes. Under 
the existing engine family criteria specified in the regulations, 
manufacturers group their various engine lines into engine families 
that have similar design characteristics including the combustion 
cycle, cooling system, cylinder configuration, number of cylinders, 
engine class, valve location, fuel type, aftertreatment design, and 
useful life category. We are allowing small-volume engine manufacturers 
to group all their Small SI engines into a single engine family for 
certification by engine class and useful life category, subject to good 
engineering judgment (see Sec.  1054.230).
(e) Hardship Provisions
    We are also establishing two types of hardship provisions for 
nonhandheld engine manufacturers consistent with the Panel 
recommendations. As has been our experience with similar provisions 
already adopted, we anticipate that hardship mechanisms will be used 
sparingly. First, under the unusual circumstances hardship provision, 
any manufacturer subject to the new standards may apply for hardship 
relief if circumstances outside their control cause the failure to 
comply and if failure to sell the subject engines or equipment or fuel 
system component would have a major impact on the company's solvency 
(see Sec.  1068.245). An example of an unusual circumstance outside a 
manufacturer's control may be an ``Act of God,'' a fire at the 
manufacturing plant, or the unforeseen shutdown of a supplier with no 
alternative available. The terms and time frame of the relief will 
depend on the specific circumstances of the company and the situation 
involved. As part of its application for hardship, a company will be 
required to provide a compliance plan detailing when and how it will 
achieve compliance with the standards. This hardship provision will be 
available to all manufacturers of engines, equipment, boats, and fuel 
system components subject to the new standards, regardless of business 
size.
    Second, an economic hardship provision allows small businesses 
subject to the new standards to petition EPA for limited additional 
lead time to comply with the standards (see Sec.  1068.250). A small 
business must make the case that it has taken all possible business, 
technical, and economic steps to comply, but the burden of compliance 
costs would have a significant impact on the company's solvency. 
Hardship relief could include requirements for interim emission 
reductions and/or the purchase and use of emission credits. The length 
of the hardship relief decided during review of the hardship 
application will be up to one year, with the potential to extend the 
relief as needed. We anticipate that one to two years will normally be 
sufficient. As part of its application for

[[Page 59099]]

hardship, a company will be required to provide a compliance plan 
detailing when and how it will achieve compliance with the standards. 
This hardship provision will be available only to qualifying small 
businesses.
(3) Burden Reduction Approaches for Small-Volume Nonhandheld Equipment 
Manufacturers
    We are establishing three provisions for small-volume nonhandheld 
equipment manufacturers. The purpose of these provisions is to reduce 
the burden on companies for which fixed costs cannot be distributed 
over large sales volumes. That is useful for small-volume equipment 
manufacturers that may need more lead time to redesign their equipment 
to accommodate the new Phase 3 engine designs.
    Under EPA's current Phase 2 regulations, EPA provided a number of 
lead time provisions for small-volume equipment manufacturers. For the 
Phase 2 regulations, the criteria for determining if a company was a 
``small-volume equipment manufacturer'' was based on whether the 
company produced fewer than 5,000 nonhandheld pieces of equipment per 
year (excluding equipment sold in California that are subject to the 
California ARB standards). For the same reasons noted above for engine 
manufacturers, EPA is retaining the current production-based criteria 
for determining who is a small-volume equipment manufacturer and, as a 
result, eligible for the Phase 3 flexibilities described below (see 
Sec.  1054.801). The determination of which companies qualify as small-
volume equipment manufacturers for the purposes of the flexibilities 
described below will be based on the average annual U.S.-directed 
production of nonhandheld equipment over three years from 2007 through 
2009.
    Based on estimated sales data for equipment manufacturers, EPA 
believes the 5,000 unit cut-off for equipment manufacturers will 
include almost all the small business equipment manufacturers using 
SBA's employee-based definition. However, to ensure all small 
businesses have access to the flexibilities described below, EPA is 
also allowing equipment manufacturers which exceed the production cut-
off level noted above, but comply with SBA's employee-based definition 
(e.g., 500 employees for equipment manufacturers, 750 employees for 
construction equipment manufacturers, and 1,000 employees for generator 
manufacturers), to request treatment as a small-volume equipment 
manufacturer (see Sec.  1054.635). In such a case, the manufacturer 
must provide information to EPA demonstrating that the manufacturer has 
fewer employees than the applicable employee cut-off level to be 
approved as a small-volume equipment manufacturer.
(a) Additional Lead Time
    As described in Section V.E.3., EPA is implementing a transition 
program for all equipment manufacturers that produce Class II 
equipment. Under that program, equipment manufacturers can install 
Phase 2 engines in limited numbers of Class II equipment over the first 
four years the Phase 3 standards apply (i.e., 2011 through 2014). The 
number of equipment that can use Phase 2 engines is based on 30 percent 
of an average annual production level of Class II equipment. However, 
for small-volume equipment manufacturers, EPA is allowing a higher 
level of allowances. Small-volume equipment manufacturers can install 
Phase 2 engines at a level of 200 percent of an average annual 
production level of Class II equipment. Small-volume equipment 
manufacturers can use these allowances over the same four year period 
of the transition program noted above (see Sec.  1054.625). Therefore, 
a small-volume equipment manufacturer could potentially use Phase 2 
engines on all their Class II equipment for two years, consistent with 
the SBAR Panel's recommendation, or they might, for example, sell half 
their Class II equipment with Phase 2 engines for four years assuming 
sales stay constant over time.
(b) Simplified Certification Procedure
    We are establishing a simplified engine certification procedure for 
all equipment manufacturers, including small-volume equipment 
manufacturers (see Sec.  1054.612). See Section V.E.4 for further 
discussion of this provision.
(c) Hardship Provisions
    Because nonhandheld equipment manufacturers in many cases depend on 
engine manufacturers to supply certified engines in time to produce 
complying equipment, we are also establishing a hardship provision for 
all nonhandheld equipment manufacturers, regardless of size. The 
provision will allow an equipment manufacturer to request more time if 
they are unable to obtain a certified engine and they are not at fault 
and will face serious economic hardship without an extension (see Sec.  
1068.255).

G. Technological Feasibility

(1) Level of Standards
    We are promulgating new, more stringent exhaust HC+NOX 
standards for Class I and II Small SI engines. We are also establishing 
a new CO standard for Small SI engines used in marine generator 
applications.
    For the 2008 model year manufacturers have certified nearly 500 
Class I and II engine families to the Phase 2 standards using a variety 
of engine designs and emission control technology. All Class I engines 
were produced using carbureted air-fuel induction systems. A small 
number of engines used catalyst-based emission control technology. 
Similarly, Class II engines were predominantly carbureted. A limited 
number of these engines used catalyst technology, electronic engine 
controls and fuel injection, or were water-cooled. In both classes, 
several engine families were certified at levels that will comply with 
the new Phase 3 standards. Also, several families were very close to 
the new emission standards. This suggests that, even accounting for the 
relative increase in stringency associated with the Phase 3 
requirements, some families either will not need to do anything or will 
require only modest reductions in their emission performance to meet 
the new standards. However, many engine families clearly will have to 
do more to improve their emission controls.
    Based on our own testing of advanced technology for these engines, 
our engineering assessments, and statements from the affected industry, 
we believe the new requirements will require many engine manufacturers 
to adopt exhaust aftertreatment technology using catalyst-based 
systems. Other likely changes include improved engine designs and fuel 
delivery systems. Finally, adding electronic controls or fuel injection 
systems may obviate the need for catalytic aftertreatment for some 
engine families, with the most likely candidates being multi-cylinder 
engine designs.
(2) Implementation Dates
    We are establishing HC+NOX exhaust emission standards of 
10.0 g/kW-hr for Class I engines starting in the 2012 model year and 
8.0 g/kW-hr for Class II engines starting in the 2011 model year. For 
both classes of nonhandheld engines, we are maintaining the existing CO 
standard of 610 g/kW-hr. We expect manufacturers to meet these 
standards by improving engine combustion and adding catalysts on most 
engines.
    For spark-ignition engines used in marine generators, we are 
promulgating a more stringent Phase 3 CO emission

[[Page 59100]]

standard of 5.0 g/kW-hr. This will apply equally to all sizes of 
engines subject to the Class I and II Small SI engine standards, with 
implementation dates as described above relative to Class I and Class 
II engines.
(3) Technological Approaches
    Our feasibility assessment began by evaluating the emissions 
performance of current technology for Small SI engines and equipment. 
These initial efforts focused on developing a baseline for emissions 
and general engine performance so we could assess the potential for new 
emission standards for engines and equipment in this category. This 
process involved laboratory and field evaluations of the current 
engines and equipment. We reviewed engineering information and data on 
existing engine designs and their emissions performance. Patents of 
existing catalyst/muffler designs for Class I engines were also 
reviewed. We engaged engine manufacturers and suppliers of emission 
control-related engine components in discussions regarding recent and 
expected advances in emissions performance beyond that required to 
comply with the current Phase 2 standards. Finally, we purchased 
catalyst/muffler units that were already in mass production by an 
engine manufacturer for use on European walk-behind lawn mowers and 
conducted engineering and chemical analyses on the design and materials 
of those units.
    We used the information and experience gathered in the above 
effort, along with the previous catalyst design experience of our 
engineering staff, to design and build prototype catalyst-based 
emission control systems that were capable of effectively and safely 
achieving the new Phase 3 requirement based on dynamometer and field 
testing. We also used the information and the results of our engine 
testing to assess the potential need for improvements to engine and 
fuel system designs, and the selective use of electronic engine 
controls and fuel injection on some engine types. A great deal of this 
effort was conducted in association with our more exhaustive study 
regarding the efficacy and safety of implementing advanced exhaust 
emission controls on Small SI engines, as well as new evaporative 
requirements for these engines. In other testing, we evaluated advanced 
emission controls on a multi-cylinder Class II engine with electronic 
fuel injection. The results of that study are also discussed in Section 
VII.
    In our test program to assess the feasibility of achieving the 
Phase 3 HC+NOX standard, we evaluated 15 Class I engines of 
varying displacements and valve-train designs. Each of these engines 
was equipped with a catalyst-based control system and all achieved the 
applicable standard at the end of their regulatory useful lives. Our 
work also suggests that manufacturers of Class I engines may need to 
improve the durability of their basic engine designs, ignition systems, 
or fuel metering systems for some engines to comply with the emission 
regulations.
    We tested five single-cylinder, overhead-valve Class II engines 
with prototype catalyst/muffler control systems. Three of the engines 
were carbureted and two were equipped with electronic engine and fuel 
controls. This latter technology improves the management of air-fuel 
mixtures and ignition spark timing. Each of the engines achieved the 
requisite emission limit for HC+NOX (i.e., 8.0 g/kW-hr). 
Based on this work and information from one manufacturer of emission 
controls, we believe either a catalyst-based system or electronic 
engine controls appear sufficient to meet the standard. Recent 
certification data also suggests a number of Class II engines may be 
able to comply with the new standard with engine modifications only. 
Finally, similar to Class I engines, we found that manufacturers of 
Class II engines may also need to improve the durability of their 
ignition systems or fuel metering systems for some engines to comply 
with the emission regulations.
    Multi-cylinder Class II engines are very similar to their single-
cylinder counterparts regarding engine design and combustion 
characteristics. There are no multi-cylinder Class I engines. Based on 
these attributes and our testing of two twin-cylinder engines, we 
conclude that the Phase 3 HC+NOX standard is technically 
feasible.
    Nonetheless, we also found that multi-cylinder engines may present 
a unique concern with the application of catalytic control technology 
under atypical operating conditions. More specifically, the concern 
relates to the potential consequences of combustion misfire or a 
complete lack of combustion in one of the two or more cylinders when a 
single catalyst/muffler design is used. A single muffler is typically 
used in Class II applications. In a single-catalyst system, the 
unburned fuel and air mixture from the malfunctioning cylinder could 
combine with hot exhaust gases from the other, properly operating 
cylinder. This condition can create high temperatures within the 
muffler system as the unburned fuel and air charge from the misfiring 
cylinder combusts within the exhaust system. This could potentially 
destroy the catalyst.
    One solution is simply to have a separate catalyst/muffler for each 
cylinder. Another solution is to employ electronic engine controls to 
monitor ignition and put the engine into ``limp-mode'' until necessary 
repairs are made. For engines using carburetors, this would effectively 
require the addition of electronic controls. For engines employing 
electronic fuel injection that may need to add a small catalyst, it 
will require that the electronic controls incorporate ignition misfire 
detection if they do not already utilize the inherent capabilities 
within the engine management system.
    As described earlier, we also expect some engine families to use 
electronic fuel injection to meet the Phase 3 standard without 
employing catalytic aftertreatment. Engine families that already use 
these fuel metering systems and are reasonably close to complying with 
the new requirement are likely to need only additional calibration 
changes to the engine management system for compliance. In addition, we 
expect that some engine families that currently use carbureted fuel 
systems will convert directly to electronic fuel injection. 
Manufacturers may adopt this strategy to couple achieving the standard 
without a catalyst and realizing other advantages of using fuel 
injection such as easier starting, more stable and reliable engine 
operation, and reduced fuel consumption.
    Our evaluation of electronic fuel injection systems that could be 
used to attain the new standard found that a rather simple, low-cost 
system should be sufficient. We demonstrated this proof of concept as 
part of the engine test program we conducted in anticipation of the 
proposed rule. In that program, we fitted two single-cylinder Class II 
engines with an electronic control unit and fuel system components 
developed for motor-scooters and small-displacement motorcycles for 
Asian markets. The sensors for the system were minimized to include a 
throttle position sensor, air charge temperature sensor, oil 
temperature sensor, manifold absolute pressure sensor, and a crankshaft 
position sensor. This is in contrast to the fuel injection systems 
currently used in some equipment with two-cylinder Class II engine 
applications that employ more sophisticated and expensive automotive-
based components.
    Finally, there are a number of Class II engines that use gaseous 
fuels (i.e., liquefied petroleum gas or natural gas). Based on our 
engineering evaluation of current and likely emission control

[[Page 59101]]

technology for these engines, we conclude that there are no special 
concerns relative to achieving the Phase 3 HC+NOX standard.
    Turning to the Phase 3 CO standard for Class I and II Small SI 
engines used in marine generator applications, these engines have 
several rather unique design considerations that are relevant to 
achieving the new standard. Marine generator engines are designed to 
operate for very long periods. Manufacturers generally design the 
engines to operate at lower loads to accommodate continuous operation. 
Manufacturers also design them to take advantage of the cooling 
available from the water in the lake or river where the boat is 
operating (seawater). By routing seawater through the engine block, or 
using a heat exchanger that transfers heat from the engine coolant to 
the seawater, manufacturers are able to maintain engine temperatures as 
well as or better than automotive engines. Stable temperatures in the 
engine block make a very significant difference in engine operation, 
enabling much less distortion of the cylinders and a much more 
consistent combustion event. These operating characteristics make it 
possible to introduce advanced technology for controlling emissions. 
Manufacturers also use this cooling water in a jacketing system around 
the exhaust in order to minimize surface temperatures and reduce the 
risk of fires on boats.
    The vast majority of gasoline marine generators are produced by two 
engine manufacturers. Recently, these two manufacturers have converted 
their marine generator product lines to new designs which can reduce CO 
emissions by more than 99 percent. These manufacturers stated that this 
action is to reduce the risk of CO poisoning in response to demands 
from boat builders. These low-CO emission designs use closed-loop 
electronic fuel injection and catalytic control. Both of these 
manufacturers have certified low-CO engines capable of complying with 
the new standards. These manufacturers also use electronic controls to 
monitor catalyst function.
(4) Consideration of Regulatory Alternatives
    In developing the final emission standards, we considered what was 
achievable with catalyst technology. Our technology assessment work 
indicated that the new emission standards are feasible in the context 
of provisions for establishing emission standards prescribed in section 
213 of the Clean Air Act. We also considered what could be achieved 
with larger, more efficient catalysts and improved fuel induction 
systems. In particular, Chapter 4 of the Final RIA presents data on 
Class I engines with more active catalysts and on Class II engines with 
closed-loop control fuel injection systems in addition to a catalyst. 
In both cases larger emission reductions were achieved.
    Based on this work we considered HC+NOX standards 
involving a 50 percent reduction for Class I engines and a 65-70 
percent reduction for Class II engines. Chapter 11 of the Final RIA 
evaluates these alternatives, including an assessment of the overall 
technology and costs of meeting more stringent standards. For Class I 
engines a 50 percent reduction standard would require base engine 
changes not necessarily involved with the standards we are finalizing 
and the use of a more active catalyst. For Class II engines this would 
likely require the widespread use of closed-loop fuel injection systems 
rather than carburetors and some other engine upgrades in addition to 
the use of three-way catalysts.
    We believe it is not appropriate at this time to adopt more 
stringent exhaust emission standards for Small SI engines. Our key 
concern is lead time. More stringent standards will require three to 
five years of lead time beyond the 2011 model year start date we are 
allowing for the program contained in this final rule. We believe it 
will be more effective to implement the new Phase 3 standards to 
achieve near-term emission reductions needed to reduce ozone precursor 
emissions and to minimize growth in the Small SI exhaust emissions 
inventory in the post 2010 time frame. More efficient catalysts, engine 
improvements, and closed-loop electronic fuel injection could be the 
basis for more stringent Phase 4 emission standards at some point in 
the future.
(5) Our Conclusions
    We believe the Phase 3 exhaust emission standards for nonhandheld 
Small SI engines will achieve significant emission reductions. 
Manufacturers will likely meet the new standards with a variety of 
strategies including catalysts packaged in mufflers, engine 
modifications, and fuel-injection systems. Test data from readily 
available technologies have demonstrated the feasibility of achieving 
the new emission levels.
    As discussed in Section VII, we believe the new standards will have 
no negative effects on energy, noise, or safety and may lead to some 
positive effects.

VI. Evaporative Emissions

A. Overview

    In this final rule, we are also establishing standards for 
controlling evaporative emissions from fuel systems in marine vessels 
and equipment powered by Small SI engines. These new standards include 
requirements for controlling permeation and diurnal emissions from 
marine vessels and permeation and running loss emissions from Small SI 
equipment.
    Evaporative emissions refer to hydrocarbons released into the 
atmosphere when gasoline or other volatile fuels escape from a fuel 
system. The primary source of evaporative emissions from nonroad 
gasoline engines and equipment is known as permeation, which occurs 
when fuel penetrates the material used in the fuel system and reaches 
the ambient air. This is especially common through rubber and plastic 
fuel-system components such as fuel lines and fuel tanks. Diurnal 
emissions are another important source of evaporative emissions. 
Diurnal emissions occur as the fuel heats up due to increases in 
ambient temperature. As the fuel heats, liquid fuel evaporates into the 
vapor space inside the tank. In a sealed tank, these vapors will 
increase the pressure inside the tank; however, most tanks are vented 
to prevent this pressure buildup. The evaporating fuel therefore drives 
vapors out of the tank into the atmosphere. Running loss emissions are 
similar to diurnal emissions except that vapors escape the fuel tank as 
a result of heating from the engine or some other source of heat during 
operation rather than from normal daily temperature changes.
    Other sources of evaporative emissions include diffusion and 
refueling. Diffusion emissions occur when vapor escapes the fuel tank 
through an opening as a result of random molecular motion, independent 
of changing temperature. Although we are not adopting a specific 
standard for diffusion emissions, we expect that these emissions will 
be controlled through the running loss and diurnal emission controls. 
Refueling losses are vapors that are displaced from the fuel tank to 
the atmosphere when someone fills a fuel tank. Refueling spitback is 
the spattering of liquid fuel droplets coming out of the filler neck 
during a refueling event. Spillage is fuel that is spilled while 
refueling. We are continuing to work with manufacturers to develop 
industry standards for refueling emission control, and we are adopting 
a requirement that manufacturers use fuel system designs

[[Page 59102]]

that will help facilitate a reduction in fuel spillage.

B. Fuel Systems Covered by This Rule

    The new evaporative emission standards will apply to fuel systems 
for both Small SI engines and Marine SI engines. The marine standards 
apply to fuel systems related to both propulsion and auxiliary engines. 
In some cases, specific standards are required only for certain types 
of equipment, as described below. These standards will apply only to 
new products.
    We are incorporating the regulations related to evaporative 
emission standards in 40 CFR part 1060, as described in Section VI.C. 
Also, as described in Section VIII, we are allowing component 
manufacturers and some equipment manufacturers to certify products 
under the provisions of part 1060 with respect to recreational vehicles 
and Large SI engine. We have also adopted requirements for controlling 
evaporative emissions from marine compression-ignition engines that 
operate on volatile liquid fuels (such as methanol or ethanol). Now 
that we are adopting final requirements in part 1060, we are including 
a reference to part 1060 for these marine compression-ignition engines.
    The following definitions are important in establishing which 
components are covered by the new standards: ``evaporative,'' ``fuel 
system,'' ``fuel line,'' ``portable nonroad fuel tank,'' and 
``installed marine fuel tank.'' See the full text of these definitions 
in the final regulations at Sec.  1060.801.
    Note in particular that the new standards will apply to fuel lines, 
including hose or tubing that contains liquid fuel. This includes fuel 
supply lines but not vapor lines or vent lines that are not normally 
exposed to liquid fuel. We consider fuel return lines for handheld 
engines to be vapor lines, not fuel lines. Data in Chapter 5 of the 
Final RIA suggest that permeation rates through vapor lines and vent 
lines are already lower than the new standard; this is due to the low 
vapor concentration in the vapor line. In contrast, permeation rates 
for materials that are consistently exposed to saturated fuel vapor are 
generally considered to be about the same as that for liquid fuel. The 
new standards also do not apply to primer bulbs exposed to liquid fuel 
only for priming, but would apply to primer bulbs that are directly in 
the fuel supply line. This standard will apply to marine filler necks 
that are filled or partially filled with liquid fuel after a refueling 
event where the operator fills the tank as full as possible. In the 
case where the fuel system is designed to prevent liquid fuel from 
standing in the fill neck, the fill neck will be considered a vapor 
line and not subject to the new fuel line permeation standard.
    A special note applies to fuel systems for auxiliary marine 
engines. These engines must meet exhaust emission standards that apply 
to land-based engines. For evaporative emissions, however, it is 
important that the fuel systems for propulsion and auxiliary engines be 
subject to the same standards because these engines typically draw fuel 
from a common fuel tank and share other fuel-system components. We are 
therefore applying the Marine SI evaporative emission standards and 
certification requirements to the fuel systems for both auxiliary and 
propulsion marine engines on marine vessels. We apply a similar 
approach for nonroad engines installed in motor vehicles (such as 
generators used to power motor homes). These engines must meet exhaust 
emission standards for nonroad engines, but the evaporative 
requirements apply under the motor-vehicle program.
    Our evaporative emission standards for automotive applications are 
based on a comprehensive measurement from the whole vehicle. However, 
the evaporative standards in this final rule are generally based on 
individual fuel-system components. For instance, we are promulgating 
permeation standards for fuel lines and fuel tanks rather than for the 
equipment as a whole.\98\ We have taken this approach for several 
reasons. First, most production of Small SI equipment and Marine SI 
vessels is not vertically integrated. In other words, the fuel line 
manufacturer, the engine manufacturer, the fuel tank manufacturer, and 
the equipment manufacturer are typically separate companies. In 
addition, there are several hundred equipment manufacturers and boat 
builders, many of which are small businesses. Testing the systems as a 
whole will place the entire certification burden on the equipment 
manufacturers and boat builders. Specifying emission standards and 
testing for individual components allows for measurements that are 
narrowly focused on the source of emissions and on the technology 
changes for controlling emissions. This correspondingly allows for 
component manufacturers to certify that their products meet applicable 
standards. We believe it is most appropriate for component 
manufacturers to certify their products since they are best positioned 
to apply emission control technologies and demonstrate compliance. 
Equipment manufacturers and boat builders will then be able to purchase 
certified fuel-system components rather than doing all their own 
testing on individual components or whole systems to demonstrate 
compliance with every requirement. In contrast, controlling running 
loss emissions cannot be done on a component basis so we are requiring 
engine or equipment manufacturers to certify that they meet the running 
loss standard. We will otherwise expect most equipment manufacturers to 
simply identify a range of certified components and install the 
components as directed by the component manufacturer to demonstrate 
compliance with the final emission standards.
---------------------------------------------------------------------------

    \98\ An exception to component certification is the design 
standard for controlling running loss emissions.
---------------------------------------------------------------------------

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

[[Page 59103]]

Small SI equipment or Marine SI vessels, meaning the relevant 
evaporative standards for engines and fuel systems used in such 
equipment or vessels.\99\ See Section VI.F for a more detailed 
description of certification responsibilities for all the new 
evaporative standards.
---------------------------------------------------------------------------

    \99\ ``Small SI equipment'' includes all nonroad equipment 
powered by Small SI engines. ``Marine SI vessels'' includes all 
vessels powered by engines that run on volatile liquid fuels. In 
almost all cases these engines are powered by gasoline. Note also 
that volatile liquid fuels include methanol or ethanol, which could 
be used in a compression-ignition engine. While we are aware of no 
such equipment or vessels today, they will be covered by the final 
regulations. In this preamble, we nevertheless refer to all the 
vessels that fall within the scope of the final regulations as 
Marine SI vessels. Throughout this section, we generally refer to 
Small SI equipment and Marine SI vessels as ``equipment,'' 
consistent with the regulatory text.
---------------------------------------------------------------------------

C. Final Evaporative Emission Standards

    We are establishing permeation standards for Small SI equipment and 
Marine SI vessels, covering permeation from fuel tanks and fuel lines. 
We are also adopting diurnal emission standards for Marine SI vessels. 
In addition, we are promulgating a running loss standard for 
nonhandheld Small SI equipment (except wintertime engines), with a 
variety of specified options for manufacturers to demonstrate 
compliance.
    All the new evaporative emission standards apply to new equipment 
over a useful life period in years that matches the useful life of the 
corresponding engine (generally five or ten years). Manufacturers have 
expressed concern that they will not have time to gain five years of 
in-use experience on low-permeation fuel tanks by the effective dates 
of the tank permeation standards. Unlike barrier fuel line, which is 
well established technology, some fuel tanks may use barrier 
technologies that have not been used extensively in other applications. 
An example of this technology will be barrier surface treatments that 
must be properly matched to the fuel tank material. Therefore, we are 
finalizing a shorter useful life of two years for Marine SI and Small 
SI fuel tanks through the 2013 model year to allow manufacturers to 
gain experience in use (see Sec. Sec.  1045.145 and 1054.145).
    Handheld manufacturers have also expressed concerns about the 
durability of fuel lines used on cold-weather products. As noted below, 
we are adopting a separate fuel line requirement for cold-weather 
products. The manufacturers' concerns are similar to those noted in 
Section VI.C.2 below regarding fuel cap gasket/O-ring materials and how 
they may degrade in the field such that they have excessively high 
permeation rates but without leaking liquid fuel. Therefore, we are 
adopting a shorter useful life of two years for fuel lines used on 
cold-weather products through the 2013 model year to allow 
manufacturers to gain experience in use (see Sec.  1054.145). 
Manufacturers have noted that they plan to gather in-use data on the 
permeation levels of cold-weather equipment. While we believe 
manufacturers will be able to design and produce cold-weather products 
that comply with fuel line permeation requirements for five years, we 
will review any industry-generated data on in-use fuel lines. Should 
the data demonstrate concerns with regard to in-use durability, we 
would consider options for addressing those concerns.
    The new requirements for evaporative emissions are described in 40 
CFR part 1060, with some category-specific provisions in 40 CFR parts 
1045 and 1054, which are referred to as the exhaust standard-setting 
parts for each category of engine. The regulations in 40 CFR parts 1045 
and 1054 highlight the standards that apply and provide any specific 
directions in applying the general provisions in part 1060. The 
standards, test procedures, and certification provisions are almost 
completely uniform across our programs so this combined set of 
evaporative-related provisions makes it much easier for companies to 
certify their products if they are not subject to the exhaust emission 
standards.
    The rest of this section summarizes the new standards, additional 
requirements, and implementation dates. Unless otherwise stated, 
implementation dates specified below refer to the model year. Section 
VI.D describes how manufacturers may use emission credits to meet fuel 
tank permeation standards. Section VI.E describes the test procedures 
corresponding to each standard. Section VI.F describes how component 
and equipment manufacturers certify their products and how their 
responsibilities overlap in some cases. Section VI.F also describes the 
simplified process of design-based certification for meeting many of 
the new standards.
(1) Fuel Line Permeation Standards and Dates
    Except as noted below, the new fuel line permeation standard is 15 
g/m\2\/day at 23 [deg]C using a test fuel containing 10 percent ethanol 
and applies to fuel lines intended for use in new Small SI equipment 
and Marine SI vessels (see Sec.  1060.102 and Sec.  1060.515). The form 
of the standard refers to grams of permeation over a 24-hour period 
divided by the inside surface area of the fuel line. This is consistent 
with the standard we adopted for fuel lines in recreational vehicles.
    The move toward low-permeation fuel lines in recreational 
vehicles--and further development work in this area since the first 
proposed rule for marine evaporative emissions--demonstrates that low-
permeation fuel lines are available on the market today for Small SI 
equipment and Marine SI vessels. In addition, many manufacturers are 
already using low-permeation technologies in response to permeation 
standards in California. We are therefore requiring that this standard 
apply beginning January 1, 2009 for Marine SI vessels and for 
nonhandheld Small SI equipment. Manufacturers have expressed concern 
that these early dates may cause them to have to transition to using 
new hose designs before they can use up their existing inventory. Under 
the provisions of Sec.  1060.601(g), manufacturers would be able to use 
up existing inventory under normal business practices, even beyond the 
standard date. However, manufacturers would not be permitted to 
circumvent the standards by stockpiling noncompliant hose prior to the 
implementation of the standards.
    For handheld equipment, we are promulgating a fuel line permeation 
implementation date of 2012, except that small-volume emission families 
as defined in Sec.  1054.801 will have until 2013. Although low-
permeation fuel line technology is available, handheld equipment is not 
currently subject to fuel line permeation requirements in California 
and does not typically use low-permeation fuel lines today. In 
addition, much of the fuel line used on handheld equipment is not 
straight-run fuel line for which low-permeation replacements are 
readily available; thus, more lead time is required.
    Fuel line manufacturers have the primary responsibility to certify 
to the new emission standard. Equipment manufacturers may make 
arrangements to take on the certification responsibility if they find 
that to be to their advantage. If equipment manufacturers notify the 
fuel line manufacturer in writing that they commit to certifying the 
fuel line, then the fuel line manufacturer may ship uncertified and 
unlabeled fuel line to the equipment manufacturer.
    By specifying standards for fuel-system components rather than the 
entire fuel system, we are separately addressing appropriate 
requirements for fuel line fittings that are exposed to liquid fuel but 
are not part of the fuel line. We are requiring that these fuel

[[Page 59104]]

line fittings meet the broad specifications described in Sec.  
1060.101(f), which generally require that fittings and connections be 
designed to prevent leaks. As described in Section VI.E.1, we are 
allowing the fuel line assembly to be tested as a single unit. This 
includes connecting pieces, primer bulbs, and other fuel line 
components as a single item (see Sec.  1060.102). For example, 
manufacturers may certify fuel lines for portable marine fuel tanks as 
assemblies of fuel line, primer bulbs, and self-sealing end 
connections. Finally, we are requiring that detachable fuel lines be 
self-sealing when they are removed from the fuel tank or the engine 
because this will otherwise result in high evaporative emissions (see 
Sec.  1060.101). To the extent that equipment manufacturers and boat 
builders certify their products, they will need to describe how they 
meet the equipment-based requirements in Sec.  1060.101(f) in their 
application for certification (see Sec.  1060.202). If boat builders 
rely on certified components instead of certifying, they will need to 
keep records describing how they meet the equipment-based requirements 
contained in Sec.  1060.101(f) (see Sec.  1060.210).
    Handheld equipment manufacturers have raised concerns that fuel 
lines constructed of available low-permeation materials may not perform 
well in some handheld applications under extreme cold weather 
conditions such as below -30 [deg]C. These products often use injected 
molded fuel lines with complex shapes and designs needed to address the 
unique equipment packaging issues and the high vibration and random 
movement of the fuel lines within the overall equipment when in use. 
Industry has expressed concern and the data in Chapter 5 of the Final 
RIA suggest that durability issues may occur from using certain low-
permeation materials in these applications when the weather is 
extremely cold and that these could lead to unexpected fuel line leaks. 
Cold-weather equipment is limited to the following types of handheld 
equipment: chainsaws, cut-off saws, clearing saws, brush cutters with 
engines at or above 40cc, commercial earth and wood drills, and ice 
augers. This includes earth augers if they are also marketed as ice 
augers.
    As discussed in the Final RIA, rubbers with high acrylonitrile 
(ACN) content are used in some handheld applications. These materials 
have about half the permeation of lower ACN-content rubbers also used 
in handheld applications. To capture the capability of these materials 
to reduce permeation emissions without creating other issues for cold-
weather products, we are adopting a set of declining fuel line 
permeation standards for fuel lines used in cold-weather equipment that 
would phase-in from 2012 to 2016. The standard starts at 290 g/m\2\/day 
in 2012 and declines to 275 g/m\2\/day in 2013, 260 g/m\2\/day in 2014, 
and 245 g/m\2\/day in 2015. The standard for 2016 and later model years 
is 225 g/m\2\/day. The standards would apply to all cold-weather 
products, including small-volume families. Manufacturers would be 
allowed to demonstrate compliance with the 2012 through 2015 standards 
with a fuel line averaging program that is limited to cold-weather fuel 
lines. There would not be any banking or trading of these credits. 
Manufacturers comply with the averaging standard by naming a Family 
Emission Limit for each family of fuel lines; this Family Emission 
Limit serves as the emission standard for the family. Manufacturers may 
not name a Family Emission Limit higher than 400 g/m\2\/day during this 
period. Beginning in the 2016 model year, all fuel lines on cold-
weather equipment must meet the 225 g/m\2\/day standard without 
averaging.
    Outboard engine manufacturers have expressed concern that it will 
be difficult for them to meet final 2009 date for the sections of fuel 
lines that are mounted on their engines under the engine cowl. While 
some sections of straight-run fuel line are used with outboard engines, 
many of the smaller sections between engine mounted fuel-system 
components and connectors are preformed or injection-molded parts. 
Outboard engine manufacturers stated that they will need additional 
time to redesign and perform testing on low-permeation under-cowl fuel 
lines. To address this issue, we are finalizing a phase-in of under-
cowl fuel line permeation standards. For each engine model, we are 
adopting a phase-in, by hose length, of 30 percent in 2010, 60 percent 
in 2011, 90 percent in 2012-2014 and 100 percent in 2015 and later. 
This will allow manufacturers to transition to the use of low-
permeation fuel lines in an orderly fashion. Manufacturers also 
commented that additional lead time is necessary to develop low 
permeation primer bulbs such as those in fuel line assemblies for 
portable marine fuel tanks. To address this development time, we are 
finalizing an implementation date of 2011 for primer bulbs.
(2) Fuel Tank Permeation Standards and Dates
    Except as noted below, we are requiring a fuel tank permeation 
standard of 1.5 g/m\2\/day for tanks intended for use in new Small SI 
equipment and Marine SI vessels based on the permeation rate of 
gasoline containing 10 percent ethanol at a test temperature of 28 
[deg]C (see Sec.  1060.103 and Sec.  1060.520). The emission standard 
is based on the inside surface area of the fuel tank and is consistent 
with that adopted for fuel tanks in recreational vehicles.
    Many Small SI equipment manufacturers are currently using low-
permeation fuel tanks for products certified in California. The 
California tank permeation test procedures use a nominal test 
temperature of 40 [deg]C with California certification gasoline while 
we are requiring testing at 28 [deg]C with gasoline containing 10 
percent ethanol. We are allowing manufacturers the alternative of 
testing their fuel tanks at 40 [deg]C with the EPA test fuel. Because 
permeation increases as a function of temperature, we are establishing 
an alternative standard of 2.5 g/m\2\/day for fuel tanks tested at 40 
[deg]C.
    We consider three distinct classes of marine fuel tanks: (1) 
Portable marine fuel tanks (generally used with small outboard 
engines); (2) personal watercraft (PWC) fuel tanks; and (3) other 
installed marine fuel tanks (generally used with SD/I engines and 
larger outboard engines). The fuel tank permeation standards start in 
2011 for all Small SI equipment using Class II engines and for personal 
watercraft and portable marine fuel tanks. For Small SI equipment using 
Class I engines and for other installed marine fuel tanks (including 
engine-mounted tanks), we are applying the same standard starting in 
2012. Most of the marine fuel tanks with the later standards are 
produced in low volumes using rotation-molded cross-link polyethylene 
or fiberglass construction, both of which generally present a greater 
design challenge. We believe the additional lead time is necessary for 
these fuel tanks to allow for a smooth transition to low-permeation 
designs. For Small SI equipment, these dates also align with the 
schedule for introducing the Phase 3 exhaust emission standards.
    For handheld equipment, we are adopting a phased-in implementation 
of the fuel tank permeation standards. Manufacturers will be required 
to meet the new fuel tank permeation standards in 2009 for products 
that they already certify in California (see Sec.  90.129). The 
remaining equipment, except for structurally integrated nylon fuel 
tanks and small-volume families, will be subject to the new tank 
permeation standards in 2010 (see Sec.  1054.110). Structurally 
integrated nylon fuel tanks will be subject to the new standards in

[[Page 59105]]

2011 and small-volume families will have to meet the new tank 
permeation standards beginning in 2013. Manufacturers will need to 
start using EPA-specified procedures starting in 2010, except that 
equipment certified using carryover data will be allowed to use data 
collected using procedures specified for compliance in California for 
model years 2010 and 2011 (see Sec.  1054.145).
    Fuel tank manufacturers have the primary responsibility to certify 
to the new emission standard. Equipment manufacturers may make 
arrangements to take on the certification responsibility if they find 
that to be to their advantage. If equipment manufacturers notify the 
fuel tank manufacturer in writing that they commit to certifying the 
fuel tank, then the fuel tank manufacturer may ship uncertified and 
unlabeled fuel tanks to the equipment manufacturer. Equipment 
manufacturers must certify that their fuel tanks meet the new emission 
standards if they comply using emission credits (whether the fuel tank 
manufacturer certifies or not), as described in Section VI.F. We are 
requiring that manufacturers of portable marine fuel tanks certify that 
their products meet the new permeation standard. This is necessary 
because portable fuel tanks are not sold to boat builders for 
installation in a vessel. Therefore, there is no other manufacturer who 
could be treated as the manufacturer responsible for meeting emission 
standards that apply to portable marine fuel tanks.
    For the purpose of the new fuel tank permeation standards, a fuel 
cap directly mounted on the fuel tank is considered to be part of the 
fuel tank. The fuel cap would then be included in the tank permeation 
standard and test. The cap may optionally be tested separately from the 
tank and the results combined to determine the total tank permeation 
rate (see Sec.  1060.521). Cap manufacturers could also test their caps 
and certify them separately to the 1.5 g/m\2\/day permeation standard. 
Alternatively, manufacturers may use a default cap permeation rate as 
described in Section IV.F.8.
    As discussed above, manufacturers have expressed concerns with the 
long-term durability of known low-permeation elastomers in cold-weather 
applications. At the same time, manufacturers have commented that 
existing fuel cap gasket/O-ring materials may degrade in the field 
within a one-year period (depending on the weather and the fuel 
characteristics) such that they have excessively high permeation rates, 
but without leaking liquid fuel. To address this issue, we are allowing 
manufacturers to treat fuel cap seals on cold-weather equipment as an 
annual maintenance item. In the case of an in-use evaluation with cold-
weather equipment where the manufacturer specified this scheduled 
maintenance at certification, any elastomeric fuel cap seal more than 
one year old would be replaced prior to preconditioning the tank for 
permeation testing. At the same time, it is not certain that low-
permeation materials will deteriorate when used for fuel cap seals in 
cold-weather equipment. We intend to perform testing on fuel cap seals 
to determine the appropriateness of allowing manufacturers to specify 
scheduled maintenance to address these concerns. In the event that 
durable materials are identified, we may remove the provision allowing 
for this scheduled maintenance for purposes of compliance with fuel 
tank permeation standards.
(3) Diurnal Emission Standards and Dates
    We are promulgating diurnal emission standards for gasoline fuel 
tanks intended for use in new Marine SI vessels (see Sec.  1045.107). 
We consider three distinct classes of marine fuel tanks: (1) Portable 
marine fuel tanks (used with small outboards); (2) personal watercraft 
(PWC) fuel tanks; and (3) other installed fuel tanks (including engine-
mounted fuel tanks). We believe the new requirements will achieve at 
least a 50 percent reduction in diurnal emissions from PWC and other 
installed marine fuel tanks and nearly a 100 percent reduction from 
portable marine fuel tanks.
    For portable fuel tanks, we are adopting a design requirement that 
the tank remain sealed up to a pressure of 5.0 psi, starting on January 
1, 2010 (see Sec.  1060.105). We are also requiring that portable fuel 
tanks continue to be self-sealing when disconnected from an engine. We 
are requiring manufacturers of portable marine fuel tanks to certify 
that they meet the new diurnal emission standards. As described above 
for permeation standards, this certification responsibility may not be 
delegated to boat builders.
    For installed fuel tanks, we are adopting a general diurnal 
emission standard of 0.40 g/gal/day based on a 25.6-32.2 [deg]C 
temperature profile. The applicable test procedures are described in 
Section VI.E.3. Manufacturers have expressed concerns that some very 
large boats stay in the water throughout the boating season and 
therefore will see a much smaller daily swing in fuel temperatures, 
which corresponds with a smaller degree of diurnal emissions. We are 
addressing this concern with an alternative standard and test procedure 
that will apply only for nontrailerable boats. Using available 
measurements related to fuel temperatures and emission models to relate 
temperatures to projected diurnal emission levels, we are adopting an 
alternative standard of 0.16 g/gal/day based on a 27.6-30.2 [deg]C 
temperature profile for fuel tanks installed in nontrailerable boats. 
For the purposes of this rule, we are defining a nontrailerable boat as 
one that is 26.0 feet or more in length, or more than 8.5 feet in 
width. The length specification is consistent with the U.S. Fish and 
Wildlife Service definition for ``nontrailerable recreational vessels'' 
in 50 CFR 86.12. The width specification is consistent with the width 
limitation specified in 49 CFR 658.15 by the Federal Motor Carrier 
Safety Administration for vehicles operating on the National Network.
    Manufacturers will likely control diurnal emissions from installed 
marine fuel tanks either by sealing the fuel system up to 1.0 psi or by 
using a carbon canister in the vent line. As discussed below, we 
believe PWC manufacturers will likely seal the fuel tank with a 
pressure-relief valve while manufacturers of other boats with installed 
fuel tanks are more likely to use carbon canisters. However, either 
technology will be acceptable for either kind of installed marine fuel 
tank as long as every system meets the numerical standard applicable to 
the specific tank.
    Personal watercraft currently use sealed fuel systems for 
preventing fuel from exiting, or water from entering, the fuel tank 
during typical operation. These vessels use pressure-relief valves for 
preventing excessive positive pressure in the fuel system; the pressure 
to trigger the valve may range from 0.5 to 4.0 psi. Such fuel systems 
also use a low-pressure vacuum-relief valve to allow the engine to draw 
fuel from the tank during operation without creating negative pressures 
in the tank. For personal watercraft, we are implementing the diurnal 
emission standards beginning with the 2010 model year.
    Other vessels with installed fuel tanks typically are designed with 
open vent systems. In their comments, boat builders expressed general 
support of the feasibility of using carbon canisters on boats. In 
addition, the marine industry has expressed an interest in developing 
consensus standards for the installation of carbon canisters in boats. 
However, they commented that the development of these installation 
standards will take time and that a

[[Page 59106]]

phase-in would be needed for an orderly transition to installing 
diurnal emission controls in their boat models. Therefore, we are 
giving additional lead time beyond what we specified in the proposal. 
For fuel tanks installed on a marine engine (such as under-cowl fuel 
tanks on outboard engines), the diurnal emission standard will apply 
beginning on July 31, 2011. For other installed fuel tanks we are 
adopting a phase-in that begins July 31, 2011. In the period from July 
31, 2011 through July 31, 2012, 50 percent of the boats produced by 
each company must meet the diurnal standard described above. Beginning 
August 1, 2012, all marine fuel tanks and boats must meet the diurnal 
emission standard.\100\
---------------------------------------------------------------------------

    \100\ In this context, the date of production means the date on 
which the fuel tank is installed in the vessel. In the case of boats 
using outboard engines, it is the date that the fuel tank is 
installed on the vessel.
---------------------------------------------------------------------------

    In addition, the industry expressed concern that there are many 
small boat builders that may need additional time to become familiar 
with installation of carbon canisters in their boats. To address this, 
we will allow small boat builders to make a limited number of boats 
without diurnal emission controls from July 31, 2011 until July 31, 
2013. These allowances would be an alternative to the 50 percent phase-
in concept described above. See Section VI.G.2.f for further 
information about the allowances for small boat builders.
    If a manufacturer uses a canister-based system to comply with the 
standard, we are also requiring that manufacturers design their systems 
not to allow liquid gasoline to reach the canister during refueling or 
from fuel sloshing or volume expansion (see Sec.  1060.105). Exposing 
carbon to liquid gasoline will significantly degrade its ability to 
capture and release hydrocarbon vapors. Currently, industry consensus 
standards in ABYC H-24 to some extent address spillage during refueling 
and due to fuel expansion.\101\ However, under these guidelines, the 
refueling ``blow back'' test is only for a partial fill and does not 
necessarily prevent fuel from spilling out the vent line (where a 
canister would likely be installed) during refueling. In addition, 
although ABYC recommends that a fuel system be designed to contain 5 
percent fuel expansion, the actual requirement can be met by the 
manufacturer by simply lowering the fuel tank capacity rating without 
designing the fuel system to prevent overfilling. A system that meets 
the current ABYC requirements in this manner would not adequately 
demonstrate that liquid fuel will not reach the carbon canister. 
However, ABYC commented that it intends to revisit its standards to 
include proper canister installation instructions and an improved fuel 
spillage performance test. One example of an approach to protect the 
canister from exposure to liquid gasoline is a design in which the 
canister is mounted higher than the fuel level and a small orifice or a 
float valve is installed in the vent line to stop the flow of liquid 
gasoline to the canister.
---------------------------------------------------------------------------

    \101\ American Boat and Yacht Council, ``Standards and Technical 
Information Reports for Small Craft; H-24 Gasoline Fuel Systems,'' 
July, 2007.
---------------------------------------------------------------------------

    Fuel tank manufacturers have the primary responsibility to certify 
to the new diurnal emission standard. Equipment manufacturers, canister 
manufacturers, or system integrators may alternatively make 
arrangements to take on the certification responsibility. If another 
party notifies the fuel tank manufacturer in writing that it commits to 
certifying the product, then the fuel tank manufacturer may ship 
uncertified and unlabeled fuel tanks. We are requiring that 
manufacturers of portable marine fuel tanks certify that their products 
meet the new permeation standard. This is necessary because portable 
fuel tanks are not sold to boat builders for installation in a vessel. 
Therefore, there is no other manufacturer who could be treated as the 
manufacturer responsible for meeting emission standards that apply to 
portable marine fuel tanks.
    We are requiring that manufacturers meet certain specifications 
with their fuel tank caps, including requirements to tether the cap to 
the equipment and to design the cap to provide visual, audible, or 
other physical feedback when the vapor seal is established.
    Any increase in fuel temperature resulting from engine operation 
will cause a potential for fuel tank vapor emissions that are generated 
in a manner similar to fuel tank diurnal emissions. We are therefore 
not allowing manufacturers to disable their approaches for controlling 
diurnal emissions during engine operation (see Sec.  1060.105). This 
will ensure that any running loss emissions that would otherwise occur 
will be controlled to a comparable degree as diurnal emissions.
    Although we are not finalizing diurnal emission standards for Small 
SI equipment, we are allowing manufacturers the option of using the 
SHED-based procedures and standards adopted by California ARB for 
nonhandheld Small SI equipment. We proposed to adopt this provision 
only on an interim basis to allow for a transition to EPA's standards; 
however, as recommended by commenters, we are adopting this as a 
permanent provision. Under this approach, the evaporative emission test 
would be for the whole equipment rather than the individual components. 
The SHED-based approach might allow manufacturers to use fuel tanks or 
fuel lines with emission levels above the component standards, but we 
believe the overall emission control (including control of diurnal 
emissions) from SHED-certified systems will be at least as great as we 
would achieve from requiring manufacturers to comply with the separate 
permeation standards. We are therefore incorporating the California ARB 
SHED procedure by reference and allow for certification using those 
procedures.
(4) Diffusion Standards and Dates
    Diffusion emissions occur when vapor escapes the fuel tank through 
an opening as a result of random molecular motion, independent of 
changing temperature. Diffusion emissions can be easily controlled by 
venting fuel tanks in a way that forces fuel vapors to go through a 
long, narrow path to escape.
    We did not propose diffusion standards for handheld equipment or 
for marine vessels. Handheld equipment use fuel caps that are either 
sealed or have tortuous venting pathways to prevent fuel from spilling 
during operation. We believe these fuel cap designs limit diffusion 
emissions sufficiently so that we do not need to establish a separate 
diffusion standard. For marine vessels, we believe the diurnal emission 
standard will lead manufacturers to adopt technologies that 
automatically limit diffusion losses, so they will also control 
diffusion emissions without a separate standard.
    We are not finalizing the proposed diffusion standards for 
nonhandheld Small SI equipment. As described below, one of the design 
options specified in the proposal for controlling running loss 
emissions was an open vent system with limits on fuel temperature 
increases during operation. That approach would be effective for 
limiting running losses, but diffusion emissions could occur through 
the open vent. However, we believe all the remaining design options for 
controlling running loss emissions will effectively control diffusion 
emissions because there will be no direct path for vapor to escape 
through diffusion. A separate diffusion standard would therefore be 
redundant.
(5) Running Loss Emission Standards and Dates
    We are establishing standards to control running loss emissions 
from nonhandheld Small SI equipment beginning in the same year as the 
Phase

[[Page 59107]]

3 exhaust emission standards--2012 for Class I engines and 2011 for 
Class II engines (see Sec.  1060.104). Equipment manufacturers will 
need to certify that their equipment models meet the new running loss 
requirements since component certification is not practical.
    We have measured fuel temperatures and found that some types of 
equipment experience significant fuel heating during engine operation. 
This was especially true for fuel tanks mounted on or near the engine. 
This occurs in many types of Small SI equipment.
    It is very difficult to define a measurement procedure to 
consistently and accurately quantify running losses. Also, a 
performance standard with such a procedure introduces a challenging 
testing requirement for hundreds of small-volume equipment 
manufacturers. Moreover, we believe there are several different design 
approaches that will reliably and effectively control running losses. 
We are therefore not controlling running losses using the conventional 
approach of establishing a procedure to measure running losses and 
adopting a corresponding emission standard. Manufacturers can choose 
from one of the following approaches to demonstrate control of running 
loss emissions:
     Vent running loss fuel vapors from the fuel tank to the 
engine's intake manifold in a way that burns the fuel vapors in the 
engine instead of venting them to the atmosphere. The use of an 
actively purged carbon canister would qualify under this approach.
     Use a sealed fuel tank. A fuel bladder could be used to 
minimize fuel vapor volume in a sealed fuel tank without increasing 
tank pressure.
     Use a system with an approved executive order from the 
California Air Resources Board. This might involve a design in which a 
fuel cap is fitted with a small carbon canister and mounted on a tank 
that is not exposed to excessive engine heat.
    In the NPRM, we proposed another running loss design option whereby 
manufacturers could demonstrate, through testing, that the fuel 
temperature in the tank does not increase by more than 8 [deg]C during 
normal operation. Manufacturers commented that the temperature testing 
associated with this design option was too complex, the temperature 
limit was too low, and the associated diffusion requirements were 
infeasible. In later conversations, industry stated that these 
objections were significant enough that they were confident they would 
never use the temperature design option; we are therefore removing this 
approach from the final rule.
    We believe any of the above approaches will ensure that 
manufacturers will be substantially controlling running losses, either 
by preventing the vapors from escaping the fuel tank or by directing 
the flow of running loss vapors to prevent them from escaping to the 
atmosphere. While none of these approaches are expected to require 
extensive design changes or lead time, any manufacturer choosing the 
option to vent running loss fuel vapors into the engine's intake 
manifold will need to make this change in coordination with the overall 
engine design. As a result, we believe it is appropriate to align the 
timing of the running loss standards with the introduction of the Phase 
3 standards.
    We are not applying the running loss requirements to handheld Small 
SI engines. We believe running loss emission standards should not apply 
to handheld engines at this time because the likely approach for 
controlling running losses could affect the manufacturers' ability to 
meet the current exhaust emission standards. As described above, we are 
not changing the exhaust emission standards for handheld engines in 
this rulemaking. In addition, there are some technical challenges that 
will require further investigation. For example, the compact nature of 
the equipment makes it harder to isolate the fuel tank from the engine 
and the multi-positional nature of the operation may prevent a reliable 
means of venting fuel vapors into the intake manifold while the engine 
is running.
    We are also not applying the running loss requirements to Marine SI 
engines. Installed marine fuel tanks are generally not mounted near the 
engine or other heat sources so running losses should be very low. A 
possible exception to this is for personal watercraft or other small 
boats where the fuel tank may be closer to the engine. However, under 
the new standard for controlling diurnal emissions, we expect that PWC 
manufacturers will design their fuel tanks to stay pressurized up to 1 
psi. This will also help to control running loss emissions. For other 
applications, the use of a carbon canister for controlling diurnal 
emissions will also limit the potential for running loss vapors to 
escape to the atmosphere.
(6) Requirements Related to Refueling
    Refueling spitback and spillage emissions represent a substantial 
additional amount of fuel evaporation that contributes to overall 
emissions from equipment with gasoline-fueled engines. We are not 
adopting measurement procedures with corresponding emission standards 
to address these emission sources. However, we believe equipment 
manufacturers can take significant steps to address these refueling 
issues by designing their equipment based on sound practices. For 
example, designing a marine filler neck with a horizontal segment near 
the fuel inlet will almost inevitably lead to high levels of spillage 
since fuel flow will often reach the nozzle, leading to substantial 
fuel flow out of the fuel system. Maintaining a vertically angled 
orientation of the filler neck will allow the fuel to flow back into 
the filler neck and into the tank after the nozzle shuts off. Designing 
fuel systems for automatic shutoff would also prevent this.
    For Small SI equipment, designing fuel inlets that are readily 
accessible and large enough to see the rising fuel level (either 
through the tank wall or the fuel inlet) will substantially reduce 
accidental spillage during refueling. We are therefore requiring that 
equipment manufacturers design and build their equipment such that 
operators could reasonably be expected to fill the fuel tank without 
spitback or spillage during the refueling event (see Sec.  1060.101). 
This new requirement mirrors the following requirement recently adopted 
with respect to portable fuel containers (72 FR 8428, February 26, 
2007):
    You are required to design your portable fuel containers to 
minimize spillage during refueling to the extent practical. This 
requires that you use good engineering judgment to avoid designs 
that will make it difficult to refuel typical vehicle and equipment 
designs without spillage. (40 CFR 59.611(c)(3))
    While the final requirement is not as objective and quantifiable as 
the other standards and requirements we are adopting, we believe this 
is important, both to set a requirement for manufacturers in designing 
their products and to give EPA the ability to require manufacturers to 
select designs that are consistent with good engineering practice 
regarding effective refueling strategies. To the extent that equipment 
manufacturers and boat builders certify their products to emission 
standards, they will need to describe how they meet this refueling-
related requirement in their application for certification (see Sec.  
1060.202). If boat builders rely on certified components instead of 
applying for certification, they will need to keep records describing 
how they meet this refueling-related requirement (see Sec.  1060.210); 
Section VI.F describes how such companies can meet certification 
requirements without applying for a certificate.
    Spitback and spillage are a particular concern for gasoline-fueled 
boats.

[[Page 59108]]

Marine operators have reported that relatively large quantities of 
gasoline are released into the marina environment during refueling 
events. The American Boat and Yacht Council (ABYC) has a procedure in 
place to define a standard practice to address refueling. However, this 
procedure calls for testing by refueling up to a 75 percent fill level 
at a nominal flow rate of 5 gallons per minute. This procedure is not 
consistent with prevailing practices and is clearly not effective in 
preventing spills. We believe the most effective means of addressing 
this problem is for ABYC to revise their test procedure to reflect 
current practices and adopt a standard that would establish appropriate 
designs for preventing refueling emissions. ABYC and several boat 
builders announced after the proposal that they have initiated a 
process to work toward this outcome. The estimated time frame is to 
have the information and product testing in place to be able to 
implement these industry standards by 2012.
    A variety of technological solutions are available to address 
spitback and spillage from marine vessels. The simplest will be a 
system similar to that used on cars. A small-diameter tube could run 
along the filler neck from the top of the tank to a point near the top 
of the filler neck. Once liquid fuel reaches the opening of the filler 
neck and the extra tube, the fuel goes faster up the small-diameter 
tube and triggers automatic shutoff before the fuel climbs up the 
filler neck. This design depends on operators using the equipment 
properly and may not be fully effective, for example, with long filler 
necks and low refueling rates. An alternative design involves a snug 
fit between the nozzle's spout and the filler neck, which allows for a 
tube to run from a point inside the tank (at any predetermined level) 
directly to the shutoff venturi on the spout. The pressure change from 
the liquid fuel in the tank reaching the tube's opening triggers 
automatic shutoff of the nozzle. This system prevents overflowing fuel 
without depending on the user. These are two of several possible 
configurations to address fuel spillage from marine vessels.
    It is very likely that any effective design for preventing 
refueling losses would depend on a standardized nozzle geometry for 
interfacing with the filler neck. Although they have indicated that 
they are working to address refueling spillage, ABYC does not have the 
capability to regulate nozzle geometries. Therefore, as described in 
the proposal, we will require marina operators to transition to 
standardized nozzles. We are specifying that marine nozzles must have 
(1) a nominal spout diameter of 0.824 inches, (2) nominal placement of 
an aspirator hole 0.67 inches from the terminal end of the spout, (3) a 
straight segment for at least 2.5 inches at the end of the spout, and 
(4) a spring (if used) that terminates at least 3.0 inches from the end 
of the spout. These specifications are consistent with the products 
currently used for refueling motor vehicles. We therefore expect no 
incompatibilities for vessels that may get fuel at a marina or at a 
roadside refueling station. These nozzles will also cost no more than 
other nozzles that would have been available without this regulation. 
Rather than specifying a date certain by which marinas would need to 
convert their nozzles, we believe it is appropriate simply to specify 
that marinas start using compliant nozzles for any new construction or 
new replacement nozzles. We expect this to result in widespread use of 
standardized nozzles by 2012, when ABYC expects to have their refueling 
procedures and specifications in place. To the extent that boat 
builders start implementing refueling controls, we would expect market 
forces to accelerate the turnover to standardized nozzles. Depending on 
the designs selected for preventing refueling losses from vessels, we 
may need to also consider a maximum flow rate for marine refueling 
events. We understand that such a limit would need to be higher than 10 
gallons per minute (the current requirement for motor vehicles), but a 
higher limit may be necessary to ensure that refueling controls work 
properly. We will continue to work with manufacturers to be aware of 
the need for any further standardization in fuel supply to enable their 
designs for controlling emissions.
(7) Summary Table of Final Evaporative Emission Standards
    Table VI-1 summarizes the new standards and implementation dates 
discussed above for evaporative emissions from Small SI equipment and 
Marine SI vessels. Where a standard does not apply to a given class of 
equipment, ``NA'' is used in the table to indicate ``not applicable.''

                    Table VI-1--Final Evaporative Emission Standards and Implementation Dates
----------------------------------------------------------------------------------------------------------------
                                       Fuel line
        Standard/category             permeation        Tank permeation         Diurnal          Running loss
----------------------------------------------------------------------------------------------------------------
Standard level..................  15 g/m\2\/day.....  1.5 g/m\2\/day....  0.40 g/gal/day....  Design standard.
Handheld........................  Model year 2012 a   Model year 2009-    NA................  NA.
                                   b.                  2013 c.
Class I.........................  January 1, 2009...  Model year 2012...  NA................  Model year 2012.
Class II........................  January 1, 2009...  Model year 2011...  NA................  Model year 2011.
Portable tanks..................  January 1, 2009 d.  January 1, 2011...  January 1, 2010 e.  NA.
Personal watercraft.............  January 1, 2009...  Model year 2011...  Model year 2010...  NA.
Other vessels with installed      January 1, 2009 d.  Model year 2012...  July 31, 2011 f g.  NA.
 tanks.
----------------------------------------------------------------------------------------------------------------
a 2013 for small-volume families not used in cold-weather equipment.
b A separate set of declining fuel line permeation standards applies for cold-weather equipment from 2012
  through 2016.
c 2009 for families certified in California, 2013 for small-volume families, 2011 for structurally integrated
  nylon fuel tanks, and 2010 for remaining families.
d January 1, 2011 for primer bulbs. Phase-in for under-cowl fuel lines on outboard engines, by length: 30% in
  2010, 60% in 2011, 90% in 2012-2014, 100% in 2015.
e Design standard.
f Fuel tanks installed in nontrailerable boats ([gteqt] 26 ft. in length or > 8.5 ft. in width) may meet a
  standard of 0.16 g/gal/day over an alternative test cycle.
g See Sec.   1045.625 for allowances to delay implementation of the diurnal standard for a limited number of
  vessels over the first two years.

D. Emission Credit Programs

    A common feature of emission control programs for motor vehicles 
and nonroad engines and equipment is an emission credit program that 
allows manufacturers to generate emission credits based on certified 
emission levels for engine families that are more stringent than the 
standard. See Section VII.C.5 of the preamble to the proposed rule for 
background information and

[[Page 59109]]

general provisions related to emission credit programs.
    We believe it is appropriate to consider compliance based on 
emission credits relative to fuel tank permeation standards. As 
described above, the emission standards apply to the fuel tanks 
directly, such that we generally expect component manufacturers to 
certify their products. However, we believe it is best to avoid placing 
the responsibility for demonstrating a proper emission credit balance 
on component manufacturers for three main reasons. First, it is in many 
cases not clear whether these components will be produced for one type 
of application or another. Component manufacturers might therefore be 
selling similar products into different applications that are subject 
to different standards--or no standards at all. Component manufacturers 
may or may not know in which application their products will be used. 
Second, there will be situations in which equipment manufacturers and 
boat builders take on the responsibility for certifying components. 
This may be the result of an arrangement with the component 
manufacturer, or equipment manufacturers and boat builders might build 
their own fuel tanks. We believe it will be much more difficult to 
manage an emission credit program in which manufacturers at different 
places in the manufacturing chain will be keeping credit balances. 
There will also be a significant risk of double-counting of emission 
credits. Third, most component manufacturers will be in a position to 
use credits or generate credits, but not both. Equipment manufacturers 
and boat builders are more likely to be in a position where they can 
keep an internal balance of generating and using credits to meet 
applicable requirements. Our experience with other programs leads us to 
believe that an emission credit program that depends on trading is not 
likely to be successful.
    We are therefore promulgating emission credit provisions in which 
equipment manufacturers and boat builders keep a balance of credits for 
their product line. Equipment manufacturers and boat builders choosing 
to comply based on emission credits will need to certify all their 
products that either generate or use emission credits. Fuel tank 
manufacturers will be able to produce their fuel tanks with emission 
levels above or below applicable emission standards but will not be 
able to generate emission credits and will not need to maintain an 
accounting to demonstrate a balance of emission credits. Small SI 
engine manufacturers that provide a complete fuel system may also 
participate in the fuel tank credit program.
(1) Averaging, Banking, and Trading for Small SI Equipment and Marine 
SI Vessels
    We are establishing averaging, banking, and trading (ABT) 
provisions for fuel tank permeation from Small SI equipment and Marine 
SI vessels (see subpart H in parts 1045 and 1054).
    We are aware of certain control technologies that will allow 
manufacturers to produce fuel tanks that reduce emissions more 
effectively than we are requiring. These technologies may not be 
feasible or practical in all applications, but we are allowing 
equipment manufacturers using such low-emission technologies to 
generate emission credits. In other cases, an equipment manufacturer 
may want, or need, to use emission credits that will allow for fuel 
tanks with permeation rates above the applicable standards. Equipment 
manufacturers can quantify positive or negative emission credits by 
using the Family Emission Limit (FEL) to define the applicable emission 
level, then factoring in internal surface area, sales volumes, and 
useful life to calculate a credit total. This FEL would be established 
by the tank certifier (generally the fuel tank manufacturer) and would 
be based on permeation testing done either by the component 
manufacturer or the equipment or vessel manufacturer. Through 
averaging, these emission credits could be used by the same equipment 
or vessel manufacturer to offset other fuel tanks in the same model 
year that do not have control technologies that control emissions to 
the level of the standard. Through banking, such an equipment 
manufacturer could use the emission credits in later model years to 
offset high-emitting fuel tanks. The emission credits could also be 
traded to another equipment manufacturer to offset that company's high-
emitting fuel tanks.
    We believe an ABT program is potentially very advantageous for fuel 
tanks because of the wide variety of tank designs. The geometry, 
materials, production volumes, and market dynamics for some fuel tanks 
are well suited to applying emission controls, but other fuel tanks 
pose a bigger challenge. The new emission credit program allows us to 
set a single standard that applies broadly without dictating that all 
fuel tanks be converted to low-permeation technology at the same time.
    Emission credits earned under the evaporative emission ABT program 
will have an indefinite credit life with no discounting. We consider 
these emission credits to be part of the overall program for complying 
with the new standards. Given that we may consider further reductions 
beyond these standards in the future, we believe it will be important 
to assess the evaporative ABT credit situation that exists at the time 
any further standards are considered. We will set such future emission 
standards based on the statutory direction that emission standards must 
represent the greatest degree of emission reduction achievable, 
considering cost, safety, lead time, and other factors. Emission credit 
balances will be part of the analysis for determining the appropriate 
level and timing of new standards. If we were to allow the use of 
credits generated under the standards adopted in this rule for 
complying with more stringent future standards, we may need to adopt 
emission standards at more stringent levels or with an earlier start 
date than we would absent the continued use of existing emission 
credits, depending on the level of emission credit banks. 
Alternatively, we could adopt future standards without allowing the use 
of existing emission credits, or we could place limits on the amount of 
credits a manufacturer could use.
    We are not allowing manufacturers to generate emission credits by 
using metal fuel tanks. These tanks will have permeation rates well 
below the standard, but there is extensive use of metal tanks today, so 
it would be difficult to allow these emission credits without 
undercutting the stringency of the standard and the expected emission 
reductions from the standard.
    Within an ABT program, manufacturers are allowed to use credits 
only within a defined averaging set. For the evaporative emission ABT 
program, we are not allowing the exchange of emission credits between 
Small SI equipment and Marine SI vessels. The new standards are 
intended to be technology-forcing for each of these equipment 
categories. We are concerned that cross-trading may allow marginal 
credits in one area to hamper technological advances in another area. 
For Small SI equipment, we will not allow credit exchanges between 
handheld and nonhandheld equipment. For handheld equipment, we will 
allow credit exchanges between Class III, Class IV and Class V 
equipment. For nonhandheld equipment, we will allow credit exchanges 
between Class I and Class II equipment. For Marine SI vessels, we will 
allow credit exchanges between all types of vessels, except those using 
portable marine fuel tanks

[[Page 59110]]

which, as noted below, are not included in the ABT program.
    We are requiring portable marine fuel tanks to meet emission 
standards without an emission credit program. Emission control 
technologies and marketing related to portable marine fuel tanks are 
quite different than for installed tanks. Most, if not all, portable 
fuel tanks are made using high-density polyethylene in a blow-molding 
process. The control technologies for these tanks are relatively 
straightforward and readily available so we do not anticipate that 
these companies will need emission credits to meet the new standards. 
In addition, because these fuel tanks are not installed in vessels that 
are subject to emission standards, the fuel tank manufacturer will need 
to take on the responsibility for certification. As a result, we will 
treat these portable fuel tank manufacturers as both the component 
manufacturer and the equipment manufacturer with respect to their 
portable fuel tanks.
    In the early years of the ABT program we are not establishing an 
FEL cap. This will give manufacturers additional time to use 
uncontrolled fuel tanks, primarily in small-volume applications, until 
they can convert their full product lines to having fuel tanks with 
permeation control. We are setting an FEL cap of 5.0 g/m\2\/day (8.3 g/
m\2\/day if tested at 40 [deg]C) starting a few years after 
implementing the tank permeation standards. For Class II equipment and 
personal watercraft, the FEL cap will begin in 2014. For Class I 
equipment and other installed marine fuel tanks, the FEL cap will begin 
in 2015. For handheld equipment, the FEL cap will begin in 2015. (See 
Sec.  1045.107 and Sec.  1054.110.) For Small SI equipment qualifying 
as small-volume emission families, we are setting an FEL cap of 8.0 g/
m\2\/day (13.3 g/m\2\/day if tested at 40 [deg]C.) This is generally 
limited to equipment models where the manufacturer produces no more 
than 5,000 units with a given fuel tank design. The purpose of the FEL 
cap will be to prevent the long-term production of fuel tanks with no 
permeation control while still providing the regulatory flexibility 
associated with emission credit programs.
    Evaporative emission credits under the tank permeation standards 
will be calculated using the following equation: credits [grams] = 
(Standard- FEL) x useful life [years] x 365 days/year x inside surface 
area [m\2\]. Both the standard and the FEL are in units of g/m\2\/day 
based on testing at 28[deg]C.
    As discussed earlier, we are establishing an alternative standard 
for tank permeation testing performed at 40[deg]C of 2.5 g/m\2\/day. 
Because permeation is higher at this temperature than the primary test 
temperature, emissions credits and debits calculated at this test 
temperature will be expected to be higher as well. When determining 
credits for a tank certified to the alternative standard, manufacturers 
will use the alternative standard in the credit equation. Plus, we are 
requiring that credits and debits that are calculated be adjusted using 
a multiplicative factor of 0.60 to account for the effect of 
temperature.
    We are also allowing handheld equipment manufacturers to earn 
credits for equipment using fuel tanks certified earlier than required. 
As noted in Section VI.D.3 below, manufacturers of nonhandheld 
equipment and Marine SI vessels can also be rewarded for introducing 
products that comply with evaporative standards earlier than required.
(2) Other Evaporative Sources
    We are not promulgating an emission credit program for other 
evaporative sources. We believe technologies are readily available to 
meet the applicable standards for fuel line permeation and diurnal 
emissions (see Section VI.H.). The exception to this is for fuel lines 
on cold-weather equipment and under-cowl fuel lines on outboard 
engines, as discussed above in Section VI.C.1, where we are adopting 
temporary averaging provisions (see Sec.  1045.112 and Sec.  1054.145). 
In addition, the diurnal emission standards for portable marine fuel 
tanks and PWC fuel tanks are largely based on existing technology so 
any meaningful emission credit program with the new standards would 
result in windfall credits. The running loss standard is not based on 
emission measurements, and refueling-related requirements are based on 
design specifications only, so it is not appropriate or even possible 
to calculate emission credits.
(3) Early-Allowance Programs
    In some cases manufacturers may be able to meet the new emission 
standards earlier than we are requiring. We are adopting provisions for 
equipment manufacturers using low-emission evaporative systems early to 
generate allowances before the standards apply. These early allowances 
could be used for a limited time after the implementation date of the 
standards to sell equipment or fuel tanks that have emissions above the 
standards. We are establishing two types of allowances. The first is 
for Small SI nonhandheld equipment as a whole where for every year a 
piece of equipment is certified early, another piece of equipment could 
delay complying with the new standards by an equal time period beyond 
the implementation date. The second is similar but is just for the fuel 
tank rather than the whole equipment (nonhandheld Small SI or Marine 
SI). Equipment or fuel tanks certified for purposes of generating early 
allowances would need to be certified with EPA and will be subject to 
all applicable requirements. Manufacturers will be required to report 
to EPA the number of early allowances generated under these programs 
and how the allowances are used. These allowances are similar to the 
emission credit program elements described above but they are based on 
counting compliant products rather than calculating emission credits. 
Establishing appropriate credit calculations would be difficult because 
the early compliance is in some cases based on products meeting 
different standards using different procedures.
(a) Nonhandheld Small SI Equipment
    Many Small SI equipment manufacturers are currently certifying 
products to evaporative emission standards in California. The purpose 
of the early-allowance program is to provide an incentive for 
manufacturers to begin selling low-emission products nationwide. We are 
providing allowances to manufacturers for equipment meeting the 
California evaporative emission standards that are sold in the United 
States outside of California and are therefore not subject to 
California's emission standards. Manufacturers will need to have 
California certificates for these equipment types. (See Sec.  
1054.145.)
    Allowances could be earned in any year before 2012 for Class I 
equipment and before 2011 for Class II equipment. The allowances may be 
used through the 2014 model year for Class I equipment and through the 
2013 model year for Class II equipment. Allowances cannot be traded 
between Class I and Class II equipment. To keep this program simple, we 
are not adjusting the allowances based on the anticipated emission 
rates from the equipment. Therefore, we believe it is necessary to at 
least distinguish between Class I and Class II equipment.
(b) Fuel Tanks
    We are also providing an early-allowance program for nonhandheld 
Small SI equipment for fuel tanks (see Sec.  1054.145). This program is 
similar to the program described above for equipment allowances, except 
that it will be for fuel tanks only. We will

[[Page 59111]]

accept California-certified configurations. Allowances could be earned 
prior to 2011 for Class II equipment and prior to 2012 for Class I 
equipment; allowances could be used through 2013 for Class II equipment 
and through 2014 for Class I equipment. Allowances will not be 
exchangeable between Class I and Class II equipment.
    The early-allowance program for marine fuel tanks is similar except 
that there are no California standards for these tanks (see Sec.  
1045.145). Manufacturers certifying early to the new fuel tank 
permeation standards will be able to earn allowances that they could 
use to offset high-emitting fuel tanks after the new standards go into 
place. The early-allowance program would apply to all marine fuel 
tanks, including portable fuel tanks, personal watercraft, and other 
installed fuel tanks. For portable fuel tanks, the tank manufacturer 
would earn the allowances, whereas the vessel manufacturer would earn 
the allowances for personal watercraft and other installed fuel tanks. 
We are not allowing the cross-trading of allowances between portable 
fuel tanks, personal watercraft, and other installed fuel tanks. Each 
of these categories includes significantly different tank sizes and 
installed tanks have different implementation dates and are expected to 
use different permeation control technology. For portable fuel tanks 
and personal watercraft, allowances could be earned prior to 2011 and 
may be used through the 2013 model year. For other installed tanks, 
allowances could be earned prior to 2012 and used through the 2014 
model year.

E. Testing Requirements

    Compliance with the evaporative emission standards is determined by 
following specific testing procedures. This section describes the new 
test procedures for measuring fuel line permeation, fuel tank 
permeation, and diurnal emissions. As discussed in Section VI.F.8, we 
are adopting design-based certification as an alternative to testing 
for certain standards.
(1) Fuel Line Permeation Testing Procedures
    We are requiring that fuel line permeation be measured at a 
temperature of 23  2 [deg]C using a weight-loss method 
similar to that specified in SAE J30 and J1527 recommended practices 
(see Sec.  1060.515).102 103 We are making two modifications 
to the SAE recommended practice. The first modification is for the test 
fuel to contain ethanol; the second modification is to require 
preconditioning of the fuel line through a fuel soak. These 
modifications are described below and are consistent with our current 
requirements for recreational vehicles.
---------------------------------------------------------------------------

    \102\ Society of Automotive Engineers Surface Vehicle Standard, 
``Fuel and Oil Hoses,'' SAE J30, June 1998 (Docket EPA-HQ-OAR-2004-
0008-0176).
    \103\ SAE Recommended Practice J1527, ``Marine Fuel Hoses,'' 
1993, (Docket EPA-HQ-OAR-2004-0008-0195-0177).
---------------------------------------------------------------------------

(a) Test Fuel
    The recommended practice in SAE J30 and J1527 is to use ASTM Fuel C 
(defined in ASTM D471-98) as a test fuel. We are requiring the use of a 
test fuel containing 10 percent ethanol. We believe the test fuel must 
contain ethanol because it is commonly blended into in-use gasoline and 
because ethanol substantially increases permeation rates for many 
materials.
    Specifically, we are requiring the use of a test fuel consisting of 
an ASTM Fuel C blended with ethanol such that the blended fuel contains 
10 percent ethanol by volume (CE10).\104\ Manufacturers have expressed 
support for this test fuel because it is more consistent than testing 
with gasoline and because it is widely used today by industry for 
permeation testing. In addition, most of the data used to develop the 
new fuel line permeation standards were collected on this test fuel. 
This fuel is allowed today as one of two test fuels for measuring 
permeation from fuel lines under the recreational vehicle standards. 
California ARB also specifies Fuel CE10 as the test for fuel line 
permeation measurements with small offroad engines.
---------------------------------------------------------------------------

    \104\ ASTM Fuel C is a mix of equal parts toluene and isooctane. 
We refer to gasoline blended with ethanol as E10.
---------------------------------------------------------------------------

    One exception is for fuel lines on cold-weather handheld products. 
In this case, the standard is based on a test fuel of IE10, which is 
EPA certification gasoline blended with 10 percent ethanol by volume.
    We are finalizing specifications for fuel ethanol blended into test 
gasoline based on standard industry practice. Specifically, we are 
incorporating by reference ASTM D4806-07, which specifies, among other 
things, acceptable denaturants and maximum water content.\105\
---------------------------------------------------------------------------

    \105\ ASTM International, ``Standard Specification for Denatured 
Fuel Ethanol for Blending with Gasoline for Use as Automotive Spark-
Ignition Engine Fuel,'' ASTM D4806-07, 2007.
---------------------------------------------------------------------------

(b) Preconditioning Soak
    The second difference from weight-loss procedures in SAE practices 
is in fuel line preconditioning. We believe the fuel line should be 
preconditioned with an initial fuel fill followed by a long enough soak 
to ensure that the permeation rate has stabilized. Manufacturers may 
choose one of two alternative specifications for the soak period--
either four weeks at 43  5 [deg]C or eight weeks at 23 
 5 [deg]C. Either of these approaches should adequately 
stabilize permeation rates for most materials. However, manufacturers 
may need a longer soak period to stabilize the permeation rate for 
certain fuel line designs, consistent with good engineering judgment. 
For instance, a thick-walled fuel line may take longer to reach a 
stable permeation rate than a thinner-walled fuel line. After this fuel 
soak, the fuel reservoir and fuel line must be drained and immediately 
refilled with fresh test fuel prior to the weight-loss test.
(c) Alternative Approaches
    California's regulations, in CCR 2754(a)(1)(C), reference SAE J1737 
as the method for measuring permeation from fuel lines. These 
recommended procedures use a recirculation technique whereby nitrogen 
flows over the test sample to carry the permeating vapors to adsorption 
canisters. Permeation is determined based on the weight change of the 
canisters. This method was intended to provide a greater level of 
sensitivity than the weight loss method specified in SAE J30 and J1527 
so that lower rates of permeation could be measured. As an alternative, 
we will accept permeation data collected using the methodology in SAE 
J1737 under Sec.  1060.505(c).\106\ If this alternative is used, the 
same test fuel, test temperature, and preconditioning period must be 
used as for the primary (weight-loss) test method.
---------------------------------------------------------------------------

    \106\ SAE Recommended Practice J1737, ``Test Procedure to 
Determine the Hydrocarbon Losses from Fuel Tubes, Hoses, Fittings, 
and Fuel Line Assemblies by Recirculation,'' 1997, (Docket EPA-HQ-
OAR-2004-0008-0178).
---------------------------------------------------------------------------

    We are allowing permeation measurements using alternative equipment 
and procedures that provide equivalent results (see Sec.  1060.505). To 
use these alternative methods, manufacturers will first need to get our 
approval. An example of an alternative approach would be enclosure-type 
testing such as in 40 CFR part 86. In the case of enclosure-type 
testing, the manufacturer would need to demonstrate that it is 
correctly accounting for the ethanol content in

[[Page 59112]]

the fuel. Note that the test fuel, test temperatures, and 
preconditioning soak described above will still apply. Because 
permeation increases with temperature we will accept data collected at 
higher temperatures (greater than 23 [deg]C) for a demonstration of 
compliance.
    For portable marine fuel tanks, the fuel line assembly from the 
engine to the fuel tank typically includes two sections of fuel line 
with a primer bulb in between and quick-connect assemblies on either 
end. We are adopting a provision to allow manufacturers to test a full 
assembly as a single fuel line to simplify testing for these fuel line 
assemblies (see Sec.  1060.102). This gives manufacturers the 
flexibility to use a variety of materials as needed for performance 
reasons while meeting the fuel line permeation standard for the fully 
assembled product. Measured values will be based on the total measured 
permeation divided by the total internal surface area of the fuel line 
assembly. However, where it is impractical to calculate the internal 
surface area of individual parts of the assembly, such as a primer 
bulb, we will allow a simplified calculation that treats the full 
assembly as a straight fuel line. This small inaccuracy will cause 
reported emission levels (in g/m2/day) to be slightly higher 
so it will not jeopardize a manufacturer's effort to demonstrate 
compliance with the applicable standard.
(2) Fuel Tank Permeation Testing Procedures
    The new test procedure for fuel tank permeation includes 
preconditioning, durability simulation, and a weight-loss permeation 
test (see Sec.  1060.520). The preconditioning and the durability 
testing may be conducted simultaneously; manufacturers must put the 
tank through durability testing while the tank is undergoing its 
preconditioning fuel soak to reach a stabilized permeation level.
(a) Test Fuel
    Similar to the new fuel line testing procedures, we are requiring 
the use of a test fuel containing 10 percent ethanol to help ensure in-
use emission reductions with the full range of in-use fuels. 
Specifically, we are requiring the use of IE10 as the test fuel which 
is made up of 90 percent certification gasoline and 10 percent ethanol 
by volume. This is the same test fuel specified for testing fuel tanks 
for recreational vehicles. In addition, IE10 is representative of in-
use test fuels. We are allowing Fuel CE10 as an alternative test fuel. 
Data in Chapter 5 of the Final RIA suggest that fuel tank permeation 
tends to be somewhat higher on CE10 than IE10, so testing on CE10 
should be an acceptable demonstration of compliance.
    We are finalizing specifications for fuel ethanol blended into test 
gasoline based on standard industry practice. Specifically, we are 
incorporating by reference ASTM D4806-07 which specifies, among other 
things, acceptable denaturants and maximum water content.
(b) Preconditioning Fuel Soak
    Before permeation testing, the fuel tank must be preconditioned by 
allowing it to sit with fuel inside until the hydrocarbon permeation 
rate has stabilized. Under this step, we are requiring that the fuel 
tank be filled with test fuel and soaked--either for 20 weeks at 28 
 5 [deg]C or for 10 weeks at 43  5 [deg]C. 
Either of these approaches should adequately stabilize permeation rates 
for most materials. However, manufacturers may need a longer soak 
period to stabilize the permeation rate for certain fuel tank designs, 
consistent with good engineering judgment.
    The tank will have to be sealed during this fuel soak and any 
components that are directly mounted to the fuel tank, such as a fuel 
cap, must be attached. Other openings, such as fittings for fuel lines, 
openings for grommets, or petcocks, will be sealed with impermeable 
plugs (or left unmachined so there is no hole in the tested 
configuration). In addition, if there is a vent path through the fuel 
cap, that vent path may be sealed. Alternatively, the opening could be 
sealed for testing and the fuel cap tested separately for permeation 
(discussed below). If the fuel cap is not directly mounted on the fuel 
tank (i.e., the fuel tank is designed to have a separate fill neck 
between the fuel cap and the tank), the tank may be sealed with 
something other than a production fuel cap.
    If the test fuel is dispensed at a temperature below the soak 
temperature, it would be possible for the fuel tank to pressurize if 
the tank were sealed prior to the fuel temperature reaching the soak 
temperature. In this case, it would be acceptable to allow reasonable 
time for the test fuel to approach the soak temperature, prior to 
sealing, to prevent over-pressurization of the fuel tank. To prevent 
gross evaporation of fuel vapors during this period, the venting of the 
tank should be no greater than needed to prevent over-pressurization of 
the fuel tank. The regulation specifies that the fuel tank must be 
sealed within a maximum of eight hours after refueling. Manufacturers 
should also take steps to minimize vapor losses during the time that 
the fuel is warming, such as leaving the fuel cap loosely in place or 
routing vapors through a vent line.
    Manufacturers may do the durability testing described below during 
the time period specified for preconditioning. The time spent in 
durability testing may count as preconditioning time as long as ambient 
temperatures are within the specified limits and the fuel tank has fuel 
inside the entire time. During the slosh testing, a fuel fill level of 
40 percent will be considered acceptable for the fuel soak. Otherwise, 
we are requiring that the fuel tank be filled to nominal capacity 
during the fuel soak.
(c) Durability Tests
    We are adopting three tests for the evaluation of the durability of 
fuel tank permeation controls: (1) Fuel sloshing; (2) pressure-vacuum 
cycling; and (3) ultraviolet exposure. The purpose of these 
deterioration tests is to help ensure that the technology is durable 
under the wide range of in-use operating conditions. For sloshing, the 
fuel tank must be filled to 40-50 percent capacity with the specified 
test fuel and rocked for one million cycles. Pressure-vacuum testing 
must consist of 10,000 cycles between -0.5 and 2.0 psi with a cycle 
time of 60 seconds. These two new durability tests are based on draft 
recommended SAE practice.\107\ The third durability test is intended to 
assess potential impacts of ultraviolet sunlight on the durability of 
surface treatment. In this test, the tank will be exposed to 
ultraviolet light wavelength ranging from 300 to 400 nanometers with an 
intensity of at least 0.40 W-hr/m2/min on the tank surface 
for 450 hours. Alternatively, the tank could be exposed to direct 
natural sunlight for an equivalent period of time.
---------------------------------------------------------------------------

    \107\ Draft SAE Information Report J1769, ``Test Protocol for 
Evaluation of Long Term Permeation Barrier Durability on Non-
Metallic Fuel Tanks,'' (Docket EPA-HQ-OAR-2004-0008-0195).
---------------------------------------------------------------------------

    We do not believe the durability testing requirements are necessary 
for all fuel tank designs. Therefore, we are excluding metal tanks and 
other tanks using direct material solutions in the molding process from 
the durability test procedures. However, these durability procedures 
will apply to fuel tanks using surface treatments or post-processing 
barrier coatings as a permeation barrier. We are concerned that 
improperly applied treatments or coatings may deteriorate. The 
specified durability demonstrations are necessary to ensure that fuel 
tanks properly

[[Page 59113]]

control emissions throughout the useful life.
(d) Weight-loss Test
    Following the fuel soak, the fuel tank must be drained and refilled 
with fresh fuel as described above. The permeation rate from the fuel 
tanks are determined by comparing mass measurements of the fuel tank 
over the test period while ambient temperatures are held at 28  2 [deg]C. Testing may alternatively be performed at 40  2 [deg]C, in which case a higher numerical standard applies.
    We received several comments that the test procedure should require 
daily mass measurements similar to the procedures required by CARB in 
TP-901. We agree with commenters that making daily recordings of the 
fuel tank weight is consistent with good engineering practices. These 
daily mass measurements can be used to determine the stability of the 
permeation rate of the fuel tank and can help identify if anything 
unusual is occurring during the test such as a lost seal during 
testing. The test procedures in TP-901 require that the weight loss 
test continue until the coefficient of determination (r\2\), from a 
plot of the cumulative daily weight loss versus time for 10 consecutive 
24-hour cycles, is 95 percent or greater. (California ARB mistakenly 
refers to the r\2\ value as the correlation coefficient.) We believe 
this approach gives testing facilities flexibility for basing the 
length of the test on good engineering judgment rather than a fixed 
time period. We are therefore adopting this general method of using 
daily measurements to determine the length of the test, with one 
modification. The CARB method would require test facilities to make 
measurements over at least one weekend. We believe weight loss 
measurements can be suspended for short periods of time without a 
negative impact on the test. We therefore do not require that the 11 
weight loss measurements (including the 0-hour measurement) be on 
consecutive days, provided that measurements are made on at least five 
different days of any given seven-day period of the test. Measurements 
must be made at roughly the same time on each test day.
    A change in atmospheric pressure over the weeks of testing can 
affect the accuracy of measured weights for testing due to the buoyancy 
of the fuel tank. The buoyancy effect on emission measurements is 
proportional to the volume of the fuel tank, so this procedure is 
appropriate even for testing very small fuel tanks. To address this we 
are adopting a procedure in which a reference fuel tank is filled with 
an amount of glass bead or some other inert material such that the 
weight of the reference tank is approximately the same as the total 
weight of the test tank. The reference tank is used to zero the scale 
before measuring the weight of the test tank. This will result in 
measured and reported values representing the change in mass from 
permeation losses rather than a comparison of absolute masses. This is 
similar to an approach in which weighing will determine absolute masses 
with a mathematical correction to account for the effects of buoyancy. 
We believe the specified approach is better because it minimizes the 
possibility of introducing or propagating error.
    We are allowing permeation measurements for certification using 
alternative equipment and procedures that provide equivalent results. 
To use these alternative methods, manufacturers would first need to get 
our approval. An example of an alternative weight-loss measurement 
procedure would be to test the fuel tank in a SHED and determine the 
permeation by measuring the concentration of hydrocarbons in the 
enclosure. In the case of SHED testing, the manufacturer would need to 
demonstrate that it is correctly accounting for the ethanol content in 
the fuel.
(e) Fuel Cap Permeation Testing
    As discussed above, manufacturers have the option to test the fuel 
cap separately from the tank and combine the results to determine the 
total tank permeation rate. In this case, the permeation test must be 
performed as described above except that the fuel cap will be mounted 
on an impermeable reservoir such as a metal or glass tank. The volume 
of the test reservoir must be at least one liter to ensure sufficient 
fuel vapor exposure. We are requiring that the ``tank'' surface area 
for calculating the results will be the smallest inside the cross 
sectional area of the opening on which the cap is mounted. The fuel cap 
will need to be tested in conjunction with a representative gasket. In 
the case where the vent path is through grooves in the gasket, another 
gasket of the same material and dimensions, without the vent grooves, 
may be used. In the case where the vent is through the cap, that vent 
must be sealed for testing. Alternatively, manufacturers may use the 
default cap permeation rate described in Section IV.F.8.
    Handheld equipment manufacturers commented that fuel caps should be 
subject to durability testing and recommended that the cap should be 
subjected to 300 on-off cycles as a durability test.\108\ For handheld 
products, data in the Final RIA suggests that rubber fuel cap seals may 
contribute a significant portion of the permeation measured in the fuel 
tank permeation test. We are concerned that a coating used on the 
gaskets to reduce the measured permeation during the test may wear off 
during in-use operation. We are therefore adopting this additional 
durability testing for fuel caps on handheld tanks.
---------------------------------------------------------------------------

    \108\ ``OPEI HHPC Comments on EPA Proposed Phase 3 Rule for HH 
Fuel Tank Permeation,'' Outdoor Power Equipment Institute, February 
5, 2008.
---------------------------------------------------------------------------

    Handheld equipment manufacturers also commented that cold-weather 
products cannot use existing low permeation rubbers for their seals due 
to potential dynamic cracking issues at very low temperatures. In 
addition, materials used today degrade after a year of exposure to fuel 
containing ethanol. While this does not appear to lead to fuel leakage, 
data in the Final RIA suggest that this degradation may have a large 
effect on tank permeation. To address this issue, EPA intends to 
conduct a technical study of cold-weather fuel cap seals. For this 
final rule we are adopting an allowance for manufacturers to specify 
rubber fuel cap seals on cold-weather equipment as maintenance items. 
These seals could therefore be replaced prior to the fuel 
preconditioning soak when permeation testing is performed on in-use 
fuel tanks if the seals are more than one year old. If the technical 
study or other information reveals that a fuel resistant material or 
other solution can safely be used in cold-weather applications, we will 
consider removing the provision allowing manufacturers to identify 
gasket replacement as a scheduled maintenance item in the application 
for certification.
(3) Diurnal Emission Testing Procedures
    The new test procedure for diurnal emissions from installed marine 
fuel tanks involves placing the fuel tank in a SHED, varying the fuel 
temperature over a prescribed profile, and measuring the hydrocarbons 
escaping from the fuel tank (see Sec.  1060.525). The final results are 
reported in grams per gallon where the grams are the mass of 
hydrocarbons escaping from the fuel tank over 24 hours and the gallons 
are the nominal fuel tank capacity. The new test procedure is derived 
from the automotive evaporative emission test

[[Page 59114]]

with modifications specific to marine applications.\109\
---------------------------------------------------------------------------

    \109\ See 40 CFR part 86, subpart B, for the automotive 
evaporative emission test procedures.
---------------------------------------------------------------------------

(a) Temperature Profile
    We believe it is appropriate to base diurnal measurements on a 
summer day with ambient temperatures ranging from 72 to 96 [deg]F (22.2 
to 35.6 [deg]C). This temperature profile, which is also used for 
automotive testing, represents a hot summer day when ground-level ozone 
formation is most prominent. Due to the thermal mass of the fuel and, 
in some cases, the inherent insulation provided by the boat hull, the 
fuel temperatures would cover a narrower range. Data presented in 
Chapter 5 of the Final RIA suggest that the fuel temperature in an 
installed marine fuel tank will see a total change of about half the 
ambient temperature swing. We are therefore adopting a test temperature 
range of 78 to 90 [deg]F (25.6 to 32.2 [deg]C) for installed marine 
fuel tanks. This testing is based on fuel temperature instead of 
ambient temperature.
    We are adopting an alternative, narrower temperature range for fuel 
tanks installed in nontrailerable boats ([gteqt] 26 ft. in length or > 
8.5 ft. in width). Data presented in Chapter 5 of the Final RIA suggest 
that the fuel temperature swing for a boat stored in the water is about 
20 percent of the ambient temperature swing. Based on this 
relationship, we are adopting an alternative temperature cycle for 
tanks installed in nontrailerable boats of 81.6 to 86.4 [deg]F (27.6 to 
30.2 [deg]C). This alternative temperature cycle is associated with an 
alternative standard as described in Section VI.C.3.
    Diurnal emission measurements for cars include a three-day 
temperature cycle to ensure that the carbon canister can hold at least 
three days of diurnal emissions without substantial escape of 
hydrocarbon vapors to the atmosphere. For marine vessels using carbon 
canisters as a strategy for controlling evaporative emissions, we are 
also requiring a three-day cycle in this final rule. In the automotive 
test, the canister is loaded and then purged by the engine during a 
warm-up drive before the first day of testing. We are adopting a 
different approach for marine vessels because we anticipate that 
canisters on marine applications will be passively purged. Before the 
first day of testing, the canister would be loaded to its working 
capacity and then run over the diurnal test temperature cycle, starting 
and ending at the lowest temperature, to allow one day of passive 
purging. The test result would then be based on the highest recorded 
value during the following three days.
    For fuel systems using a sealed system, we believe a three-day test 
will not be necessary. In this case, the fuel tank would be sealed once 
the fuel reaches equilibrium at the starting temperature for testing. 
The SHED would then be purged and the test would consist of a single 
run through the diurnal temperature cycle. We are establishing this 
one-day test for the following technologies: sealed systems, sealed 
systems with a pressure-relief valve, limiting flow orifices, bladder 
fuel tanks, and sealed fuel tanks with a volume-compensating air bag.
(b) Test Fuel
    Consistent with the automotive test procedures, we are specifying a 
gasoline test fuel with a nominal volatility of 9 psi.\110\ We are not 
requiring that the fuel used in diurnal emission testing include 
ethanol for two reasons. First, we do not believe that ethanol affects 
the diurnal emissions or control effectiveness other than the effect 
that ethanol in the fuel may have on fuel volatility. Second, in many 
areas of the country, in-use fuels containing ethanol are blended in 
such a way as to control for ethanol effects in order to meet fuel 
volatility requirements.
---------------------------------------------------------------------------

    \110\ Volatility is specified based on a procedure known as Reid 
Vapor Pressure (see ASTM D 323-99a).
---------------------------------------------------------------------------

    Diurnal emissions from vented systems are a function not only of 
temperature and fuel volatility, but also of the size of the vapor 
space in the fuel tank. Consistent with the automotive procedures, we 
are requiring that the fuel tank be filled at the start of the test to 
40 percent of its nominal capacity. Nominal capacity is defined as the 
fuel tank's volume as specified by the fuel tank manufacturer, using at 
least two significant figures, based on the maximum volume of fuel the 
tank can hold with standard refueling techniques. The ``permanent'' 
vapor space above a fuel tank that has been filled to capacity should 
not be considered as part of the fuel tank's nominal capacity.
(c) Fuel Tank Configuration
    The majority of marine fuel tanks are made of plastic. Plastic fuel 
tanks designed to meet our new standards will still be expected to have 
some amount of permeation. However, the effect of permeation on the 
test results should be very small if the test tank was a new model that 
had not been previously exposed to fuel. For fuel tanks that have 
reached a stabilized permeation rate (such as testing on in-use tanks), 
we believe it is appropriate to correct for permeation. The regulation 
specifies that manufacturers may measure the permeation rate and 
subtract it from the final diurnal test result. The fuel tank 
permeation rate would be measured with the established procedure for 
measuring permeation emissions, except that the fuel for testing 
(including preconditioning) would be the same as that used for diurnal 
emission testing and the permeation testing must occur at a nominal 
ambient temperature of 28[deg]C. This test measurement would have to be 
made just before the diurnal emission test to ensure that the 
permeation rate does not change significantly over the course of the 
diurnal emission measurement. In no case will we allow a permeation 
correction higher than that corresponding to the applicable permeation 
standard for a tank with a given inside surface area. Because not 
correcting for permeation represents the worst-case test result, we 
will accept data from manufacturers in which no permeation correction 
is applied.
    As with the permeation test procedures, a manufacturer may request 
EPA approval of an alternative method provided that this method 
provides measurements that are equivalent to the primary method.

F. Certification and Compliance Provisions

    Sections VII and VIII of the preamble to the proposed rule describe 
several general provisions for certifying emission families and meeting 
other regulatory requirements. This section notes several particulars 
for applying these general provisions to evaporative emissions.
    Marine vessels do not always include installed fuel systems. 
Manufacturers of vessels without installed fuel systems do not have the 
ability to control engine or fuel system design parameters. We are 
therefore excluding vessels that do not have installed fuel systems 
from the new standards (see Sec.  1045.5). As a result, it is necessary 
for us to treat manufacturers of uninstalled fuel-system components as 
the equipment manufacturer with respect to evaporative emission 
standards. This includes manufacturers of outboard engines (including 
any fuel lines or fuel tanks produced with the engine), portable fuel 
tanks, and the fuel line assembly (including fuel line, primer bulb, 
and connectors).
    For ease of reference, Small SI equipment manufacturers, Marine SI 
boat builders, and manufacturers of portable marine fuel tanks (and

[[Page 59115]]

associated fuel-system components) are all referred to as equipment 
manufacturers in this section.
(1) Liability for Certification and Compliance
    The new standards for fuel lines and fuel tanks apply to any such 
components that are used with or intended to be used with Small SI 
engines or Marine SI engines (see Sec.  1060.1 and Sec.  1060.601). 
Section VI.C describes for each standard which manufacturer is expected 
to certify.
    In most cases, nonroad standards apply to the manufacturer of the 
engine or the manufacturer of the nonroad equipment. Here, the products 
subject to the standards (fuel lines and fuel tanks) are typically 
manufactured by a different manufacturer. In most cases the engine 
manufacturers do not produce complete fuel systems and therefore are 
not in a position to do all the testing and certification work 
necessary to cover the whole range of products that will be used. We 
are therefore providing an arrangement in which manufacturers of fuel-
system components are in most cases subject to the standards and are 
subject to certification and other compliance requirements associated 
with the applicable standards. We are prohibiting the introduction into 
commerce of noncompliant fuel-system components that are intended for 
installation in Small SI equipment or Marine SI vessels unless the 
component manufacturer either certifies the component or has a 
contractual arrangement with each equipment manufacturer using its 
products that the equipment manufacturer will certify those components. 
As a matter of good practice, any components not intended for 
installation in Small SI equipment or Marine SI vessels should be 
labeled accordingly to prevent the possibility of improper 
installation.
    As described in Section VI.D, component manufacturers generally 
certify their products using measured emission levels showing that the 
components meet the applicable emission standard. In the case of 
permeation standards for fuel tanks, component manufacturers may 
alternatively certify to an FEL above or below the standard. If any 
fuel tank manufacturer certifies using an FEL, the FEL becomes the 
emission standard for that emission family for all practical purposes. 
The fuel tank manufacturer will have the option to certify to an FEL 
above or below the standard, but will not be required to meet any 
overall average or maintain a positive balance of credits for their 
products. This is to facilitate the use of ABT by equipment 
manufacturers, which must balance their positive and negative credits, 
as discussed below.
    Equipment manufacturers are subject to all the new evaporative 
emission standards. This applies for the general standards described 
above with respect to fuel caps, miscellaneous fuel-system components, 
and refueling (see Sec.  1060.101(f)). These standards generally depend 
on design specifications rather than emission measurements, so we 
believe it is appropriate to simply deem these products to be certified 
if they are designed and produced to meet the standards we specify. The 
equipment manufacturer will also need to keep records of the components 
used (see Sec.  1060.210). This will allow us, by operation of the 
regulation, to have certified products without requiring the paperwork 
burden associated with demonstrating compliance with these relatively 
straightforward specifications. Manufacturers could optionally apply 
for and receive a certificate of conformity with respect to these 
general standards, but this is not necessary and we will expect this to 
be a rare occurrence.
    Equipment manufacturers will also be subject to all the new 
permeation, diurnal, and running loss standards that apply. Equipment 
manufacturers may comply with requirements related to evaporative 
emission standards in three different situations. First, equipment 
manufacturers might install only components certified by the component 
manufacturer, without using emission credits. In this case all the 
components must meet the emission standard or have an FEL below the 
standard. Manufacturers of Marine SI vessels will be subject to the 
fuel line and fuel tank standards (including diurnal standards), but 
will be able to satisfy their requirements by using certified 
components. Such a vessel manufacturer will generally need to use 
certified components, add an emission label, and follow any applicable 
emission-related installation instructions to ensure that certified 
components are properly installed. This is similar to an equipment 
manufacturer that is required to properly install certified engines in 
its equipment, except that the equipment manufacturer must meet general 
design standards and shares the liability for meeting emission 
standards. We are requiring manufacturers of Small SI equipment to 
certify with respect to evaporative emission standards even if they use 
certified components, largely because they are still responsible for 
running loss requirements.
    Second, equipment manufacturers may be required to certify certain 
components based on contractual arrangements with the manufacturer of 
those components. In this case, the equipment manufacturer's 
certification causes the component manufacturer to no longer be subject 
to the standard. This approach might involve the equipment manufacturer 
relying on test data from the component manufacturer. The equipment 
manufacturer might also be producing its own fuel tanks for 
installation in its equipment, in which case it will be subject to the 
standards and all requirements related to certification and compliance. 
In either case, the equipment manufacturer will take on all the 
responsibilities associated with certification and compliance with 
respect to those components.
    Third, equipment manufacturers may comply with evaporative emission 
requirements by using certified components, some of which are certified 
to an FEL above the standard. The equipment manufacturer would then 
comply based on emission credits. In this case, the equipment 
manufacturer takes on all the certification and compliance 
responsibilities with respect to any fuel tanks that are part of the 
equipment manufacturer's emission credit calculations. Equipment 
manufacturers will generally use only certified components for meeting 
evaporative emission requirements, but they might also hold the 
certificate for such components. For purposes of certification, 
equipment manufacturers will not need to submit new test data if they 
use certified components. Equipment manufacturers must make an annual 
accounting to demonstrate a net balance of credits for the model year. 
Under this approach, the fuel tank manufacturer will continue to be 
subject to the standards for its products and be required to meet the 
certification and compliance responsibilities related to the standard. 
However, as in the first option, the fuel tank manufacturer will not be 
required to meet any averaging requirements or be required to use 
emissions credits. Where equipment manufacturers use ABT with fuel 
tanks that have already been certified by the component manufacturer, 
there would be overlapping certifications between the two parties. We 
address this by specifying that all parties are responsible for meeting 
applicable requirements associated with the standards to which they 
have certified, but if any specific requirement is met by one company, 
we will consider the

[[Page 59116]]

requirement to be met for all companies (see Sec.  1060.5). For 
example, either the component manufacturer or the equipment 
manufacturer could honor warranty claims, but we may hold both 
companies responsible for the violation if there is a failure to meet 
warranty obligations.
    Similarly, if we find that new equipment is sold without a valid 
certificate of conformity for the fuel lines or fuel tanks, then the 
equipment manufacturer and all the affected fuel-system manufacturers 
subject to the standards will be liable for the noncompliance (see 
Sec.  1060.601).
    Liability for recall of noncompliant products will similarly fall 
to any manufacturer whose product is subject to the standard, as 
described above. If more than one manufacturer is subject to the 
standards for a noncompliant product, we will have the discretion to 
assign recall liability to any one of those manufacturers. In assigning 
this liability, we will generally consider factors such as which 
manufacturer has substantial manufacturing responsibility and which 
manufacturer holds the certificate (see Sec.  1060.5). However, we may 
hold equipment manufacturers liable for recall even if they do not 
manufacture or certify the defective product. This will generally be 
limited to cases where the component manufacturer is unavailable to 
execute any remedial action. For example, if a foreign component 
manufacturer discontinues their participation in the U.S. market or a 
component manufacturer goes out of business, we will turn to the 
equipment manufacturer.
(2) Regulatory Requirements Related to Certification
    The established provisions for implementing exhaust emission 
standards apply similarly for evaporative emission standards; however, 
because the control technologies are very different, these requirements 
require further clarification. For example, scheduled maintenance is an 
important part of certifying engines to exhaust emission standards. 
However, there is little or no maintenance involved for the expected 
technologies for controlling evaporative emissions. The regulations 
still require manufacturers to identify specified maintenance 
procedures, if there are any, but there are no specific limitations on 
the maintenance intervals and there is no distinction for emission-
related maintenance. Manufacturers may not do any maintenance during 
testing for certification. (See Sec.  1060.125 and Sec.  1060.235.) We 
also do not expect that emission-related warranty claims will be 
common, but we are requiring a two-year period for emission-related 
warranties with respect to evaporative emission controls.
    Similarly, we do not expect manufacturers to use evaporative 
emission control technologies that involve adjustable parameters or 
auxiliary emission control devices. Technologies that control 
evaporative emissions are generally passive designs that prevent vapors 
from escaping, in contrast to the active systems engines used to 
control exhaust emissions. The regulations state the basic expectation 
that systems must comply with standards throughout any adjustable range 
without auxiliary emission control devices, but it is clear that these 
provisions will not apply to most evaporative systems. We also do not 
allow emission control strategies that cause or contribute to an 
unreasonable risk to public health or welfare or that involve defeat 
devices. While these are additional statutory provisions that are 
meaningful primarily in the context of controlling exhaust emissions, 
we are including them for evaporative emissions for completeness (see 
Sec.  1060.101). This also addresses the possibility that future 
technologies may be different in a way that makes these provisions more 
meaningful.
    The testing specified for certifying fuel systems to the 
evaporative emission standards includes measurements for evaluating the 
durability of emission control technologies where appropriate. While we 
adopted evaporative requirements for recreational vehicles relying on a 
testing approach that used deterioration factors, we believe it is more 
appropriate to incorporate the durability testing for each family 
directly. Therefore, no requirement (or opportunity) exists for 
generating deterioration factors for any evaporative emission standard.
    We are requiring that component manufacturers label the fuel lines, 
fuel tanks, and other fuel-system components that they certify (see 
Sec.  1060.137). These labels generally identify the manufacturer, the 
applicable emission standard (or Family Emission Limit), and family 
identification. We are including a provision to allow manufacturers to 
use an abbreviated code that would allow for referring to the 
information filed for certification under the engine family name. 
Manufacturers may also design their fuel lines to include a continuous 
stripe or other pattern to help identify the particular type or grade 
of fuel line. This would be in addition to the other labeling 
requirements.
    Engine or equipment manufacturers must also add an emission control 
information label to identify the evaporative emission controls (see 
Sec.  1060.135). If engine, equipment, or vessel manufacturers also 
certify fuel-system components separately, they may include that 
additional information in a combined label. If the equipment is 
produced by the same company that certifies the engine for exhaust 
standards, the emission control information label for the engine may 
include all the appropriate information related to evaporative 
emissions.
    While we are not adopting specific requirements for manufacturers 
to evaluate production-line or in-use products, we require that 
manufacturers set up their own quality plan for evaluating their 
products to ensure compliance. Also, we may pursue testing of certified 
products to evaluate compliance with evaporative emission standards 
(see Sec.  1060.301).
(3) Emission Families
    To certify equipment or components, manufacturers will first define 
their emission families. This is generally based on selecting groups of 
products that have similar emission characteristics throughout the 
useful life (see Sec.  1060.230). For example, fuel tanks could be 
grouped together if they were made of the same material (including 
consideration of additives such as pigments, plasticizers, and UV 
inhibitors that are expected to affect emissions) and the same control 
technology. For running loss control for nonhandheld Small SI engines 
and equipment, emission families are based on the selected compliance 
demonstration. For example, certifying manufacturers may have one 
emission family for all their products that vent fuel vapors to the 
engine's air intake system.
    The manufacturer selects a single product from the emission family 
for certification testing. This product will be the one that is most 
likely to exceed the applicable emission standard. For instance, the 
``worst-case'' fuel tank in a family of monolayer tanks will likely be 
the tank with the thinnest average wall thickness. For fuel lines or 
co-extruded fuel tanks with a permeation barrier layer, the worst-case 
configuration may be the one with the thinnest barrier.
    Testing with those products, as specified above, will need to meet 
applicable emission standards. The manufacturer then sends us an 
application for certification. After reviewing the information in the 
application to verify that the

[[Page 59117]]

manufacturer demonstrates compliance with all applicable requirements, 
we will issue a certificate of conformity allowing equipment 
manufacturers to introduce into commerce certified components or 
equipment.
(4) Compliance Provisions From 40 CFR Part 1068
    We are applying the provisions of 40 CFR part 1068 to Small SI and 
Marine SI engines, equipment, and vessels. This section describes how 
some of the provisions of part 1068 apply specifically with respect to 
evaporative emissions.
    The provisions of Sec.  1068.101 prohibit introducing into commerce 
new nonroad engines and equipment unless they are covered by a 
certificate of conformity and labeled appropriately. Section VI.F.1 
describes the responsibilities for engine manufacturers, equipment 
manufacturers, and manufacturers of fuel-system components with respect 
to the prohibition against introducing uncertified products into 
commerce. In the case of portable marine fuel tanks and outboard 
engines, there is no equipment manufacturer so we are treating 
manufacturers of these items as equipment manufacturers relative to 
this prohibition.
    While engine rebuilding or extensive engine maintenance is 
commonplace in the context of exhaust emission controls, there is very 
little analogous servicing related to evaporative emission controls. 
Nevertheless, it can be expected that individual fuel lines, fuel 
tanks, or other fuel-system components may be replaced periodically. 
While the detailed rebuilding provisions of Sec.  1068.120 have no 
meaning for evaporative emission controls, the underlying requirement 
applies generally. Specifically, if someone is servicing a certified 
system, there must be a reasonable basis to believe that the modified 
emission control system will perform at least as well as the original 
system. We are not imposing any recordkeeping requirements related to 
maintenance of evaporative emission control systems.
    There are many instances where we specify in 40 CFR part 1068, 
subparts C and D, that engines (and the associated equipment) are 
exempt from emission standards under certain circumstances, such as for 
testing, national security, or export. Our principle objective in 
applying these provisions to evaporative emission standards is to avoid 
confusion. We are therefore adding a provision that any exemption from 
exhaust emission standards automatically triggers a corresponding 
exemption from evaporative emission standards for the same products. We 
believe it is unlikely that an equipment manufacturer will need a 
separate exemption from evaporative emission standards, but the 
exemptions related to national security, testing, and economic hardship 
will apply if such a situation were to occur. We believe the other 
exemptions available for engines would not be necessary for equipment 
manufacturers with respect to evaporative emissions.
    Given the extended times required to precondition fuel-system 
components, we have no plans to initiate selective enforcement audits 
to test for compliance with products coming off the assembly line. On 
the other hand, we may require certifying manufacturers to supply us 
with production equipment or components as needed for our own testing 
or we may find our own source of products for testing.
    The defect-reporting requirements of Sec.  1068.501 apply to 
certified evaporative systems. This requires the certifying 
manufacturer to maintain information, such as warranty claims, that may 
indicate an emission-related defect. The regulations describe when 
manufacturers must pursue an investigation of apparent defects and when 
to report defects to EPA. These provisions apply to every certifying 
manufacturer and their certified products, including component 
manufacturers.
(5) Interim Standards and Provisions for Small SI Equipment
    Most Small SI equipment manufacturers are currently certifying 
products to evaporative emission requirements in California. However, 
these standards and their associated test procedures differ somewhat 
from those contained in this final rule. Although the standards are 
different, we believe evaporative emission control technologies are 
available to meet the California ARB's standards and our new emission 
standards. To help manufacturers transition to selling low-emission 
equipment nationwide, we are accepting California ARB certification of 
equipment and components in the early years of the new federal program.
    As discussed above, we are accepting California ARB certification 
for nonhandheld equipment and fuel tanks for the purposes of the early-
allowance program (see Sec. Sec.  1045.145 and 1054.145). We are also 
accepting California ARB certification of handheld fuel tanks through 
the 2011 model year (see Sec.  90.129).
    We are accepting California ARB certification or certain SAE 
specifications through the 2010 model year for Class II engines and 
through the 2010 model year for Class I engines (see Sec.  90.127). 
These SAE specifications include SAE J30 R11A, SAE J30 R12, and SAE 
J2260 Category 1.
(6) Replacement Parts
    We are applying the tampering prohibition in Sec.  1068.101(b)(1) 
for evaporative systems. This means that it will be a violation to 
replace compliant fuel tanks or fuel lines with noncompliant products 
that effectively disable the applicable emission controls. Low-cost 
replacement products would be easy to make available and it would be 
difficult to prevent or control their use. We are therefore adopting 
several provisions to address this concern. In Sec.  1060.610 we 
clarify the meaning of tampering for evaporative systems and finalize 
specific labeling requirements. First, for the period from January 1, 
2012 to December 31, 2019, we require that manufacturers, distributors, 
retailers, and importers of replacement parts clearly label their 
products with respect to the applicable requirements. For example, a 
package might be labeled as compliant with the requirements in 40 CFR 
part 1060 or it might be labeled as noncompliant and appropriately used 
only for applications not covered by EPA standards. Unless the 
packaging clearly states otherwise, the product is presumed to be 
intended for applications that are subject to EPA standards. Second, 
starting in 2020 we are establishing a provision stating that it is 
presumed that all replacement parts that could be used in applications 
covered by EPA standards will in fact be installed in such equipment. 
This presumption significantly enhances our ability to enforce the 
tampering prohibition because the replacement part is then noncompliant 
before it is installed in a vessel or a piece of equipment. We believe 
shifting to a blanket presumption in 2020 is appropriate since in-use 
vessels and equipment will be almost universally meeting EPA's 
evaporative emission standards by that time.
    The obligation for owners who replace certified fuel tanks or fuel 
lines with new components is to use components that have been certified 
under the applicable regulations. We have made a change from the 
proposal to remove the requirement for owners to use certified tanks 
that meet or exceed the FEL from the component being replaced, if 
applicable. Commenters emphasized that the proposed approach would be 
unworkable. We agree that the best approach for ensuring that we

[[Page 59118]]

preserve emission controls without adopting unreasonable requirements 
is to specify simply that new replacement components need to be 
certified.
(7) Certification Fees
    Under our current certification program, manufacturers pay a fee to 
cover the costs associated with various certification and other 
compliance activities associated with an EPA issued certificate of 
conformity. These fees are based on the projected costs to EPA per 
emission family. For the fees rule published May 2004, we conducted a 
cost study to assess EPA's costs associated with conducting programs 
for the industries that we certify (69 FR 26222, May 11, 2004).\111\ We 
are establishing a new fees category for certification related to the 
new evaporative emission standards. The costs for this category will be 
determined using the same method used in conducting the previous cost 
study.
---------------------------------------------------------------------------

    \111\ A copy of the cost worksheets that were used to assess the 
fees per category may be found on EPA's fees Web site at http://
www.epa.gov/otaq/proprule.htm.
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    As under the current program, this depends on an assessment of the 
anticipated number of emission families and the corresponding EPA 
staffing necessary to perform this work. At this time, EPA plans to 
perform a basic level of certification review of information and data 
submitted to issue certificates of conformity for the evaporative 
emission standards, as well as conducting some testing to measure 
evaporative emissions. This is especially the case for equipment 
manufacturers that use only certified components for meeting applicable 
emission standards. We are establishing a fee of $241 based on Agency 
costs for half of a federal employee's time and three employees hired 
through the National Senior Citizens Education and Research Center 
dedicated to the administration of the evaporative certification 
program, including the administrative, testing, and overhead costs 
associated with these people. The total cost to administer the program 
is estimated to be $362,225. We divided this cost by the estimated 
number of certificates, 1,503, to calculate the fee.
    The fee of $241 per certificate applies through the 2014 model 
year. Starting in 2015, we will update the fees related to evaporative 
emission certificates each year when we update the fees for all 
categories. The fees update will be based upon EPA's costs of 
implementing the evaporative category multiplied by the consumer price 
index (CPI), then divided by the average of the number of certificates 
received in the two years prior to the update. The CPI will be applied 
to all of EPA's costs except overhead. This is a departure from EPA's 
current fees program wherein the CPI is applied only to EPA's labor 
costs. In the most recent fees rulemaking, commenters objected to 
applying the CPI to EPA's fixed costs. In the new fee program for the 
evaporative category, however, there are no fixed costs. EPA expects 
all its costs to increase with inflation and we therefore think it is 
appropriate to apply the inflation adjustment to all the program costs.
    Where a manufacturer holds the certificates for compliance with 
exhaust emission standards and includes certification for evaporative 
emissions for the same engine/equipment model, we will assess an 
additional charge related to compliance with evaporative emission 
standards to that for the exhaust emission certification.
    EPA believes it appropriate to charge less for a certificate 
related to evaporative emissions relative to the existing charge for 
certificates of conformity for exhaust emissions from the engines in 
these same vessels and equipment. The amount of time and level of 
effort associated with reviewing the latter certificates is higher than 
that projected for the certificates for evaporative emissions.
(8) Design-Based Certification
    Certification of equipment or components that are subject to 
performance-based emission standards depends on test data showing that 
products meet the applicable standards. We are adopting a variety of 
approaches that reduce the level of testing needed to show compliance. 
As described above, we allow manufacturers to group their products into 
emission families so that a test on a single worst-case configuration 
can be used to show that all products in the emission family are 
compliant. Also, test data from a given year could be ``carried over'' 
for later years for a given emission control design (see Sec.  
1060.235). These steps help reduce the overall cost of testing.
    Design-based certification is another method that may be available 
for reducing testing requirements (see Sec.  1060.240). To certify 
their products using design-based certification, manufacturers will 
describe, from an engineering perspective, how their fuel systems meet 
the applicable design specifications. We believe there are several 
designs that use established technologies that are well understood to 
have certain emission characteristics that ensure compliance with 
applicable emission standards. At the same time, while design-based 
certification is a useful tool for reducing the test burden associated 
with certification, this does not remove a manufacturer's liability for 
meeting all applicable requirements throughout the useful life of the 
engine, equipment, vessel, or component.
    The following sections describe how we propose to implement design-
based certification for each of the different performance standards. We 
are adopting design-based certification provisions for fuel tank 
permeation and diurnal emissions. The emission data we used to develop 
these new design-based certification options are presented in Chapter 5 
of the Final RIA.
    We are not adopting design-based certification provisions for fuel 
lines. This contrasts with the approach we adopted for recreational 
vehicles, where we specified that fuel lines meeting certain SAE 
specifications could be certified by design. That decision was 
appropriate for recreational vehicles, because we did not include 
provisions for component certification. Fuel line manufacturers will 
need to conduct testing anyway to qualify their fuel lines as meeting 
the various industry ratings for Small SI and marine applications so 
any testing burden to demonstrate compliance with EPA standards should 
be minimal. We will allow test data used to meet industry standards to 
be used to certify to the new standards provided that the data were 
collected in a manner consistent with this final rule and that the data 
are available to EPA upon request.
(a) Fuel Tank Permeation
    A metal fuel tank automatically meets the design criteria for a 
design-based certification as a low-permeation fuel tank, subject to 
the restrictions on fuel caps and seals described below.\112\ There is 
also a body of existing test data showing that co-extruded fuel tanks 
from automotive applications have permeation rates that are well below 
the new standard. We are allowing design-based certification for co-
extruded high-density polyethylene fuel tanks with a continuous 
ethylene vinyl alcohol (EVOH) barrier layer. The EVOH barrier layer is 
required to be at least 2 percent of the wall thickness of the fuel 
tank. In addition, the ethylene content of the

[[Page 59119]]

EVOH can be no higher than 40 mole percent.
---------------------------------------------------------------------------

    \112\ Manufacturers may also consider metal fuel tanks meeting 
the gasket- and cap-related specifications to be ``deemed 
certified,'' in which case no application for certification is 
necessary. Such a fuel tank is considered compliant independent of 
any test results from emission measurements. While this would be the 
most straightforward path, many prefer instead to go through the 
certification process for their tanks.
---------------------------------------------------------------------------

    To address the permeability of the gaskets and seals used on metal 
and co-extruded tanks, the design criteria include a specification that 
seals (such as gaskets and O-rings) not made of low-permeability 
materials must have a total exposed surface area less than 0.25 percent 
of the total inside surface area of the fuel tank. For example, 
consider a four-gallon fuel tank with an inside surface area of 0.40 
square meters. The total exposed surface area of seals on this fuel 
tank must be smaller than 1000 mm\2\ (= 0.25%/100 x 0.40m\2\ x 
1,000,000 mm\2\/m\2\). This is consistent with the proposed rule and 
the current requirements for recreational vehicles, but allows for 
larger seals for larger tanks. In addition, if a non-metal fuel cap not 
made of low-permeability material is directly mounted to the fuel tank, 
the surface area of the fuel cap (determined by the cross-sectional 
area of the fill opening) may not exceed 3.0 percent of the total 
inside surface area of the fuel tank.
    A metal or co-extruded fuel tank with a fuel cap and seals that 
meet these design criteria would be expected to reliably pass the 
standard. However, we believe it is not appropriate to assign an 
emission level to fuel tanks using design-based certification such that 
they can generate emission credits. Given the uncertainty of emission 
rates from the seals and gaskets, we will not consider these tanks to 
be any more effective than other fuel tanks meeting emission standards 
for purposes of emission credits.
    In the case where the fuel cap is directly mounted on the fuel 
tank, we consider the cap and associated seals to be part of the fuel 
tank. As discussed above, we allow fuel caps to be tested either 
mounted on the fuel tank, or individually. As an alternative to testing 
the fuel cap, the manufacturer may opt to use a default permeation rate 
of 30 g/m\2\/day (or 50 g/m\2\/day for testing at 40 [deg]C). To be 
eligible for this default rate, the seal on the fuel cap must be made 
of a low-permeability material, such as a fluoroelastomer. The surface 
area associated with this default value is the smallest inside cross-
sectional area of the opening on which the cap is mounted. If 
manufacturers use this default value, they would seal the fuel fill 
area with a non-permeable plug during the tank permeation test and the 
default permeation rate would be factored into the final result.
(b) Diurnal Emissions
    For portable marine fuel tanks, we are establishing a design 
standard based on automatically sealing the tank to prevent fuel 
venting while fuel temperatures are rising. The options described below 
for design-based certification therefore deal only with installed 
marine fuel tanks (including personal watercraft).
    A fuel system sealed to 1.0 psi will meet the criteria for design-
based certification relative to the new diurnal emission standards. 
Such sealed systems reliably ensure that total diurnal emissions over 
the specified test procedure will be below the new standard. This type 
of system will allow venting of fuel vapors only when pressures exceed 
1.0 psi or when the fuel cap is removed for refueling. Note that 
systems with anti-siphon valves will have to be designed to prevent 
fuel releases when the system is under pressure to meet U.S. Coast 
Guard requirements.
    Bladder fuel tanks and tanks with a volume-compensating air bag are 
specialized versions of tanks that may meet the specifications for 
systems that remain sealed up to positive pressures of 1.0 psi. In each 
of these designs, volume changes within a sealed system prevent 
pressure buildup.
    Fuel tanks equipped with a passively purged carbon canister may be 
certified by design, subject to several technical specifications. To 
ensure that there is enough carbon to collect a sufficient mass of 
hydrocarbon vapors, we specify a minimum butane working capacity of 9.0 
g/dL based on the test procedures specified in ASTM D5228. The carbon 
canister will need a minimum carbon volume of 0.040 liters per gallon 
of nominal fuel tank capacity. For fuel tanks certified to the optional 
standards for tanks in nontrailerable boats (>=26 ft. in length or >8.5 
ft. in width), we are requiring a minimum carbon volume of 0.016 liters 
per gallon of nominal fuel tank capacity.
    We are adopting three additional specifications for the quality of 
the carbon. We believe these specifications are necessary to ensure 
that the canister continues to function effectively over the full 
useful life. First, the carbon must meet a moisture adsorption capacity 
maximum of 0.5 grams of water per gram of carbon at 90 percent relative 
humidity and a temperature of 255 [deg]C. Second, the 
carbon must pass a dust attrition test similar to that in ASTM D3802. 
Third, the carbon granules must have a minimum mean diameter of 3.1 mm 
based on the procedures in ASTM D2862. These procedures are described 
in more detail in Chapter 5 of the Final RIA.
    We are also requiring that the carbon canister must be properly 
designed to ensure proper in-use diurnal emission control. The 
canisters will need to be designed using good engineering judgment to 
ensure structural integrity. They must include a volume compensator or 
other device to hold the carbon pellets in place under vibration and 
changing temperatures and the vapor flow will need to be directed so 
that it reaches the whole carbon bed rather than just passing through 
part of the carbon. We are also requiring that the geometry of the 
carbon canister must have a length-to-diameter ratio of at least 3.5.
(c) Additional Designs
    We may establish additional design-based certification options 
where we find that new test data demonstrate that the use of other 
technologies will ensure compliance with applicable emission standards. 
These designs will need to produce emission levels comfortably below 
the emission standards after considering variability in emission 
control performance. In addition, all aspects of these designs would 
need to be publicly available and quantifiable. For instance, we would 
not create a design-based certification for a material or process 
without full public disclosure of all the characteristics of that 
material or process relevant to its emission control characteristics. 
We would also not include products whose emission control performance 
is highly variable due to tolerances in materials or manufacturing 
processes. For instance, barrier treatments and post-processing 
coatings would generally not be eligible for design-based 
certification.
    Manufacturers wanting to use designs other than those discussed 
here will have to perform the applicable testing for certification. 
However, once an additional technology is proven to be inherently low-
emitting such that it will without question meet emission standards, we 
may consider approving its use under the regulations for design-based 
certification. For example, if several manufacturers were to pool 
resources to test a diurnal emission control strategy and submit the 
data to us, we could consider this particular technology, with any 
appropriate design specifications, as one that qualifies to be 
considered compliant under design-based certification. We intend to 
revise the regulations to include any additional technologies we decide 
are suitable for design-based certification, but we may also approve 
the use of additional design-based certification with these 
technologies before changing the regulations.

[[Page 59120]]

(9) Coordination With Coast Guard
    As part of its compliance assurance program for safety standards, 
the U.S. Coast Guard regularly visits boat builders to perform 
inspections on the production of new boats. The frequency of these 
inspections is such that each boat builder is visited approximately 
once every two years. The U.S. Coast Guard has indicated a willingness 
to consider environmental compliance assurance as part of these 
inspections. For example, the inspections could include checking for 
certification labels and proper installation of emission control 
components. We will continue to work with the U.S. Coast Guard to 
coordinate these efforts.

G. Small-Business Provisions

(1) Small Business Advocacy Review Panel
    On May 3, 2001, we convened a Small Business Advocacy Review Panel 
under section 609(b) of the Regulatory Flexibility Act (RFA) as amended 
by the Small Business Regulatory Enforcement Fairness Act of 1996. The 
purpose of the Panel was to collect the advice and recommendations of 
representatives of small entities that could be affected by the 
proposal and to report on those comments and the Panel's findings and 
recommendations as to issues related to the key elements of the Initial 
Regulatory Flexibility Analysis under section 603 of the Regulatory 
Flexibility Act. We re-convened the Panel on August 17, 2006 to update 
our findings for this final rule. The Panel report has been placed in 
the rulemaking record for this final rule. Section 609(b) of the 
Regulatory Flexibility Act directs the Panel to report on the comments 
of small entity representatives and make findings as to issues related 
to certain elements of an initial regulatory flexibility analysis 
(IRFA) under RFA section 603. Those elements of an IRFA are:
     A description of, and where feasible, an estimate of the 
number of small entities to which the rule will apply;
     A description of projected reporting, recordkeeping, and 
other compliance requirements of the rule, including an estimate of the 
classes of small entities that will be subject to the requirements and 
the type of professional skills necessary for preparation of the report 
or record;
     An identification, to the extent practicable, of all 
relevant Federal rules that may duplicate, overlap, or conflict with 
the rule; and
     A description of any significant alternative to the rule 
that accomplishes the stated objectives of applicable statutes and that 
minimizes any significant economic impact of the rule on small 
entities.
    In addition to the EPA's Small Business Advocacy Chairperson, the 
Panel consisted of the Director of the Assessment and Standards 
Division of the Office of Transportation and Air Quality, the 
Administrator of the Office of Information and Regulatory Affairs 
within the Office of Management and Budget, and the Chief Counsel for 
Advocacy of the Small Business Administration.
    EPA used the size standards provided by the Small Business 
Administration (SBA) at 13 CFR part 121 to identify small entities for 
the purposes of its regulatory flexibility analysis. Companies that 
manufacture internal-combustion engines and that employ fewer than 
1,000 people are considered small businesses for the purpose of the RFA 
analysis for this rule. Equipment manufacturers, boat builders, and 
fuel-system component manufacturers that employ fewer than 500 people 
are considered small businesses for the purpose of the RFA analysis for 
this rule. Based on this information, we asked 25 companies that met 
the SBA small business thresholds to serve as small entity 
representatives for the duration of the Panel process. These companies 
represented a cross-section of engine manufacturers, equipment 
manufacturers, and fuel-system component manufacturers.
    With input from small-entity representatives, the Panel drafted a 
report which provides findings and recommendations to us on how to 
reduce potential burdens on small businesses that may occur as a result 
of this final rule. The Panel Report is included in the rulemaking 
record for this final rule. We are adopting all the recommendations as 
presented in the Panel Report. The flexibility options recommended to 
us by the Panel, and any updated assessments, are described below.
(2) Burden Reduction Approaches for Small Businesses Subject to the 
Final Evaporative Emission Standards
    The SBAR Panel Report includes six general recommendations for 
regulatory flexibility for small businesses affected by the new 
evaporative emission standards. This section discusses the provisions 
being established based on each of these recommendations plus one 
additional provision for small-volume boat builders. In these industry 
sectors, we believe the burden reduction approaches presented in the 
Panel Report should be applied to all businesses with the exception of 
the general economic hardship provision and the marine diurnal 
allowances, both of which are described below and are designed 
specifically for small businesses. The majority of fuel tanks produced 
for the Small SI equipment and Marine SI vessel market are made by 
small businesses or by companies producing small volumes of these 
products. The purpose of these options is to reduce the potential 
burden on companies for which fixed costs cannot be distributed over a 
large product line. For this reason, we often also consider production 
volumes when making decisions regarding provisions to reduce compliance 
burden.
(a) Consideration of Appropriate Lead Time
    Small businesses commented that they would need to make significant 
changes to their plastic fuel tank designs and molding practices to 
meet the new fuel tank permeation standards. For blow-molded tank 
designs with a molded-in permeation barrier, new blow-molding machines 
would be needed that could produce multi-layer fuel tanks. One small 
business commented that, due to the lead time needed to install a new 
machine and to perform quality checks on the tanks, they would not be 
ready to sell multi-layer blow-molded fuel tanks until 2011 for the 
Small SI and Marine SI markets.
    Small businesses that make rotation-molded fuel tanks were divided 
in their opinion of when they would be ready to produce low-permeation 
fuel tanks. One manufacturer stated that it is already producing fuel 
tanks with a low-permeation inner layer that are used in Small SI 
applications. This company also sells marine fuel tanks, but not with 
low-permeation technology. However, they have successfully performed 
Coast Guard durability testing on a prototype 40-gallon marine tank 
using their low-permeation technology. Two other small businesses that 
make rotation-molded fuel tanks stated that they have not been able to 
identify and demonstrate a low-permeation technology that would meet 
their cost and performance needs. They commented that developing and 
demonstrating low-permeation technology is especially an issue for the 
marine industry because of the many different tank designs and Coast 
Guard durability requirements.
    Consistent with the Panel recommendations and in response to the 
above comments, we are adopting an implementation schedule that we 
believe provides sufficient lead time for blow-molded and marine 
rotation-molded fuel tanks. We are establishing

[[Page 59121]]

tank permeation implementation dates of 2011 for Class II equipment and 
2012 for Class I equipment. We are implementing the permeation 
standards in 2011 for portable marine fuel tanks and for personal 
watercraft and in 2012 for other installed fuel tanks, which are 
typically rotation-molded (see Sec.  1060.1).
    There was no disagreement on the technological feasibility of the 
Marine SI diurnal emission standard EPA is considering. The marine 
industry has expressed a commitment to developing consensus standards 
for the installation of carbon canisters in boats. However, they have 
noted that the development of these consensus standards will take time 
and that time would be needed for an orderly transition to installing 
the diurnal emission controls to their boat models. Therefore, as noted 
earlier, we are giving an additional 18 months of lead time, compared 
to the proposal, which means that the diurnal standard will apply 
starting on July 31, 2011. In addition, in response to concerns that 
there are many small boat builders that may need additional time to 
become familiar with carbon canister technology and learn how to 
install canisters in their boats, we are adopting interim allowances 
that will give additional time for a limited number of new boats. Small 
boat builders could choose between a percentage-based phase-in for one 
year or an allowance to produce up to 1,200 vessels without diurnal 
systems over the first two years. The options available to boat 
builders are described in more detail in Section VI.C.3 and Section 
VI.G.2.f.
    In developing the proposal, the majority of large nonhandheld 
equipment manufacturers indicated that they would be using low-
permeation fuel lines in the near term as part of their current product 
plans. In addition, the Panel expressed concern that small equipment 
manufacturers who do not sell products in California may not 
necessarily be planning on using low-permeation fuel lines in 2008. 
Therefore, we proposed that the fuel line permeation standards would 
take effect in 2008 for most nonhandheld equipment manufacturers and in 
2009 for small-volume equipment manufacturers. Given that we are not 
adopting the final rule until mid-2008, we have delayed the 
implementation of the low-permeation fuel line requirement until 
January 1, 2009 for nonhandheld equipment. We are keeping the 2009 
implementation date for low-permeation fuel line for small businesses 
producing Small SI nonhandheld equipment. We believe the 2009 date is 
feasible for all equipment manufacturers, given that fuel line meeting 
the low permeation standards is already widely available and 
manufacturers selling most types of nonhandheld equipment in California 
were required to use such fuel lines starting in 2007 or 2008.
(b) Fuel Tank ABT and Early-Incentive Program
    The Panel recommended that we propose ABT and early-allowance 
programs for fuel tank permeation. We are adopting these programs in 
this final rule. The provisions of the ABT and early-allowance programs 
are described above in Section VI.D.
(c) Broad Definition of Emission Family
    The Panel recommended that we propose broad emission families for 
fuel tank emission families similar to the existing provisions for 
recreational vehicles. As described earlier in Section VI.F.3, we are 
adopting provisions that allow fuel tank emission families to be based 
on type of material (including additives such as pigments, 
plasticizers, and UV inhibitors that are expected to affect control of 
emissions), emission control strategy, and production methods. This 
would allow fuel tanks of different sizes, shapes, and wall thicknesses 
to be grouped into the same emission family (see Sec.  1060.230). In 
addition, Small SI and Marine SI fuel tanks could be allowed in the 
same emission family if the tanks meet these criteria. Manufacturers 
therefore will be able to broadly group similar fuel tanks into the 
same emission family and then test only the configuration most likely 
to exceed the emission standard.
(d) Compliance Progress Review for Marine Fuel Tanks
    During the development of the proposed rule, we worked closely with 
the recreational marine fuel tank industry to understand their 
products, business practices, and production processes. Information 
gathered from these interactions was used to craft the proposed 
regulatory provisions related to controlling gasoline fuel tank 
permeation emissions. During these discussions, important issues were 
identified with respect to concerns regarding the technical feasibility 
of controlling permeation emissions from rotation-molded tanks made 
from cross-link polyethylene (XLPE).
    Manufacturers asserted that the availability of rotation-molded 
fuel tanks is critical to the marine industry. This type of fuel tank 
is installed in many recreational marine vessels powered by SD/I and 
outboard engines. The rotation-molding process, which has low capital 
costs relative to injection molding, facilitates the economical 
production of fuel tanks in the low production volumes required by boat 
builders. Furthermore, plastic fuel tanks offer advantages over metal 
fuel tanks, both in terms of cost and corrosion resistance. The 
advantages of XLPE over other plastics used in fuel tanks today, such 
as HDPE, are its compatibility with the rotation-molding process and 
the ability of XLPE fuel tanks to meet the U.S. Coast Guard safety 
tests, especially the flame-resistance test. Nearly all manufacturers 
of rotation-molded marine fuel tanks qualify as small businesses under 
this rule.
    We have concluded that the 2012 fuel permeation standards are 
technologically feasible for rotation-molded marine fuel tanks. This 
conclusion is supported by data presented in the Final RIA. As can be 
seen from the comments on the proposed rule and related information in 
the public docket, several rotation-molded tank manufacturers support 
EPA's proposed standards and implementation dates and have provided 
information to support their positions. We originally proposed tank 
permeation standards for these fuel tanks in 2002. Since that time, 
several manufacturers have shown progress in the development of low-
permeation, rotation-molded tanks. In addition, this rule provides 
about 36 months of lead time for these manufacturers to address 
remaining technology issues, certify their products, and prepare for 
production of certified fuel tanks.
    However, several other rotation-molded tank manufacturers are not 
as far along in their technological progress toward meeting the 
standards and are not certain about their ability to meet EPA 
requirements in 2012. To address this situation, these manufacturers 
have requested that EPA perform a technical review in 2010 to determine 
whether the compliance dates should be adjusted. However, for the 
reasons discussed above, we believe that the tank permeation standards 
have been demonstrated to be technologically feasible in the 2012 time 
frame and do not look favorably upon the request for a technology 
review of the permeation standard.
    Nevertheless, we are concerned about the potential long-term 
impacts on the small businesses that have not yet developed 
technologies that meet the new emission standards. Although marine fuel 
tanks must comply with Coast Guard safety regulations, marine fuel tank 
manufacturers have never been required to certify to permeation 
standards. The rotation-molded tank

[[Page 59122]]

manufacturers are generally small businesses with limited engineering 
staffs and are dependent on materials suppliers for their raw 
materials.
    During the next few years, EPA intends to hold periodic progress 
reviews with small businesses that make rotation-molded fuel tanks. The 
purpose of these progress reviews will be to monitor the progress of 
individual companies towards compliance with the tank permeation 
standards and to provide feedback as needed. Rather than conducting a 
broad program with the entire industry, we plan to conduct separate, 
voluntary reviews with each interested company. These sessions will be 
instrumental to EPA in following the progress for these companies and 
assessing their efforts and potential problems.
    To help address small business concerns, we are relying on the 
small-volume manufacturer hardship relief provisions in 40 CFR 
1068.250. These provisions are described below. In the event that a 
small business is unsuccessful in the 2012 model year and seeks 
hardship relief, the progress reviews described above would provide an 
important foundation in determining whether a manufacturer has taken 
all possible steps to comply with the permeation standards in a timely 
manner.
(e) Design-Based Certification
    For recreational vehicles, manufacturers using metal fuel tanks may 
certify by design to the tank permeation standards. Tanks using design-
based certification provisions are not included in the ABT program 
because they are assigned a certification emission level equal to the 
standard. The Panel recommended that we propose to allow design-based 
certification for metal tanks and plastic fuel tanks with a continuous 
EVOH barrier. The Panel also recommended that we propose design-based 
certification for carbon canisters. A detailed description of the new 
design-based certification options we are adopting is presented earlier 
in Section VI.F.8 of this document.
    The National Marine Manufacturers Association (NMMA), the American 
Boat and Yacht Council (ABYC), and the Society of Automotive Engineers 
(SAE) have industry-recommended practices for boat designs that must be 
met as a condition of NMMA membership. NMMA stated that they are 
working to update these recommended practices to include installation 
instructions for carbon canisters and design specifications for low-
permeation fuel lines. The Panel recommended that EPA accept data used 
for meeting the voluntary requirements as part of the EPA 
certification. We will allow this data to be used as part of EPA 
certification as long as it is collected consistent with the test 
procedures and other requirements described in this final rule.
(f) Marine Diurnal Allowances
    As described above, manufacturers expressed concern that many 
small-volume boat builders may need additional time to develop 
installation procedures and install carbon canisters in their boats. To 
address this, we are establishing an interim allowance program that 
will give additional time for these manufacturers for a certain number 
of boats. Under this program, each small-volume boat builder will be 
allowed to sell these boats without the diurnal emission controls that 
would otherwise be required. These allowances are intended to help 
small boat builders engage in an orderly transition to the new 
standards and will only be available for boats produced in the first 
two years of the program. This allowance program applies only to boats 
with installed fuel tanks that are expected to use carbon canisters to 
meet the diurnal emission standards. Therefore, it does not apply to 
portable fuel tanks, personal watercraft, or outboard engines with 
under-cowl fuel tanks. If a small-volume boat builder chooses to use 
this allowance provision, then the 50 percent phase-in for the first 
year, as described in Section VI.C.3, would not apply.
    Specifically, each small-volume boat builder will have a total of 
1,200 allowances that may be used, at the manufacturer's discretion, 
for boats produced from July 31, 2011 through July 31, 2013.\113\ For 
instance, a small boat builder could produce 800 boats in the first 
year and 400 in the second year without diurnal emission controls. For 
most small boat builders, we expect that this allowance program will 
result in an additional year, or even two years, of lead time for them 
to address potential installation issues related to carbon canisters.
---------------------------------------------------------------------------

    \113\ In this context, the date of production means the date on 
which the engine is installed in the vessel. In the case of boats 
using outboard engines, it is the date on which the fuel tank is 
installed.
---------------------------------------------------------------------------

    Under this diurnal allowance approach for small-volume boat 
builders, such boat builders will only need to place a label on the 
vessel with a statement acknowledging that an allowance is being used. 
In addition, the small-volume boat builder must notify EPA of its 
intent to use the allowances prior to producing any exempted vessels. 
The small-volume boat builder must also maintain records of the number 
of allowances used and submit a report to EPA showing the number of 
allowances used in each year. Note that boats exempted from diurnal 
requirements must still use fuel lines and fuel tanks that meet 
permeation standards.
(g) Hardship Provisions
    We are adopting two types of hardship provisions consistent with 
the Panel recommendations. EPA used the SBA size standards for purposes 
of defining ``small businesses'' for its regulatory flexibility 
analysis. The eligibility criteria for the hardship provisions 
described below reflect EPA's consideration of the Panel's 
recommendations and a reasonable application of existing hardship 
provisions. As has been our experience with similar provisions already 
adopted, we anticipate that hardship mechanisms will be used sparingly. 
First, under the unusual circumstances hardship provision, any 
manufacturer subject to the new standards may apply for hardship relief 
if circumstances outside its control cause the failure to comply and if 
failure to sell the subject engines or equipment or fuel system 
component would have a major impact on the company's solvency (see 
Sec.  1068.245). An example of an unusual circumstance outside a 
manufacturer's control may be an ``Act of God,'' a fire at the 
manufacturing plant, or the unforeseen shutdown of a supplier with no 
alternative available. The terms and time frame of the relief will 
depend on the specific circumstances of the company and the situation 
involved. As part of its application for hardship, a company will be 
required to provide a compliance plan detailing when and how it will 
achieve compliance with the standards. This hardship provision will be 
available to all manufacturers of engines, equipment, boats, and fuel 
system components subject to the new standards, regardless of business 
size.
    Second, an economic hardship provision allows small businesses 
subject to the new standards to petition EPA for limited additional 
lead time to comply with the standards (see Sec.  1068.250). A small 
business must make the case that it has taken all possible business, 
technical, and economic steps to comply, but the burden of compliance 
costs would have a significant impact on the company's solvency. 
Hardship relief could include requirements for interim emission 
reductions and/or the purchase and use of emission credits. The length 
of the

[[Page 59123]]

hardship relief decided during review of the hardship application will 
be up to one year, with the potential to extend the relief as needed. 
We anticipate that one to two years will normally be sufficient. As 
part of its application for hardship, a company will be required to 
provide a compliance plan detailing when and how it will achieve 
compliance with the standards.
    The criteria for determining which manufacturers are eligible for 
the economic hardship (as well as other small-volume manufacturer 
flexibilities described in this section) are presented in Sections 
III.F.2 and IV.G for Marine SI engine manufacturers; in Section V.F.2 
for nonhandheld engine manufacturers; and in Section V.F.3 for 
nonhandheld equipment manufacturers. For handheld equipment 
manufacturers, EPA is using the existing small-volume manufacturer 
criterion, which relies on a production cut-off of 25,000 pieces of 
handheld equipment per year. For boat builders and fuel-system 
component manufacturers, EPA is basing the determination of whether a 
company is a small business eligible for the hardship provision on the 
SBA size standards at 13 CFR 121. Under SBA size standards, a boat 
builder or fuel-system component manufacturer is a small business if it 
has 500 or fewer employees.
    The criteria for determining which manufacturers are eligible for 
the economic hardship (as well as other small-volume manufacturer 
flexibilities described in this section) are presented in Sections 
III.F.2 and IV.G for Marine SI engine manufacturers; in Section V.F.2 
for nonhandheld engine manufacturers; and in Section V.F.3 for 
nonhandheld equipment manufacturers. For handheld equipment 
manufacturers, EPA is using the existing small-volume manufacturer 
criterion, which relies on a production cut-off of 25,000 pieces of 
handheld equipment per year. For boat builders and fuel-system 
component manufacturers, EPA is basing the determination of whether a 
company is a small business on the SBA definition. Under SBA 
regulations, a boat builder or fuel-system component manufacturer is a 
small business if it has 500 or fewer employees.
    Because many boat builders, nonhandheld equipment manufacturers, 
and handheld equipment manufacturers will depend on fuel tank 
manufacturers and fuel line manufacturers to supply certified products 
in time to produce complying vessels and equipment, we are also 
establishing a hardship provision for all Marine SI vessel 
manufacturers and Small SI equipment manufacturers, regardless of size. 
The hardship provision allows the boat builder or equipment 
manufacturer to request more time if they are unable to obtain a 
certified fuel-system component and they are not at fault and would 
otherwise face serious economic hardship (see Sec.  1068.255).

H. Technological Feasibility

    We believe there are several strategies that manufacturers can use 
to meet the new evaporative emission standards. We have collected and 
will continue to collect emission test data on a wide range of 
technologies for controlling evaporative emissions. The design-based 
certification levels discussed above rely on this test data and we may 
amend the list of approved designs and emission levels as more data 
become available.
    In the following sections we briefly describe how we selected 
specific emission standards and implementation dates, followed by a 
more extensive discussion of the expected emission control 
technologies. A more detailed discussion of the feasibility of the new 
evaporative requirements, including all the underlying test data, is 
included in Chapter 5 of the Final RIA. See Table VI-1 for a summary of 
the new evaporative emission standards.
(1) Level of Standards
    The fuel line and fuel tank permeation standards for Small SI 
equipment and Marine SI vessels are based on the standards already 
adopted for recreational vehicles. These applications use similar 
technology in their fuel systems. In cases where the fuel systems 
differ we have identified technological approaches that could be used 
to meet these same emission levels. The control strategies are 
discussed below. For fuel lines used with cold-weather equipment, we 
are adopting a relaxed set of standards based on available permeation 
data. In addition, we have new higher numerical standards for fuel tank 
permeation for tests performed at higher temperature (40 [deg]C vs. 28 
[deg]C). These higher numerical standards are based on data described 
in Chapter 5 of the Final RIA.
    For fuel tanks installed in personal watercraft and for portable 
marine fuel tanks, we are adopting diurnal emission standards based on 
the current capabilities of these systems. We are basing the new 
standard for other installed marine fuel tanks on the capabilities of 
passive systems that store emitted vapors in a carbon canister. The 
Final RIA describes the test results on passively purged canisters and 
other technologies that led us to the level of the diurnal emission 
standard.
    We measured running loss emissions and found that some Small SI 
products have very high emission levels. The large variety of 
manufacturers and equipment types makes it impractical to design a 
measurement procedure, which means that we are unable to specify a 
performance standard. We are instead adopting a design standard for 
running losses from nonhandheld Small SI equipment by specifying that 
manufacturers may use any of a variety of specified design solutions, 
as described in Section VI.C.5. Several of these design options are 
already in common use today.
    We are requiring that equipment and vessel manufacturers use good 
engineering practices in their designs to minimize refueling spitback 
and spillage. In general, the regulation simply requires manufacturers 
to use system designs that are commonly used today. Several refueling 
spitback and spillage control strategies are discussed in Chapter 5 of 
the Final RIA.
(2) Implementation Dates
    Low-permeation fuel line is widely available today. Many Small SI 
equipment manufacturers certifying to permeation standards in 
California are selling products with low-permeation fuel line 
nationwide. In addition, many boat builders have begun using low-
permeation marine fuel lines to feed fuel from the fuel tank to the 
engine. For this reason, we are implementing the fuel line permeation 
standards in 2009 for nonhandheld Small SI equipment and for Marine SI 
vessels. The dates provide more than two years additional lead time 
beyond the California requirements for Small SI equipment. For handheld 
equipment, there are no fuel line permeation requirements in 
California. In addition, injection molded fuel lines are common in many 
applications rather than straight-run extruded fuel line. For this 
reason we are delaying implementation of fuel line permeation standards 
for handheld equipment until 2012 (or 2013 for small volume emission 
families). Primer bulbs and many of the fuel line segments used under 
the cowl of outboard marine engines are also injection molded. In 
addition, these fuel lines are not subject to standards in California. 
We are providing additional lead time for manufacturers to address 
emissions from these fuel lines as well. The permeation standard begins 
in 2011 for primer bulbs used with marine fuel lines; permeation 
standards for under-cowl fuel lines phase in between 2010 and 2015.
    Similar to fuel line technology, low-permeation fuel tank 
constructions are

[[Page 59124]]

used today in automotive and portable fuel tank applications. This 
technology has been developed for use in recreational vehicles and for 
Small SI equipment sold in California. The available technology options 
include surface treatment and multi-layer constructions, though 
rotation-molding presents some unique design challenges. Based on 
discussions with fuel tank manufacturers, and our own assessment of the 
lead time necessary to change current industry practices, we believe 
low-permeation fuel tank technology can be applied in the 2011-2012 
model years for Small SI and Marine SI fuel tanks. We are implementing 
the fuel tank permeation standards in 2011 for Class II equipment, 
portable marine fuel tanks and personal watercraft. For Class I 
equipment and other installed marine fuel tanks, the implementation 
date is 2012. We are phasing in the handheld fuel tank standards on the 
following schedule: 2009 for equipment models certifying in California, 
2011 for structurally integrated nylon tanks, 2013 for small-volume 
families, and 2010 for the remaining fuel tanks used with handheld 
equipment. We believe this will facilitate an orderly transition from 
current fuel tank designs to low-permeation fuel tanks.
    We are allowing until 2012 for large marine fuel tanks to meet 
permeation standards largely due to concerns raised over the 
application of low-permeation rotation-molded fuel tank technology in 
marine applications. The majority of these fuel tanks are typically 
rotation-molded by small businesses. Although low-permeation technology 
has emerged for these applications, we believe the allotted lead time 
will be necessary for all manufacturers to be ready to implement this 
technology. This will give these manufacturers time to make changes to 
their production processes to comply with the standards and to make any 
tooling changes that may be necessary. We are similarly implementing 
the fuel tank permeation standards for Class I fuel tanks installed in 
Small SI equipment in 2012, mostly to align with the implementation 
date for the Phase 3 exhaust emission standards. This is especially 
important for Class I engines where most of the engine manufacturers 
will also be responsible for meeting evaporative emission standards.
    We are implementing the running loss standards for nonhandheld 
Small SI equipment in the same year as the exhaust emission standards. 
We believe this is appropriate because the running loss vapor will in 
some cases be routed to the intake manifold for combustion in the 
engine. Manufacturers will need to account for the effect of the 
additional running loss vapor in their engine calibrations.
    We are implementing the new diurnal standards for portable marine 
fuel tanks on January 1, 2010 and for personal watercraft beginning 
with the 2010 model year. We believe these requirements will not result 
in a significant change from current practice so the dates will provide 
sufficient lead time for manufacturers to comply with standards. For 
other installed fuel tanks, however, we are adopting a later 
implementation date beginning in mid-2011. The development of canisters 
as an approach to control diurnal emissions without pressurizing the 
tanks has substantially reduced the expected level of effort to 
redesign and retool for making fuel tanks. However, canister technology 
has not yet been applied commercially to marine applications and the 
final rule includes added lead time for manufacturers to work out 
various technical parameters associated with the large variety of boat 
models and tanks.
(3) Technological Approaches
    We believe several emission control technologies can be used to 
reduce evaporative emissions from Small SI equipment and Marine SI 
vessels. These emission control strategies are discussed below. Chapter 
5 of the Final RIA presents more detail on these technologies and 
Chapter 6 provides information on the estimated costs.
(a) Fuel Line Permeation
    Fuel lines produced for use in Small SI equipment and Marine SI 
applications are generally extruded nitrile rubber with a cover for 
abrasion resistance. Fuel lines used in Small SI applications often 
meet SAE J30 R7 specifications, including a permeation limit of 550 g/
m2/day at 23 [deg]C on ASTM Fuel C. Fuel lines for personal 
watercraft are typically designed to meet SAE J2046, which includes a 
permeation limit of 300 g/m2/day at 23 [deg]C on ASTM Fuel 
C.\114\ Marine fuel lines subject to Coast Guard requirements under 33 
CFR part 183 are designated as either Type A or Type B and either Class 
1 or Class 2. SAE J1527 provides detail on these fuel line designs. 
Type A fuel lines pass the U.S. Coast Guard fire test while Type B 
designates fuel lines that have not passed this test. Class 1 fuel 
lines are intended for fuel-feed lines where the fuel line is normally 
in contact with liquid fuel and has a permeation limit of 100 g/
m2/day at 23 [deg]C. Class 2 fuel lines are intended for 
vent lines and fuel fill necks where liquid fuel is not continuously in 
contact with the fuel line; it has a permeation limit of 300 g/
m2/day at 23 [deg]C. Recently, SAE J1527 has been modified 
to include a ``-15'' designation for fuel lines meeting a permeation 
limit of 15 g/m2/day at 23 [deg]C on fuel CE10. In general 
practice, most boat builders use Class 1 fuel lines for both vent lines 
and fuel-feed lines to avoid carrying two types of fuel lines. Most 
fuel fill necks, which have a much larger diameter and are constructed 
differently, use materials meeting specifications for Class 2 fuel 
lines.
---------------------------------------------------------------------------

    \114\ Society of Automotive Engineers Surface Vehicle Standard, 
``Personal Watercraft Fuel Systems,'' SAE J2046, Issues 1993-01-19 
(Docket EPA-HQ-OAR-2004-0008-0179).
---------------------------------------------------------------------------

    Low-permeability fuel lines are in production today. One fuel line 
design, already used in some marine applications, uses a thermoplastic 
layer between two rubber layers to control permeation. This 
thermoplastic barrier may be either nylon or ethyl vinyl acetate. 
Barrier approaches in automotive applications include fuel lines with 
fluoroelastomers such as FKM and fluoroplastics such as Teflon and THV. 
In addition to presenting data on low-permeation fuel lines, Chapter 5 
of the Final RIA lists several fuel-system materials and their 
permeation rates. Molded rubber fuel line components, such as 
conventional primer bulbs and some handheld fuel lines, could meet the 
standard by using a fluoroelastomer such as FKM. The Final RIA also 
discusses low-permeation materials that retain their flexibility at low 
temperatures.
    Automotive fuel lines made of low-permeation plastic tubing are 
generally made from fluoroplastics. An added benefit of these low-
permeability fuel lines is that some fluoropolymers can be made to 
conduct electricity and therefore prevent the buildup of static 
charges. This type of fuel line can reduce permeation by more than an 
order of magnitude below the level associated with barrier-type fuel 
lines, but it is relatively inflexible and will need to be molded in 
specific shapes for each equipment or vessel design. Manufacturers have 
commented that they need flexible fuel lines to fit their many designs, 
resist vibration, prevent kinking, and simplify connections and 
fittings. An alternative to custom molding is to manufacture fuel lines 
with a corrugated profile (like a vacuum hose). Producing flexible 
fluoropolymer fuel lines is somewhat more expensive but the result is a 
product that meets emission standards without compromising in-use 
performance or ease of installation.

[[Page 59125]]

(b) Fuel Tank Permeation
    Blow-molding is widely used for the manufacture of Small SI, 
portable marine, and PWC fuel tanks. Typically, blow-molding is 
performed by creating a hollow tube, known as a parison, by pushing 
high-density polyethylene (HDPE) through an extruder with a screw. The 
parison is then pinched in a mold and inflated with an inert gas. In 
highway applications, low-permeation plastic fuel tanks are produced by 
blow molding a layer of ethylene vinyl alcohol (EVOH) or nylon between 
two layers of polyethylene. This process is called coextrusion and 
requires at least five layers: The barrier layer, adhesive layers on 
either side of the barrier layer, and two outside layers of HDPE that 
make up most of the thickness of the fuel tank walls. However, multi-
layer construction requires additional extruder screws, which 
significantly increases the cost of the blow-molding process. One 
manufacturer has developed a two-layer barrier approach using a 
polyarylamide inner liner. This technology is not in production yet but 
appears to be capable of permeation levels similar to the traditional 
EVOH barrier designs. This approach will enable blow-molding of low-
permeation fuel tanks with only one additional extruder screw.
    Multi-layer fuel tanks can also be formed using injection molding. 
In this method a low-viscosity polymer is forced into a thin mold to 
create the two sides of the fuel tank (e.g., top and bottom), which are 
then fused together. To add a barrier layer, a thin sheet of the 
barrier material is placed inside the mold before injecting the 
poleythylene. The polyethylene, which generally has a much lower 
melting point than the barrier material, bonds with the barrier 
material to create a shell with an inner liner.
    A less expensive alternative to coextrusion is to blend a low-
permeation resin with the HDPE and extrude it with a single screw to 
create barrier platelets. The trade name typically used for this 
permeation control strategy is Selar. The low-permeability resin, 
typically EVOH or nylon, creates noncontinuous platelets in the HDPE 
fuel tank to reduce permeation by creating long, tortuous pathways that 
the hydrocarbon molecules must navigate to escape through the fuel tank 
walls. Although the barrier is not continuous, this strategy can still 
achieve greater than a 90 percent reduction in permeation of gasoline. 
EVOH has much higher permeation resistance to alcohol than nylon so it 
will likely be the preferred material for meeting the new standard 
based on testing with a 10 percent ethanol fuel.
    Many fuel tanks for Small SI equipment are injection-molded out of 
either HDPE or nylon. Injection-molding can be used with lower 
production volumes than blow-molding due to lower tooling costs. In 
this method, a low-viscosity polymer is forced into a thin mold to 
create the two sides of the fuel tank; these are then fused together 
using vibration, hot plate or sonic welding. A strategy such as Selar 
has not been demonstrated to work with injection-molding due to high 
shear forces.
    An alternative to injection-molding is thermoforming, which is also 
cost-effective for lower production volumes. In this process, sheet 
material is heated and then drawn into two vacuum dies. The two halves 
are then fused while the plastic is still molten to form the fuel tank. 
Low-permeation fuel tanks can be constructed using this process by 
using multi-layer sheet material. This multi-layer sheet material can 
be extruded using materials similar to those used with multi-layer 
blow-molded fuel tank designs. A typical barrier construction includes 
a thin EVOH barrier, adhesion layers on both sides, a layer of HDPE 
regrind, and outside layers of pure virgin HDPE.
    Regardless of the molding process, another type of low-permeation 
technology for HDPE fuel tanks will be to treat the surfaces with a 
barrier layer. Two ways of achieving this are known as fluorination and 
sulfonation. The fluorination process causes a chemical reaction where 
exposed hydrogen atoms are replaced by larger fluorine atoms, which 
creates a barrier on the surface of the fuel tank. In this process, 
batches of fuel tanks are generally processed post-production by 
stacking them in a steel container. The container is then voided of air 
and flooded with fluorine gas. By pulling a vacuum in the container, 
the fluorine gas is forced into every crevice in the fuel tanks. 
Fluorinating with this process treats both the inside and outside 
surfaces of the fuel tank, thereby improving the reliability and 
durability of the permeation-resistance. As an alternative, blow-molded 
fuel tanks can be fluorinated during production by exposing the inside 
surface of the fuel tank to fluorine during the molding process. 
However, this method may not prove as effective as post-production 
fluorination.
    Sulfonation is another surface treatment technology where sulfur 
trioxide is used to create the barrier by reacting with the exposed 
polyethylene to form sulfonic acid groups on the surface. Current 
practices for sulfonation are to place fuel tanks on a small assembly 
line and expose the inner surfaces to sulfur trioxide, then rinse with 
a neutralizing agent. However, sulfonation can also be performed using 
a batch method. Either of these sulfonation processes can be used to 
reduce gasoline permeation by more than 95 percent.
    A fourth method for molding plastic fuel tanks is called rotation-
molding. Rotation-molding is a lower-cost alternative for smaller 
production volumes. In this method, a mold is filled with a powder form 
of polyethylene with a catalyst material. While the mold is rotated in 
an oven, the heat melts the plastic. When cross-link polyethylene 
(XLPE) is used, this heat activates a catalyst in the plastic, which 
causes a strong cross-link material structure to form. This method is 
often used for relatively large fuel tanks in Small SI equipment and 
for installed marine fuel tanks. The advantages of this method are low 
tooling costs, which allows for smaller production volumes, and 
increased strength and flame resistance. Flame resistance is especially 
important for installed marine fuel tanks subject to 33 CFR part 183. 
At this time, the barrier treatment approaches discussed above for HDPE 
have not been demonstrated to be effective for XLPE.
    We have evaluated two permeation control approaches for rotation-
molded fuel tanks. The first is to form an inner layer during the 
molding process. Historically, the primary approach for this is to use 
a drop box that opens after the XLPE tank begins to form. However, 
processes have been developed that eliminate the need for a drop box. 
With this construction a low-permeation inner liner can be molded into 
the fuel tank. Manufacturers are currently developing acetyl copolymer, 
nylon, and polybutylene terephthalate inner liners for this 
application. In fact, one fuel tank manufacturer is already selling 
tanks with a nylon inner liner into Class II Small SI equipment 
applications. Initial testing suggests that these barrier layers could 
be used to achieve the new standards.
    The second approach to creating a barrier layer on XLPE rotation-
molded fuel tanks is to use an epoxy barrier coating. One manufacturer 
has demonstrated that a low-permeation barrier coating can adhere to an 
XLPE fuel tank resulting in a permeation rate below the new standard. 
In this case, the manufacturer used a low level of fluorination to 
increase the surface energy of the XLPE so the epoxy will adhere 
properly.

[[Page 59126]]

    Marine fuel tanks are sometimes also fabricated out of either metal 
or fiberglass. Metal does not permeate so tanks that are constructed 
and installed properly to prevent corrosion should meet the new 
standards throughout their full service life. For fiberglass fuel 
tanks, one manufacturer has developed a composite that has been 
demonstrated to meet the new fuel tank permeation standard. Permeation 
control is achieved by incorporating fillers into a resin system and 
coating the assembled tank interior and exterior. This filler is made 
up of nanocomposites (very small particles of treated volcanic ash) 
which are dispersed into a carrier matrix. These particles act like the 
barrier platelets discussed above by creating a tortuous pathway for 
hydrocarbon migration through the walls of the fuel tank.
(c) Diurnal
    Portable marine fuel tanks are currently equipped with a valve that 
can be closed by the user when the tank is stored to contain vapor 
within the fuel tank. These fuel tanks are designed to hold the 
pressure that builds up when a sealed fuel tank undergoes normal daily 
warming. This valve must be opened when the engine is operating to 
prevent a vacuum from forming in the fuel tank as the fuel level in the 
tank decreases. A vacuum in the fuel tank could prevent fuel from being 
drawn into the engine. Because the valve is user-controlled, any 
emission control is dependent on user behavior. This can be corrected 
by replacing the user-controlled valve with a simple one-way valve in 
the fuel cap. For instance, a diaphragm valve that is common in many 
automotive applications seals when under positive pressure but opens at 
low-vacuum conditions.
    Personal watercraft currently use sealed systems with pressure-
relief valves that start venting vapors when pressures reach a 
threshold that ranges from 0.5 to 4.0 psi. We believe the new standard 
can be met through the use of a sealed fuel system with a 1.0 psi 
pressure-relief valve. Personal watercraft should therefore be able to 
meet the new standard with little or no change to current designs.
    For other vessels with installed fuel tanks, manufacturers have 
commented that even 1.0 psi of pressure would be too high for their 
applications.\115\ They expressed concern that their fuel tanks had 
large, flat surfaces that would deform or leak at pressures of 0.5 psi 
or higher. This concern led us to consider several technologies for 
controlling diurnal emissions without pressurizing the tank, including 
carbon canisters, volume-compensating air bags, and bladder fuel tanks.
---------------------------------------------------------------------------

    \115\ U.S. Coast Guard regulations in 33 CFR 183.586 require 
that marine fuel tanks must be designed to withstand 25,000 pressure 
cycles from 0-3 psi. Even though marine fuel tanks typically can 
withstand this pressure cycling without damage to the tank, the 
tanks tend to deform significantly when under pressure.
---------------------------------------------------------------------------

    The primary evaporative emission control device used in automotive 
applications is a carbon canister. With this technology, vapor 
generated in the tank is vented to a canister containing activated 
carbon. The fuel tank must be sealed such that the only venting that 
occurs is through the carbon canister. This prevents more than a 
minimal amount of positive or negative pressure in the tank. The 
activated carbon collects and stores the hydrocarbons. The activated 
carbon bed in automotive canisters is refreshed by drawing air over the 
carbon to purge the hydrocarbon vapors and route them to the engine's 
air intake where they are eventually burned as fuel for the engine.
    In a marine application, routing purged vapors to the engine's 
intake is not practical because of the potential complications with the 
engine and tank created by the variety of manufacturers and engine/tank 
configurations in the fleet each year. Therefore, canisters were not 
originally considered to be a practical technology for controlling 
diurnal vapor from boats. Since that time, however, we have collected 
information showing that the canister is purged sufficiently during 
cooling periods to substantially reduce diurnal emissions. When the 
fuel in the tank cools, fresh air is drawn back through the canister 
into the fuel tank. This fresh air partially purges the canister and 
returns hydrocarbons to the fuel tank. This creates open sites in the 
carbon so the canister can again collect vapor during the next heating 
event. Test data presented in Chapter 5 of the Final RIA show that a 
canister starting from empty is more than 90 percent effective until it 
reaches the point of saturation. Once it reaches saturation, a canister 
is still capable of reducing diurnal emissions by more than 60 percent 
due to the normal airflow across the canister bed during cooling 
periods. Adding active purging to route vapors to the engine's air 
intake during engine operation would improve the level of control 
somewhat, depending on how often the engine is operated.
    Manufacturers have raised the concern that it is common for fuel to 
pass out the vent line during refueling. If there were a canister in 
the vent line it would become saturated with fuel. While this would not 
likely cause permanent damage to the canister, we believe marine fuel 
systems should prevent liquid fuel from exiting the vent line for both 
environmental and safety reasons. A float valve or small orifice in the 
entrance to the vent line from the fuel tank would prevent liquid fuel 
from reaching the canister or escaping from the tank. Any pressure 
build-up from such a valve would cause fuel to back up the fill neck 
and shut off the fuel dispensing nozzle as it now does in automotive 
applications. In addition, a vapor space should be included to account 
for fuel expansion. Manufacturers have also expressed concerns for 
canister durability in marine applications due to vibration, shock, and 
humidity. However, there are now marine grades of activated carbon that 
are harder and more moisture-resistant than typical automotive carbon. 
Manufacturers installed canisters equipped with the marine grade carbon 
on 14 boats in a pilot program and encountered no problems. This is 
discussed in more detail in Chapter 5 of the Final RIA.
    Another concept for minimizing pressure in a sealed fuel tank is 
through the use of a volume-compensating air bag. The purpose of the 
bag is to fill up the vapor space above the liquid fuel. By minimizing 
the vapor space, the equilibrium concentration of fuel vapors occupies 
a smaller volume, resulting in a smaller mass of vapors. As the 
equilibrium vapor concentration increases with increasing temperature, 
the vapor space expands, which forces air out of the bag through the 
vent to atmosphere. Because the bag volume decreases to compensate for 
the expanding vapor space, total pressure inside the fuel tank stays 
very close to atmospheric pressure. Once the fuel tank cools in 
response to cooling ambient temperatures the resulting vacuum in the 
fuel tank would make the bag expand again by drawing air from the 
surrounding environment. Our test results show that pressure could be 
kept below 0.8 psi using a bag with a capacity equal to 25 percent of 
the fuel tank capacity. The use of a volume-compensating air bag, in 
conjunction with a pressure-relief valve, would be very effective in 
controlling diurnal emissions.
    Probably the most effective technology for reducing diurnal 
emissions from marine fuel tanks is through the use of a collapsible 
fuel bladder. In this concept, a low-permeation bladder is installed in 
the fuel tank to hold the fuel. As fuel is drawn from the bladder the 
vacuum created collapses the bladder. There is, therefore, no vapor 
space and no

[[Page 59127]]

pressure build-up from fuel heating. No vapors would be vented to the 
atmosphere since the bladder is sealed. This option could also 
eliminate running loss emissions and significantly reduce emissions 
during refueling that would normally result from dispensed fuel 
displacing vapor in the fuel tank. We have received comments that this 
would be cost-prohibitive because it could increase costs from 30 to 
100 percent, depending on tank size. However, bladder fuel tanks have 
safety advantages and they are already sold by at least one 
manufacturer to meet market demand in niche applications.
(d) Running Loss
    Running loss emissions can be controlled by sealing the fuel cap 
and routing vapors from the fuel tank to the engine intake. In doing 
so, vapors generated by heat from the engine will be burned in the 
engine's combustion chamber. It may be necessary to use a valve or 
limited-flow orifice in the purge line to prevent too much fuel vapor 
from reaching the engine and to prevent liquid fuel from entering the 
line if the equipment turns over. Depending on the configuration of the 
fuel system and purge line, a one-way valve in the fuel cap may be 
desired to prevent a vacuum in the fuel tank during engine operation. 
We anticipate that a system like this will eliminate running loss 
emissions. However, higher temperatures during operation and the 
additional length of vapor line will slightly increase permeation. 
Considering these effects, we still believe that the system described 
here will reduce running losses from Small SI equipment by more than 90 
percent.
    We are not adopting requirements to control running loss emissions 
from marine vessels. For portable marine fuel tanks and fuel tanks 
installed in vessels other than personal watercraft we expect the 
significant distance from the engine and the cooling effect of 
operating the vessel in water to prevent significant heating of the 
fuel tanks during engine operation. For personal watercraft, fuel tanks 
have a sealed system with pressure relief that should help contain 
running loss emissions. For other installed fuel tanks, we expect the 
system for controlling diurnal emissions will capture about half of any 
running losses that would occur.
(e) Diffusion
    A secondary benefit of the running loss control described above for 
Small SI equipment relates to diffusion emissions. In a system that 
vents running loss vapors to the engine, venting vapors will be routed 
through the vapor line to the engine intake, rather than through open 
vents in the fuel cap. This approach should therefore eliminate 
diffusion emissions.
    In the case of marine vessels, diffusion emissions are generally 
minimal due to long vent lines on the fuel tanks or the use of sealed 
fuel tanks. Further, the addition of diurnal emission controls will 
effectively control diffusion emissions.
(4) Regulatory Alternatives
    We considered both less and more stringent evaporative emission 
control alternatives for fuel systems used in Small SI equipment and 
Marine SI vessels. Chapter 11 of the Final RIA presents details on this 
analysis of regulatory alternatives. The results of this analysis are 
summarized below. We believe the new permeation standards are 
reflective of available technology and represent a step change in 
emission performance. Therefore, we consider the same permeation 
control scenario in the less stringent and more stringent regulatory 
alternatives.
    For Small SI equipment, we considered a less stringent alternative 
without running loss emission standards for Small SI engines. However, 
we believe controlling running loss emissions from nonhandheld 
equipment is feasible at a relatively low cost. Running loss emissions 
can be controlled by sealing the fuel cap and routing vapors from the 
fuel tank to the engine intake. Not requiring these controls is 
inconsistent with section 213 of the Clean Air Act. For a more 
stringent alternative, we considered applying a diurnal emission 
standard for all Small SI equipment. We believe passively purging 
carbon canisters could reduce diurnal emissions by 50 to 60 percent 
from Small SI equipment. However, we believe there would be significant 
costs to add carbon canisters to all Small SI equipment nationwide, 
especially when taking packaging and vibration into account. The cost 
sensitivity is especially noteworthy given the relatively low emissions 
levels (on a per-equipment basis) from such small fuel tanks.
    For marine vessels, we considered a less stringent alternative, 
where there would be no diurnal emission standard for vessels with 
installed fuel tanks. However, installed fuel tanks on marine vessels 
have much higher capacities than those used in Small SI applications. 
Our analysis indicates that carbon canisters are feasible for boats at 
relatively low cost. While packaging and vibration are also issues with 
marine applications, we believe these issues have been addressed. 
Manufacturers installed carbon canisters in fourteen boats in a pilot 
program. The results demonstrated the feasibility of this technology. 
The new standards are achievable through engineering design-based 
certification with canisters that are much smaller than the fuel tanks. 
In addition, sealed systems, with pressure-control strategies will be 
accepted under the provisions for design-based certification. For a 
more stringent scenario, we considered a standard that would require 
boat builders to use an actively purged carbon canister. This means 
that the engine would draw air through the canister during operation to 
purge the canister of stored hydrocarbons. However, we rejected this 
option because marine engines operate too infrequently to consistently 
purge the canister to allow for increased storage of further vapor 
loading from the fuel tank. The gain in overall efficiency would be 
quite small relative to the complexity of integrating engine purge 
strategies and hardware into a vessel-based control strategy. The 
additional benefit of an actively purged diurnal control system is 
small in comparison to its cost and complexity.
(5) Our Conclusions
    We believe the new evaporative emission standards reflect what 
manufacturers can achieve through the application of available 
technology. We believe the lead time is necessary and adequate for fuel 
tank manufacturers, fuel line manufacturers, engine manufacturers, 
equipment manufacturers, and boat builders to select, design, and 
produce evaporative emission control strategies that will work best for 
their product lines. We expect that meeting these requirements will 
pose a challenge, but one that is feasible when taking into 
consideration the availability and cost of technology, lead time, 
noise, energy, and safety. The role of these factors is presented in 
detail in Chapters 5 and 6 of the Final RIA. As discussed in Section 
VII, we do not believe the new standards will have negative effects on 
energy, noise, or safety and may lead to some positive effects.

VII. Energy, Noise, and Safety

    Section 213 of the Clean Air Act directs us to consider the 
potential impacts on safety, noise, and energy when establishing the 
feasibility of emission standards for nonroad engines. Furthermore, 
section 205 of EPA's 2006 Appropriations Act requires us to assess 
potential safety issues, including the risk of fire and burn to 
consumers in use, associated with the new emission

[[Page 59128]]

standards for nonroad spark-ignition engines below 50 horsepower.\116\ 
As detailed in the following sections, we expect that the new exhaust 
and evaporative emission standards will either have no adverse affect 
on safety, noise, and energy or will improve certain aspects of these 
important characteristics. A more in-depth discussion of these topics 
relative to the new exhaust and evaporative emission standards is 
contained in Chapters 4 and 5 of the Final RIA, respectively. Also, our 
conclusions relative to safety are fully documented in our 
comprehensive safety study which is discussed in the next section.
---------------------------------------------------------------------------

    \116\ Department of the Interior, Environment, and Related 
Agencies Appropriations Act, 2006, Pub. L. No. 109-54, Title II, 
sec. 205, 119 Stat. 499, 532 (August 2, 2005).
---------------------------------------------------------------------------

A. Safety

    We conducted a comprehensive, multi-year safety study of spark-
ignition engines that focused on the four areas where we are adopting 
new emission standards.\117\ These areas are:
---------------------------------------------------------------------------

    \117\ ``EPA Technical Study on the Safety of Emission Controls 
for Nonroad Spark-Ignition Engines < 50 Horsepower,'' Office of 
Transportation and Air Quality, U.S. Environmental Protection 
Agency, Washington, DC, EPA420-R-06-006, March 2006. This document 
is available in Docket EPA-HQ-OAR-2004-0008. This report was also 
subject to peer review, as described in a peer review report that is 
also available in the docket.
---------------------------------------------------------------------------

     New catalyst-based HC+NOX exhaust emission 
standards for Class I and Class II nonhandheld spark-ignition engines;
     New fuel evaporative emission standards for nonhandheld 
and handheld equipment;
     New HC+NOX exhaust emission standards for 
outboard and personal watercraft engines and vessels, and a new CO 
exhaust emission standard for nonhandheld engines used in marine 
auxiliary applications; and
     New fuel evaporative emission standards for outboard and 
personal watercraft engines and vessels.
    Each of these four areas is discussed in greater detail in the next 
sections.
(1) Exhaust Emission Standards for Small Spark-Ignition Engines
    The technology approaches that we assessed for achieving the new 
Small SI engine standards included exhaust catalyst aftertreatment and 
improvements to engine and fuel system designs. In addition to our own 
testing and development effort, we also met with engine and equipment 
manufacturers to better understand their designs and technology and to 
determine the state of technological progress beyond EPA's Phase 2 
emission standards.
    The scope of our safety study included Class I and Class II engine 
systems that are used in residential walk-behind and ride-on lawn mower 
applications, respectively. Residential lawn mower equipment was chosen 
for the following reasons.
     Lawn mowers and the closely-related category of lawn 
tractors overwhelmingly represent the largest categories of equipment 
using Class I and Class II engines.
     Consumer Product Safety Commission (CPSC) data indicate 
that more thermal burn injuries are associated with lawn mowers than 
occur with other nonhandheld equipment; lawn mowers therefore represent 
the largest thermal burn risk for these classes of engines.
     General findings regarding advanced emission control 
technologies for residential lawn and garden equipment carry over to 
commercial lawn and turf care equipment as well as to other nonhandheld 
equipment using Class I and Class II engines.
    We conducted the technical study of the incremental risk on several 
fronts. First, working with CPSC, we evaluated their reports and 
databases and other outside sources to identify those in-use situations 
which create fire and burn risk for consumers. The outside sources 
included meetings, workshops, and discussions with engine and equipment 
manufacturers. From this information, we identified ten scenarios for 
evaluation that covered a comprehensive variety of in-use conditions or 
circumstances which potentially could lead to an increased risk in 
burns or fires.
    Second, we conducted extensive laboratory and field testing of both 
current technology (Phase 2) and prototype catalyst-equipped advanced-
technology engines and equipment (Phase 3) to assess the emission 
control performance and thermal characteristics of the engines and 
equipment. This testing included a comparison of exhaust system, 
engine, and equipment surface temperatures using still and full motion 
video thermal imaging equipment.
    Third, we conducted a design and process Failure Mode and Effects 
Analyses (FMEA) comparing current Phase 2 and Phase 3 compliant engines 
and equipment to evaluate incremental changes in risk probability as a 
way of evaluating the incremental risk of upgrading Phase 2 engines to 
meet Phase 3 emission standards.\118\ This is an engineering analysis 
tool to help engineers and other professional staff to identify and 
manage risk. In an FMEA, potential failure modes, causes of failure, 
and failure effects are identified and a resulting risk probability is 
calculated from these results. This risk probability is used by the 
FMEA team to rank problems for potential action to reduce or eliminate 
the causal factors. Identifying these causal factors is important 
because they are the elements that a manufacturer can consider to 
reduce the adverse effects that might result from a particular failure 
mode.
---------------------------------------------------------------------------

    \118\ ``EPA Technical Study on the Safety of Emission Controls 
for Nonroad Spark-Ignition Engines < 50 Horsepower,'' Office of 
Transportation and Air Quality, U.S. Environmental Protection 
Agency, Washington, DC, EPA420-R-06-006, March 2006. This document 
is available in Docket EPA-HQ-OAR-2004-0008.
---------------------------------------------------------------------------

    Our technical work and subsequent analysis of all the data and 
information strongly indicate that effective catalyst-based standards 
can be implemented without an incremental increase in the risk of fire 
or burn to the consumer either during or after using the equipment. 
Similarly, we did not find any increase in the risk of fire during 
refueling or in storage near typical combustible materials. For 
example, our testing program demonstrated that properly designed 
catalyst-mufflers could, in some cases, actually result in systems that 
were significantly cooler than many current original equipment 
mufflers. A number of design elements appear useful to properly 
managing heat loads including: (1) The use of catalyst designs that 
minimize CO oxidation through careful selection of catalyst size, 
washcoat composition, and precious metal loading; (2) positioning the 
catalyst within the cooling air flow of the engine fan or redirecting 
some cooling air over the catalyst area with a steel shroud; (3) 
redirecting exhaust flow through multiple chambers or baffles within 
the catalyst-muffler; and (4) larger catalyst-muffler volumes than the 
original equipment muffler.
(2) Fuel Evaporative Emission Standards for Nonhandheld and Handheld 
Engines and Equipment
    We reviewed the fuel line and fuel tank characteristics for 
nonhandheld and handheld equipment and evaluated control technology 
which could be used to reduce evaporative emissions from these two 
subcategories. The available technology is capable of achieving 
reductions in fuel tank and fuel line permeation without an adverse 
incremental impact on safety. For fuel lines and fuel tanks, the 
applicable consensus safety standards, manufacturer specific test 
procedures and EPA requirements are sufficient to

[[Page 59129]]

ensure that there will be no increase in the types of fuel leaks that 
lead to fire and burn risk during in-use operation. Instead, these 
standards will reduce vapor emissions both during operation and in 
storage. That reduction, coupled with some expected equipment redesign, 
is expected to lead to reductions in the risk of fire or burn without 
affecting component durability.
    The Failure Mode and Effects Analyses, which was described in the 
previous section, also evaluated permeation and running loss controls 
on nonhandheld engines. We found that these controls will not increase 
the probability of fire and burn risk from those expected with current 
fuel systems, but could in fact lead to directionally improved systems 
from a safety perspective. Finally, the running loss control program 
being promulgated for nonhandheld equipment will lead to changes that 
are expected to reduce risk of fire during in-use operation. Moving 
fuel tanks away from heat sources, improving cap designs to limit 
leakage on tip over, and requiring a tethered cap will all help to 
eliminate conditions which lead to in-use problems related to fuel 
leaks and spillage. Therefore, we believe the application of emission 
control technology to reduce evaporative emissions from these fuel 
lines and fuel tanks will not lead to an increase in incremental risk 
of fires or burns and in some cases is likely to at least directionally 
reduce such risks.
(3) Exhaust Emission Standards for Outboard and Personal Watercraft 
Marine Engines and Vessels and Marine Auxiliary Engines
    Our analysis of exhaust emission standards for OB/PWC engines and 
marine auxiliary engines found that the U.S. Coast Guard (USCG) has 
comprehensive safety standards that apply to engines and fuel systems 
used in these vessels. Additionally, organizations such as the Society 
of Automotive Engineers, Underwriters Laboratories, and the American 
Boat and Yacht Council (ABYC) also have safety standards that apply in 
this area. We also found that the four-stroke and two-stroke direct 
injection engine technologies which are likely to be used to meet the 
exhaust emission standards contemplated for OB/PWC engines are in 
widespread use in the vessel fleet today. These more sophisticated 
engine technologies are replacing the traditional two-stroke carbureted 
engines. The four-stroke and two-stroke direct injection engines meet 
applicable USCG and ABYC safety standards and future products will do 
so as well. The new emission standards must be complementary to 
existing safety standards and our analysis indicates that this will be 
the case. There are no known safety issues with the advanced 
technologies compared with two-stroke carbureted engines. The newer-
technology engines arguably provide safety benefits due to improved 
engine reliability and range in-use. Based on the applicability of USCG 
and ABYC safety standards and the good in-use experience with advanced-
technology engines in the current vessel fleet, we believe new emission 
standards will not create an incremental increase in the risk of fire 
or burn to the consumer.
(4) Fuel Evaporative Emission Standards for Outboard and Personal 
Watercraft Engines and Vessels
    We reviewed the fuel line and fuel tank characteristics for marine 
vessels and evaluated control technology which could be used to reduce 
evaporative emissions from boats. With regard to fuel lines, fuel 
tanks, and diurnal controls, there are rigorous USCG, ABYC, United 
Laboratories, and Society of Automotive Engineers standards which 
manufacturers will continue to meet for fuel system components. All 
these standards are designed to address the in-use performance of fuel 
systems, with the goal of eliminating fuel leaks. The low-permeation 
fuel lines and tanks needed to meet the Phase 3 requirements will need 
to pass these standards and every indication is that they will 
pass.\119\
---------------------------------------------------------------------------

    \119\ ``EPA Technical Study on the Safety of Emission Controls 
for Nonroad Spark-Ignition Engines < 50 Horsepower,'' Office of 
Transportation and Air Quality, U.S. Environmental Protection 
Agency, Washington, DC, EPA420-R-06-006, March 2006. This document 
is available in Docket EPA-HQ-OAR-2004-0008.
---------------------------------------------------------------------------

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

B. Noise

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

C. Energy

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

[[Page 59130]]

due to evaporation, we estimate that the lifetime average fuel savings 
will be about 1.6 gallons for an average piece of Small SI equipment 
and 32 gallons for an average boat. This translates to a fuel savings 
of about 41 million gallons for Small SI equipment and 30 million 
gallons for Marine SI vessels in 2030 when most of the affected 
equipment used in the U.S. will be expected to have evaporative 
emission controls.

VIII. Requirements Affecting Other Engine and Vehicle Categories

    We are making several regulatory changes that will affect other 
engines, equipment, vehicles, and vessels in our nonroad and highway 
programs. These changes are described in the following subsections. As 
noted in these subsections, those changes that were not proposed are 
being made in response to the comments we received.

A. State Preemption

    Section 209(e) of the Clean Air Act prohibits states and their 
political subdivisions from adopting or enforcing standards and other 
requirements relating to the control of emissions from nonroad engines 
or vehicles. Section 209(e) authorizes EPA to waive this preemption for 
California for standards and other requirements for nonroad engines and 
vehicles, excluding new engines that are smaller than 175 horsepower 
used in farm or construction equipment or vehicles and new locomotives 
or new engines used in locomotives. States other than California may 
adopt and enforce standards identical to California standards 
authorized by EPA.
    EPA promulgated regulations implementing section 209(e) on July 20, 
1994 (59 FR 36987). EPA subsequently promulgated revised regulations 
implementing section 209(e) on December 30, 1997 (62 FR 67733). See 40 
CFR part 85, subpart Q. As proposed, we are creating a new part 1074 
that describes the federal preemption of state and local emission 
requirements. This is being done as part of EPA's ongoing effort to 
write its regulations in plain language format in subchapter U of title 
40 of the CFR. The final regulations are based directly on the existing 
regulations in 40 CFR part 85, subpart Q. With the exception of the 
specific changes described in this section, we are not changing the 
meaning of these regulations.
    Pursuant to section 428 of the 2004 Consolidated Appropriations 
Act, we are adding regulatory language to implement the legislative 
restriction on states other than California adopting, after September 
1, 2003, standards or other requirements applicable to spark-ignition 
engines smaller than 50 horsepower. We are also adding, pursuant to 
that legislation, criteria for EPA's consideration in authorizing 
California to adopt and enforce standards applicable to such 
engines.\120\
---------------------------------------------------------------------------

    \120\ See section 428 of the Appropriations Act for 2004.
---------------------------------------------------------------------------

    In addition, on July 12, 2002, the American Road and Transportation 
Builders Association (ARTBA) petitioned EPA to amend EPA's rules 
implementing section 209(e) of the Act.\121\ In particular, ARTBA 
petitioned EPA to amend its regulations and interpretive rule regarding 
preemption of state and local requirements ``that impose in-use and 
operational controls or fleet-wide purchase, sale or use standards on 
nonroad engines.'' \122\ ARTBA believes such controls should be 
preempted.
---------------------------------------------------------------------------

    \121\ ``Petition to Amend Rules Implementing Clean Air Act 
section 209(e),'' American Road and Transportation Builders 
Association (ARTBA), July 12, 2002. Also, EPA received an additional 
communication from ARTBA urging EPA to grant the petition after the 
decision of the U.S. Supreme Court in EMA v. SCAQMD, 541 U.S. 246 
(2004). See ``ARTBA Petition,'' L. Joseph, ARTBA, to D. Dickinson & 
R. Doyle, EPA, April 30, 2004. These documents are available in 
Docket EPA-HQ-OAR-2004-0008.
    \122\ In 1994, EPA promulgated an interpretive rule at Appendix 
A to subpart A of 40 CFR part 89. This interpretive rule was amended 
as part of the rule promulgated on December 30, 1997 (62 FR 67733). 
The appendix provides, among other things, that state restrictions 
on the use and operation of nonroad engines are not preempted under 
section 209.
---------------------------------------------------------------------------

    As we were already planning to revise the preemption provisions to 
a certain extent in this rule, we determined that it was appropriate to 
respond to ARTBA's petition in the context of this rule, and noticed 
our review in the proposal for this rule, giving the public the ability 
to respond to provide comments regarding ARTBA's petition. After 
reviewing ARTBA's petition and the comments received regarding the 
petition, EPA is not adopting the changes requested by ARTBA in its 
petition. While EPA is in agreement with ARTBA regarding some of the 
observations it makes in the petition regarding preemption of state 
standards, particularly state fleet average standards, we believe the 
current regulatory language is sufficient regarding preemption of such 
standards. In addition, we believe that it would be inappropriate to 
grant ARTBA's request that we amend the existing regulations to find 
that restrictions on the use and operation of nonroad engines are 
preempted under section 209(e) of the Act. For a full discussion and 
response to ARTBA's petition and the comments we received on the 
petition, please review ``Response to the Petition of American Road and 
Transportation Builders Association to Amend Regulations Regarding the 
Preemption of State Standards Regulating Emissions from Nonroad 
Engines,'' which has been placed in the docket for this rulemaking.

B. Certification Fees

    Under our current certification program, manufacturers pay a fee to 
cover the costs associated with various certification and other 
compliance activities associated with an EPA issued certificate of 
conformity. These fees are based on the actual and/or projected cost to 
EPA per emission family. We are establishing a new fees category for 
certification related to the new evaporative emission standards. 
Sections III and VI describe how the fees apply to sterndrive/inboard 
marine engines and equipment and vessels subject to evaporative 
emission standards since manufacturers are not currently required to 
pay certification fees for these products.
    In addition, as proposed, we are creating a new part 1027 in title 
40 that incorporates the new and existing fee requirements under a 
single part in the regulations. This is being done as part of EPA's 
ongoing effort to write its regulations in plain language format in 
subchapter U of title 40 of the CFR. The final regulations are based 
directly on the existing regulations in 40 CFR part 85, subpart Y. 
Aside from a variety of specific changes, moving this language to part 
1027 is not intended to affect the substance of the existing fee 
provisions. We are making the following adjustments and clarifications 
to the existing regulations:
     Establishing a new fees category for new evaporative 
emission standards.
     Eliminating one of the paths for applying for a reduced 
fee. The existing regulations specify that applications covering fewer 
than six vehicles or engines, each with an estimated retail sales price 
below $75,000, shall receive a certificate for five vehicles or 
engines. Holders of these certificates are required to submit an annual 
model year reduced fee payment report adjusting the fees paid. We are 
eliminating this pathway and the associated report, as they are complex 
and have been rarely used.
     Clarifying the obligation to make additional payment on a 
reduced fee certificate if the actual final sales price is more than 
the projected retail sales price for a reduced fee vehicle or engine. 
As before, the final fee payment must also reflect the actual number of 
vehicles.
     Applying the calculated fee changes for later years, which 
are based on the

[[Page 59131]]

Consumer Price Index and the total number of certificates, only after 
the change in the fee's value since the last reported change has 
reached $50. The fee change for the ``Other'' category for calendar 
year 2005 to 2006 changed from $826 to $839 and for non-road 
compression-ignition engines from $1822 to $1831. Under the final rule, 
the fee will not change until such time as the fee increase will be 
$50.00 or greater. This might not occur after one year, but after two 
or more years the calculated increase in a fee based on the change in 
the Consumer Price Index might be more than $50.00. The same applies if 
the price goes up or down. For example, if the fee published in EPA 
guidance for a category of engine was $1,000 in 2011 and the calculated 
fee for 2012 is $990 and in 2013 is $1040, the fee in 2013 will remain 
at $1,000 since the change from the 2011 fee is only $40. This will 
minimize confusion related to changing fees where the calculated fee is 
very close to that already established for the previous year. It will 
also lessen paperwork and administrative burdens for manufacturers and 
EPA in making adjustments for small fees changes for applications that 
are completed around the change in a calendar year. The number of 
certificates may go up or down in any given year, while the Consumer 
Price Index will generally increase annually. As a result, this change 
will be revenue-neutral or will perhaps slightly decrease overall 
revenues.
     Clarifying that all fee-related records need to be kept, 
not just those related to the ``final reduced fee calculation and 
adjustment.''
     Adding www.Pay.gov or other methods specified in guidance 
as acceptable alternative methods for payment and filing of fee forms.
     Establishing a single deadline for all types of refunds: 
Total, partial for reduced fees, and partial for corrections. In all 
cases, refund requests must be received within six months of the end of 
the model year. A common type of request is due to an error in the fee 
amount paid as a result of changed fees for a new calendar year. We 
frequently apply these overpayments to other pending certification 
applications. This is less burdensome than applying for a simple 
refund, both for EPA and for most manufacturers. Applications to apply 
such refunds to other certification applications must also be received 
within six months of the end of the model year of the original engine 
family or test group.
     Emphasizing with additional cross references that the same 
reduced fee provisions that apply to Independent Commercial Importers 
also apply to modification and test vehicle certificates under 40 CFR 
85.1509 and 89.609: The number of vehicles covered is listed on the 
certificate, a revision of the certificate must be applied for and 
additional reduced fee payments made if additional vehicles are to be 
covered, and the certificate must be revised to show the new total 
number of vehicles to be covered.
    We are making one additional change in the regulations based on 
comments regarding the limits on fees that apply for locomotive and 
marine diesel remanufacturing systems or kits. We are specifying that 
certified remanufacturing systems or kits under these programs are 
eligible for reduced fees based on the value of the remanufacturing 
system or kit rather than the value of the whole locomotive or vessel. 
This is analogous to existing provisions for fuel-conversion kits in 
which the regulation specifies that the basis for evaluating the one-
percent threshold is the value of the kit alone. We are therefore 
modifying the regulation to allow for reduced fees where the assessed 
fee is more than one percent of the value of the remanufacturing system 
or kit. This applies equally to locomotives and marine diesel engines, 
which are now also subject to remanufacturing certification provisions.

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

    We have adopted final rules to apply the provisions of part 1068 
for locomotives regulated under part 1033, nonroad diesel engines 
regulated under 40 CFR part 1039, marine diesel engines regulated under 
40 CFR part 1042, Large SI engines regulated under 40 CFR part 1048, 
and recreational vehicles regulated under 40 CFR part 1051. In this 
final rule we are applying these provisions for Small SI and Marine SI 
engines, equipment, and vessels. Any changes we make to part 1068 will 
apply equally for these other types of engines and vehicles.
    The following paragraphs describe several amendments we are making 
to part 1068, including several changes and clarifications subsequent 
to the proposed rule. We summarize several of the most important 
changes since the proposal in Section X.
(3) Partially Complete Engines
    We proposed to revise our definition of ``engine'' to be clear that 
it includes those engines that are only partially complete. We received 
many comments regarding the impact of this clarification. The final 
approach described in this subsection includes revisions from the 
proposal to address these comments.
    We are aware that in some cases manufacturers produce nonroad 
engines by starting with a complete or partially complete engine from 
another manufacturer and modify it as needed for the particular 
application. This is especially common for Marine SI and Large SI 
engines and equipment, but it may also occur for other types of nonroad 
engines and equipment. We are aware that an interpretation of the 
prohibited acts in Sec.  1068.101 would disallow this practice because 
the original engine manufacturer is arguably selling an engine that is 
not covered by a certificate of conformity even though emission 
standards apply. We are also concerned that some manufacturers might 
choose to exploit this ambiguity by importing partially complete 
engines, contending that these are not subject to standards, where the 
company receiving the shipment would assemble the engines and sell them 
without going through the certification process. It would be very 
difficult to monitor or enforce requirements with this kind of business 
activity.
    We are addressing this first by defining ``engine'' for the 
purposes of the regulations (see Sec.  1068.30). To do this, we 
differentiate between complete engines and partially complete engines, 
both of which need to be covered by a valid certificate or an 
exemption. An engine block becomes an ``engine'' subject to standards 
when a crankshaft is installed. This represents a substantial step in 
the manufacturing process. Selecting a later point in the assembly 
process would only create the potential for loopholes for companies 
wanting to sell products that fall just short of what it would take to 
be subject to standards.
    Partially complete engines include any engine that has not been 
fully assembled or is not yet in its final configuration. This might 
include short blocks that are shipped to another location for final 
assembly. It might also include full assembled engines that will be 
installed in all-terrain vehicles (which are subject to equipment-based 
standards). Even though these engines are still subject to further 
assembly or modification, they are subject to standards and 
certification requirements and therefore may not be introduced into 
U.S. commerce without an exemption. We are adopting provisions to 
accommodate various assembly paths reflecting current business 
practices. For example, we are specifying that manufacturers may ship 
partially

[[Page 59132]]

complete engines between two of their facilities (see Sec.  1068.260). 
We would require manufacturers to notify us that this practice is 
occurring and get our approval, but they would not need to take any 
additional steps.
    We have greater concerns about ensuring that engines always reach 
their certified configuration when engines are shipped from one company 
to another, or anytime a company that is not a certificate holder is 
introducing partially complete engines into U.S. commerce. To address 
this, we are adopting detailed provisions in Sec.  1068.262. These 
provisions clarify and expand on the provisions adopted earlier in 
Sec.  1068.330 for imported engines. The original engine manufacturer 
needs a written request from a secondary engine manufacturer who 
already holds a valid certificate of conformity for the engine based on 
its final configuration and application. The request from the secondary 
engine manufacturer would also identify an engine family name. This 
engine family name could be any valid family name for that engine model 
and would not necessarily need to be the actual family name for that 
engine in its final configuration. For example, a secondary engine 
manufacturer might sell a single engine model into stationary, marine, 
and industrial applications, each of which might have a different 
engine family name. As long as there is a valid family name, the 
original engine manufacturer could be confident that the secondary 
engine manufacturer will be modifying the engine to be in a certified 
configuration. The original engine manufacturer would apply a removable 
label identifying their corporate name and stating that the engines are 
exempt under these provisions for partially complete engines. The label 
or the accompanying bill of lading would also name the secondary engine 
manufacturer as the certificate-holder and identify the destination for 
the engines being shipped. The labels may be applied to individual 
engines or they may be applied to the packaging for engines that are 
shipped together.
    We are accommodating the need to start assembling products while 
the application for certification is pending. We would treat these 
shipments the same as we would treat early production for a 
manufacturer building its own engine blocks, as described in Section 
VIII.C.2.
    There are also situations in which a secondary manufacturer would 
build engines that will continue to be exempt after the point of final 
assembly. For example, some engines may be intended only for export, 
for national security, or for developmental or testing purposes. In 
these cases where the secondary engine manufacturer is unable to 
identify a valid family name, they would simply inform the original 
manufacturer of the regulatory cite that allows them to produce 
exempted engines. Note that this process is generally permitted only in 
the case where the original engine manufacturer and the secondary 
engine manufacturer are certificate holders, which means that they have 
at least one certificate of conformity with EPA (even if that is for a 
different type of engine).
    The regulation includes language to clarify that the original 
manufacturer is liable for shipment of properly labeled engines to a 
manufacturer who has applied for or received a valid certificate of 
conformity or who has an exemption for the engines being shipped. The 
original engine manufacturer would be in violation if (1) the engines 
and their labels are separated before reaching the secondary engine 
manufacturer, (2) if the engines are shipped to the wrong destination, 
or (3) if the secondary engine manufacturer does not in fact have the 
certification or exemption in place as prescribed. We expect original 
engine manufacturers to have a clear relationship with their associated 
secondary engine manufacturers so they can readily verify the status of 
any particular certification or exemption; due diligence on the part of 
the original engine manufacturer should allow for a high degree of 
confidence that all the applicable conditions are met.
    Another situation involving partially complete engines involves the 
engine block as a replacement part where, for example, the original 
engine had major structural damage. In this case the engine 
manufacturer will typically sell an engine block with piston, 
crankshaft, and other internal components to allow the user to repower 
with many of the components from the original engine. Under the new 
definitions, these short blocks or three-quarter blocks are considered 
new engines subject to emission standards. We have addressed this 
situation in the regulations with the replacement engine provisions in 
Sec.  1068.240. This may involve one of two basic situations. In cases 
where the short block is no different than what is being produced for 
complete, certified engines in the current model year, there is no need 
for demonstrations or approval for an exemption from emission 
standards. We are adding clarifying language that these partially 
complete engines may be sold to repower failed engines without 
restriction. We do, however, require that these engines be labeled to 
prevent someone from circumventing the regulations by using these short 
blocks to build new noncompliant engines. These labels would serve as a 
preventive measure and make it easier for EPA inspectors to detect a 
violation. In cases where the short block is from a previous model year 
when less stringent emission standards apply, we would want to treat 
this under the same replacement-engine provisions that apply to 
complete engines. Section VIII.C.5 describes these provisions related 
to replacement engines in greater detail.
    We are also further clarifying the requirement for engine 
manufacturers to sell engines in their certified configuration (see 
Sec.  1068.260). The existing provisions in part 1068 describe how 
manufacturers may use delegated assembly to arrange for equipment 
manufacturers to separately source aftertreatment components for 
engines that depend on aftertreatment to meet emission standards. We 
are including language to clarify that we will consider an engine to be 
in its certified configuration in certain circumstances even if 
emission-related components are not assembled to the engine. This is 
intended to reflect common practice that has developed over the years. 
We are also clarifying that engines may be shipped without radiators or 
other components that are unrelated to emission controls, and that we 
may approve requests to ship engines without emission-related 
components in some circumstances. This will generally be limited to 
equipment-related components such as vehicle-speed sensors. We may 
specify conditions that we determine are needed to ensure that shipping 
the engine without such components will not result in the engine being 
operated outside of its certified configuration.
(4) Provisions Related to Model Year and Date of Manufacture
    We proposed definitions of ``model year'' and ``date of 
manufacture'' in conjunction with our proposed definition of 
``engine''. We received a number of comments regarding these 
definitions. As a result of these comments, we are finalizing the 
approach described below.
    Until now, the regulations have not specified the point in the 
assembly or procurement process that should serve as the basis for 
establishing an engine's date of manufacture for purposes of deciding 
which standards apply. For the large majority of engines, this is not 
an issue, since total assembly time from start to finish is measured in 
hours or

[[Page 59133]]

perhaps days. As a result, it is relatively uncommon for there to be 
any uncertainty regarding an engine's date of manufacture. 
Nevertheless, we have learned that there are widely diverging practices 
for establishing an engine's date of manufacture in several special 
situations, which means there is a different effective date of new 
emission standards for different manufacturers. This is especially of 
interest for larger engines, which are more likely to have longer 
assembly times and to be assembled in multiple stages at different 
facilities. We believe it is important to establish a clear requirement 
in this regard to avoid ambiguity and different interpretations. A 
consistent approach preserves a level playing field and may prevent 
some manufacturers from manipulating their build dates to circumvent 
the regulations.
    We expected that the proposed definition of ``date of 
manufacture,'' based on reaching a final, running configuration, was 
the most straightforward and logical interpretation. The comments 
received and the ensuing discussions made clear that this 
interpretation was not universally held. The diversity of views 
underscores the need for the regulations to establish a clear and 
uniform requirement.
    We recognize the concern that manufacturers need a high degree of 
certainty regarding applicable emission standards when they initiate 
assembly of an engine. Any number of variables in the production 
process could affect how long it takes to finish building an engine. We 
therefore believe it is most appropriate to match up the definitions 
for ``date of manufacture'' and ``engine'' by specifying that an 
engine's date of manufacture should be based on the date that the 
crankshaft is installed in the engine. This provides manufacturers with 
the control they need to determine which emission standards apply when 
they start to build the engine.
    We are aware that secondary engine manufacturers may have inventory 
and assembly procedures that are not tied to the actual date of 
crankshaft installation by the original engine manufacturer. We are 
therefore specifying for this situation that the date of manufacture is 
generally the date the secondary engine manufacturer receives shipment 
of the partially complete engine. Alternatively, where the manufacturer 
knows the date the crankshaft was actually installed in the engine and 
receives the engine within 30 days of that date, it may use the actual 
date of crankshaft installation as the date of manufacture. This puts 
the secondary engine manufacturer in a similar position relative to 
companies with sole responsibility for assembling complete engines, 
without placing unreasonable expectations on secondary engine 
manufacturers to know how engines were assembled by their supplier.
    Some manufacturers may want to name a date of manufacture that is 
later than we specify in the regulation. This may be for marketing 
purposes, managing inventories of engine components, or for other 
recordkeeping or product-development reasons. There is no risk of 
manufacturers gaining an advantage of being subject to less stringent 
standards by delaying the date of manufacture for an engine, so we 
would have no objection to that. However, we limit the selection of 
date of manufacture to a later point in the assembly process. Selecting 
a date of manufacture after the end of the assembly process for an 
engine would raise concerns about the risk for manipulating emission 
credits for a given model year and about ensuring that engine assembly 
and dates of manufacture are always within the production period 
established for a given engine family, as described in the certificate 
of conformity or the manufacturer's records. We see no legitimate 
reason to select a date of manufacture after completing assembly for an 
engine. Note that since the entire assembly process is complete within 
no more than a few days for most engines, we would expect this 
allowance to rarely affect the date of manufacture significantly.
    This approach to defining ``date of manufacture'' addresses 
manufacturers' concerns for knowing which standards apply to an engine, 
but we are also concerned that manufacturers could ramp up production 
of engine blocks with installed crankshafts as a method to delay 
compliance with new emission standards. EPA regulations have always 
included provisions describing limits on inventory and stockpiling 
practices for nonroad equipment manufacturers. The regulations until 
now do not clearly address issues related to stockpiling for engine 
manufacturers. We agree with the suggestion from commenters that anti-
stockpiling provisions that are specific to engine manufacturers would 
be appropriate. The Clean Air Act contemplates the need for such 
provisions in section 202(b)(3), where there is direction for EPA to 
consider establishing a definition of model year that prevents 
stockpiling. At the same time, we received other comments related to 
production periods and model year, leading us to adopt a collection of 
related provisions in Sec.  1068.103.
    The new text in Sec.  1068.103 includes three main provisions that 
are already in place for motor vehicles and heavy-duty highway engines 
in Sec. Sec.  85.2304 and 85.2305. First, we are clarifying that the 
scope of a certificate of conformity may be limited to established 
engine models, production periods, or production facilities. Any such 
limits would be included in the manufacturer's application for 
certification or in the certificate of conformity. Second, we are 
defining the limits on selecting production periods for purposes of 
establishing the model year. Third, we are clarifying that engine 
manufacturers may start producing engines after they submit an 
application for certification and before the certification is approved. 
This includes provisions to address the manufacturers' responsibility 
to ensure (1) that engines are not introduced into U.S. commerce until 
the certification is approved; (2) that all engines are assembled 
consistent with the certification, including any changes that may come 
from the certification review process; and (3) that manufacturers make 
these early-production engines available for production-line testing or 
selective enforcement audits, as appropriate.
    In addition, we are adding provisions to establish limits on 
stockpiling for engine manufacturers. We are doing this by stating that 
manufacturers must use their normal inventory and assembly processes 
for initiating assembly of their engines. We include a clarifying 
expectation that we would expect normal assembly processes to involve 
no more than one week to complete engine assembly once the crankshaft 
is installed. We understand that assembly processes in some special 
cases are more complicated, and that engine manufacturers may be unable 
to complete engine assembly in some cases based on delivery of certain 
components or other extenuating factors. To put some boundaries on 
these exceptional situations, the regulation specifies a presumption 
that the engine manufacturer has violated the stockpiling prohibition 
if engine assembly is complete more than 30 days after the end of the 
model. This presumption date is 60 days after the end of the model year 
for engines with per-cylinder displacement above 2.5 liters. This 
generally distinguishes engines that may have relatively high sales 
volumes (including heavy-duty highway engines) from bigger engines that 
are sold in much lower sales volumes.
    Note that the potential burden and disruption related to these 
provisions is limited in two important ways. First, the

[[Page 59134]]

restrictions related to date of manufacture and model year in Sec.  
1068.103(f) apply only when there is a change in emission standards for 
the coming model year. We would still expect manufacturers to take this 
approach in years when there is no change in emission standards, but 
these requirements would not strictly apply. We are also including 
hardship provisions to allow manufacturers to request approval to 
extend the final assembly deadline for their engines if circumstances 
outside their control prevent them from completing engine assembly in 
time. We would approve such a request only if the manufacturer could 
not have avoided the situation and took all possible steps to minimize 
the extent of the delay.
(5) Restrictions on Naming Model Years Relative to Calendar Year
    We proposed restrictions to naming model years for Small SI 
engines. In response to the comments we received, we are finalizing 
these restrictions for all engines subject to 40 CFR part 1068.
    Exhaust emission standards apply based on the date of engine 
assembly. We similarly require that equipment manufacturers use engines 
meeting emission standards in the same model year as equipment based on 
the equipment assembly date. For example, starting January 1, 2009, an 
equipment manufacturer must generally use a 2009 model year engine. 
However, we allow equipment manufacturers to deplete their normal 
inventories of engines from the previous model year as long as there is 
no stockpiling of those earlier engines. Note that this restriction 
does not apply if emission standards are unchanged for the current 
model year. We have found many instances where companies will import 
new engines usually installed in equipment and claim that the engine 
was built before emission standards took effect, even if the start date 
for emission standards was several years earlier. We believe many of 
these engines were in fact built later than the named model year, but 
it is difficult to prove the date of manufacture, which then makes it 
difficult to properly enforce these requirements. Now that emission 
standards have been in place for most engines for several years, we 
believe it is appropriate to implement a provision that prevents new 
engines manufactured several years previously to be imported when more 
recent emission standards have been adopted. This will prevent 
companies from importing noncompliant products by inappropriately 
declaring a manufacture date that precedes the point at which the 
current standards started to apply. This also puts a time limit on our 
existing provisions that allow for normal inventory management to use 
the supply of engines from previous model years when there has been a 
change in standards.
    We are specifying that engines and equipment will be treated as 
having a model year at most one year earlier than the calendar year in 
which the importation occurs when there is a change in emission 
standards (see Sec.  90.615 and Sec.  1068.360). This requirement will 
start January 1, 2009 for Small SI engines and it will start 
immediately when the final rule becomes effective for engines/equipment 
subject to part 1068. For example, for new standards starting in the 
2009 or earlier model years, beginning January 1, 2010, all imported 
new engines will be considered to have a model year of 2009 or later 
and will need to comply with new 2009 standards, regardless of the 
actual build date of the engines or equipment. (Engines or equipment 
will be considered new unless the importer demonstrates that the engine 
or equipment had already been placed into service, as described below.) 
This will allow a minimum of twelve months for manufactured engines to 
be shipped to equipment manufacturers, installed in equipment and 
imported into the United States. This time interval will be 
substantially longer for most engines because the engine manufacturer's 
model year typically ends well before the end of the calendar year. 
Also, engines produced earlier in the model year will have that much 
more time to be shipped, installed, and imported.
    Manufacturers have expressed concern that the one-year limitation 
on imported products may be too short since there are often delays 
related to shipping, inventory, and perhaps most significantly, 
unpredictable fluctuations in actual sales volumes. We do not believe 
it is appropriate to maintain long-term inventories of these products 
outside the United States for eventual importation when it is clear 
ahead of time that the new standards are scheduled to take effect. 
Companies may be able to import these products shortly after 
manufacturing and keep their inventories in a U.S. distribution network 
to avoid the situation of being unable to sell these products in the 
United States.
    In years where the standards do not change, this provision will 
have no practical effect because, for example, a 2004 model year engine 
meets the 2006 model year standards. We will treat such an engine as 
compliant based on its 2004 emission label, any emission credit 
calculations for the 2004 model year, and so on. These engines can 
therefore be imported anytime until the end of the calendar year in 
which new standards take effect.
    We do not intend for these provisions to delay the introduction of 
the new emission standards by one year. It is still a violation to 
produce an engine in the 2011 calendar year and call it a 2010 model 
year engine to avoid being subject to 2011 standards.
    Importation of equipment that is not new is handled differently. 
These products will not be required to be upgraded to meet new emission 
standards that started to apply after the engine and equipment were 
manufactured. However, to avoid the situation where companies simply 
declare that they are importing used equipment to avoid new standards, 
we are requiring that they provide clear and convincing evidence that 
such engines have been placed into service prior to importation. Such 
evidence will generally include documentary evidence of purchase and 
maintenance history and visible wear that is consistent with the 
reported manufacture date. Importing products for resale or importing 
more than one engine or piece of equipment at a time will generally 
call for closer evaluation to determine that this degree of evidence 
has been met. Note that the regulations generally treat engines 
converted to a different category as new engines, even if they have 
already been placed into service. For example, if a motor vehicle is 
modified such that it no longer fits under the definition of motor 
vehicle, its engine generally becomes a new nonroad engine and is 
subject to emission standards and other requirements based on its model 
year as specified in the regulation.
(6) Liability for Causing Violations
    In the last few years, there has been a surge in the number of 
illegal nonroad engines, vehicles and equipment, such as tractors, lawn 
mowers, generators and all-terrain vehicles, imported into the United 
States. A significant number of the imported nonroad engines, vehicles 
and equipment fail to meet EPA requirements and standards under the 
Clean Air Act. The manufacturers of these illegal goods often are out 
of the effective reach of United States jurisdiction and enforcement. 
In 2007, the recall of lead-contaminated toys and more than 5,300 
melamine-laced pet food products resulted in heightened interest in 
what the U.S. government is doing to safeguard the health of its

[[Page 59135]]

citizens with regard to imported consumer products.
    In July 2007, President Bush signed Executive Order 13439 
establishing an Interagency Working Group on Import Safety. This 
Working Group consists of over ten government agencies including EPA 
and the Departments of Health and Human Services, Homeland Security, 
State, Treasury, Justice, Agriculture, and Transportation. The wide 
range of agencies involved in this Working Group illustrates the 
breadth of import issues.
    One of the recommendations of the Interagency Working Group on 
Import Safety was to consider a strategic focus or initiative, using 
existing statutory and regulatory authorities, and, based upon Agency 
priorities, increase enforcement actions against foreign and domestic 
manufacturers, as well as importers, brokers, distributors, and 
retailers who introduce illegal goods into the stream of commerce. This 
rulemaking will help clarify for all regulated parties, including 
retailers, that liability for the importation of nonroad vehicles, 
engines and equipment in violation of the Clean Air Act and/or its 
implementing regulations extends beyond the manufacturer and direct 
importer of the product.
    We requested comments regarding revisions to Sec.  1068.101 to 
clarify the types of actions for which EPA may pursue enforcement 
proceedings. In this rule we are finalizing such clarifying provisions 
in Sec.  1068.101. Section 203 of the Act states that performing 
certain acts, ``and the causing thereof,'' constitutes a prohibited 
act. We are adding a new paragraph (c) in Sec.  1068.101 to 
specifically include this prohibition on the ``causing'' of any of the 
prohibited acts listed in the statute and the regulations. Adding this 
clarification will help people who are subject to the regulations to 
more fully understand what actions are prohibited and may potentially 
subject them to enforcement proceedings under the Act. The revisions 
themselves do not add new enforcement authorities beyond what is 
already specified in the statute.
    Since we consider it a violation to cause someone to commit a 
specified prohibited act, persons causing any such prohibited act would 
also be subject to the full administrative and judicial enforcement 
actions allowable under the Act and the regulations. The prohibition on 
``causing'' a prohibited act would apply to all persons and would not 
be limited to manufacturers or importers of regulated engines or 
equipment.
    EPA interprets the ``causation'' aspect of section 203 broadly. In 
assessing whether a person has caused a prohibited act, EPA will 
evaluate the totality of the circumstances. For example, in certain 
circumstances EPA believes that a retailer may be responsible for 
causing the importation of engines or equipment not covered by a valid 
certificate of conformity or otherwise in violation of our regulations, 
such as the emission labeling requirements. In addition to the 
prohibitions that apply to manufacturers and importers under section 
203, EPA will also consider many factors in assessing whether a 
manufacturer, importer, retailer, distributor or other person has 
caused a prohibited act. For example, contractual (or otherwise 
established) business relationships of those persons involved in 
producing and/or selling new engines and equipment could be evidence of 
the ability of the person to cause a violation. In addition, we would 
consider the particular efforts or influence of the alleged violator 
contributing to, leading to, or resulting in the prohibited act. On the 
other hand, we would also consider a person's efforts to prevent such a 
violation as evidence that they did not cause the violation.
    EPA will evaluate the entire circumstances in determining whether a 
person caused another person to commit a prohibited act such as 
importing engines or equipment in violation of our regulations.
    To assist importers, distributors, retailers, and the general 
public to determine whether the products they are buying or selling 
comply with EPA regulations, EPA is expanding its compliance assistance 
efforts. Imports compliance assistance information is available at 
http://www.epa.gov/otaq/imports/index.htm and http://
www.bordercenter.org/chem/vehicles.htm. Additionally, general 
certification information may also be found at http://www.epa.gov/otaq/
nonroad.
(7) Engine rebuilding and replacement engines
    We are finalizing the proposed changes to Sec.  1068.240. In 
addition, we are also making other changes to that section to address 
manufacturers' concerns for producing short blocks from previous-tier 
engines as replacement components for engines needing service in the 
field. (See Section VIII.C.1 for additional discussion.) The current 
provisions for the replacement-engine exemption in Sec.  1068.240 
require that manufacturers take possession of the old engine (or 
confirm that it has been destroyed) and take steps to confirm that the 
exemption is needed for each new replacement engine. We acknowledge 
that these requirements could limit the manufacturers' ability in some 
cases to respond quickly for operators that would depend on minimizing 
their downtime.
    The most significant change being made in response to the 
manufacturers comments is the allowance for limited use of partially 
complete engines as replacement components without the administrative 
requirements and oversight provisions that currently apply under Sec.  
1068.240. We have created a streamlined approach for manufacturers to 
produce and sell a certain number of replacement engines, including 
partially complete engines, based on production volumes from preceding 
years. We are adopting a threshold of 1.0 percent of annual production 
through 2013 and 0.5 percent for 2014 and later. To calculate the 
number of engines under this provision, manufacturers would first 
determine their U.S.-directed production volumes of certified engines 
each year. This information is generally submitted as part of the 
reporting for production-line testing or in separate annual reports. 
The manufacturer would consider the preceding three model years to 
select the highest total production volume of certified engines across 
all their models in a given year. Multiplying this production volume by 
0.01 (or 0.005 starting in 2014) would give the number of engines that 
the manufacturer could produce without triggering the administrative 
requirements currently specified in Sec.  1068.240. (We may approve the 
use of calculations based on earlier model years in unusual 
circumstances, such as the case where a manufacturer opts out of a 
broad category of engine production but continues to supply service 
parts for those models.) These threshold values should allow 
manufacturers the flexibility to meet the demand for partially complete 
replacement engines, but at production levels that clearly will not 
undermine the expected benefits of the emission standards that 
otherwise apply to new engines. For any number of noncompliant 
replacement engines exceeding the specified threshold, manufacturers 
would need to meet all the requirements that currently apply under 
Sec.  1068.240.
    The engine grouping includes fairly broad aggregation of products 
to keep similar engines together. For example, all outboard engines, 
all snowmobiles, and all handheld engines would be counted together as 
separate groups. Diesel engines are generally sold to distributors in a 
configuration that

[[Page 59136]]

could be adapted for use in nonroad applications, either land-based or 
marine, or in stationary applications. Engine manufacturers should 
therefore aggregate their sales of these engines without regard to 
their eventual deployment in any of these applications. However, we are 
aware that the very wide range in sizes and sales volumes makes it 
necessary to prevent aggregating large and small engines. Without this, 
the high sales volumes associated with small engines could allow for 
unlimited production of high-power replacement engines. Since it is not 
possible to establish a power rating for a partially complete engine, 
it is necessary instead to rely on engine displacement to differentiate 
these products. The selected per-cylinder cutpoints reflect existing 
regulatory requirements and production and marketing characteristics 
related to current engine offerings. The situation is similar for 
spark-ignition engines that may be used in stationary or nonroad 
applications (including marine), except that there is a much less 
pronounced range in engine sizes. The engine groupings for calculating 
allowable numbers of engines under this approach are shown in Table 
VIII.C-1.
    We are also applying the replacement-engine exemption provisions to 
heavy-duty highway engines. There have been no such exemption 
provisions in the past; however, we are expecting engine technologies 
to change significantly in the coming years such that vehicle owners 
may be unable to replace engines that fail prematurely without being 
able to access replacement engines that are specifically built to match 
the earlier configuration. We believe these engines can be accounted 
for separately from nonroad and stationary engines with respect to 
production volumes, but we are otherwise applying all the provisions of 
Sec.  1068.240 equally to heavy-duty highway engines.

   Table VIII.C-1--Aggregating Sets for Streamlined Replacement-Engine
                               Provisions
------------------------------------------------------------------------
                                   Standard-setting         Engine
         Engine category                 part            subcategories
------------------------------------------------------------------------
Highway CI......................  40 CFR part 86....   disp. < 0.6 L/cyl
                                                      0.6 <= disp. < 1.2
                                                       L/cyl
Nonroad CI, Stationary CI, and    40 CFR part 1039    disp. >= 1.2 L/cyl
 Marine CI.                        or 40 CFR part     disp. < 0.6 L/cyl
                                   1042.              0.6 <= disp. < 1.2
                                                       L/cyl
                                                      1.2 <= disp. < 2.5
                                                       L/cyl
                                                      2.5 <= disp. < 7.0
                                                       L/cyl
Marine SI.......................  40 CFR part 1045..  outboard personal
                                                       watercraft.
Large SI, Stationary SI, and      40 CFR part 1048    all engines
 Marine SI (sterndrive/inboard     or 40 CFR part
 only).                            1045.
Recreational vehicles...........  40 CFR part 1051..  off-highway
                                                       motorcycle, all-
                                                       terrain vehicle,
                                                       snowmobile.
Small SI and Stationary SI......  40 CFR part 1054..  handheld, Class I,
                                                       Class II.
------------------------------------------------------------------------

    There are two special situations to note. First, the replacement-
engine provisions do not apply to locomotives, which have already been 
established in previous rulemakings. Second, the provisions for a 
streamlined approach for replacement engines do not apply for engines 
with per-cylinder displacement over 7.0 liters. These are generally 
very large, custom-built engines with low production volumes, so we 
believe it is not necessary or appropriate for engine manufacturers to 
maintain an inventory of these engines (complete or partially complete) 
on the assumption that someone wanting a replacement engine could not 
install an engine certified to emission standards for the current model 
year.
    We are making an additional change to the replacement-engine 
exemption in Sec.  1068.240 to clarify what provisions apply for short 
blocks from a currently certified engine family. These are considered 
engines under the new regulatory definitions, so they need to be 
covered by a certificate of conformity or an exemption. We are 
specifying that short blocks from an engine model certified for the 
current model year are exempt under the replacement-engine exemption. 
These engines do not need an exemption based on their level of emission 
control since they are identical to certified engines meeting current 
standards. Rather, these engines need an exemption simply because they 
are shipped before they reach a certified configuration. Final assembly 
would typically be performed by the owner or a local service facility 
rather than an equipment manufacturer. We are therefore applying no 
conditions or restrictions on the sale of these replacement engines, 
other than the need for being part of a certified engine family and 
being labeled appropriately. The regulation specifies how to label the 
engine blocks to ensure that they can be clearly identified as 
replacement components. The regulation also clarifies that anyone 
completing the assembly of such an engine in violation of applicable 
requirements is a manufacturer who has committed a prohibited act. For 
example, installing such an engine in a new piece of equipment would 
violate the conditions of the replacement engine exemption and we may 
hold responsible any parties involved in assembling or installing the 
engine.
    Simplified labeling requirements apply to current-tier short blocks 
used as replacement engines and to previous-tier short blocks falling 
under the streamlined approach for replacement engines described above. 
The general expectation is that the final, assembled engines continue 
to have a label describing their certification status (unless they were 
built before emission standards started to apply). For engines in which 
the certification label is on the short block or another component that 
is part of the short-block assembly, we require that the short block 
includes a permanent label identifying the name of the manufacturer, 
the part number of the short-block assembly, and a short statement 
describing this as a replacement engine. For engines in which the 
certification label is mounted on the equipment or on a part of the 
engine that will likely be preserved as part of the final assembly, we 
require similar labeling except that the label does not need to be 
permanent.
    In addition, manufacturers have expressed a concern that the engine 
rebuilding provisions in Sec.  1068.120 and the replacement engine 
provisions in Sec.  1068.240 do not clearly address the situation in 
which rebuilt engines are used to repower equipment where the engine 
being replaced meets alternate emission standards (such as those 
produced under the Transition Program for Equipment Manufacturers). 
These

[[Page 59137]]

engines are not certified to the emission standards that otherwise 
apply for the given model year, so there may be some confusion 
regarding the appropriate way of applying these regulatory 
requirements. We are therefore adopting clarifying language to make 
sure the required statements on engine labels and the underlying 
regulatory requirements reflect this scenario.
(8) Delegated Assembly
    We understand that engine manufacturers have competing interests 
both to maintain the ability to arrange flexible assembly procedures 
and agreements, and to ensure that their engines are introduced into 
commerce only after being assembled in the certified configuration. We 
share those objectives and believe the regulations related to delegated 
assembly serve the purpose of creating a framework for balancing these 
different concerns. These regulatory provisions will help manufacturers 
by defining practices that prevent a situation where competitiveness 
concerns cause them to take steps to reduce costs at the risk of 
producing noncompliant products.
    We proposed special delegated assembly provisions for Small SI 
engines, rather than applying the delegated assembly provisions of part 
1068. In this final rule, however, we are consolidating the various 
approaches for different types of engines and integrating them into a 
single framework that will apply generally for heavy-duty highway 
engines and for nonroad engines. The main difference between these 
previously existing programs is the allowance for heavy-duty highway 
engines to rely either on pricing engines and aftertreatment components 
together or auditing vehicle manufacturers, but not necessarily both, 
to ensure that installed engines are in a certified configuration. 
While we are concerned about the incentive for vehicle and equipment 
manufacturers to gain a financial advantage if aftertreatment 
components are not priced together with the engine, we believe 
requiring engine manufacturers to perform audits of vehicle or 
equipment manufacturers is generally sufficient to provide the proper 
assurances that engines are being properly assembled and installed. 
Conversely, we believe that pricing aftertreatment and engines together 
is a strong enough assurance of proper assembly and installation 
procedures that audits are generally not necessary as an additional 
oversight measure. We note that these provisions spell out a minimum 
level of oversight for engine manufacturers. There may be instances, 
such as a new relationship with a vehicle or equipment manufacturer or 
some other reason to have less confidence in proper assembly 
procedures, where the engine manufacturer would want or need to take 
steps beyond what the regulations require to ensure that engines are 
assembled properly.
    We believe there is a strong advantage in implementing requirements 
uniformly across all the engine programs, both for EPA and for 
manufacturers. Aside from the pricing and auditing requirements 
described above, we are making the following provisions part of the 
final program, which were part of one or more of the programs adopted 
earlier in parts 85 and 1068, :
     Auditing rates are generally set at four equipment (or 
vehicle) manufacturers per year, or enough to rotate through all the 
equipment manufacturers over a four-year period, whichever is less. A 
reduced rate may apply after several years of successful implementation 
of these requirements.
     We are continuing the approach already adopted to provide 
for a streamlined demonstration for integrated manufacturers where the 
auditing would effectively be an internal practice.
     Engine manufacturers remain responsible for the in-use 
compliance of engines sold using the delegated-assembly provisions. 
This means, for example, that these engines would be subject to recall 
if we find that there are a substantial number of nonconforming 
engines.
    In addition, we are including the following provisions in the 
unified approach to delegated assembly that were initiated as part of 
the proposal for Small SI engines:
     Distributors may participate in delegated assembly, but 
only to the extent that they act as equipment manufacturers, adding 
aftertreatment devices before shipping the engines to vehicle or 
equipment manufacturers. Allowing distributors to further delegate 
engine assembly to another set of companies raises fundamental 
questions about the ability of engine manufacturers to adequately 
ensure proper final assembly of their engines. We are making a 
temporary allowance for this for Small SI engines to accommodate the 
transitional provisions allowing equipment manufacturers to gradually 
work toward making Phase 3 products. Starting in 2015, Small SI 
manufacturers may rely on distributors to act as their agents only with 
our approval. Note that this restriction on distributors does not apply 
in cases where the distributor has a financial or administrative role 
in facilitating a transaction between engine and equipment 
manufacturers where the engine and equipment manufacturers meet all the 
requirements that apply under Sec.  1068.261(d).
     If engine manufacturers design their air-intake systems 
such that they depend on specific parts (identifiable by part number) 
to achieve proper air flow through the engine, that raises concerns 
that are similar to aftertreatment devices. In fact, we are currently 
pursuing an enforcement case where an equipment manufacturer did not 
follow the engine manufacturer's directions to use a specific air 
filter. We are specifying that air filters identified by part number 
must be included in delegated assembly, though we require audits 
related to air filters only if audits are already occurring for exhaust 
systems. If manufacturers specify intake air systems by performance 
parameters such as maximum pressure drop across the air filter, the 
delegated-assembly provisions do not apply. This is similar to the way 
we have treated exhaust components for systems not requiring exhaust 
aftertreatment. See Sec.  1068.260(a).
     Vehicle or equipment manufacturers submitting annual 
affidavits must include a count of aftertreatment devices received to 
verify that there were enough of the right models of aftertreatment 
devices for the number of engines involved.
     Engines need to be labeled to identify their status as 
delegated-assembly engines, either with a removable label or with 
``Delegated Assembly'' noted on the engine's permanent label. This 
ensures that engines will not be introduced into commerce without an 
indication of their status relative to the certified configuration.
     Engine manufacturers must confirm that vehicle or 
equipment manufacturers have ordered aftertreatment devices 
corresponding to an engine order, but this confirmation is limited to 
the initial shipment of engines for a new certification and may occur 
up to 30 days after the engines have been ordered.
     For engines subject to requirements for production-line 
testing or selective enforcement audits, we specify that aftertreatment 
components must be randomly procured. We agree with the suggestion in 
the comments to broaden the allowance for randomly procuring 
components. As long as manufacturers use a method to randomly select 
components that are appropriate for the particular engine 
configuration, these

[[Page 59138]]

components may come from any point in the normal distribution chain.
    Manufacturers raised a concern regarding the possibility that they 
may inappropriately be paying Customs duties based on the value of 
aftertreatment devices that were priced with the engine even though 
they would be shipped separately. We have confirmed with the U.S. 
Customs and Border Protection that such an inappropriate payment of 
import duties can be avoided with documentation showing that the price 
of the engine includes a charge for components that are not included in 
that particular shipment. This also applies for importing 
aftertreatment devices alone where the import duty should not apply 
based on the value of the engine and aftertreatment together. This 
could most easily be accomplished by itemizing the invoice to identify 
the value of the missing components relative to the value of the rest 
of the engine. The regulations now include these specific instructions 
regarding invoicing with respect to import duties.
    We understand that there may be companies complying with the 
delegated assembly provisions in Sec.  85.1713 or Sec.  1068.260 today. 
The changes included in this final rule generally expand the 
flexibility of complying with regulatory requirements. These regulatory 
changes generally apply immediately with the effective date of the 
final rule. However, there may be some need to modify current practices 
to conform to the revised regulation. If a manufacturer needs 
additional time to comply, we would expect to use the provisions of 
Sec.  1068.40 to work out an arrangement under which the manufacturer 
would be able to make an orderly transition toward complying with the 
new requirements.
(9) Miscellaneous Changes
    The most noticeable change we are making to part 1068 is the 
proposed clarification to the language throughout to make necessary 
distinctions between engines, equipment, and fuel-system components--
and particularly between equipment using certified engines and 
equipment that has been certified to meet equipment-based standards. 
This becomes necessary because the evaporative emission standards apply 
in some cases to equipment manufacturers and boat builders, while the 
exhaust emission standards apply only to engine manufacturers. Some 
provisions in part 1068 apply to equipment manufacturers differently if 
they hold a certificate of conformity rather than merely installing 
certified engines (or certified fuel-system components). The changes in 
regulatory language are intended to help make those distinctions. See 
Sec.  1068.2 for a description of the new terminology that we intend to 
use throughout part 1068.
    We previously adopted a definition of ``nonroad engine'' that 
continues to apply today (see Sec.  1068.30). This definition 
distinguishes between portable or transportable engines that may be 
considered either nonroad or stationary, depending on the way they will 
be used. The distinction between nonroad and stationary engines is most 
often relevant for new engines in determining which emission standards 
apply. However, we have received numerous questions related to 
equipment whose usage has changed so that the original designation no 
longer applies. The text of that original definition did not clearly 
address these situations. We are therefore adopting the proposed 
provisions that apply when an engine previously used in a nonroad 
application is subsequently used in an application other than a nonroad 
application, or when an engine previously used in a stationary 
application is moved (see Sec.  1068.31). In response to comments, we 
are also including language in the final rule to clarify that switching 
between nonroad and stationary does not change the engine's model year 
for purposes of establishing applicable standards. The engine would 
need to meet applicable requirements for its new application (or 
status), but this would not involve certifying the engine as new for 
the current model year. Note that the purpose of these changes to 
regulatory language is to clarify existing provisions rather than 
change which requirements apply for specific situations.
    We are adopting the proposed changes to the thresholds for 
determining whether to investigate or report emission-related defects. 
These changes are intended to more carefully reflect the level of 
investigation and reporting that should apply for very high-volume 
engine families. In particular, we specify that manufacturers should 
investigate defects if potential (unscreened) emission-related defects 
exceed 4 percent for sales volumes between 50,000 and 550,000, with a 
threshold of 25,000 for all families with sales volumes above 550,000. 
Similarly, we specify that manufacturers should send a report if 
confirmed emission-related defects exceed 1 percent for sales volumes 
between 50,000 and 550,000, with a threshold of 6,000 for all families 
with sales volumes above 550,000.
    Several of the new provisions in part 1068 address fundamental 
issues for complying with emission standards. Defining ``engine'' and 
``date of manufacture,'' clarifying the timing of the transition to new 
model years, adding requirements for shipping partially complete 
engines to secondary engine manufacturers, and creating a new path for 
exempting replacement engines could lead manufacturers to make 
significant changes in the way they comply with the regulations. 
However, in many cases we would expect the new regulations to generally 
reflect current business practices. We are therefore amending the 
regulatory requirements to part 1068 without identifying a certain lead 
time before the requirements apply. Instead, to address those 
situations where manufacturers need time to make a transition toward 
complying with new requirements, we are adding a general provision 
allowing us to approve a manufacturer's request to delay implementation 
of the new requirements in part 1068 for up to 12 months from the 
effective date of the final rule (see Sec.  1068.40). The changes to 
part 1068 have a legal effective date of December 8, 2008. We will 
generally approve these requests if manufacturers can demonstrate that 
it would be impractical to comply with the new requirements in the 
given time frame. We may consider the potential for adverse 
environmental impacts in our decision.
    In addition, we proposed several amendments to part 1068 to clarify 
various items. These are being finalized, including:
     Sec.  1068.101(a)(1): Revising the prohibited act to 
specify that engines must be ``covered by'' a certificate rather than 
``having'' a certificate. The revised language is more descriptive and 
consistent with the Clean Air Act.
     Sec.  1068.101(a)(1)(i): Clarifying that engines or 
equipment are considered to be uncertified if they are not in a 
configuration that is included in the applicable certificate of 
conformity. This applies even if the product had an emission label 
stating that it complies with emission standards.
     Sec.  1068.101(a)(2): Clarifying the prohibition on 
recordkeeping to apply also to submission of records to the Agency.
     Sec.  1068.101(b)(1): Clarifying the prohibition against 
using engines in a way that renders emission controls inoperative to 
emphasize that it includes misfueling or failing to use additives that 
the manufacturer specifies as part of the engine's certified 
configuration. This is more likely to

[[Page 59139]]

apply for compression-ignition engines than spark-ignition engines.
     Sec.  1068.101(b)(7): Clarifying the prohibitions related 
to warranty to require the submission of specified information in the 
application for certification; adding language to identify obligations 
related to recall and installation and maintenance instructions; and 
preventing the manufacturer from communicating to users that warranty 
coverage is conditioned on using authorized parts or service 
facilities. These provisions are consistent with requirements that 
apply in other EPA programs.
     Sec.  1068.105(a): Revising the regulation to allow 
equipment manufacturers to use up normal inventories of previous model 
year engines only if it is a continuation of ongoing production with 
existing inventories. These provisions do not apply for an equipment 
manufacturer starting to produce a new equipment model.
     Sec.  1068.105: Eliminating paragraph (b) related to using 
highway certification for nonroad engines or equipment since these 
provisions are spelled out specifically for each nonroad program where 
appropriate.
     Sec.  1068.105(b): Clarifying the requirement to follow 
emission-related installation instructions to include installation 
instructions from manufacturers that certify components to evaporative 
emission standards.
     Sec.  1068.120: Clarifying that the rebuilding provisions 
apply to maintenance related to evaporative emissions.
     Sec.  1068.240: Clarifying that the scope of the exemption 
for new replacement engines is limited to certain engines.
     Sec.  1068.250: Revising the applicability of the small-
business hardship provisions to address a situation where the standard-
setting part does not define criteria for establishing which companies 
qualify as small-volume manufacturers; where we do not already specify 
such criteria, we will rely on the criteria established by the Small 
Business Administration.
     Sec.  1068.250: Clarifying the timing related to hardship 
approvals and the ability to get extensions under appropriate 
circumstances.
     Sec.  1068.305: Clarifying that that the requirement to 
submit importation forms applies to all engines, not just nonconforming 
engines; also adding a requirement to keep these records for five 
years. Both of these changes are consistent with the Customs 
regulations at 19 CFR 12.74.
     Part 1068, Appendix I: Defining emission-related 
components related to evaporative emission controls.

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

    We are making a variety of technical amendments to the regulations 
in 40 CFR part 1048 for Large SI engines, as described in this section.
    As described in Section V.E.1, we are establishing a provision to 
allow for assigned deterioration factors for small-volume engine 
families for Small SI engines. We requested comment on applying this 
kind of provision to Large SI engines, for which manufacturers do more 
extensive testing to demonstrate compliance over a useful life of 5,000 
hours. We are therefore including in the final rule an allowance for 
manufacturers to use an assigned deterioration factor for engine 
families with U.S.-directed production volumes up to 300 units. This 
should provide significant relief in the testing burden for certifying 
very small engine families.
    We are adopting the proposed changes to the provisions related to 
competition engines to align with the final rule for Small SI engines. 
Any Small SI engine that is produced under the competition exemption 
will very likely exceed 19 kW. As a result, we believe it is 
appropriate to make these provisions identical to avoid confusion.
    Manufacturers have notified us that the transient test for 
constant-speed engines does not represent in-use operation in a way 
that significantly affects measured emission levels. This notification 
is required by Sec.  1065.10(c)(1). In particular, manufacturers have 
pointed out that the specified operation involves light engine loads 
such that combustion and exhaust temperatures do not rise enough to 
reach catalyst light-off temperatures. As a result, meeting the 
standard using the constant-speed transient test will require the use 
of significantly oversized catalysts, which will add significant costs 
without a commensurate improvement for in-use emission control. We 
faced a similar dilemma in the effort to adopt transient standards for 
nonroad diesel engines, concluding that the transient standards should 
not apply until we develop a suitable duty cycle that more 
appropriately reflects in-use operation. As proposed, we are taking 
this same approach for Large SI engines, waiving the requirement for 
constant-speed engines to meet the transient standards until we are 
able to develop a more appropriate duty cycle. We are clarifying that 
manufacturers certifying constant-speed engines should describe their 
approach to controlling emissions during transient operation in their 
application for certification. Manufacturers must continue to meet the 
standards for steady-state testing and the field-testing standards 
continue to apply. See Section 1.8 of the Summary and Analysis of 
Comments for a discussion of the methods for demonstrating compliance 
with the field-testing standards for certification.
    Manufacturers have also pointed out that a multiplicative 
deterioration factor is problematic for engines with very low emission 
levels. While the standard allows that HC+NOX emissions may 
be as high as 2.7 g/kW-hr, manufacturers are certifying some engine 
families with deteriorated emission levels below 0.1 g/kW-hr. These 
very low emission levels are so far below the standard that measurement 
variability and minor engine-to-engine variability can lead to small 
absolute differences in emission levels that become magnified by a 
deterioration factor that reflects the extremely small low-hour 
measurement. We are therefore finalizing the proposed specification 
that manufacturers may use an additive deterioration factor if their 
low-hour emission levels are below 0.3 g/kW-hr for HC+NOX or 
0.5 g/kW-hr for CO. This change accommodates the mathematical and 
analyzer effects of very low emission levels without changing the 
current practice for the majority of engines that are certified with 
emission levels closer to the standard (we increased the threshold from 
the proposed level of 0.3 g/kW-hr for CO to a level of 0.5 g/kW-hr to 
reflect the greater variability in CO emissions at this level of 
control). This change removes the incentive for manufacturers to 
increase their engine's emission levels to avoid an artificially large 
deterioration factor. The only exception is for cases in which good 
engineering judgment dictates that a multiplicative deterioration 
factor will nevertheless be appropriate for engines with very low 
emissions. This may be the case if an engine's deterioration can be 
attributed, even at very low emission levels, to proportionally 
decreased catalyst conversion of emissions from an aged engine. It is 
important to note that Large SI engine manufacturers are subject to in-
use testing to demonstrate that they meet emission standards throughout 
the useful life. Should such testing indicate that an additive 
deterioration factor does not appropriately reflect actual performance, 
we will require manufacturers to revise their deterioration factors 
appropriately, as required under the regulations. If such

[[Page 59140]]

discrepancies appear for multiple manufacturers, we will revise the 
regulation to again require multiplicative deterioration factors for 
all aftertreatment-based systems.
    Most Large SI engines are installed in equipment that has metal 
fuel tanks. This formed the basis of the regulatory approach to set 
evaporative emission standards and certification requirements. 
Manufacturers have raised questions about the appropriate steps to take 
for systems that rely on plastic fuel tanks. We have determined that 
the current emission standards and test procedures do not require 
manufacturers to account for permeation emissions from plastic fuel 
tanks. To address this concern, we are revising the regulations to 
reference the test procedures in part 1060, where preconditioning and 
measurement procedures clarify how to test plastic fuel tanks. We are 
also specifying that the design-based certification for plastic fuel 
tanks meeting the diurnal emission standards must incorporate the 
technologies specified in 40 CFR 1060.240. For other technologies, the 
certifying manufacturer must perform tests to demonstrate compliance 
with the diurnal emission standards. Since manufacturers will need some 
time to meet these requirements, we are implementing this change 
starting with the 2010 model year. As a related matter, we are also 
changing the regulation to allow for component certification of fuel 
tanks (see 40 CFR 1060.5). This will be necessary to accommodate the 
situation described above for plastic fuel tanks. This administrative 
adjustment does not affect the underlying requirement to design and 
certify products to meet applicable emission standards. We changed the 
final rule in response to comments, mainly to include more careful 
specification of canister preconditioning procedures for those systems 
that certify by testing rather than by design.
    In the proposal we requested comment on updating the reference 
standard for specifying low-permeation fuel lines. The current 
permeation standards for Large SI equipment references Category 1 fuel 
lines as defined in the version of SAE J2260 that was issued November 
1996. We are adopting by reference the updated version of SAE J2260, 
which was finalized in November 2004 by the Society of Automotive 
Engineers. The new procedures have two primary differences related to 
fuel line permeation. First, the test fuel was changed from CM15 to 
CE10.\123\ Second, the associated limits for the different categories 
of fuel line permeation were revised. Data presented in Chapter 5 of 
the Final RIA suggest that permeation rates from low-permeation fuel 
line materials can be less than half on CE10 than on CM15. The 
permeation specification for Category 1 fuel line was revised by SAE 
from 0-25 g/m\2\/day to 3-10 g/m\2\/day. (A new Category 0 was added at 
0-3 g/m\2\/day.) Directionally, the new Category 1 permeation limits 
seem to account for the change in the test fuel. In addition, ethanol 
fuel blends are common with in-use fuels while methanol fuel blends are 
much less common. We are revising the regulation to specify that fuel 
lines must meet the Category 1 specification in the 2004 version of SAE 
J2260.
---------------------------------------------------------------------------

    \123\ ``C'' refers to fuel C as specified in ASTM D 412, E10 
refers to 10 percent ethanol, and M15 refers to 15 percent methanol.
---------------------------------------------------------------------------

    We are making several additional technical amendments to part 1048. 
Many of these simply correct typographical errors or add references to 
the regulatory cites in part 1054 for Small SI engines. Several changes 
are intended merely to align regulatory language with that of other 
programs, including those that are subject to new standards under this 
final rule. In addition, we are making the changes described below. 
Note that the changes being made to the production-line and in-use 
testing requirements are being made in response to comments. As noted, 
a few others are also being made in response to comments. However, most 
of these changes are being finalized as proposed.
     Sec.  1048.5: Clarifying that locomotive propulsion 
engines are not subject to Large SI emission standards, even if they 
use spark-ignition engines. This is based on the separate provisions 
that apply to locomotives in Clean Air Act section 213 (including those 
that use spark-ignition engines).
     Sec.  1048.101: Clarifying manufacturer's responsibility 
to meet emission standards for different types of testing, especially 
to differentiate between field-testing standards and duty-cycle 
standards.
     Sec.  1048.105: Clarifying that only the permeation 
standards of SAE J2260 apply to fuel lines used with Large SI engines.
     Sec.  1048.105: Clarifying that the requirement to prevent 
fuel boiling is affected by the pressure in the fuel tank. The 
regulation currently characterizes the boiling point of fuel only at 
atmospheric pressure. Pressurizing the fuel tank increases the boiling 
point of the fuel. We are also adding clarifying language to describe 
how engine manufacturers may meet their requirements related to fuel 
boiling by describing appropriate steps or limitations in their 
installation instructions.
     Sec.  1048.105: Reorganizing the regulatory provisions to 
align with the new language in 40 CFR part 1060, and relying on those 
test procedures. This will help to provide uniformity across our 
nonroad programs.
     Sec.  1048.110: (1) Clarifying that ``malfunctions'' 
relate to engines failing to maintain emission control and not to 
diagnostic systems that fail to report signals. (2) Clarifying that the 
malfunction indicator light needs to stay illuminated for malfunctions 
or for system errors. (3) Limiting the scope of diagnostic requirement 
to engines with closed-loop controls and three-way catalysts. This 
limitation is consistent with the conclusion we have reached for Marine 
SI engines.
     Sec.  1048.120: Clarifying that the emission-related 
warranty covers only those components from 40 CFR part 1068, Appendix 
I, whose failure will increase emissions of regulated pollutants.
     Sec.  1048.125: Giving examples of noncritical emission-
related maintenance, such as changing spark plugs and re-seating 
valves.
     Sec.  1048.135: Revising the engine labeling requirements 
to allow omission of the manufacturing date only if the date is 
stamped, engraved or otherwise permanently applied on the engine, 
rather than allowing manufacturers to keep records of engine build 
dates. This is important for verifying that engines comply with 
standards based on their build date. This requirement takes effect 
starting with the 2010 model year. See Section 1.3 of the Summary and 
Analysis of Comments for further discussion of issues related to this 
requirement.
     Sec.  1048.205: Removing detailed specifications for 
describing auxiliary emission control devices in the application for 
certification. This responds to the concern expressed by manufacturers 
that the existing, very prescriptive approach requires much more 
information than is needed to adequately describe emission control 
systems. We are leaving in place a broad requirement to describe 
emission control systems and parameters in sufficient detail to allow 
EPA to confirm that no defeat devices are employed. Manufacturers 
should be motivated to include substantial information to make such 
determinations in the certification process, rather than being subject 
to this

[[Page 59141]]

type of investigation for emission control approaches that are found to 
be outside of the scope of the application for certification. We may 
require manufacturers to submit additional information if the 
description submitted with the application is not adequate for 
evaluating the appropriateness of the design.
     Sec.  1048.205: Adding a requirement to align projected 
production volumes with actual production from previous years. This 
does not imply additional reporting or recordkeeping requirements. It 
is intended simply to avoid situations where manufacturers 
intentionally mis-state their projected production volumes to gain some 
advantage under the regulations.
     Sec.  1048.205: Specifying that manufacturers must submit 
modal emission results rather than just submitting a weighted average. 
Since this information is already part of the demonstration related to 
the field-testing standards, this should already be common practice.
     Sec.  1048.220: Clarifying that if manufacturers change 
their maintenance instructions after starting production for an engine 
family, they may not disqualify engines for in-use testing or warranty 
claims based on the fact that operators did not follow the revised 
maintenance instructions.
     Sec.  1048.225: Clarifying the terminology to refer to 
``new or modified engine configurations'' rather than ``new or modified 
nonroad engines.'' This is necessary to avoid using the term ``new 
nonroad engine'' in a way that differs from the definition in Sec.  
1048.801.
     Sec.  1048.230: Clarifying that engine families relate 
fundamentally to emission certification and that we will expect 
manufacturers to suggest a tailored approach to specifying engine 
families under Sec.  1048.230(d) to occur only in unusual 
circumstances.
     Sec.  1048.250: Adding a requirement for manufacturers to 
report their production volumes for an engine family separate from 
reports for production-line testing. For example, by excluding small-
volume families from production-line testing, the reports of those 
production volumes would otherwise no longer be available to us. Also, 
we are clarifying that manufacturers must report total production 
volumes for an engine family for any production that occurs after 
submission of the final PLT report for the model year.
     Sec.  1048.301: Allowing small-volume emission families to 
be exempted from production-line testing requirements. This applies for 
engine families with sales volumes below 150 units. This level of 
production does not allow for adequate testing to use the statistical 
techniques before exceeding specified maximum testing rates.
     Sec.  1048.301: Specifying that manufacturers may use an 
alternate method for production-line testing by using field-grade 
analyzers (instead of lab-grade) without prior approval, as long as 
they double the specified minimum sampling rate.
     Sec.  1048.305: Clarifying that (1) tested engines should 
be built in a way that represents production engines and (2) the field-
testing standards apply for any testing conducted (this may involve 
simply comparing modal results to the field-testing standards). We are 
also revising the provision related to repeat testing after an 
invalidated test to specify that manufacturers do not need our approval 
before retesting, except that we may require this if we find that tests 
have been improperly invalidated.
     Sec.  1048.310: Clarifying the relationship between 
quarterly testing and compliance with the annual testing requirements.
     Sec.  1048.315: Correcting the equation for the CumSum 
statistic to prevent negative values.
     Sec.  1048.345: Changing the PLT reporting deadline from 
30 to 45 days after the end of each calendar quarter. This aligns with 
change we are making in other programs.
     Sec.  1048.350: Allowing manufacturers to keep electronic 
records related to production-line testing rather than paper records.
     Sec.  1048.405: Adding a provision allowing for an 
adjustment of in-use testing plans if unforeseen circumstances prevent 
completion of the testing effort. This aligns with the change described 
in Section IV for Marine SI engines.
     Sec.  1048.410: Clarifying that repeat tests with an in-
use test engine are acceptable, as long as the same number of repeat 
tests are performed for all engines.
     Sec.  1048.415: Clarifying that the provisions related to 
defect reporting in 40 CFR 1068.501 apply for in-use testing.
     Sec.  1048.501: Removing specified mapping procedures, 
since these are addressed in 40 CFR part 1065.
     Sec.  1048.501: Clarifying the evaporative testing 
procedures, mainly by describing preconditioning procedures for engines 
equipped with carbon canisters (loading with vapors, then operating the 
engine to purge the canister appropriately). These procedures are 
consistent with the requirements we specify for light-duty vehicles in 
part 86 and for nonroad equipment in part 1060.
     Sec.  1048.505: (1) Removing redundant text and removing 
sampling times specified in Table 1, since these are already addressed 
in Sec.  1048.505(a)(1); (2) correcting the mode sequence listed in the 
table for ramped-modal testing; (3) clarifying that cycle statistics 
for discrete-mode testing are defined in Sec.  1065.514. This involves 
treating the series of modes as if it were continuous operation; and 
(4) referring to Sec.  1065.510 for idle specifications. These idle 
specifications provide more detailed instructions; we do not intend to 
change the way manufacturers test at idle.
     Sec. Sec.  1048.605 and 1048.610: Requiring some 
demonstration that the sales restrictions that apply for these sections 
are met, and clarifying the provisions related to emission credits for 
vehicles that generate or use emission credits under 40 CFR part 86.
     Sec.  1048.801: (1) Revising several definitions to align 
with updated definitions adopted for other programs; (2) Expanding the 
definition of small-volume engine manufacturer to also include 
companies with annual U.S. production volumes of no more than 2,000 
Large SI engines. This aligns with the provisions already adopted by 
California ARB. (3) Revising (in response to comments) the provision 
for emission-data engines to specify that the low-hour test result 
should generally occur after no more than 125 hours of engine 
operation. The regulations separately specify that engines may be 
presumed stabilized after 50 hours, so this would allow at least 75 
hours to perform testing on various fuels and configurations before the 
engine is no longer eligible for testing low-hour results. (4) 
Clarifying that an imported motor vehicle (or motor vehicle engine) 
that has been converted for nonroad use retains its original model 
year, but only if it was originally certified under part 86. Converted 
vehicles and engines that were not certified under part 86 have an 
assigned model year based on the date of conversion for nonroad use and 
must therefore meet nonroad standards based on the new model year.

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

    We are making a variety of technical amendments to the regulations 
in 40 CFR part 1051 for recreational vehicles, as described in this 
section.
    In the proposal we requested comment on revising the regulation to 
allow for manufacturers of fuel-system components to certify that their 
products meet emission standards. For

[[Page 59142]]

recreational vehicles we adopted a program in which the exhaust and 
evaporative emission standards apply to the vehicle so we did not set 
up a process for certifying fuel-system components. We continue to 
believe that evaporative emission standards should apply to the 
vehicle. However, we are revising the final rule to include a process 
by which manufacturers of fuel-system components can opt into this 
program by certifying their fuel tanks or fuel lines to the applicable 
standards. While this is a voluntary step, any manufacturer opting into 
the program in this way will be subject to all the requirements that 
apply to certificate holders. While manufacturers of recreational 
vehicles will continue to be responsible for meeting standards and 
certifying their vehicles, it may be appropriate to simplify their 
compliance effort by allowing them to rely on the certification of the 
fuel line manufacturer or fuel tank manufacturer.
    We are making several additional technical amendments to part 1051. 
Many of these simply correct typographical errors or add references to 
the regulatory cites in part 1054. Several changes are intended merely 
to align regulatory language with that of other programs, including 
those that are subject to the standards in this final rule. In 
addition, we are making the changes described below. Note that the 
changes being made to the production-line and other testing 
requirements are being made in response to comments. As noted, a few 
others are also being made in response to comments or as clarifications 
of existing text. However, most of these changes are being finalized as 
proposed.
     Sec.  1051.1: Revising the speed threshold for offroad 
utility vehicles to be subject to part 1051. Changing from ``25 miles 
per hour or higher'' to ``higher than 25 miles per hour'' aligns this 
provision with the similar threshold for qualifying as a motor vehicle 
in 40 CFR 85.1703.
     Sec.  1051.5: Clarifying the status of very small 
recreational vehicles to reflect the provisions in the current 
regulations in 40 CFR part 90 to treat such vehicles with a dry weight 
under 20 kilograms as Small SI engines.
     Sec.  1051.25: Clarifying that manufacturers of 
recreational vehicles that use engines certified to meet exhaust 
emission standards must still certify the vehicle with respect to the 
evaporative emission standards.
     Sec.  1051.120: Clarifying that the emission-related 
warranty covers only those components from 40 CFR part 1068, Appendix 
I, whose failure will increase emissions of regulated pollutants.
     Sec.  1051.125: Giving examples of noncritical emission-
related maintenance, such as changing spark plugs and re-seating 
valves.
     Sec.  1051.135: Revising the labeling requirements to 
allow omission of the manufacturing date only if the date is stamped, 
engraved, or otherwise permanently applied on the vehicle, rather than 
allowing manufacturers to keep records of vehicle build dates. This is 
important for verifying that vehicles comply with standards based on 
their build date. This requirement takes effect starting with the 2010 
model year. See Section 1.3 of the Summary and Analysis of Comments for 
further discussion of issues related to this requirement.
     Sec.  1051.135: Adding a requirement to label vehicles as 
described in part 1060 for evaporative emission controls. Since this 
change may involve some time for manufacturers to comply, we are 
applying this requirement starting with the 2010 model year.
     Sec.  1051.137: Clarifying how the labeling requirements 
apply with respect to the averaging program and selected family 
emission limits.
     Sec.  1051.140: Allowing (in response to comments) for 
identification of engine displacement to the nearest whole cubic 
centimeter (rather than the nearest 0.5 cubic centimeter). This level 
of precision is adequate for implementing regulatory provisions related 
to engine displacement.
     Sec.  1051.145: Allowing the continued use of part 91 test 
procedures (instead of part 1065 procedures) for snowmobiles subject to 
Phase 2 or Phase 2 standards. We will revisit this provision in the 
context of adopting revised Phase 3 standards.
     Sec.  1051.205: Removing detailed specifications for 
describing auxiliary emission control devices in the application for 
certification. This responds to the concern expressed by manufacturers 
that the existing, very prescriptive approach requires much more 
information that is needed to adequately describe emission control 
systems. We are leaving in place a broad requirement to describe 
emission control systems and parameters in sufficient detail to allow 
EPA to confirm that no defeat devices are employed. Manufacturers 
should be motivated to include substantial information to make such 
determinations in the certification process, rather than being subject 
to this type of investigation for emission control approaches that are 
found to be outside of the scope of the application for certification. 
We may require manufacturers to submit additional information if the 
description submitted with the application is not adequate for 
evaluating the appropriateness of the design.
     Sec.  1051.205: Requirements to align projected production 
volumes with actual production from previous years. This does not imply 
additional reporting or recordkeeping requirements. It is intended 
simply to avoid situations where manufacturers intentionally mis-state 
their projected production volumes to gain some advantage under the 
regulations.
     Sec.  1051.220: Clarifying that if manufacturers change 
their maintenance instructions after starting production for an engine 
family, they may not disqualify vehicles for warranty claims based on 
the fact that operators did not follow the revised maintenance 
instructions.
     Sec.  1051.225: Clarifying the terminology to refer to 
``new or modified vehicle configurations'' rather than ``new or 
modified vehicles.'' This is necessary to avoid confusion with the term 
``new vehicle'' as it relates to introduction into commerce.
     Sec.  1051.225: Clarifying the provisions related to 
changing an engine family's Family Emission Limit after the start of 
production.
     Sec.  1051.255: Adopting a different SAE standard for 
specifying low-permeability materials to allow for design-based 
certification of metal fuel tanks with gaskets made of polymer 
materials. The previous language does not adequately characterize the 
necessary testing and material specifications.
     Sec.  1051.230: Clarifying that engine families relate 
fundamentally to emission certification and that we will expect 
manufacturers to suggest a tailored approach to specifying engine 
families under Sec.  1051.230(e) to occur only in unusual 
circumstances.
     Sec.  1051.245: Revising the specification for fuel lines 
meeting the specifications of SAE J 2260 to include the 2004 version of 
this standard as described in Section VIII.D.
     Sec.  1051.250: Adding a requirement for manufacturers to 
report their production volumes for an engine family separate from 
reports for production-line testing. For example, by excluding small-
volume families from production-line testing, the reports of production 
volumes would otherwise no longer be available to us. Also, we are 
clarifying that manufacturers must report total production volumes for 
an engine family for any production that occurs after submission of the 
final PLT report for the model year.

[[Page 59143]]

     Sec.  1051.301: Allowing small-volume emission families to 
be exempted from production-line testing requirements. This applies for 
engine families with production volumes below 150 units. This level of 
production does not allow for adequate testing to use the statistical 
techniques before exceeding specified maximum testing rates.
     Sec.  1051.301: Specifying that manufacturers may use an 
alternate method for production-line testing by using field-grade 
analyzers (instead of lab-grade) without prior approval, as long as 
they double the specified minimum sampling rate.
     Sec.  1051.305: Clarifying that tested vehicles should be 
built in a way that represents production vehicles.
     Sec.  1051.305: Revising the provision related to repeat 
testing after an invalidated test to specify that manufacturers do not 
need our approval before retesting, except that we may require this if 
we find that tests have been improperly invalidated.
     Sec.  1051.310: Clarifying the relationship between 
quarterly testing and compliance with the annual testing requirements; 
and clarifying the testing provisions that apply for engine families 
where the production period is substantially less than a full year.
     Sec.  1051.315: Correcting the equation for the CumSum 
statistic to prevent negative values.
     Sec.  1051.325: Clarifying the basis on which we will 
approve retroactive changes to the Family Emission Limit for an engine 
family that has failed under production-line testing.
     Sec.  1051.345: Changing the PLT reporting deadline from 
30 to 45 days after the end of each calendar quarter. This aligns with 
change we are making in other programs.
     Sec.  1051.350: Allowing manufacturers to keep electronic 
records related to production-line testing rather than paper records.
     Sec.  1051.501: Adding a specified test fuel for diesel-
fueled recreational vehicles that certify under part 1051. This would 
generally involve either low-sulfur diesel fuel (< 500 ppm sulfur) or 
ultra low-sulfur diesel fuel (< 15 ppm sulfur).
     Sec.  1051.505: (1) Clarifying that cycle statistics for 
discrete-mode testing on an engine dynamometer are defined in Sec.  
1065.514. This involves treating the series of modes as if it involved 
continuous operation. (2) Specifying that manufacturers may choose 
between discrete-mode and ramped-modal measurements for production-line 
testing if the application for certification includes testing conducted 
with both types of testing. (3) Referring to Sec.  1065.510 for idle 
specifications. These idle specifications provide more detailed 
instructions; we do not intend to change the way manufacturers test at 
idle.
     Sec. Sec.  1051.605 and 1051.610: Requiring a 
demonstration that the sales restrictions that apply for these sections 
are met.
     Sec.  1051.650: Adding a requirement to certify vehicles 
that are converted to run on a different fuel. We expect this is a rare 
occurrence, but one that we should make subject to certification 
requirements.
     Sec.  1051.701: Clarifying that manufacturers using 
emission credits to meet emission standards must base their credit 
calculations on their full product line-up, rather than considering 
only those engine families with Family Emission Limits above or below 
the emission standard.
     Sec. Sec.  1051.710-1051.735: Making various minor 
revisions to align with regulatory specifications in other programs.
     Sec.  1051.735: Adding a requirement to keep records 
related to banked emission credits for as long as a manufacturer 
intends for those credits to be valid. This is necessary for us to 
verify the appropriateness of credits used for demonstrating compliance 
with emission standards in later model years.
     Sec.  1051.801: Revising several definitions to align with 
updated definitions adopted for other programs.
     Sec.  1051.801: Clarifying that an engine's ``maximum 
engine power'' does not change if it is installed in a vehicle or piece 
of equipment that limits the engine's operation. For example, adding a 
speed limiter to a vehicle does not affect the engine's ``maximum 
engine power'' as determined by the engine manufacturer for the engine 
as it would be tested using the specified procedures.
     Sec.  1051.801: Clarifying that an imported motor vehicle 
that has been converted for nonroad use retains its original model 
year, but only if it was originally certified under part 86. Converted 
vehicles that were not certified under part 86 have an assigned model 
year based on the date of conversion for nonroad use and must therefore 
meet nonroad standards based on the new model year.

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

    We proposed to make several adjustments to the provisions related 
to delegated assembly specified in Sec.  85.1713. These proposed 
adjustments include:
     Removing the provision related to auditing outside the 
United States since equipment manufactured in other countries will not 
be subject to these provisions
     Clarifying that the exemption expires when the equipment 
manufacturer takes possession of the engine, but not before it reaches 
the point of final assembly
     Clarifying the prohibition related to following 
installation instructions to ensure that engines are in their certified 
configuration when installed in a piece of equipment.
    We are adopting these proposed provisions as part of a bigger 
effort to harmonize delegated-assembly across engine categories. See 
Section VIII.C.6 for further discussion of the changes in delegated 
assembly in the harmonized approach we are adopting in Sec.  1068.261. 
Note that the new labeling requirements we are adopting take effect for 
heavy-duty highway engines starting in the 2010 model year.
    Manufacturers also submitted comments describing technical and 
practical challenges related to the transition to using part 1065 test 
procedures for heavy-duty highway engines. We have agreed to delay the 
mandatory use of part 1065 procedures until July 2010. However, there 
are several areas where part 1065 specifies procedures or methods that 
are already well established, where those methods represent substantial 
improvements over the existing procedures specified in part 86. We are 
therefore not extending the deadline for these specific provisions. See 
Sec.  86.1305-2010 for additional information.
    We have revised the final rule to include new provisions allowing 
for a replacement-engine exemption for heavy-duty highway engines under 
Sec.  1068.240 as described in Section VIII.C.5.

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

    On January 18, 2008 we promulgated final emission standards for 
stationary spark-ignition engines (73 FR 3567). The final rule 
specified that stationary spark-ignition engines at or below 19 kW 
would be subject to all the same emission standards and certification 
requirements that apply to Small SI engines. Since we are promulgating 
new standards for Small SI engines in this rule, these requirements 
should apply automatically to those stationary engines. However, since 
the Phase 3 standards are in 40 CFR part 1054, as described in Section 
V, we are revising the regulatory language for stationary spark-
ignition engines in 40 CFR part

[[Page 59144]]

60, subpart JJJJ, to directly reference the Phase 3 standards in part 
1054, as proposed.

H. Amendments Related to Locomotive, Marine, and Other Nonroad 
Compression-Ignition Engines (40 CFR parts 89, 92, 94, 1033, 1039, and 
1042)

    In response to comments, we are making a variety of technical 
amendments to regulatory provisions for nonroad compression-ignition 
engines. Several of these changes are intended to align with the 
changes we are adopting in this rule for spark-ignition engines, either 
to be consistent with those standard-setting parts, or to fit with 
changes we are making to the general compliance provisions in part 
1068. There are also a variety of changes to correct paragraph 
references and other typographical errors. We are making the following 
additional adjustments and clarifications to the regulations:
     Modifying the labeling statement for replacement engines 
under part 89 to clarify what applies when manufacturer replace an 
engine that was originally exempted from emission standards.
     Correcting a typographical error to define the alternate 
emission standard for switch locomotives in Sec.  1033.101(b) to be the 
same as that for line-haul locomotives, as described in the preamble to 
that final rule.
     Revising the start date for the certification requirement 
for automatic engine stop/start in Sec.  1033.115 to provide sufficient 
lead time following publication of the final rule establishing part 
1033. Note that this revision addresses only administrative 
requirements and does not delay the introduction of the emission 
control technology.
     Clarifying provisions related to assigned deterioration 
factors for locomotive remanufacturers in Sec.  1033.150 to be 
consistent with the description in the preamble to the final rule 
establishing part 1033.
     Clarifying the need for prior approval of adjustments for 
automatic shutdown features to be consistent with the description in 
the preamble to the final rule establishing part 1033 (see Sec.  
1033.530).
     Clarifying the definition of ``new'' in Sec.  1033.801 for 
remanufactured engines that have been certified.
     Revising the definition of ``hobby engine'' in Sec.  
1039.5 and Sec.  1042.5 to rely on vehicle characteristics (reduced-
scale models that are not capable of transporting a person) rather than 
engine characteristics (less than 50 cc per cylinder). See Section 1.2 
of the Summary and Analysis of Comments for further information.
     Clarifying that compression-ignition engines used in 
recreational vehicles and certified under part 1051 are not required to 
certify under part 1039.
     Clarifying the labeling requirements that apply for 
engines meeting the alternate PM standard specified in Sec.  
1039.101(c) (see Sec.  1039.102 and Sec.  1039.135).
     Adding a provision allowing manufacturers to specify 
scheduled maintenance for crankcase vent filters. This is analogous to 
servicing PCV valves for engines that have closed crankcases (see Sec.  
1039.125).
     Revising the Transition Program for Equipment 
Manufacturers in Sec.  1039.625 and Sec.  1039.626 to (1) require 
manufacturers to send only a single report to EPA, (2) allow 
manufacturers to identify their contact information in their reports or 
on a publicly accessible Web site rather than on their equipment 
labels, (3) specify a notification deadline based on the start of using 
these provisions, rather than tying the deadline only to the start of 
the year, (4) allow manufacturers to omit the FEL from the engine label 
if the FEL is below the emission standard that would otherwise apply, 
(5) identify specific asset thresholds for avoiding bond payments for 
importing exempted products, (6) clarify the types of penalties and 
judgments that would be subject to payment from the posted bond, and 
(7) specify that manufacturers may identify an agent for service 
anywhere in the United States (rather than specifically in Washington, 
DC).
     Correcting an error for marine compression-ignition 
engines in Sec.  1042.101 by noting that the Tier 3 NOX+HC 
standards do not apply for engines between 2000 and 3700 kW that have a 
power density above 35 kW per liter. The footnote in Table 1 of this 
section denoting this distinction was inadvertently omitted for the 
high power-density engines.
     Revising the requirements related to evaporative emissions 
in Sec.  1042.105 to align with the new provisions that apply for 
Marine SI applications as described in Section VI.
     Removing Sec.  1042.601(g) since this provision is being 
codified in this rule at Sec.  1068.101(b)(1).

IX. Projected Impacts

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

    As discussed in previous sections, this final rule will reduce 
exhaust emissions from specific sizes of nonhandheld Small SI and 
Marine SI engines. It will also reduce evaporative emissions from the 
fuel systems used on nonhandheld and handheld Small SI equipment and 
Marine SI vessels (for simplicity we collectively include the 
evaporative emission requirements from equipment or vessels when 
referring to Small SI or Marine SI engines in the remainder of this 
section). The new exhaust and evaporative emission standards will 
directly affect volatile organic hydrocarbon compounds (VOC), oxides of 
nitrogen (NOX), and to a lesser extent carbon monoxide (CO). 
Also, we anticipate that the emission control technology which is 
likely to be used to meet the exhaust emission standards will affect 
directly emitted particulate matter, most importantly particles with 
diameters of 2.5 micrometers or less (PM2.5). It will also 
incrementally reduce air toxic emissions. A detailed analysis of the 
effects of this final rule on emissions and emission inventories can be 
found in Chapter 3 of the Final RIA.
    The contribution of exhaust and evaporative emissions from Small SI 
and Marine SI engines to total 50-state mobile-source emission 
inventories is significant and will remain so into the future. Table 
IX-1 presents the nationwide inventory for these engines for both 2002 
and 2030. (The inventories cover all Small SI and Marine SI engines 
including the portion of Small SI engines regulated by the California 
ARB.) Table IX-1 shows that for the primary pollutants affected by this 
final rule, these engines contribute about 25 to 35 percent of the 
nationwide VOC emissions from all mobile sources. The nationwide 
contribution to the total mobile source NOX inventory is 
about 5 percent or less. Finally, for PM2.5, the contribution is about 
10 percent.

[[Page 59145]]



  Table IX-1--Contribution of Small Nonroad and Marine SI Engines to National (50-State) Mobile Source Emission
                                                   Inventories
----------------------------------------------------------------------------------------------------------------
                                                               2002                            2030
                                                 ---------------------------------------------------------------
                                                     Small SI/                       Small SI/
                    Pollutant                        marine SI      Percent of       marine SI      Percent of
                                                    inventory,     mobile source    inventory,     mobile source
                                                       tons          inventory         tons          inventory
----------------------------------------------------------------------------------------------------------------
VOC.............................................       2,169,000              26       1,430,000              35
NOX.............................................         169,700               1         311,300               6
PM2.5...........................................          41,960               8          44,040              12
CO..............................................      19,607,000              23      15,605,000              30
----------------------------------------------------------------------------------------------------------------

(1) VOC
    Table IX-2 shows the VOC emissions and emission reductions we 
expect both with and without the new standards for engines, equipment, 
and vessels affected by the final rule. In 2002, Small SI and Marine SI 
emitted approximately 1,047,000 and 931,000 tons of VOC, respectively. 
Without the new standards, these emissions will decrease because of the 
effect of the existing emission control requirements to about 958,000 
and 484,000 tons by 2040, respectively. With the new controls, this 
pollutant will be further reduced by 34 percent for Small SI engines 
and 73 percent for Marine SI engines by 2040. The VOC emission 
inventory trends over time for both categories of engines that are 
subject to the final rule are shown in Figure IX-1.

    Table IX-2--National (50-State) VOC Emissions and Emission Reductions for Small SI and Marine SI Engines
----------------------------------------------------------------------------------------------------------------
                                                                                                       Percent
              Year                    Category        Without rule      With rule       Reduction     reduction
----------------------------------------------------------------------------------------------------------------
                                 Small Engine......       1,047,374       1,047,374  ..............  ...........
                                 Marine............         931,132         931,132  ..............  ...........
2002...........................  Both..............       1,978,506       1,978,506  ..............  ...........
                                 Small Engine......         675,131         488,517         186,614           28
                                 Marine............         505,981         384,108         121,873           24
2015...........................  Both..............       1,181,112         872,624         308,487           26
                                 Small Engine......         728,853         242,957         240,948           33
                                 Marine............         460,481         242,957         217,524           47
2020...........................  Both..............       1,189,334         730,862         458,472           39
                                 Small Engine......         842,970         558,094         284,876           34
                                 Marine............         458,656         139,083         319,573           70
2030...........................  Both..............       1,301,626         697,177         604,449           46
                                 Small Engine......         958,429         633,050         325,379           34
                                 Marine............         483,949         128,906         355,043           73
2040...........................  Both..............       1,442,377         761,956         680,422           47
----------------------------------------------------------------------------------------------------------------


[[Page 59146]]

[GRAPHIC] [TIFF OMITTED] TR08OC08.064

(2) NOX
    Table IX-3 shows the NOX emissions and emission 
reductions we expect both with and without the new standards for 
engines affected by the final rule. In 2002, Small SI and Marine SI 
emitted approximately 107,000 and 46,300 tons of NOX, 
respectively. Without the new standards, these emissions will increase 
to about 181,000, and 132,000 tons by 2040, respectively. With the new 
controls, this pollutant will be reduced by 49 percent for Small SI 
engines and 48 percent for Marine SI engines by 2040. The 
NOX emission inventory trends over time for both categories 
of engines that are subject to the final rule are shown in Figure IX-2.

    Table IX-3--National (50-State) NOX Emissions and Emission Reductions for Small SI and Marine SI Engines
----------------------------------------------------------------------------------------------------------------
                                                                                                       Percent
              Year                    Category        Without rule      With rule       Reduction     reduction
----------------------------------------------------------------------------------------------------------------
                                 Small Engine......         106,804         106,804  ..............  ...........
                                 Marine............          46,311          46,311  ..............  ...........
2002...........................  Both..............         153,115         153,115  ..............  ...........
                                 Small Engine......         126,395          76,412          49,983           40
                                 Marine............         101,703          85,334          16,369           16
2015...........................  Both..............         228,098         161,746          66,353           29
                                 Small Engine......         137,002          72,175          64,827           47
                                 Marine............         111,525          81,398          30,128           27
2020...........................  Both..............         248,527         153,572          94,954           38
                                 Small Engine......         158,840          81,977          76,863           48
                                 Marine............         123,335          68,639          54,696           44
2030...........................  Both..............         282,175         150,616         131,559           47
                                 Small Engine......         180,973          93,181          87,792           49
                                 Marine............         131,907          68,461          63,445           48
2040...........................  Both..............         312,880         161,643         151,237           48
----------------------------------------------------------------------------------------------------------------


[[Page 59147]]

[GRAPHIC] [TIFF OMITTED] TR08OC08.065

(3) PM2.5
    Table IX-4 shows the PM2.5 emissions and emission reductions we 
expect both with and without the new standards for engines affected by 
the final rule. In 2002, Small SI and Marine SI emitted 23,000 and 
15,000 tons of PM2.5, respectively. Without the new standards, the 
PM2.5 emissions from Small SI engines will increase to 
39,000 by 2040, while those from Marine SI will decrease to about 6,000 
tons in that year due to the effects of the existing emission control 
requirements for certain types of Marine SI engines, such as outboards. 
With the new controls, this pollutant will be reduced by 3 percent for 
Small SI engines and an additional 84 percent for Marine SI engines by 
2040.
    The PM2.5 emission inventory trends over time for both categories 
of engines that are subject to the final rule are shown in Figure IX-3.

   Table IX-4--National (50-State) PM2.5 Emissions and Emission Reductions for Small SI and Marine SI Engines
----------------------------------------------------------------------------------------------------------------
                                                                                                       Percent
              Year                    Category        Without rule      With rule       Reduction     reduction
----------------------------------------------------------------------------------------------------------------
                                 Small Engine......          23,382          23,382  ..............  ...........
                                 Marine............          15,092          15,092  ..............  ...........
2002...........................  Both..............          38,474          38,474  ..............  ...........
                                 Small Engine......          27,747          27,115             632            2
                                 Marine............           6,823           4,951           1,872           27
2015...........................  Both..............          34,570          32,066           2,504            7
                                 Small Engine......          30,009          29,189             820            3
                                 Marine............           5,908           2,640           3,269           55
2020...........................  Both..............          35,917          31,828           4,089           11
                                 Small Engine......          34,535          33,572             963            3
                                 Marine............           5,719           1,137           4,582           80
2030...........................  Both..............          40,255          34,710           5,545           14
                                 Small Engine......          39,079          37,979           1,100            3
                                 Marine............           6,016             989           5,027           84
2040...........................  Both..............          45,095          38,968           6,127           14
----------------------------------------------------------------------------------------------------------------


[[Page 59148]]

[GRAPHIC] [TIFF OMITTED] TR08OC08.066

(4) CO
    Table IX-5 shows the CO emissions and emission reductions we expect 
both with and without the new standards for engines affected by the 
final rule. In 2002, Small SI and Marine SI emitted 15,091,000 and 
2,472,000 tons of CO, respectively. Without the new standards, these 
emissions will decrease because of the effect of the existing emission 
control requirements to about 14,007,000 and 1,766,000 tons by 2040, 
respectively. With the new controls, this pollutant will be reduced by 
an additional 9 percent for Small SI engines and an additional 21 
percent for Marine SI engines by 2040. The CO emission inventory trends 
over time for both categories of engines that are subject to the final 
rule are shown in Figure IX-4.

     Table IX-5--National (50-State) CO Emissions and Emission Reductions for Small SI and Marine SI Engines
----------------------------------------------------------------------------------------------------------------
                                                                                                       Percent
              Year                    Category        Without rule      With rule       Reduction     reduction
----------------------------------------------------------------------------------------------------------------
                                 Small Engine......      15,091,835      15,091,835  ..............  ...........
                                 Marine............       2,472,251       2,472,251  ..............  ...........
2002...........................  Both..............      17,564,086      17,564,086  ..............  ...........
                                 Small Engine......       9,879,027       9,135,515         743,512            8
                                 Marine............       1,690,755       1,587,889         102,867            6
2015...........................  Both..............      11,569,782      10,723,404         846,379            7
                                 Small Engine......      10,645,870       9,679,462         966,407            9
                                 Marine............       1,638,114       1,452,196         185,917           11
2020...........................  Both..............      12,283,983      11,131,659       1,152,325            9
                                 Small Engine......      12,310,505      11,166,921       1,143,584            9
                                 Marine............       1,671,627       1,353,989         317,638           19
2030...........................  Both..............      13,982,132      12,520,910       1,461,222           10
                                 Small Engine......      14,007,335      12,701,792       1,305,543            9
                                 Marine............       1,765,651       1,399,715         365,936           21
2040...........................  Both..............      15,772,986      14,101,507       1,671,479           11
----------------------------------------------------------------------------------------------------------------


[[Page 59149]]

[GRAPHIC] [TIFF OMITTED] TR08OC08.067

B. Estimated Costs

    In assessing the economic impact of setting emission standards, we 
have made a best estimate of the costs associated with the technologies 
we anticipate manufacturers will use in meeting the standards. In 
making our estimates for the final rule, we have relied on our own 
technology assessment, which includes information developed by EPA's 
National Vehicle and Fuel Emissions Laboratory (NVFEL). Estimated costs 
include variable costs (e.g., hardware and assembly time) and fixed 
costs (e.g., research and development, retooling, engine certification 
and test cell upgrades to 40 CFR 1065 requirements). We projected that 
manufacturers will redirect existing research and development funds to 
invest in the fixed costs associated with changes needed to meet the 
rulemaking requirements. The analysis also considers total operating 
costs, including maintenance and fuel consumption. Cost estimates based 
on the projected technologies represent an expected change in the cost 
of engines as they begin to comply with new emission standards. All 
costs are presented in 2005 dollars. Full details of our cost analysis 
can be found in Chapter 6 of the Final RIA. Estimated costs related to 
exhaust emissions were also subject to peer review, as described in a 
set of peer review reports that are available in the docket for this 
rulemaking.
    Cost estimates based on the current projected costs for our 
estimated technology packages represent an expected incremental cost of 
equipment in the near term. For the longer term we have identified a 
factor that will cause cost impacts to decrease over time. We expect 
that manufacturers will undergo a learning process that will lead to 
lower variable costs. For instance, the analysis incorporates the 
expectation that Small SI engine manufacturers will optimize the 
catalyst muffler offerings available and thereby streamline their 
production and reduce costs. The cost analysis generally incorporates 
this learning effect by decreasing estimated variable costs by 20 
percent starting in the sixth year of production. The learning curve 
has not been applied to Small SI EFI systems due to the fact that the 
technologies are currently well established on similar sized engines in 
other applications.
    We project average costs to comply with the new exhaust emission 
standards for Small SI engines and equipment to range from $9-$11 per 
Class I equipment to meet the Phase 3 standards. We anticipate the 
manufacturers will meet the emission standard with several technologies 
including engine improvements and catalysts. For Class II equipment, we 
project average costs to range from $15-$26 per equipment to meet the 
new emission standards. We anticipate the manufacturers of Class II 
engines will meet the new exhaust emission standards by engine 
improvements and adding catalysts and/or electronic fuel injection to 
their engines. The use of electronic fuel injection is estimated to 
provide a fuel savings of 10% over the lifetime of a Class II engine. 
Using an average garden tractor estimated lifetime of 5.8 years, and 
the estimate that 6.6% of Class II engines will utilize electronic fuel 
injection, this calculates to be a lifetime savings of 273 gallons. 
This translates to a discounted lifetime savings of approximately $496 
per engine, at an average fuel price of $1.81 per gallon.
    For Small SI equipment, we have also estimated a per-unit cost for 
the new evaporative emission standards. The average short-term costs 
without fuel savings are projected to be $0.82 for handheld equipment, 
$3.05 for Class I equipment, and $6.73 for Class II equipment. These 
costs are based on fuel tank and fuel line permeation control, and for 
non-handheld equipment, running loss and diffusion control. Because 
evaporative emissions are composed of otherwise usable fuel that is 
lost to the atmosphere, measures that reduce evaporative emissions will 
result in fuel savings. We estimate that the average fuel savings, due 
to permeation control, be about 1.4 gallons over the 5 year average 
operating lifetime. This translates to a discounted lifetime savings of 
more than $2 at an average fuel price of $1.81 per gallon.
    For marine engines, we estimated per-engine costs for OB, PWC, and 
SD/I engines for meeting the new exhaust emission standards. The short-
term cost estimates without fuel savings are $290 for OB, $390 for PWC, 
and $360 for SD/

[[Page 59150]]

I engines. For OB/PWC engines, we anticipate that manufacturers will 
meet the standards through the expanded production of existing low-
emission technologies such as four-stroke and direct-injection two-
stroke engines. For most SD/I engines, we anticipate that manufacturers 
will use catalytic control to meet the new standards.
    For marine vessels, we have also estimated a per-unit cost for the 
new evaporative emission standards. The average short-term costs 
without fuel savings are projected to be $12 for boats with portable 
fuel tanks, $17 for PWC, and $74 for boats with installed fuel tanks. 
These costs are based on fuel tank and fuel line permeation control and 
diurnal emission control. For portable fuel tanks, diurnal emission 
control is based on an automatic sealing vent, for PWC we estimate that 
changes will not be necessary from current designs, and for other boats 
with installed fuel tanks, the estimated costs are based on the use of 
a passively-purged carbon canister. Because evaporative emissions are 
composed of otherwise usable fuel that is lost to the atmosphere, 
measures that reduce evaporative emissions will result in fuel savings. 
We estimate that the average fuel savings, due to permeation control, 
to be about 28 gallons over the 15 year average operating lifetime. 
This translates to a discounted lifetime savings of more than $30 at an 
average fuel price of $1.81 per gallon.

C. Cost per Ton

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

   Table IX-6--Estimated Annualized Cost to Manufacturers and Annualized Fuel Savings over 30 Years Due to the
                                 Phase 3 Small SI and Marine SI Engine Standards
                                     [2005$, 3 and 7 percent discount rates]
----------------------------------------------------------------------------------------------------------------
                                                                       Annualized cost to      Annualized fuel
                                                                          manufacturers      savings  (millions/
             Engine category                  Emissions category          (millions/yr)              yr)
                                                                     -------------------------------------------
                                                                          3%         7%         3%         7%
----------------------------------------------------------------------------------------------------------------
Small SI Engines........................  Exhaust...................       $190       $182        $27        $24
                                          Evaporative...............         68         65         59         53
                                          Aggregate.................        258        247         86         77
Marine SI Engines.......................  Exhaust...................        123        123         67         56
                                          Evaporative...............         23         22         27         22
                                          Aggregate.................        146        144         94         78
----------------------------------------------------------------------------------------------------------------

    We have estimated the Small SI and Marine SI engine cost per ton of 
the Phase 3 HC+NOX standards over the typical lifetime of 
the equipment that are covered by this final rule. We have examined the 
cost per ton by performing a nationwide cost per ton analysis in which 
the net present value of the cost of compliance per year is divided by 
the net present value of the HC+NOX benefits over 30 years. 
The resultant discounted cost per ton is presented in Table IX-7. The 
total (exhaust and evaporative) cost per ton, using a 7 percent 
discount rate, with fuel savings is $856 for Small SI equipment and 
$360 for marine vessels. For the final rule as a whole, the cost per 
ton of HC+NOX reduction is $623. Reduced operating costs 
offset a portion of the increased cost of producing the cleaner Small 
SI and Marine SI engines. Reduced fuel consumption also offsets the 
costs of permeation control. Chapter 7 of the RIA contains a more 
detailed discussion of the cost per ton analysis.

                       Table IX-7--Estimated Cost Per Ton of the HC+NOX Emission Standards
                                     [2005$, 3 and 7 percent discount rates]
----------------------------------------------------------------------------------------------------------------
                                                                                   Discounted cost per ton
                                                           Implementation  -------------------------------------
                        Category                               dates           Without fuel    With fuel savings
                                                                             savings  (3%/7%)        (3%/7%)
----------------------------------------------------------------------------------------------------------------
Small SI Exhaust.......................................          2011-2012      $1,152/$1,264        $986/$1,097
Small SI Evaporative...................................          2009-2013            690/740             90/140
Marine SI Exhaust......................................          2010-2013            700/830            320/450
Marine SI Evaporative..................................          2009-2012            500/590         (100)/(10)
Aggregate..............................................          2009-2013            868/974            519/623
----------------------------------------------------------------------------------------------------------------


[[Page 59151]]

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

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

D. Air Quality Impact

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

E. Benefits

    This section presents our analysis of the health and environmental 
benefits that are estimated to occur as a result of the final Small SI 
and Marine SI engine standards throughout the period from initial 
implementation through 2030. Nationwide, the engines that are subject 
to the emission standards in this rule are a significant source of 
mobile source air pollution. The standards would reduce exposure to 
hydrocarbon, CO and NOX emissions and help avoid a range of 
adverse health effects associated with ambient ozone and 
PM2.5 levels. In addition, the proposed standards would help 
reduce exposure to CO, air toxics, and PM2.5 for persons who 
operate or who work with or are otherwise active in close proximity to 
these engines. As described below, the reductions in PM and ozone from 
the standards are expected to result in significant reductions in 
premature deaths and other serious human health effects, as well as 
other important public health and welfare effects.
    EPA typically quantifies and monetizes PM- and ozone-related 
impacts in its regulatory impact analyses (RIAs) when possible. The RIA 
for the proposal for this rulemaking only quantified benefits from PM; 
in the current RIA we quantify and monetize the ozone-related health 
and environmental impacts associated with the final rule. The science 
underlying the analysis is based on the current ozone criteria 
document.\124\ To estimate the incidence and monetary value of the 
health outcomes associated with this final rule, we used health impact 
functions based on published epidemiological studies, and valuation 
functions derived from the economics literature.\125\ Key health 
endpoints analyzed include premature mortality, hospital and emergency 
room visits, school absences, and minor restricted activity days. The 
analytic approach to characterizing uncertainty is consistent with the 
analysis used in the RIA for the proposed O3 NAAQS.
---------------------------------------------------------------------------

    \124\ U.S. Environmental Protection Agency (2006) Air quality 
criteria for ozone and related photochemical oxidants (second 
external review draft) Research Triangle Park, NC: National Center 
for Environmental Assessment; report no. EPA/600R-05/004aB-cB, 
3v.Available: http://cfpub.epa.gov/ncea/cfm/
recordisplay.cfm?deid=137307[March 2006].
    \125\ Health impact functions measure the change in a health 
endpoint of interest, such as hospital admissions, for a given 
change in ambient ozone or PM concentration.
---------------------------------------------------------------------------

    The benefits modeling is based on peer-reviewed studies of air 
quality and health and welfare effects associated with improvements in 
air quality and peer-reviewed studies of the dollar values of those 
public health and welfare effects. These methods are consistent with 
benefits analyses performed for the recent analysis of the final Ozone 
NAAQS and the final PM NAAQS analysis.126 127 They are 
described in detail in the regulatory impact analyses prepared for 
those rules.
---------------------------------------------------------------------------

    \126\ U.S. Environmental Protection Agency. March 2008. Final 
Ozone NAAQS Regulatory Impact Analysis. Prepared by: Office of Air 
and Radiation, Office of Air Quality Planning and Standards.
    \127\ U.S. Environmental Protection Agency. October 2006. Final 
Regulatory Impact Analysis (RIA) for the Proposed National Ambient 
Air Quality Standards for Particulate Matter. Prepared by: Office of 
Air and Radiation. Available at HTTP://www.epa.gov/ttn/ecas/
ria.html.
---------------------------------------------------------------------------

    The range of PM benefits associated with the final standards is 
estimated based on risk reductions estimated using several sources of 
PM-related mortality effect estimates. In order to provide an 
indication of the sensitivity of the benefits estimates to alternative 
assumptions about PM mortality risk reductions, in Chapter 8 of the RIA 
we present a variety of benefits estimates based on two epidemiological 
studies (including the ACS Study and the Six Cities Study) and the 
recent PM mortality expert elicitation.\128\ EPA intends to ask the 
Science Advisory Board to provide additional advice as to which 
scientific studies should be used in future RIAs to estimate the 
benefits of reductions in PM-related premature mortality.
---------------------------------------------------------------------------

    \128\ Industrial Economics, Incorporated (IEc). 2006. Expanded 
Expert Judgment Assessment of the Concentration-Response 
Relationship Between PM2.5 Exposure and Mortality. Peer 
Review Draft. Prepared for: Office of Air Quality Planning and 
Standards, U.S. Environmental Protection Agency, Research Triangle 
Park, NC. August.
---------------------------------------------------------------------------

    In a recent report on the estimation of ozone-related premature 
mortality published by the National Research Council (NRC),\129\ a 
panel of experts and reviewers concluded that ozone-related mortality 
should be included in estimates of the health benefits of reducing 
ozone exposure. The report also recommended that the estimation of 
ozone-related premature mortality be accompanied by broad uncertainty 
analyses while giving little or no weight to the assumption that there 
is no causal association between ozone exposure and premature 
mortality. Because EPA has yet to develop a coordinated response to the 
NRC report's findings and recommendations, however, we have retained 
the approach to estimating ozone-related premature mortality used in 
RIA for the final Ozone NAAQS. EPA will specifically address the 
report's findings and recommendations in future rulemakings.
---------------------------------------------------------------------------

    \129\ National Research Council (NRC). 2002. Estimating the 
Public Health Benefits of Proposed Air Pollution Regulations. The 
National Academies Press: Washington, DC.
---------------------------------------------------------------------------

    The range of ozone benefits associated with the final standards is 
based on risk

[[Page 59152]]

reductions estimated using several sources of ozone-related mortality 
effect estimates. This analysis presents four alternative estimates for 
the association based upon different functions reported in the 
scientific literature. One estimate is derived from the National 
Morbidity, Mortality, and Air Pollution Study (NMMAPS),\130\ which was 
used as the primary basis for the risk analysis in the ozone Staff 
Paper \131\ and reviewed by the Clean Air Science Advisory Committee 
(CASAC).\132\ We also use three studies that synthesize ozone mortality 
data across a large number of individual studies.133 134 135 
This approach is not inconsistent with recommendations provided by the 
NRC in their ozone mortality report (NRC, 2008), ``The committee 
recommends that the greatest emphasis be placed on estimates from new 
systematic multicity analyses that use national databases of air 
pollution and mortality, such as in the NMMAPS, without excluding 
consideration of meta-analyses of previously published studies.''
---------------------------------------------------------------------------

    \130\ Bell, M.L., et al. 2004. Ozone and short-term mortality in 
95 U.S. urban communities, 1987-2000. Jama, 2004. 292(19): p. 2372-
8.
    \131\ U.S. EPA (2007) Review of the National Ambient Air Quality 
Standards for Ozone, Policy Assessment of Scientific and Technical 
Information. OAQPS Staff Paper. EPA-452/R-07-003. This document is 
available in Docket EPA-HQ-OAR-2003-0190. This document is available 
electronically at: http:www.epa.gov/ttn/naaqs/standards/ozone/s_
o3_cr_sp.html.
    \132\ CASAC (2007). Clean Air Scientific Advisory Committee's 
(CASAC) Review of the Agency's Final Ozone Staff Paper. EPA-CASAC-
07-002. March 26.
    \133\ Bell, M.L., F. Dominici, and J.M. Samet. A meta-analysis 
of time-series studies of ozone and mortality with comparison to the 
national morbidity, mortality, and air pollution study. 
Epidemiology, 2005. 16(4): p. 436-45.
    \134\ Ito, K., S.F. De Leon, and M. Lippmann. Associations 
between ozone and daily mortality: analysis and meta-analysis. 
Epidemiology, 2005. 16(4): p. 446-57.
    \135\ Levy, J.I., S.M. Chemerynski, and J.A. Sarnat. 2005. Ozone 
exposure and mortality: an empiric bayes metaregression analysis. 
Epidemiology, 2005. 16(4): p. 458-68.
---------------------------------------------------------------------------

    The range of total ozone- and PM-related benefits associated with 
the final standards is presented in Table IX.E-1. We present total 
benefits based on the PM- and ozone-related premature mortality 
function used. The benefits ranges therefore reflect the addition of 
each estimate of ozone-related premature mortality (each with its own 
row in Table IX.E-1) to estimates of PM-related premature mortality, 
derived from either the epidemiological literature or the expert 
elicitation. The estimates in Table IX.E-1, and all monetized benefits 
presented in this section, are in year 2005 dollars.

[[Page 59153]]

[GRAPHIC] [TIFF OMITTED] TR08OC08.068

(1) Quantified Human Health and Environmental Effects of the Final 
Standards
    In this section we discuss the ozone and PM2.5 health 
and environmental impacts of the final standards. We discuss how these 
impacts are monetized in the next section. It should be noted that the 
emission control scenarios used in the air quality and benefits 
modeling are slightly different than the final emission control 
program. The differences reflect further refinements of the regulatory 
program since we performed the air quality modeling for this rule. 
Emissions and air quality modeling decisions are made early in the 
analytical process. Chapter 3 of the RIA describes the changes in the 
inputs and resulting emission inventories between the preliminary 
assumptions used for the air quality modeling and the final emission 
control scenario.
Estimated Ozone and PM Impacts
    To model the ozone and PM air quality benefits of this rule we used 
the Community Multiscale Air Quality (CMAQ) model. CMAQ simulates the 
numerous physical and chemical processes involved in the formation, 
transport, and deposition of particulate matter. This model is commonly 
used in regional applications to estimate the ozone and PM reductions 
expected to occur from a given set of emissions controls. The 
meteorological data input into CMAQ are developed by a separate model, 
the Penn State University/National Center for Atmospheric Research 
Mesoscale Model, known as MM5. The modeling domain covers the entire 
48-State U.S., as modeled in final ozone NAAQS analysis.\136\ The grid 
resolution for the modeling domain was 12 x 12 km.
---------------------------------------------------------------------------

    \136\ U.S. Environmental Protection Agency. March 2008. Final 
Ozone NAAQS Regulatory Impact Analysis. Prepared by: Office of Air 
and Radiation, Office of Air Quality Planning and Standards.
---------------------------------------------------------------------------

    The modeled ambient air quality data serves as an input to the 
Environmental Benefits Mapping and Analysis Program (BenMAP).\137\ 
BenMAP is a computer program developed by EPA that integrates a number 
of the modeling elements used in previous Regulatory Impact Analyses 
(e.g., interpolation functions, population projections, health impact 
functions, valuation functions, analysis and pooling

[[Page 59154]]

methods) to translate modeled air concentration estimates into health 
effects incidence estimates and monetized benefits estimates.
---------------------------------------------------------------------------

    \137\ Information on BenMAP, including downloads of the 
software, can be found at http: //www.epa.gov/air/benmap.
---------------------------------------------------------------------------

    Table IX.E-2 presents the estimates of ozone- and PM-related health 
impacts for the years 2020 and 2030, which are based on the modeled air 
quality changes between a baseline, pre-control scenario and a post-
control scenario reflecting the final emission control strategy.
    The use of two sources of PM mortality reflects two different 
sources of information about the impact of reductions in PM on 
reduction in the risk of premature death, including both the published 
epidemiology literature and an expert elicitation study conducted by 
EPA in 2006. In 2030, based on the estimate provided by the ACS study, 
we estimate that PM-related emission reductions related to the final 
rule will result in 230 fewer premature fatalities annually. The number 
of premature mortalities avoided increases to 510 when based on the Six 
Cities study. When the range of expert opinion is used, we estimate 
between 120 and 1,300 fewer premature mortalities in 2030. We also 
estimate 220 fewer cases of chronic bronchitis, 530 fewer nonfatal 
heart attacks, 190 fewer hospitalizations (for respiratory and 
cardiovascular disease combined), 140,000 fewer days of restricted 
activity due to respiratory illness and approximately 23,000 fewer 
work-loss days. This analysis projects substantial health improvements 
for children from reduced upper and lower respiratory illness, acute 
bronchitis, and asthma attacks. These results are based on an assumed 
cutpoint in the long-term mortality concentration-response functions at 
10 [mu]g/m\3\, and an assumed cutpoint in the short-term morbidity 
concentration-response functions at 10 [mu]g/m\3\. The impact using 
four alterative cutpoints (3 [mu]g/m\3\ 7.5 [mu]g/m\3\, 12 [mu]g/m\3\, 
and 14 [mu]g/m\3\) has on PM2.5-related mortality incidence 
estimation is presented in Chapter 8 of the RIA.
    For ozone, we estimate a range of between 77-350 fewer premature 
mortalities as a result of the final rule in 2030, assuming that there 
is a causal relationship between ozone exposure and mortality. We also 
estimate that by 2030, the final rule will result in over 1,300 avoided 
respiratory hospital admissions and emergency room visits, 450,000 
fewer days of restricted activity due to respiratory illness, and 
180,000 school loss days avoided.
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[GRAPHIC] [TIFF OMITTED] TR08OC08.069


[[Page 59156]]


[GRAPHIC] [TIFF OMITTED] TR08OC08.070

(2) Monetized Benefits
    Table IX.E-3 presents the estimated monetary value of reductions in 
the incidence of health and welfare effects. Tables IX.E-4 and IX.E-5 
present the total annual PM- and ozone-related health benefits, which 
are estimated to be between $1.8 and $4.4 billion in 2030, assuming a 3 
percent discount rate, or between $1.6 and $4.3 billion, assuming a 7 
percent discount rate, using the ACS-derived estimate of PM-related 
premature mortality (Pope et al., 2002) and the range of ozone-related 
premature mortality studies derived from the epidemiological 
literature. The range of benefits expands to between $1.1 and $12 
billion, assuming a 3 percent discount rate, when the estimate includes 
the opinions of outside experts on PM and the risk of premature death, 
or between $1.0 and $11 billion, assuming a 7 percent discount rate. 
All monetized estimates are stated in 2005$. These estimates account 
for growth in real gross domestic product (GDP) per capita between the 
present and the years 2020 and 2030. As the tables indicate, total 
benefits are driven primarily by the reduction in premature fatalities 
each year.
---------------------------------------------------------------------------

    \138\ Industrial Economics, Incorporated (IEc). 2006. Expanded 
Expert Judgment Assessment of the Concentration-Response 
Relationship Between PM2.5 Exposure and Mortality. Peer 
Review Draft. Prepared for: Office of Air Quality Planning and 
Standards, U.S. Environmental Protection Agency, Research Triangle 
Park, NC. August.
---------------------------------------------------------------------------

    The estimates of monetized benefits include only one example of 
nonhealth-related benefits. Changes in the ambient level of 
PM2.5 are known to affect the level of visibility in much of 
the U.S. Individuals value visibility both in the places they live and 
work, in the places they travel to for recreational purposes, and at 
sites of unique public value, such as at National Parks. For the final 
standards, we present the recreational visibility benefits of 
improvements in visibility at 86 Class I areas located throughout 
California, the Southwest, and the Southeast. These estimated benefits 
are shown in Table IX.E-3.
    Tables IX.E-3, IX.E-4 and IX.E-5 do not include those additional 
health and environmental benefits of the rule that we were unable to 
quantify or monetize. These effects are additive to the estimate of 
total benefits, and are related to two primary sources. First, there 
are many human health and welfare effects associated with PM, ozone, 
and toxic air pollutant reductions that remain unquantified because of 
current limitations in the methods or available data. A full 
appreciation of the overall economic consequences of the final 
standards requires consideration of all benefits and costs projected to 
result from the new standards, not just those benefits and costs which 
could be expressed here in dollar terms. A list of the benefit 
categories that could not be quantified or monetized in our benefit 
estimates are provided in Table IX.E-6.
---------------------------------------------------------------------------

    \139\ Industrial Economics, Incorporated (IEc). 2006. Expanded 
Expert Judgment Assessment of the Concentration-Response 
Relationship Between PM2.5 Exposure and Mortality. Peer 
Review Draft. Prepared for: Office of Air Quality Planning and 
Standards, U.S. Environmental Protection Agency, Research Triangle 
Park, NC. August.

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

[[Page 59157]]

[GRAPHIC] [TIFF OMITTED] TR08OC08.071


[[Page 59158]]


[GRAPHIC] [TIFF OMITTED] TR08OC08.072

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[[Page 59159]]



    Table IX.E-4--Total Monetized Benefits of the Final Small SI and Marine SI Engine Rule--3% Discount Rate
----------------------------------------------------------------------------------------------------------------
                                                  Mean total    Ozone mortality                     Mean total
  Ozone mortality function       Reference         benefits         function        Reference        benefits
----------------------------------------------------------------------------------------------------------------
             Total Ozone and PM Benefits (billions, 2005$)--PM Mortality Derived from the ACS Study
----------------------------------------------------------------------------------------------------------------
2020:                                                           2030:
    NMMAPS..................  Bell et al.,               $1.5      NMMAPS......  Bell et al.,               $2.4
                               2004.                                              2004.
----------------------------------------------------------------------------------------------------------------
    Meta-analysis...........  Bell et al.,                2.3      Meta-         Bell et al.,                3.7
                               2005.                      2.7       analysis.     2005.                      4.4
                              Ito et al.,                                        Ito et al.,
                               2005.                                              2005.
                              Levy et al.,                2.7                    Levy et al.,                4.4
                               2005.                                              2005.
----------------------------------------------------------------------------------------------------------------
Assumption that association is not causal \a\             1.2   Assumption that association is               1.8
                                                                 not causal \a\
----------------------------------------------------------------------------------------------------------------
 Total Ozone and PM Benefits (billions, 2005$)--PM Mortality Derived from Expert Elicitation (Lowest and Highest
                                                    Estimate)
----------------------------------------------------------------------------------------------------------------
2020:                                                           2030:
    NMMAPS..................  Bell et al.,            1.1-6.1      NMMAPS......  Bell et al.,            1.7-9.7
                               2004.                                              2004.
----------------------------------------------------------------------------------------------------------------
    Meta-analysis...........  Bell et al.,            1.8-6.9       Meta-        Bell et al.,             3.0-11
                               2005.                  2.2-7.3       analysis.     2005.                   3.7-12
                              Ito et al.,                                        Ito et al.,
                               2005.                                              2005.
                              Levy et al.,            2.3-7.4                    Levy et al.,             3.7-12
                               2005.                                              2005.
----------------------------------------------------------------------------------------------------------------
Assumption that association is not causal \a\         0.7-5.8   Assumption that association is          1.1-9.1
                                                                 not causal \a\
----------------------------------------------------------------------------------------------------------------
\a\ A recent report published by the National Research Council (NRC, 2008) recommended that EPA ``give little or
  no weight to the assumption that there is no causal association between estimated reductions in premature
  mortality and reduced ozone exposure.''


    Table IX.E-5--Total Monetized Benefits of the Final Small SI and Marine SI Engine Rule--7% Discount Rate
----------------------------------------------------------------------------------------------------------------
                                                  Mean total    Ozone mortality                     Mean total
  Ozone mortality function       Reference         benefits         function        Reference        benefits
----------------------------------------------------------------------------------------------------------------
             Total Ozone and PM Benefits (billions, 2005$)--PM Mortality Derived from the ACS Study
----------------------------------------------------------------------------------------------------------------
2020:                                                           2030:
    NMMAPS..................  Bell et al.,               $1.4      NMMAPS......  Bell et al.,               $2.2
                               2004.                                              2004.
----------------------------------------------------------------------------------------------------------------
    Meta-analysis...........  Bell et al.,                2.2      Meta-         Bell et al.,                3.5
                               2005.                     2.67       analysis.     2005.                     4.24
                              Ito et al.,                                        Ito et al.,
                               2005.                                              2005.
                              Levy et al.,                2.6                    Levy et al.,                4.3
                               2005.                                              2005.
----------------------------------------------------------------------------------------------------------------
Assumption that association is not causal \a\             1.1   Assumption that association is             * 1.6
                                                                 not causal \a\
----------------------------------------------------------------------------------------------------------------
 Total Ozone and PM Benefits (billions, 2005$)--PM Mortality Derived from Expert Elicitation (Lowest and Highest
                                                    Estimate)
----------------------------------------------------------------------------------------------------------------
2020:                                                           2030:
    NMMAPS..................   Bell et al.,           1.0-5.6      NMMAPS......  Bell et al.,            1.6-8.8
                               2004.                                              2004.
----------------------------------------------------------------------------------------------------------------
    Meta-analysis...........  Bell et al.,            1.8-6.4      Meta-         Bell et al.,             2.9-10
                               2005.                  2.2-6.8       analysis.     2005.                   3.6-11
                              Ito et al.,                                        Ito et al.,
                               2005.                                              2005.
                              Levy et al.,            2.2-6.8                    Levy et al.,             3.7-11
                               2005.                                              2005.
----------------------------------------------------------------------------------------------------------------
Assumption that association is not causal \a\         0.7-5.2   Assumption that association is          1.0-8.2
                                                                 not causal \a\
----------------------------------------------------------------------------------------------------------------
\a\ A recent report published by the National Research Council (NRC, 2008) recommended that EPA ``give little or
  no weight to the assumption that there is no causal association between estimated reductions in premature
  mortality and reduced ozone exposure.''


  Table IX.E-6--Unquantified and Non-Monetized Potential Effects of the
              Final Small SI and Marine SI Engine Standards
------------------------------------------------------------------------
                                     Effects not included in analysis--
         Pollutant/effects                       changes in:
------------------------------------------------------------------------
Ozone Health \a\..................  Chronic respiratory damage \b\.
                                    Premature aging of the lungs \b\.
                                    Non-asthma respiratory emergency
                                     room visits.
                                    Exposure to UVb (+/-) \e\.
Ozone Welfare.....................  Yields for
                                     --commercial forests.
                                     --some fruits and vegetables.
                                     --non-commercial crops.
                                    Damage to urban ornamental plants.
                                    Impacts on recreational demand from
                                     damaged forest aesthetics.

[[Page 59160]]

 
                                    Ecosystem functions.
                                    Exposure to UVb (+/-) \e\.
PM Health \c\.....................  Premature mortality--short term
                                     exposures \d\.
                                    Low birth weight.
                                    Pulmonary function.
                                    Chronic respiratory diseases other
                                     than chronic bronchitis.
                                    Non-asthma respiratory emergency
                                     room visits.
                                    Exposure to UVb (+/-) \e\.
PM Welfare........................  Residential and recreational
                                     visibility in non-Class I areas.
                                    Soiling and materials damage.
                                    Damage to ecosystem functions.
                                    Exposure to UVb (+/-) \e\.
Nitrogen and Sulfate Deposition     Commercial forests due to acidic
 Welfare.                            sulfate and nitrate deposition.
                                    Commercial freshwater fishing due to
                                     acidic deposition.
                                    Recreation in terrestrial ecosystems
                                     due to acidic deposition.
                                    Existence values for currently
                                     healthy ecosystems.
                                    Commercial fishing, agriculture, and
                                     forests due to nitrogen deposition.
                                    Recreation in estuarine ecosystems
                                     due to nitrogen deposition.
                                    Ecosystem functions.
                                    Passive fertilization.
CO Health.........................  Behavioral effects.
HC/Toxics Health \f\..............  Cancer (benzene, 1,3-butadiene,
                                     formaldehyde, acetaldehyde).
                                    Anemia (benzene).
                                    Disruption of production of blood
                                     components (benzene).
                                    Reduction in the number of blood
                                     platelets (benzene).
                                    Excessive bone marrow formation
                                     (benzene).
                                    Depression of lymphocyte counts
                                     (benzene).
                                    Reproductive and developmental
                                     effects (1,3-butadiene).
                                    Irritation of eyes and mucus
                                     membranes (formaldehyde).
                                    Respiratory irritation
                                     (formaldehyde).
                                    Asthma attacks in asthmatics
                                     (formaldehyde).
                                    Asthma-like symptoms in non-
                                     asthmatics (formaldehyde).
                                    Irritation of the eyes, skin, and
                                     respiratory tract (acetaldehyde).
                                    Upper respiratory tract irritation
                                     and congestion (acrolein).
HC/Toxics Welfare.................  Direct toxic effects to animals.
                                    Bioaccumulation in the food chain.
                                    Damage to ecosystem function.
                                    Odor.
------------------------------------------------------------------------
 \a\ The public health impact of biological responses such as increased
  airway responsiveness to stimuli, inflammation in the lung, acute
  inflammation and respiratory cell damage, and increased susceptibility
  to respiratory infection are likely partially represented by our
  quantified endpoints.
 \b\ The public health impact of effects such as chronic respiratory
  damage and premature aging of the lungs may be partially represented
  by quantified endpoints such as hospital admissions or premature
  mortality, but a number of other related health impacts, such as
  doctor visits and decreased athletic performance, remain unquantified.
 
 \c\ In addition to primary economic endpoints, there are a number of
  biological responses that have been associated with PM health effects
  including morphological changes and altered host defense mechanisms.
  The public health impact of these biological responses may be partly
  represented by our quantified endpoints.
 \d\ While some of the effects of short-term exposures are likely to be
  captured in the estimates, there may be premature mortality due to
  short-term exposure to PM not captured in the cohort studies used in
  this analysis. However, the PM mortality results derived from the
  expert elicitation do take into account premature mortality effects of
  short term exposures.
 \e\ May result in benefits or disbenefits.
 \f\ Many of the key hydrocarbons related to this rule are also
  hazardous air pollutants listed in the Clean Air Act.

(3) What Are the Significant Limitations of the Benefit-Cost Analysis?
    Every benefit-cost analysis examining the potential effects of a 
change in environmental protection requirements is limited to some 
extent by data gaps, limitations in model capabilities (such as 
geographic coverage), and uncertainties in the underlying scientific 
and economic studies used to configure the benefit and cost models. 
Limitations of the scientific literature often result in the inability 
to estimate quantitative changes in health and environmental effects, 
such as potential increases in premature mortality associated with 
increased exposure to carbon monoxide. Deficiencies in the economics 
literature often result in the inability to assign economic values even 
to those health and environmental outcomes which can be quantified. 
These general uncertainties in the underlying scientific and economics 
literature, which can lead to valuations that are higher or lower, are 
discussed in detail in the RIA and its supporting references. Key 
uncertainties that have a bearing on the results of the benefit-cost 
analysis of the final standards include the following:
     The exclusion of potentially significant and unquantified 
benefit categories (such as health, odor, and ecological benefits of 
reduction in air toxics, ozone, and PM);
     Errors in measurement and projection for variables such as 
population growth;
     Uncertainties in the estimation of future year emissions 
inventories and air quality;
     Uncertainty in the estimated relationships of health and 
welfare

[[Page 59161]]

effects to changes in pollutant concentrations including the shape of 
the C-R function, the size of the effect estimates, and the relative 
toxicity of the many components of the PM mixture;
     Uncertainties in exposure estimation; and
     Uncertainties associated with the effect of potential 
future actions to limit emissions.
    As Table IX.E-3 indicates, total benefits are driven primarily by 
the reduction in premature mortalities each year. Some key assumptions 
underlying the premature mortality estimates include the following, 
which may also contribute to uncertainty:
     Inhalation of fine particles is causally associated with 
premature death at concentrations near those experienced by most 
Americans on a daily basis. Although biological mechanisms for this 
effect have not yet been completely established, the weight of the 
available epidemiological, toxicological, and experimental evidence 
supports an assumption of causality. The impacts of including a 
probabilistic representation of causality were explored in the expert 
elicitation-based results of the recently published PM NAAQS RIA. 
Consistent with that analysis, we discuss the implications of these 
results in the RIA for the final standards.
     All fine particles, regardless of their chemical 
composition, are equally potent in causing premature mortality. This is 
an important assumption, because PM produced via transported precursors 
emitted from Small SI and Marine SI engines may differ significantly 
from PM precursors released from electric generating units and other 
industrial sources. However, no clear scientific grounds exist for 
supporting differential effects estimates by particle type.
     The C-R function for fine particles is approximately 
linear within the range of ambient concentrations under consideration 
(above the assumed threshold of 10 [mu]g/m\3\). Thus, the estimates 
include health benefits from reducing fine particles in areas with 
varied concentrations of PM, including both regions that may be in 
attainment with PM2.5 standards and those that are at risk 
of not meeting the standards.
     In a recent report on the estimation of ozone-related 
premature mortality published by the National Research Council (NRC), a 
panel of experts and reviewers concluded that ozone-related mortality 
should be included in estimates of the health benefits of reducing 
ozone exposure. The report also recommended that the estimation of 
ozone-related premature mortality be accompanied by broad uncertainty 
analyses while giving little or no weight to the assumption that there 
is no causal association between ozone exposure and premature 
mortality. Because EPA has yet to develop a coordinated response to the 
NRC report's findings and recommendations, however, we have retained 
the approach to estimating ozone-related premature mortality used in 
RIA for the final Ozone NAAQS. EPA will specifically address the 
report's findings and recommendations in future rulemakings.
    Despite these uncertainties, we believe this benefit-cost analysis 
provides a conservative estimate of the estimated economic benefits of 
the final standards in future years because of the exclusion of 
potentially significant benefit categories. Acknowledging benefits 
omissions and uncertainties, we present a best estimate of the total 
benefits based on our interpretation of the best available scientific 
literature and methods supported by EPA's technical peer review panel, 
the Science Advisory Board's Health Effects Subcommittee (SAB-HES). The 
National Academies of Science (NRC, 2002) also reviewed EPA's 
methodology for analyzing the health benefits of measures taken to 
reduce air pollution. EPA addressed many of these comments in the 
analysis of the final PM NAAQS.140, 141 The analysis of the 
final standards incorporates this most recent work to the extent 
possible.
---------------------------------------------------------------------------

    \140\ National Research Council (NRC). 2002. Estimating the 
Public Health Benefits of Proposed Air Pollution Regulations. The 
National Academies Press: Washington, DC.
    \141\ U.S. Environmental Protection Agency. October 2006. Final 
Regulatory Impact Analysis (RIA) for the Proposed National Ambient 
Air Quality Standards for Particulate Matter. Prepared by: Office of 
Air and Radiation. Available at HTTP://www.epa.gov/ttn/ecas/
ria.html.
---------------------------------------------------------------------------

(4) Benefit-Cost Analysis
    In estimating the net benefits of the final standards, the 
appropriate cost measure is ``social costs.'' Social costs represent 
the welfare costs of a rule to society. These costs do not consider 
transfer payments (such as taxes) that are simply redistributions of 
wealth. Table XII.E-7 contains the estimates of monetized benefits and 
estimated social welfare costs for the final rule and each of the final 
control programs. The annual social welfare costs of all provisions of 
this final rule are described more fully in Section IX.F.
    The results in Table IX.E-7 suggest that the 2020 monetized 
benefits of the final standards are greater than the expected social 
welfare costs. Specifically, the annual benefits of the total program 
will range between $1.2 to $4.0 billion annually in 2020 using a three 
percent discount rate, or between $1.1 to $3.8 billion assuming a 7 
percent discount rate, compared to estimated social costs of 
approximately $210 million in that same year. These benefits are 
expected to increase to between $1.8 and $6.4 billion annually in 2030 
using a three percent discount rate, or between $1.6 and $6.1 billion 
assuming a 7 percent discount rate, while the social costs are 
estimated to be approximately $190 million. Though there are a number 
of health and environmental effects associated with the final standards 
that we are unable to quantify or monetize (see Table IX.E-6), the 
benefits of the final standards outweigh the projected costs. When we 
examine the benefit-to-cost comparison for the rule standards 
separately, we also find that the benefits of the specific engine 
standards outweigh their projected costs.

  Table IX.E-7--Summary of Annual Benefits, Costs, and Net Benefits of the Final Small SI and Marine SI Engine
                                          Standards (Millions, 2005$)a
----------------------------------------------------------------------------------------------------------------
               Description                               2020                                2030
----------------------------------------------------------------------------------------------------------------
Estimated Social Costs:b
    Small SI............................  $163..............................  $185
    Marine SI...........................  $44...............................  0.8
                                         -----------------------------------------------------------------------
        Total Social Costs..............  $210..............................  190
----------------------------------------------------------------------------------------------------------------
Estimated Health Benefits of the Final
 Standards:c, d, e, f
    Small SI:

[[Page 59162]]

 
        3 percent discount rate.........  $860 to $2,600....................  $820 to $2,900
        7 percent discount rate.........  $790 to $2,500....................  $710 to $2,800
    Marine SI:
        3 percent discount rate.........  $340 to $1,400....................  $980 to $3,500
        7 percent discount rate.........  $310 to $1,300....................  $890 to $3,300
Total Benefits:
    3 percent discount rate.............  $1,200 to $4,000..................  $1,800 to $6,400
    7 percent discount rate.............  $1,100 to $3,800..................  $1,600 to $6,100
----------------------------------------------------------------------------------------------------------------
Annual Net Benefits (Total Benefits--
 Total Costs)
    3 percent discount rate.............  $990 to $3,800....................  $1,600 to $6,200
    7 percent discount rate.............  $890 to $3,600....................  $1,400 to $5,900
----------------------------------------------------------------------------------------------------------------
a All estimates represent annualized benefits and costs anticipated for the years 2020 and 2030. Totals may not
  sum due to rounding.
b The calculation of annual costs does not require amortization of costs over time. Therefore, the estimates of
  annual cost do not include a discount rate or rate of return assumption (see Chapter 9 of the RIA). In Chapter
  9, however, we use both a 3 percent and 7 percent social discount rate to calculate the net present value of
  total social costs consistent with EPA and OMB guidelines for preparing economic analyses (US EPA, 2000 and
  OMB, 2003).
c Total includes ozone and PM2.5 benefits. Range was developed by adding the estimate from the ozone premature
  mortality function, including an assumption that the association is not causal, to PM2.5-related premature
  mortality derived from the ACS (Pope et al., 2002) and Six Cities (Laden et al., 2006) studies.
d Annual benefits analysis results reflect the use of a 3 percent and 7 percent discount rate in the valuation
  of premature mortality and nonfatal myocardial infarctions, consistent with EPA and OMB guidelines for
  preparing economic analyses (US EPA, 2000 and OMB, 2003).\142\, \143\
e Valuation of premature mortality based on long-term PM exposure assumes discounting over the SAB recommended
  20-year segmented lag structure described in the Regulatory Impact Analysis for the Final Clean Air Interstate
  Rule (March, 2005).
f Not all possible benefits or disbenefits are quantified and monetized in this analysis. Potential benefit
  categories that have not been quantified and monetized are listed in Table IX.E-6.

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

    \142\ U.S. Environmental Protection Agency, 2000. Gidelines for 
Preparing Economic Analyses. www.yosemite1.epa.gov/ee/epa/eed/hsf/
pages/Guideline.html.
    \143\ Office of Management and Budget, The Executive Office of 
the President, 2003. Circular A-4. http://www.whitehouse.gov/omb/
circulars.
---------------------------------------------------------------------------

F. Economic Impact Analysis

    We prepared an Economic Impact Analysis (EIA) to estimate the 
economic impacts of the final emission control program on the Small SI 
and Marine SI engine and equipment markets. In this section we briefly 
describe the Economic Impact Model (EIM) we developed to estimate the 
market-level changes in price and outputs for affected markets, the 
social costs of the program, and the expected distribution of those 
costs across affected stakeholders. As defined in EPA's Guidelines for 
Preparing Economic Analyses, social costs are the value of the goods 
and services lost by society resulting from a) the use of resources to 
comply with and implement a regulation and b) reductions in 
output.\144\
---------------------------------------------------------------------------

    \144\ EPA Guidelines for Preparing Economic Analyses, EPA 240-R-
00-003, September 2000, p 113. A copy of this document can be found 
at http://yosemite.epa.gov/ee/epa/eed.nsf/webpages/Guidelines.html
_____________________________________-

 A quantitative Economic Impact Model (EIM) was developed to 
estimate price and quantity changes and total social costs associated 
with the emission control program. The EIM is a computer model 
comprised of a series of spreadsheet modules that simulate the supply 
and demand characteristics of each of the markets under consideration. 
The model methodology is firmly rooted in applied microeconomic theory 
and was developed following the methodology set out in OAQPS's Economic 
Analysis Resource Document.\145\ Chapter 9 of the RIA contains a 
detailed description of the EIM, including the economic theory behind 
the model and the data used to construct it, the baseline equilibrium 
market conditions, and the model's behavior parameters. The EIM and the 
estimated compliance costs presented above are used to estimate the 
economic impacts of the program. The results of this analysis are 
summarized below.
---------------------------------------------------------------------------

    \145\ U.S. Environmental Protection Agency, Office of Air 
Quality Planning and Standards, Innovative Strategies and Economics 
Group, OAQPS Economic Analysis Resource Document, April 1999. A copy 
of this document can be found at http://www.epa.gov/ttn/ecas/
econdata/Rmanual2/.
---------------------------------------------------------------------------

(1) Market Analysis Results
    In the market analysis, we estimate how prices and quantities of 
goods and services affected by the emission control program can be 
expected to change once the program goes into effect.
    The compliance costs associated with the new Small SI and Marine SI 
engine and equipment standards are expected to lead to price and 
quantity changes in these markets. A summary of the market analysis 
results is presented in Table XII.F-1 for 2014, 2018, and 2030. These 
years were chosen because 2014 is the year with the highest compliance 
cost; 2018, the year in which the compliance costs are reduced due to 
the learning curve, and the market impacts reflect variable costs as 
well as growth in equipment population; and 2030 illustrates the long-
term impacts of the program. Results for all years can be found in 
Chapter 9 of the RIA.
    For all markets, the market impacts for the early years are driven 
by either the fixed cost or the combination of the fixed and variable 
costs associated with different standards. This leads to a small 
increase in estimated price impacts for the years 2008 through 2014, 
the period during which the costs change over time reflecting the 
phase-in of different costs (variable and fixed costs) for each 
standard or the phase-in of different standards. The increase is small 
because the annual per unit compliance costs from these new standards 
are relatively smaller than the engine or equipment per unit price.
    The Small SI exhaust standards begin in 2011 for Class II and 2012 
for Class I. The marine exhaust standards generally begin in 2010. The 
Small SI evaporative emission standards are staggered beginning in 
2008, with regulatory flexibility providing some small delays until 
2013. The marine evaporative emission standards are staggered beginning 
in 2009, with regulatory flexibility providing some small delays until 
2015.

[[Page 59163]]

    In the Marine SI market, the average price increase for Marine SI 
engines in 2014, the high cost year, is estimated to be about 2.4 
percent, or $266. In the long term (by 2030), the average price 
increase is expected to decline to about 1.9 percent, or $213. On the 
vessel side, the average price change reflects the direct equipment 
compliance costs plus the portion of the engine costs that are passed 
on to the equipment purchaser (via higher engine prices). The average 
price increase in 2014 is expected to be about 1.6 percent, or $285. By 
2030, this average price increase is expected to decline to about 1.3 
percent, or $231. These price increases are expected to vary across 
vessel categories. The category with the largest price increase is 
expected to be personal watercraft engines, with an estimated price 
increase of about 3.0 percent in 2014; this is expected to decrease to 
2.4 percent in 2030. The smallest expected change in 2014 is expected 
to be for sterndrive/inboards vessels, which are expected to see price 
increases of about 0.9 percent.
    In the Small SI market, the average price increase for Small SI 
engines in 2014, the high cost year, is estimated to be about 8.3 
percent, or $14. By 2030, this average price increase is expected to 
decline to about 7.4 percent, or $12. On the equipment side, the 
average price change reflects the direct equipment compliance costs 
plus the portion of the engine costs that are passed on to the 
equipment purchaser (via higher engine prices). The average price 
increase for all Small SI equipment in 2014 is expected to be about 2.6 
percent, or $10. By 2030, this average price increase is expected to 
decline to about 2.3 percent, or $8. The average price increase and 
quantity decrease differs by category of equipment. For Class I 
equipment, the price increase is estimated to be about 6.2 percent 
($17) in 2014, decreasing to 5.6 percent ($15) in 2030. For Class II 
equipment, a higher price increase is expected, about 2.6 percent ($24) 
in 2014, decreasing to 2.2 percent ($20) in 2030.
    For the handheld equipment market, prices are expected to increase 
about 0.2 percent or $0.3 for all years, and quantities are expected to 
decrease about 0.3 percent.
BILLING CODE 6560-50-P

[[Page 59164]]

[GRAPHIC] [TIFF OMITTED] TR08OC08.073

(2) Economic Welfare Analysis
    In the economic welfare analysis we look at the total social costs 
associated with the program and their distribution across key 
stakeholders.
    The total estimated social costs of the program are about $444 
million, $399 million, and 459 million for 2014, 2018 and 2030. These 
estimated social costs are a slight less than the total compliance 
costs for those years. The slight reduction in social costs when 
compared to compliance costs occurs because the total engineering costs 
do not reflect the decreased sales of the Small SI and Marine SI 
engines and equipment that are incorporated in the total social costs. 
Results for all years are presented in Chapter 9 of the RIA.
    Table XII.F-2 shows how total social costs are expected to be 
shared across stakeholders, for selected years.
    We estimate the total social costs of the program to be 
approximately $459 million in 2030. The Marine SI sector is expected to 
bear about 33.5 percent of the social costs of the programs in 2030, 
and the Small SI sector is expected to bear 66.5 percent. In each of 
these two sectors, these social costs are expected to be born primarily 
by end-users of Marine SI and Small SI equipment (about 86 percent). 
This will also be offset by the fuel savings. The remaining 14 percent 
is expected to be borne by Small SI or Marine SI engine and equipment 
manufacturers.

[[Page 59165]]



             Table XII.F-2--Summary of Estimated Social Costs for 2014, 2018, 2030 (2005$, $million)
----------------------------------------------------------------------------------------------------------------
                                                        2014                  2018                  2030
                                               -----------------------------------------------------------------
               Stakeholder group                 Surplus               Surplus               Surplus
                                                  change    Percent     change    Percent     change    Percent
----------------------------------------------------------------------------------------------------------------
Marine SI:
    Engine Manufacturers......................     -$10.5        2.4      -$8.7        2.2      -$9.4        2.1
    Equipment Manufacturers...................     -$29.7        6.7     -$25.0        6.3     -$27.1        5.9
    End User (Households).....................    -$130.0       29.3    -$108.2       27.1    -$117.2       25.6
        Subtotal..............................    -$170.2       38.4    -$142.0       35.6    -$153.7       33.5
Small SI:
    Engine Manufacturers......................      -$5.4        1.2      -$5.0        1.2      -$5.9        1.3
    Equipment Manufacturers...................     -$18.1        4.1     -$16.9        4.2     -$20.0        4.4
    End User (Households).....................    -$250.2       56.4    -$235.0       58.9    -$278.9       60.8
        Subtotal..............................    -$273.6       61.6    -$256.8       64.4    -$304.9       66.5
            Total.............................    -$443.8  .........    -$398.8  .........    -$458.6  .........
----------------------------------------------------------------------------------------------------------------

    Table XII.F-3 contains the distribution of the total surplus losses 
for the program from 2008 through 2037. This table shows that Small SI 
and Marine SI equipment manufacturers are expected to bear more of the 
burden of the program than engine manufacturers. The present value of 
net social costs of the final standards through 2037 at a 3 percent 
discount rate, shown in Table XII.F-3, is estimated to be $4.2 billion, 
taking the fuel savings into account. We also performed an analysis 
using a 7 percent social discount rate.\146\ Using that discount rate, 
the present value of the net social costs through 2037 is estimated to 
be $2.7 billion, including the fuel savings.
---------------------------------------------------------------------------

    \146\ EPA has historically presented the present value of cost 
and benefits estimates using both a 3 percent and a 7 percent social 
discount. The 3 percent rate represents a demand-side approach and 
reflects the time preference of consumption (the rate at which 
society is willing to trade current consumption for future 
consumption). The 7 percent rate is a cost-side approach and 
reflects the shadow price of capital.

             Table XII.F-3--Estimated Net Social Costs Through 2037 by Stakeholder (2005$, $million)
----------------------------------------------------------------------------------------------------------------
                                                                    Percent of                      Percent of
                Stakeholder group                 Surplus change   total surplus  Surplus change   total surplus
----------------------------------------------------------------------------------------------------------------
                                                              NPV 3%
                                                              NPV 7%
----------------------------------------------------------------------------------------------------------------
Marine SI:
    Engine Manufacturers........................         -$167.0             2.2         -$100.8             2.2
    Equipment Manufacturers.....................         -$474.5             6.2         -$285.2             6.3
    End User (Households).......................       -$2,079.0            27.3       -$1,257.1            27.9
                                                 ---------------------------------------------------------------
        Subtotal................................       -$2,720.5            35.7       -$1,643.2            36.5
Small SI:
    Engine Manufacturers........................          -$94.1             1.2          -$54.8             1.2
    Equipment Manufacturers.....................         -$329.9             7.4         -$195.4             7.5
    End User (Households).......................       -$4,472.1            58.7       -$2,612.8            58.0
                                                 ---------------------------------------------------------------
        Subtotal................................       -$4,896.1            64.3       -$2,863.0            63.5
                                                 ---------------------------------------------------------------
Total Social Costs..............................       -$7,616.6  ..............       -$4,506.2  ..............
Fuel Savings....................................        $3,374.6  ..............        $1,774.7  ..............
Net Social Costs................................       -$4,242.0  ..............       -$2,731.5  ..............
----------------------------------------------------------------------------------------------------------------

(3) What Are the Significant Limitations of the Economic Impact 
Analysis?
    Every economic impact analysis examining the market and social 
welfare impacts of a regulatory program is limited to some extent by 
limitations in model capabilities, deficiencies in the economic 
literatures with respect to estimated values of key variables necessary 
to configure the model, and data gaps. In this EIA, there are three 
potential sources of uncertainty: (1) Uncertainty resulting from the 
way the EIM is designed, particularly from the use of a partial 
equilibrium model; (2) uncertainty resulting from the values for key 
model parameters, particularly the price elasticity of supply and 
demand; and (3) uncertainty resulting from the values for key model 
inputs, particularly baseline equilibrium price and quantities.
    Uncertainty associated with the economic impact model structure 
arises from the use of a partial equilibrium approach, the use of the 
national level of analysis, and the assumption of competitive market 
structure. These features of the model mean it does not take into 
account impacts on secondary markets or the general economy, and it 
does not consider regional impacts. The results may also be biased to 
the extent that firms have some control over market prices, which would 
result in the modeling over-estimating the impacts on producers of 
affected goods and services.
    The values used for the price elasticities of supply and demand are 
critical parameters in the EIM. The values of these parameters have an 
impact on both the estimated change in price and quantity produced 
expected as a result of compliance with the final

[[Page 59166]]

standards and on how the burden of the social costs will be shared 
among producer and consumer groups. In selecting the values to use in 
the EIM it is important that they reflect the behavioral responses of 
the industries under analysis.
    Finally, uncertainty in measurement of data inputs can have an 
impact on the results of the analysis. This includes measurement of the 
baseline equilibrium prices and quantities and the estimation of future 
year sales. In addition, there may be uncertainty in how similar 
engines and equipment were combined into smaller groups to facilitate 
the analysis. There may also be uncertainty in the compliance cost 
estimations.
    While variations in the above model parameters may affect the 
distribution of social costs among stakeholders and the estimated 
market impacts, they will not affect the total social costs of the 
program. This is because the total social costs are directly related to 
the total compliance costs. To explore the effects of key sources of 
uncertainty, we performed a sensitivity analysis in which we examine 
the results of using alternative values for the price elasticity of 
supply and demand, and alternative baseline prices for certain 
equipment markets. The results of these analyses are contained in 
Appendix 9H of the RIA prepared for this rule.
    Despite these uncertainties, we believe this economic impact 
analysis provides a reasonable estimate of the expected market impacts 
and social welfare costs of the final standards in future. 
Acknowledging benefits omissions and uncertainties, we present a best 
estimate of the social costs based on our interpretation of the best 
available scientific literature and methods supported by EPA's 
Guidelines for Preparing Economic Analyses and the OAQPS Economic 
Analysis Resource Document.

X. Public Participation

    We published the proposed rule on May 18, 2007 (72 FR 28098) and 
held a public hearing on June 5, 2007 in Reston, Virginia. The public 
comment period continued until August 3, 2007. We received written 
comments from over 100 entities, including manufacturers, state and 
environmental groups, and individual citizens. The comments covered a 
wide range of issues, many of which were very specific recommendations 
related to test procedures and certification and compliance provisions. 
The comments and our responses are described in the Summary and 
Analysis of Comments document which has been placed in the docket for 
this rulemaking. Commenters also raised a variety of broader issues 
that we highlight in this section.
    Diffusion and running loss control for nonhandheld Small SI engines 
and equipment. We proposed diffusion and running loss standards for 
nonhandheld Small SI engines and equipment. The diffusion standard 
included a simple measurement procedure and a corresponding standard 
that could be met with basic technology to limit venting from fuel 
tanks. We proposed a variety of methods for controlling running losses. 
The most common approach expected is for equipment manufacturers to 
install a vent line to route running loss vapors to the engine's 
intake. We proposed an alternative approach that would allow equipment 
manufacturers to demonstrate that fuel temperatures would increase only 
a small amount during operation, which would minimize the source of 
running loss vapors. Manufacturers objected to the proposed measurement 
procedure and standard for diffusion emissions. They also commented 
that they thought the temperature-based option for controlling running 
losses was impractical based on the measurement procedures and other 
implementation provisions. We are therefore removing the temperature-
based option for running loss control. Manufacturers must generally 
either run a vapor line from the fuel tank to the engine's intake or 
find a way to use a sealed fuel tank. Under any remaining technology 
scenario for controlling running loss emissions, manufacturers would be 
designing and producing their fuel tanks with inherently low diffusion 
emissions. We therefore anticipate that diffusion emissions will be 
controlled even though we are not adopting standards or measurement 
requirements for diffusion.
    SHED testing for nonhandheld engines and equipment. We proposed to 
allow certification based on California ARB's SHED testing on an 
interim basis to ease the transition to EPA's Phase 3 standards. The 
SHED procedure is intended to measure all evaporative emissions from a 
piece of equipment rather than separately measuring emissions from fuel 
lines and fuel tanks. It is also intended to capture diurnal emissions. 
As described in the proposal, we chose not to apply diurnal emission 
standards. Manufacturers requested that we include a long-term 
allowance for SHED testing so they could choose to sell California-
certified products nationwide without repeating their certification 
efforts to comply with EPA's different standards and testing protocol. 
While there is some chance that manufacturers could concentrate their 
emission controls, for example, on diurnal and fuel tank permeation 
such that they would not need low-permeation fuel lines, we believe 
that on balance a SHED-certified product will invariably be at least as 
low-emitting as equipment that uses only certified low-permeation fuel 
lines and fuel tanks. As a result, we are including in the regulations 
a long-term allowance for manufacturers to meet EPA requirements based 
on an overall measurement of evaporative emissions from equipment with 
complete fuel systems.
    Bonding requirements for Small SI engines. We described in the 
proposal that we were considering bonding requirements for Small SI 
engines. We described our concerns that low-cost products were being 
sold without the necessary commitment to following through on any 
obligations that may arise over an engine's operating life, such as 
warranty, recall, or some other finding of noncompliance with the 
regulations. Several commenters strongly supported the bonding 
requirements. No commenters objected to the bonding requirements. We 
requested comment on defining a threshold for determining which 
companies had a sufficient presence in the United States and a good 
compliance history that would allow us to conclude that bonding 
requirements were not needed. Subsequent discussions with manufacturers 
led us to narrow our approach to focus on multiple thresholds tailored 
to specific types of companies. A baseline threshold of $10 million in 
long-term assets applies for engine manufacturers. A mid-level 
threshold of $6 million applies to secondary engine manufacturers. 
These are generally smaller companies with smaller sales volumes. We 
are also including a reduced threshold of $3 million for companies that 
have had U.S.-certified engines for at least ten years without any 
violations. We believe bonding requirements should still apply for 
companies with a long-term market presence, but a lower asset threshold 
for these companies is appropriate.
    A noteworthy change from the proposal is the inclusion of 
domestically produced engines. While the proposal focused on imported 
engines, we concluded that trade rules and good practice dictate that 
the bonding requirements should apply equally to companies producing 
product in the United States. Manufacturers of any substantial size 
would easily meet the asset threshold, so the only additional companies 
likely to be

[[Page 59167]]

affected by this change would be very small domestic manufacturers. We 
may conclude that these companies too should meet bonding requirements 
if we have reason to believe that they will be unable to meet their 
obligations related to in-use engines. On the other hand, we believe 
there will be cases where manufacturers can use something other than a 
posted bond to demonstrate that they will meet these obligations. We 
are therefore including provisions for a process by which small 
manufacturers would be able to request that a different asset threshold 
(or a different bond value) would apply. We would evaluate these 
requests on a case-by-case basis and approve changes to the specified 
approach only if it was clear that manufacturers would meet their in-
use obligations.
    Transition to exhaust emission standards for sterndrive/inboard 
engines. Manufacturers expressed concerns before the proposed rule that 
they were anticipating a change in engine models from General Motors, 
which supplies most companies with partially complete engines for 
making sterndrive/inboard engines. With the approaching obsolescence of 
two of these engine models, engine manufacturers did not want to put in 
the effort to redesign those engines for one or two years of production 
before they made the transition to the replacement engine models. We 
described several possible approaches for addressing this in the 
proposal. We are adopting a provision to specify directly in the 
regulation that we are approving a one-year hardship for the affected 
engine models, which allows the engine manufacturers to produce these 
engines in the 2010 model year without meeting emission standards. 
Starting in the 2011 model year, manufacturers would need to meet the 
new emission standards for their full product line.
    Phase-in for marine diurnal requirements. We proposed to apply the 
diurnal emission standards for marine vessels starting in 2010. 
Manufacturers recommended delaying this standard until 2011 to allow 
time for the industry to establish consensus standards related to 
installation parameters for carbon canisters and other elements of 
diurnal emission control systems. Manufacturers also pointed out that a 
one-year delay would be preferable to a phase-in, which would be 
problematic for boat builders. The U.S. Coast Guard agreed that an 
extra year would be helpful to ensure that manufacturers had enough 
time to design and build systems that would not have safety problems. 
We agreed that starting the diurnal emission standards in 2011 would be 
appropriate. Late in the rulemaking process, the marine manufacturers 
raised a concern that small boat builders might need additional time to 
learn about the regulatory requirements and make the necessary design 
changes for complying with standards. We agreed to consider a staged 
approach, similar to what we are adopting for Small SI equipment 
manufacturers under the Phase 3 standards, in which boat builders would 
be able to make a certain number of noncompliant boats over the first 
year or two. Manufacturers emphasized that the best approach was to 
phase in the diurnal standard (30 percent of boats the first year, 60 
percent the second year, 100 percent the third year), including large 
businesses. We believe a more limited transition will be sufficient to 
meet the need to modify vessels to comply with the new standards. We 
are adopting approach that would allow companies to make up to 50 
percent of their products between July 2011 and July 2012 that do not 
yet comply with diurnal emission standards. All boats would need to 
comply after July 2012. A separate provision for small-volume boat 
builders would allow for up to 1200 noncompliant boats over the first 
two years that the standards apply (July 2011 to July 2013).
    Definition of ``engine'' We proposed to define the point at which 
engines became subject to emission standards as the point at which any 
component was attached to an engine block. This was intended to clarify 
the relationship between primary and secondary engine manufacturers and 
to prevent circumvention of the regulations by allowing the importation 
or other sale of partially complete engines that needed neither 
certification nor an exemption. Manufacturers pointed out that there 
were several incidental components added to engines early in the 
process, many times by the company that cast and/or machined the engine 
block for shipment to the engine manufacturer. We objected to the idea 
that an engine should not be subject to emission standards until it 
reached a running configuration because this would make it difficult or 
impossible to enforce our requirements. We chose to identify the best 
point early in the assembly process for making engines subject to 
standards to be the point of crankshaft installation. This is generally 
the first major assembly procedure and it involves most of the engine's 
moving parts.
    Setting up the regulations to clearly prohibit the sale of 
partially complete engines without a certificate or an exemption led us 
to adopt provisions to accommodate the several legitimate business 
practices in which manufacturers ship engines before they have reached 
a certified configuration. First, we proposed a process by which 
original engine manufacturers could ship partially complete engines to 
secondary engine manufacturers, including requirements for labeling 
engines and for secondary engine manufacturers to first obtain a 
certificate for the engine in question. Commenters objected to the 
labeling requirements and pointed out that there would sometimes be a 
need for shipping engines before the secondary engine manufacturer had 
an approved certificate. We agreed to simplify the labeling requirement 
such that the primary engine manufacturer would be able to use a single 
label for all its engines, identifying only its company name and the 
basis for the exemption, and referring to the bill of lading, which 
would identify the secondary engine manufacturer. We are also adopting 
regulatory provisions to clarify that these shipments may occur during 
the time that we are reviewing an application for certification from 
the secondary engine manufacturer, subject to certain requirements that 
are similar to those that apply for traditional engine manufacturers in 
building up inventory before their certification is approved. We also 
allow shipment of these engines when the secondary engine manufacturer 
has a valid exemption; this may occur for example, if the secondary 
engine manufacturer is developing a new model or is assembling engines 
only for export.
    Second, we proposed and are finalizing a provision to allow 
manufacturers broad discretion to ship partially complete engines 
between two of their own facilities. Manufacturers would only need to 
get our approval by describing their plans for this type of shipment in 
their application for certification. We may set certain reasonable 
conditions to ensure that manufacturers do not use these provisions to 
circumvent the regulations, but we would generally not require any 
specific labeling or recordkeeping steps for this practice.
    Third, we proposed to include partially complete engines sold as 
replacement components under the replacement-engine exemption in Sec.  
1068.240. Manufacturers expressed a concern that these engines were 
needed as replacement components and should therefore not be subject to 
standards. We noted that the existing replacement-engine exemption does 
not fit well with partially complete engines that are identical to 
engines currently being

[[Page 59168]]

produced under a valid certificate of conformity (up to that stage of 
completion). As a result, we have included language in Sec.  1068.240 
describing a streamlined path for these engines. The more difficult 
question relates to partially complete engines specially produced for 
replacement or repower where the old engine is subject to a previous 
tier of emission standards. We are concerned, as described above, that 
manufacturers could exploit this as a loophole if we did not specify 
that these engines are subject to emission standards. We are modifying 
the replacement-engine exemption to allow for very limited use of 
replacement engines without the administrative requirements and 
oversight provisions that currently apply under Sec.  1068.240. Under 
this approach we specify that manufacturers may produce and sell a 
certain number of replacement engines, including partially complete 
engines, based on production volumes from preceding years without 
making a determination that a new engine meeting current standards is 
unavailable to repower the equipment. Manufacturers would also not need 
to take possession of the old engine block (or confirm that it has been 
destroyed). For any number of noncompliant replacement engines 
exceeding the specified threshold, manufacturers would need to meet all 
the requirements that currently apply under Sec.  1068.240. See Section 
VIII above and Chapter 1 of the Summary and Analysis of Comments for 
further information and discussion related to replacement engines.

XI. Statutory and Executive Order Reviews

A. Executive Order 12866: Regulatory Planning and Review

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

B. Paperwork Reduction Act

    The information collection requirements in this final rule have 
been submitted for approval to the Office of Management and Budget 
(OMB) under the Paperwork Reduction Act, 44 U.S.C. 3501 et seq. The 
Information Collection Request (ICR) documents prepared by EPA have 
been assigned EPA ICR numbers 2251.02 and 1722.06.
    The Agency will collect information to ensure compliance with the 
provisions in this rule. This includes a variety of requirements, both 
for engine manufacturers, equipment manufacturers and manufacturers of 
fuel system components. Section 208(a) of the Clean Air Act requires 
that manufacturers provide information the Administrator may reasonably 
require to determine compliance with the regulations; submission of the 
information is therefore mandatory.
    As shown in Table XIV-1, the total annual burden associated with 
this final rule is about 131,000 hours and $17 million based on a 
projection of 1,031 respondents. The estimated burden for engine 
manufacturers is a total estimate for both new and existing reporting 
requirements. Most information collection is based on annual reporting. 
Burden means the total time, effort, or financial resources expended by 
persons to generate, maintain, retain, or disclose or provide 
information to or for a Federal agency. This includes the time needed 
to review instructions; develop, acquire, install, and utilize 
technology and systems for the purposes of collecting, validating, and 
verifying information, processing and maintaining information, and 
disclosing and providing information; adjust the existing ways to 
comply with any previously applicable instructions and requirements; 
train personnel to be able to respond to a collection of information; 
search data sources; complete and review the collection of information; 
and transmit or otherwise disclose the information.

                                       Table XIV-1--Estimated Burden for Reporting and Recordkeeping Requirements
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                                                                                                                              Annual
                                                             Number of        Average      Annual burden    Annualized     Annual labor    operation and
                     Industry sector                        respondents     burden per         hours       capital costs       costs        maintenance
                                                                            respondent                                                         costs
--------------------------------------------------------------------------------------------------------------------------------------------------------
Small SI engine manufacturers...........................              58             885          51,301      $4,829,036      $2,065,643      $3,268,306
Small SI equipment (evaporative)........................             500              19           9,500               0         412,500         120,500
Tank and hose component mfr's. (evaporative)............              53              68           3,615               0          97,670          12,773
Marine SI engine manufacturers..........................              38           1,596          60,640               0       3,110,584       6,462,307
Marine SI equipment & fuel system component mfr.                     343              29          10,020               0         730,450         120,232
 (evaporative)..........................................
                                                         -----------------------------------------------------------------------------------------------
    TOTAL...............................................             992           2,597         135,076       5,829,036       6,416,847       9,984,118
 
--------------------------------------------------------------------------------------------------------------------------------------------------------

    An agency may not conduct or sponsor, and a person is not required 
to respond to a collection of information unless it displays a 
currently valid OMB control number. The OMB control numbers for EPA's 
regulations in 40 CFR are listed in 40 CFR part 9.

C. Regulatory Flexibility Act

(1) Overview
    The Regulatory Flexibility Act (RFA) generally requires an agency 
to prepare a regulatory flexibility analysis of any rule subject to 
notice and comment rulemaking requirements under the Administrative 
Procedure Act or any other statute unless the agency certifies that the 
rule will not have a significant economic impact on a substantial 
number of small entities. Small entities include small businesses, 
small organizations, and small governmental jurisdictions.
    For purposes of assessing the impacts of this action on small 
entities, small

[[Page 59169]]

entity is defined as: (1) A small business as defined by the Small 
Business Administration's (SBA) regulations at 13 CFR 121.201 (see 
Table XIV-2, below); (2) a small governmental jurisdiction that is a 
government of a city, county, town, school district or special district 
with a population of smaller than 50,000; and (3) a small organization 
that is any not-for-profit enterprise which is independently owned and 
operated and is not dominant in its field. The following table provides 
an overview of the primary SBA small business categories potentially 
affected by this regulation.

                   Table XIV-2--Small Business Definitions for Entities Affected by This Rule
----------------------------------------------------------------------------------------------------------------
                   Industry                     NAICS a Codes      Threshold Definitions for Small Business b
----------------------------------------------------------------------------------------------------------------
Small SI and Marine SI Engine Manufacturers..          333618  1,000 employees.
Equipment Manufacturers:
    Farm Machinery...........................          333111  500 employees.
    Lawn and Garden..........................          333112  500 employees.
    Construction.............................          333120  750 employees.
    Sawmill and Woodworking..................          333210  500 employees.
    Pumps....................................          333911  500 employees.
    Air and Gas Compressors..................          333912  500 employees.
    Generators...............................          335312  1,000 employees.
Boat Builders................................          336612  500 employees.
Fuel Tank Manufacturers:
    Other Plastic Products...................          326199  500 employees.
    Metal Stamping...........................          332116  500 employees.
    Metal Tank (Heavy Gauge).................          332420  500 employees.
Fuel Line Manufacturers:
    Rubber and Plastic Fuel Lines............          326220  500 employees.
----------------------------------------------------------------------------------------------------------------
a North American Industry Classification System.
b According to SBA's regulations (13 CFR 121), businesses with no more than the listed number of employees are
  considered ``small entities'' for RFA purposes.

    After considering the economic impacts of this final rule on small 
entities, I certify that this action will not have a significant 
economic impact on a substantial number of small entities. The small 
entities directly regulated by this final rule cover a wide range of 
small businesses including engine manufacturers, equipment 
manufacturers, boat manufacturers, fuel tank manufacturers, and fuel 
hose manufacturers. Small governmental jurisdictions and small 
organizations as described above will not be impacted. We have 
determined that the estimated effect of the rule is to impact 43 
companies with costs between one and three percent of revenues, and 18 
additional companies with costs over three percent of revenues. These 
61 companies represent less than 5 percent of the total number of small 
businesses impacted by the new regulations. All remaining companies 
(over 1,000 of them) would be impacted with costs by less than one 
percent of revenues. It should be noted that this estimate is based on 
the highest level of estimated cost in the first years of the program. 
We estimate substantially lower long-term costs as manufacturers learn 
to produce compliant products at a lower cost over time.
    Pursuant to section 603 of the RFA, EPA prepared an initial 
regulatory flexibility analysis (IRFA) for the May 18, 2007 proposed 
rule (72 FR 28098). Pursuant to section 609(b) of the RFA, EPA convened 
a Small Business Advocacy Review Panel to obtain advice and 
recommendations from representatives of small entities that would 
potentially be regulated by the rule. A detailed discussion of the 
Panel's advice and recommendations is found in the Panel Reports, which 
have been placed in the docket for this rule.\147\ A summary of the 
Panel's recommendations is presented in the May 2007 proposal (72 FR 
28245).
---------------------------------------------------------------------------

    \147\ ``Panel Report of the Small Business Advocacy Review Panel 
on EPA's Planned Proposed Rule, Control of Emissions from Nonroad 
Spark-Ignition Engines and Equipment,'' October 10, 2006, Docket 
EPA-HQ-OAR-2004-0008-0562.
---------------------------------------------------------------------------

    In the final rule, EPA has made some changes to the proposal that 
reduced the level of impact to small entities directly regulated by the 
rule. As described in Section III.C.1, EPA is adopting less stringent 
standards for SD/I high-performance engines than originally proposed, 
based in part on the comments from SD/I engine manufacturers, most of 
which are small businesses. This change has resulted in a reduction in 
the number of entities projected to be impacted by more than 1 percent.
    Despite the determination that this rule will not have a 
significant economic impact on a substantial number of small entities, 
EPA prepared a Small Business Flexibility Analysis that has all the 
components of a final regulatory flexibility analysis (FRFA). A FRFA 
examines the impact of the rule on small businesses along with 
regulatory alternatives that could reduce that impact. The Small 
Business Flexibility Analysis (which is presented in Chapter 10 of the 
Final RIA) is available for review in the docket, and is summarized 
below.
(2) Need for and Objective of the Rulemaking
    Air pollution is a serious threat to the health and well-being of 
millions of Americans and imposes a large burden on the U.S. economy. 
Ground-level ozone and carbon monoxide are linked to potentially 
serious respiratory health problems, especially respiratory effects and 
environmental degradation, including visibility impairment in and 
around our national parks. (Section II and Chapter 2 of the Final RIA 
for this rule describe these pollutants and their health effects.) Over 
the past quarter century, state and federal representatives have 
established emission control programs that significantly reduce 
emissions from individual sources. Many of these sources now pollute at 
only a small fraction of their pre-control rates.
    This final rule includes standards that will require manufacturers 
to substantially reduce exhaust emissions and evaporative emissions 
from Marine SI engines and vessels and from Small SI engines and 
equipment. We are promulgating the standards under

[[Page 59170]]

section 213(a)(3) of the Clean Air Act, which directs EPA to set 
emission standards that ``achieve the greatest degree of emission 
reduction achievable through the application of technology'' giving 
appropriate consideration to cost, noise, energy, safety, and lead 
time. In addition to the general authority to regulate nonroad engines 
under the Clean Air Act, section 428 of the 2004 Consolidated 
Appropriations Act requires EPA to propose and finalize regulations for 
new nonroad spark-ignition engines below 50 horsepower.
(3) Summary of Significant Public Comments
    In the proposal, EPA proposed provisions consistent with each of 
the Panel's recommendations and sought comments on all the small 
business provisions (see 72 FR 28245, May 18, 2007). We received a 
number of comments during the comment period after we issued the 
proposal. The following section summarizes the most significant 
comments received. A summary of all comments pertaining to the small 
business provisions can be found in our Summary and Analysis of 
Comments document contained in the public docket for this rulemaking.
    With regard to marine exhaust emission standards, NMMA and several 
SD/I engine manufacturers commented on EPA's proposed criteria for 
which SD/I engine manufacturers would be eligible for the small 
business flexibilities. They recommended that EPA should base the 
criteria on number of employees rather than engine production level. 
They recommended a 500 employee threshold for small businesses with the 
option to qualify as a small-volume manufacturer if the 5,000 unit 
level is not exceeded.
    With regard to marine evaporative emission standards, NMMA, which 
represents many vessel manufacturers, noted that EPA acknowledged the 
challenges faced by the small boat builders and even requested comment 
on a three-year phase-in (33-66-100 percent) for the diurnal emission 
standards over model years 2010-2012. Rather than a phase-in, NMMA 
supported an additional two years of lead time for compliance (i.e., 
until model year 2013) for small businesses to allow for sufficient 
time for these businesses to gain experience with carbon canisters.
(4) Type and Numbers of Small Entities Affected
    The standards being promulgated for Small SI engines and equipment 
will affect manufacturers of both handheld equipment and nonhandheld 
equipment. Based on EPA certification records, the Small SI nonhandheld 
engine industry is made up primarily of large manufacturers including 
Briggs and Stratton, Tecumseh, Honda, Kohler and Kawasaki. The Small SI 
handheld engine industry is also made up primarily of large 
manufacturers including Electrolux Home Products, MTD, Homelite, Stihl 
and Husqvarna. EPA has identified 10 Small SI engine manufacturers that 
qualify as a small business under SBA definitions. Half of these small 
manufacturers certify gasoline engines and the other half certify 
liquefied petroleum gas (LPG) engines.
    The Small SI equipment market is dominated by a few large 
businesses including Toro, John Deere, MTD, Briggs and Stratton, and 
Electrolux Home Products. While the Small SI equipment market may be 
dominated by just a handful of companies, there are many small 
businesses in the market; however these small businesses account for 
less than 10 percent of equipment sales. We have identified over three 
hundred equipment manufacturers that qualify as a small business under 
the SBA definitions. More than 90 percent of these small companies 
manufacture fewer than 5,000 pieces of equipment per year. The median 
employment level is 65 employees for nonhandheld equipment 
manufacturers and 200 employees for handheld equipment manufacturers. 
The median sales revenue is approximately $9 million for nonhandheld 
equipment manufacturers and $20 million for handheld equipment 
manufacturers.
    EPA has identified 25 manufacturers that produce fuel tanks for the 
Small SI equipment market that meet the SBA definition of a small 
business. Fuel tank manufacturers rely on three different processes for 
manufacturing plastic tanks--rotational molding, blow molding and 
injection molding. EPA has identified small business fuel tank 
manufacturers using the rotational molding and blow molding processes 
but has not identified any small business manufacturers using injection 
molding. In addition, EPA has identified two manufacturers that produce 
fuel lines for the Small SI equipment market that meet the SBA 
definition of a small business. The majority of fuel line in the Small 
SI market is made by large manufacturers including Avon Automotive and 
Dana Corporation.
    The standards being promulgated for Marine SI engines and vessels 
will affect manufacturers in the OB/PWC market and the SD/I market. 
Based on EPA certification records, the OB/PWC market is made up 
primarily of large manufacturers including, Brunswick (Mercury), 
Bombardier Recreational Products, Yamaha, Honda, Kawasaki, Polaris, 
Briggs & Stratton, and Nissan. Two companies qualify as a small 
business under the SBA definition. Tohatsu makes outboard engines. The 
other small business is Surfango which makes a small number of 
motorized surfboards and has certified their product as a PWC.
    The SD/I market is made up mostly of small businesses; however, 
these businesses account for less than 20 percent of engine sales. Two 
large manufacturers, Brunswick (Mercruiser) and Volvo Penta, dominate 
the market. We have identified 28 small entities manufacturing SD/I 
marine engines. The third largest company is Indmar, which has much 
fewer than the SBA threshold of 1,000 employees. Based on sales 
estimates, number of employees reported by Thomas Register, and typical 
engine prices, we estimate that the average revenue for the larger 
small SD/I manufacturers is about $50-60 million per year. However, the 
vast majority of the SD/I engine manufacturers produce low production 
volumes of engines and typically have fewer than 50 employees.
    The two largest boat building companies are Brunswick and Genmar. 
Brunswick owns approximately 25 boat companies and Genmar owns 
approximately 12 boat companies. Based on a manufacturer list 
maintained by the U.S. Coast Guard, there are over 1,600 boat builders 
in the United States. We estimate that, based on manufacturer 
identification codes, more than 1,000 of these companies produce boats 
using gasoline marine engines. According to the National Marine 
Manufacturers Association (NMMA), most of these boat builders are small 
businesses. These small businesses range from individuals building one 
boat per year to businesses near the SBA small business threshold of 
500 employees.
    We have identified 14 marine fuel tank manufacturers in the United 
States that qualify as small businesses under the SBA definition. These 
manufacturers include five rotational molders, two blow molders, six 
aluminum fuel tank manufacturers, and one specialty fuel tank 
manufacturer. The small rotational molders average fewer than 50 
employees while the small blow-molders average over 100 employees.
    We have only identified one small fuel line manufacturer that 
produces for the Marine SI market. Novaflex primarily distributes fuel 
lines made by other manufacturers but does produce

[[Page 59171]]

its own filler necks. Because we expect vessel manufacturers will 
design their fuel systems such that there will not be standing liquid 
fuel in the fill neck (and therefore the new low-permeation fuel line 
requirements will not apply to the fill neck), we have not included 
this manufacturer in our analysis. The majority of fuel line in the 
Marine SI market is made by large manufacturers including Goodyear and 
Parker-Hannifin.
    To gauge the impact of the new standards on small businesses, EPA 
employed a cost-to-sales ratio test to estimate the number of small 
businesses that will be impacted by less than one percent, between one 
and three percent, and above three percent. For this analysis, EPA 
assumed that the costs of complying with the final standards are 
completely absorbed by the regulated entity. Overall, EPA projects that 
43 small businesses will be impacted by one to three percent, 18 small 
businesses will be impacted by over three percent, and the remaining 
companies (over 1,000 small businesses) will be impacted by less than 
one percent. Table XIV-3 summarizes the impacts on small businesses 
from the new exhaust and evaporative emission standards for Small SI 
engines and equipment and Marine SI engines and vessels. A more 
detailed description of the inputs used for each affected industry 
sector and the methodology used to develop the estimated impact on 
small businesses in each industry sector is included in the Small 
Business Flexibility Analysis as presented in Chapter 10 of the Final 
RIA for this rulemaking.

           Table XIV-3--Summary of Impacts on Small Businesses
------------------------------------------------------------------------
                                                       1-3         >3
        Industry sector             0-1 percent      percent    percent
------------------------------------------------------------------------
Manufacturers of Marine OB/PWC   2................          0          0
 engines.
Manufacturers of Marine SD/I     4................          5          0
 engines < 373 kW.
Manufacturers of Marine SD/I     19...............          0          0
 engines >= 373 kW (high-
 performance).
Boat Builders..................  >1,000...........          0          0
Manufacturers of Fuel Lines and  14...............          0          0
 Fuel Tanks for Marine SI
 Vessels.
Small SI engines and equipment.  314..............         38         18
Manufacturers of Fuel Lines and  27...............          0          0
 Fuel Tanks for Small SI
 Applications.
                                ----------------------------------------
    Total......................  380 plus >1,000           43         18
                                  boat builders.
------------------------------------------------------------------------

(5) Reporting, Recordkeeping, and Compliance Requirements
    For any emission control program, EPA must have assurances that the 
regulated products will meet the standards. Historically, EPA's 
programs for Small SI engines and Marine SI engines have included 
provisions requiring that engine manufacturers be responsible for 
providing these assurances. The program that EPA is adopting for 
manufacturers subject to this final rule include testing, reporting, 
and recordkeeping requirements for manufacturers of engines, equipment, 
vessels, and fuel system components including fuel tanks, fuel lines, 
and fuel caps.
    For Small SI engine manufacturers and OB/PWC engine manufacturers, 
EPA is continuing the same reporting, recordkeeping, and compliance 
requirements prescribed in the current regulations. For SD/I engine 
manufacturers, which are not currently subject to EPA regulation, EPA 
is applying similar reporting, recordkeeping, and compliance 
requirements to those for OB/PWC engine manufacturers. Testing 
requirements for engine manufacturers will include certification 
emission (including deterioration factor) testing and production-line 
testing. Reporting requirements will include emission test data and 
technical data on the engines. Manufacturers will also need to keep 
records of this information.
    Because of the new evaporative emission requirements, there will be 
new reporting, recordkeeping and compliance requirements for Small SI 
equipment manufacturers. Small SI equipment manufacturers participating 
in the transition program will also be subject to reporting, 
recordkeeping and compliance requirements. There will also be new 
reporting, recordkeeping and compliance requirements for fuel tank 
manufacturers, fuel line manufacturers, fuel cap manufacturers and 
marine vessel manufacturers choosing to certify their products with 
EPA. Testing requirements for these manufacturers would include 
certification emission testing. Reporting requirements would include 
emission test data and technical data on the designs. Manufacturers 
will also need to keep records of this information.
    (6) Steps Taken To Minimize the Impact on Small Entities
    The Panel recommended that EPA consider and seek comment on a wide 
range of regulatory alternatives to mitigate the impacts of the 
rulemaking on small businesses, including those flexibility options 
described below. A copy of the Final Panel Report is included in the 
docket for this final rule. A summary of the Panel's recommendations 
for the various groups of small businesses affected by the rule is 
presented in the May 2007 proposal (72 FR 28245).
    In response to the Panel's recommendations, we proposed a range of 
small business flexibilities for the various groups of small businesses 
affected by the proposed standards. As noted earlier, we received a 
number of comments during the comment period after we issued the 
proposal. A complete summary of the comments pertaining to the small 
business provisions can be found in our Summary and Analysis of 
Comments document contained in the public docket for this rulemaking.
    EPA is adopting several small business flexibilities as part of 
this rule. A few changes have been made to some of the proposed 
flexibilities in response to the comments received on the proposal as 
well as other changes made in the rulemaking. The flexibilities 
available to small businesses affected by the new exhaust emission 
standards for SD/I engines are summarized in Section III.F. The 
flexibilities available to small businesses affected by the new exhaust 
emission standards for OB/PWC engines are summarized in Section IV.G. 
The flexibilities available to small businesses affected by the new 
exhaust emission standards for Small SI engines are summarized in 
Section V.F. Finally, the flexibilities available to small businesses 
affected by the new evaporative emission standards for both Marine SI 
engines and vessels and

[[Page 59172]]

Small SI engines and equipment are summarized in Section VI.G.

D. Unfunded Mandates Reform Act

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

E. Executive Order 13132: Federalism

    Executive Order 13132, entitled ``Federalism'' (64 FR 43255, August 
10, 1999), requires EPA to develop an accountable process to ensure 
``meaningful and timely input by State and local officials in the 
development of regulatory policies that have federalism implications.'' 
``Policies that have federalism implications'' is defined in the 
Executive Order to include regulations that have ``substantial direct 
effects on the States, on the relationship between the national 
government and the States, or on the distribution of power and 
responsibilities among the various levels of government.''
    Under section 6 of Executive Order 13132, EPA may not issue a 
regulation that has federalism implications, that imposes substantial 
direct compliance costs, and that is not required by statute, unless 
the Federal government provides the funds necessary to pay the direct 
compliance costs incurred by State and local governments, or EPA 
consults with State and local officials early in the process of 
developing the proposed regulation. EPA also may not issue a regulation 
that has federalism implications and that preempts State law, unless 
the Agency consults with State and local officials early in the process 
of developing the regulation.
    Section 4 of the Executive Order contains additional requirements 
for rules that preempt State or local law, even if those rules do not 
have federalism implications (i.e., the rules will not have substantial 
direct effects on the States, on the relationship between the national 
government and the states, or on the distribution of power and 
responsibilities among the various levels of government). Those 
requirements include providing all affected State and local officials 
notice and an opportunity for appropriate participation in the 
development of the regulation. If the preemption is not based on 
express or implied statutory authority, EPA also must consult, to the 
extent practicable, with appropriate State and local officials 
regarding the conflict between State law and Federally protected 
interests within the agency's area of regulatory responsibility.
    This final rule has federalism implications because it preempts 
State law. It does not include any significant revisions from current 
statutory and regulatory requirements, but it codifies existing 
statutory requirements. Prior to the passage of Public Law 108-199, the 
various states could adopt and enforce nonroad emission control 
standards previously adopted by the state of California under section 
209(e) of the Clean Air Act, once California had received authorization 
from EPA to enforce such standards. As part of directing EPA to 
undertake this rulemaking, section 428 of Public Law 108-199 has taken 
away the authority of states' to adopt California standards for any 
nonroad spark-ignition engine under 50 horsepower that they had not 
already adopted by September 1, 2003. No state had done so by that 
date. No current state law is affected by the provisions of Public Law 
108-199 mentioned above. This rule codifies the statutory provision 
prohibiting other states from adopting California standards for nonroad 
spark-ignition engines under 50 horsepower. It does not affect the 
independent authority of California.
    EPA did consult with representatives of various State and local 
governments in developing this rule. EPA has also consulted 
representatives from the National Association of Clean Air Agencies 
(NACAA), which represents state and local air pollution officials. 
These officials participated in two EPA workshops regarding the Small 
SI safety study in which they expressed concern about the language of 
section 428 of Public Law 108-199 limiting the states' ability to adopt 
the California standards for nonroad spark-ignition engines under 50 
horsepower and urged EPA to move expeditiously in adopting new Federal 
emission standards for this category.
    As required by section 8(a) of Executive Order 13132, EPA included 
a certification from its Federalism Official stating that EPA had met 
the Executive Order's requirements in a meaningful and timely manner, 
when it sent the draft of this final rule to OMB for review pursuant to 
Executive Order 12866. A copy of this certification has been included 
in the public version of the official record for this final rule.

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

    Executive Order 13175, entitled ``Consultation and Coordination 
with Indian Tribal Governments'' (65 FR 67249, November 9, 2000), 
requires EPA to develop an accountable process to ensure ``meaningful 
and timely input by tribal officials in the development of regulatory 
policies that have tribal implications.''
    This final rule does not have tribal implications as specified in 
Executive Order 13175. This rule will be

[[Page 59173]]

implemented at the Federal level and impose compliance costs only on 
engine and equipment manufacturers. Tribal governments will be affected 
only to the extent they purchase and use equipment with regulated 
engines. Thus, Executive Order 13175 does not apply to this rule.

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

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

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

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

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

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

J. National Technology Transfer Advancement Act

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

K. 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. A Major rule cannot 
take effect until 60 days after it is published in the Federal 
Register. This action is a ``major rule'' as defined by 5 U.S.C. 
804(2). This rule will be effective December 8, 2008.

List of Subjects

40 CFR Part 9

    Reporting and recordkeeping requirements.

40 CFR Part 60

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

40 CFR Part 80

    Environmental protection, Air pollution control, Fuel additives, 
Gasoline, Imports, Incorporation by reference, Labeling, Motor vehicle 
pollution, Penalties, Reporting and recordkeeping requirements.

40 CFR Part 85

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

40 CFR Part 86

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

40 CFR Part 89

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

[[Page 59174]]

40 CFR Part 90

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

40 CFR Part 91

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

40 CFR Part 92

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

40 CFR Part 94

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

40 CFR Part 1027

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

40 CFR Parts 10333 and 1039

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

40 CFR Part 1042

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

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

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

40 CFR Part 1065

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

40 CFR Part 1068

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

40 CFR Part 1074

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

    Dated: September 4, 2008.
Stephen L. Johnson,
Administrator.

0
For the reasons set out in the preamble, title 40, chapter I of the 
Code of Federal Regulations is amended as set forth below.

PART 9--OMB APPROVALS UNDER THE PAPERWORK REDUCTION ACT

0
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.

0
2. In Sec.  9.1 the table is amended as follows:
0
a. By adding a new center heading and entry in numerical order for 
``1027.140''.
0
b. By adding a new center heading and entry in numerical order for 
``1045.825''.
0
c. By removing ``1048.20'', ``1048.201-250'', ``1048.345'', 
``1048.350'', ``1048.420'', and ``1048.425'' and adding a new entry in 
numerical order under that center heading for ``1048.825''.
0
d. By removing ``1051.201-255'', ``1051.345'', ``1051.350'', 
``1051.725'', and ``1051.730'' and adding a new entry in numerical 
order under that center heading for ``1051.825''.
0
e. By adding a new center heading and entry in numerical order for 
``1054.825''.
0
f. By adding a new center heading and entry in numerical order for 
``1060.825''.


Sec.  9.1  OMB approvals under the Paperwork Reduction Act.

* * * * *

------------------------------------------------------------------------
            40 CFR citation                      OMB control No.
------------------------------------------------------------------------
 
                              * * * * * * *
------------------------------------------------------------------------
       Fees for Engine, Vehicle, and Equipment Compliance Programs
------------------------------------------------------------------------
1027.140...............................  2060-0104, 2060-0545
 
                              * * * * * * *
------------------------------------------------------------------------
   Control of Emissions from Spark-ignition Propulsion Marine Engines
------------------------------------------------------------------------
1045.825...............................  2060-0321
------------------------------------------------------------------------
   Control of Emissions from New, Large Nonroad Spark-ignition Engines
------------------------------------------------------------------------
1048.825...............................  2060-0338
------------------------------------------------------------------------

[[Page 59175]]

 
       Control of Emissions from Recreational Engines and Vehicles
------------------------------------------------------------------------
1051.825...............................  2060-0338
------------------------------------------------------------------------
 Control of Emissions from New, Small Nonroad Spark-ignition Engines and
                                Equipment
------------------------------------------------------------------------
1054.825...............................  2060-0338
------------------------------------------------------------------------
    Control of Evaporative Emissions from New and In-use Nonroad and
                          Stationary Equipment
------------------------------------------------------------------------
1060.825...............................  2060-0321, 2060-0338
------------------------------------------------------------------------
 
------------------------------------------------------------------------
                               * * * * * *
------------------------------------------------------------------------

* * * * *

PART 60--STANDARDS OF PERFORMANCE FOR NEW STATIONARY SOURCES

0
3. The authority citation for part 60 continues to read as follows:

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

Subpart JJJJ--[Amended]

0
4. Section 60.4231 is amended as follows:
0
a. By revising the section heading.
0
b. By revising paragraph (a).
0
c. By revising paragraph (b).
0
d. By revising paragraph (c).
0
e. By revising paragraph (d).
0
f. By adding paragraph (f).


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

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

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

    (b) Stationary SI internal combustion engine manufacturers must 
certify their stationary SI ICE with a maximum engine power greater 
than 19 KW (25 HP) (except emergency stationary ICE with a maximum 
engine power greater than 25 HP and less than 130 HP) that use gasoline 
and that are manufactured on or after the applicable date in Sec.  
60.4230(a)(2), or manufactured on or after the applicable date in Sec.  
60.4230(a)(4) for emergency stationary ICE with a maximum engine power 
greater than or equal to 130 HP, to the certification emission 
standards and other requirements for new nonroad SI engines in 40 CFR 
part 1048. Stationary SI internal combustion engine manufacturers must 
certify their emergency stationary SI ICE with a maximum engine power 
greater than 25 HP and less than 130 HP that are manufactured on or 
after the applicable date in Sec.  60.4230(a)(4) to the Phase 1 
emission standards in 40 CFR 90.103, applicable to class II engines, 
and other requirements for new nonroad SI engines in 40 CFR part 90. 
Stationary SI internal combustion engine manufacturers may certify 
their stationary SI ICE with a maximum engine power less than or equal 
to 30 KW (40 HP) with a total displacement less than or equal to 1,000 
cubic centimeters (cc) to the certification emission standards and 
other requirements for new nonroad SI engines in 40 CFR part 90 or 
1054, as appropriate.
    (c) Stationary SI internal combustion engine manufacturers must 
certify their stationary SI ICE with a maximum engine power greater 
than 19 KW (25 HP) (except emergency stationary ICE with a maximum 
engine power greater than 25 HP and less than 130 HP) that are rich 
burn engines that use LPG and that are manufactured on or after the 
applicable date in Sec.  60.4230(a)(2), or manufactured on or after the 
applicable date in Sec.  60.4230(a)(4) for emergency stationary ICE 
with a maximum engine power greater than or equal to 130 HP, to the 
certification emission standards and other requirements for new nonroad 
SI engines in 40 CFR part 1048. Stationary SI internal combustion 
engine manufacturers must certify their emergency stationary SI ICE 
with a maximum engine power greater than 25 HP and less than 130 HP 
that are manufactured on or after the applicable date in Sec.  
60.4230(a)(4) to the Phase 1 emission standards in 40 CFR 90.103, 
applicable to class II engines, and other requirements for new nonroad 
SI engines in 40 CFR part 90. Stationary SI internal combustion engine 
manufacturers may certify their stationary SI ICE with a maximum engine 
power less than or equal to 30 KW (40 HP) with a total displacement 
less than or equal to 1,000 cc to the certification emission standards 
and other requirements for new nonroad SI engines in 40 CFR part 90 or 
1054, as appropriate.
    (d) Stationary SI internal combustion engine manufacturers who 
choose to certify their stationary SI ICE with a maximum engine power 
greater than 19 KW (25 HP) and less than 75 KW (100 HP) (except 
gasoline and rich burn engines that use LPG and emergency

[[Page 59176]]

stationary ICE with a maximum engine power greater than 25 HP and less 
than 130 HP) under the voluntary manufacturer certification program 
described in this subpart must certify those engines to the 
certification emission standards for new nonroad SI engines in 40 CFR 
part 1048. Stationary SI internal combustion engine manufacturers who 
choose to certify their emergency stationary SI ICE greater than 25 HP 
and less than 130 HP, must certify those engines to the Phase 1 
emission standards in 40 CFR 90.103, applicable to class II engines, 
for new nonroad SI engines in 40 CFR part 90. Stationary SI internal 
combustion engine manufacturers may certify their stationary SI ICE 
with a maximum engine power less than or equal to 30 KW (40 HP) with a 
total displacement less than or equal to 1,000 cc to the certification 
emission standards for new nonroad SI engines in 40 CFR part 90 or 
1054, as appropriate. For stationary SI ICE with a maximum engine power 
greater than 19 KW (25 HP) and less than 75 KW (100 HP) (except 
gasoline and rich burn engines that use LPG and emergency stationary 
ICE with a maximum engine power greater than 25 HP and less than 130 
HP) manufactured prior to January 1, 2011, manufacturers may choose to 
certify these engines to the standards in Table 1 to this subpart 
applicable to engines with a maximum engine power greater than or equal 
to 100 HP and less than 500 HP.
* * * * *
    (f) Manufacturers of equipment containing stationary SI internal 
combustion engines meeting the provisions of 40 CFR part 1054 must meet 
the provisions of 40 CFR part 1060, to the extent they apply to 
equipment manufacturers.

0
5. Section 60.4238 is revised to read as follows:


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

    Stationary SI internal combustion engine manufacturers who are 
subject to the emission standards specified in Sec.  60.4231(a) must 
certify their stationary SI ICE using the certification procedures 
required in 40 CFR part 90, subpart B, or 40 CFR part 1054, subpart C, 
as applicable, and must test their engines as specified in those parts. 
Manufacturers of equipment containing stationary SI internal combustion 
engines meeting the provisions of 40 CFR part 1054 must meet the 
provisions of 40 CFR part 1060, subpart C, to the extent they apply to 
equipment manufacturers.

0
6. Section 60.4239 is revised to read as follows:


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

    Stationary SI internal combustion engine manufacturers who are 
subject to the emission standards specified in Sec.  60.4231(b) must 
certify their stationary SI ICE using the certification procedures 
required in 40 CFR part 1048, subpart C, and must test their engines as 
specified in that part. Stationary SI internal combustion engine 
manufacturers who certify their stationary SI ICE with a maximum engine 
power less than or equal to 30 KW (40 HP) with a total displacement 
less than or equal to 1,000 cc to the certification emission standards 
and other requirements for new nonroad SI engines in 40 CFR part 90 or 
40 CFR part 1054, and manufacturers of stationary SI emergency engines 
that are greater than 25 HP and less than 130 HP who meet the Phase 1 
emission standards in 40 CFR 90.103, applicable to class II engines, 
must certify their stationary SI ICE using the certification procedures 
required in 40 CFR part 90, subpart B, or 40 CFR part 1054, subpart C, 
as applicable, and must test their engines as specified in those parts. 
Manufacturers of equipment containing stationary SI internal combustion 
engines meeting the provisions of 40 CFR part 1054 must meet the 
provisions of 40 CFR part 1060, subpart C, to the extent they apply to 
equipment manufacturers.

0
7. Section 60.4240 is revised to read as follows:


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

    Stationary SI internal combustion engine manufacturers who are 
subject to the emission standards specified in Sec.  60.4231(c) must 
certify their stationary SI ICE using the certification procedures 
required in 40 CFR part 1048, subpart C, and must test their engines as 
specified in that part. Stationary SI internal combustion engine 
manufacturers who certify their stationary SI ICE with a maximum engine 
power less than or equal to 30 KW (40 HP) with a total displacement 
less than or equal to 1,000 cc to the certification emission standards 
and other requirements for new nonroad SI engines in 40 CFR part 90 or 
40 CFR part 1054, and manufacturers of stationary SI emergency engines 
that are greater than 25 HP and less than 130 HP who meet the Phase 1 
emission standards in 40 CFR 90.103, applicable to class II engines, 
must certify their stationary SI ICE using the certification procedures 
required in 40 CFR part 90, subpart B, or 40 CFR part 1054, subpart C, 
as applicable, and must test their engines as specified in those parts. 
Manufacturers of equipment containing stationary SI internal combustion 
engines meeting the provisions of 40 CFR part 1054 must meet the 
provisions of 40 CFR part 1060, subpart C, to the extent they apply to 
equipment manufacturers.

0
8. Section 60.4241 is amended by revising the section heading, 
paragraph (b) and adding paragraph (i) to read as follows:


Sec.  60.4241  What are my compliance requirements if I am a 
manufacturer of stationary SI internal combustion engines participating 
in the voluntary certification program or a manufacturer of equipment 
containing such engines?

* * * * *
    (b) Manufacturers of engines other than those certified to 
standards in 40 CFR part 90 or 40 CFR part 1054 must certify their 
stationary SI ICE using the certification procedures required in 40 CFR 
part 1048, subpart C, and must follow the same test procedures that 
apply to large SI nonroad engines under 40 CFR part 1048, but must use 
the D-1 cycle of International Organization of Standardization 8178-4: 
1996(E) (incorporated by reference, see 40 CFR 60.17) or the test cycle 
requirements specified in Table 5 to 40 CFR 1048.505, except that Table 
5 of 40 CFR 1048.505 applies to high load engines only. Stationary SI 
internal combustion engine manufacturers who certify their stationary 
SI ICE with a maximum engine power less than or equal to 30 KW (40 HP) 
with a total displacement less than or equal to 1,000 cc to the 
certification emission standards and other requirements for new nonroad 
SI engines in 40 CFR part 90 or 40 CFR part 1054, and manufacturers of 
emergency engines that are greater than 25 HP and less than 130 HP who 
meet the Phase 1 standards in 40 CFR 90.103, applicable to class II 
engines, must certify their stationary SI ICE using the certification 
procedures required in 40 CFR part 90, subpart B, or 40 CFR part 1054, 
subpart C, as applicable, and must test their engines as specified in 
those parts. Manufacturers of equipment containing stationary SI 
internal

[[Page 59177]]

combustion engines meeting the provisions of 40 CFR part 1054 must meet 
the provisions of 40 CFR part 1060, subpart C, to the extent they apply 
to equipment manufacturers.
* * * * *
    (i) For engines being certified to the voluntary certification 
standards in Table 1 of this subpart, the VOC measurement shall be made 
by following the procedures in 40 CFR 1065.260 and 1065.265 in order to 
determine the total NMHC emissions by using a flame-ionization detector 
and non-methane cutter. As an alternative to the nonmethane cutter, 
manufacturers may use a gas chromatograph as allowed under 40 CFR 
1065.267 and may measure ethane, as well as methane, for excluding such 
levels from the total VOC measurement.

0
9. Section 60.4242 is amended by revising the section heading, 
paragraphs (a) and (b) and adding paragraph (f) to read as follows:


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

    (a) Stationary SI internal combustion engine manufacturers must 
meet the provisions of 40 CFR part 90, 40 CFR part 1048, or 40 CFR part 
1054, as applicable, as well as 40 CFR part 1068 for engines that are 
certified to the emission standards in 40 CFR part 1048 or 1054, except 
that engines certified pursuant to the voluntary certification 
procedures in Sec.  60.4241 are subject only to the provisions 
indicated in Sec.  60.4247 and are permitted to provide instructions to 
owners and operators allowing for deviations from certified 
configurations, if such deviations are consistent with the provisions 
of paragraphs Sec.  60.4241(c) through (f). Manufacturers of equipment 
containing stationary SI internal combustion engines meeting the 
provisions of 40 CFR part 1054 must meet the provisions of 40 CFR part 
1060, as applicable. Labels on engines certified to 40 CFR part 1048 
must refer to stationary engines, rather than or in addition to nonroad 
engines, as appropriate.
    (b) An engine manufacturer certifying an engine family or families 
to standards under this subpart that are identical to standards 
applicable under 40 CFR part 90, 40 CFR part 1048, or 40 CFR part 1054 
for that model year may certify any such family that contains both 
nonroad and stationary engines as a single engine family and/or may 
include any such family containing stationary engines in the averaging, 
banking and trading provisions applicable for such engines under those 
parts. This provision also applies to equipment or component 
manufacturers certifying to standards under 40 CFR part 1060.
* * * * *
    (f) For manufacturers of gaseous-fueled stationary engines required 
to meet the warranty provisions in 40 CFR 90.1103 or 1054.120, we may 
establish an hour-based warranty period equal to at least the certified 
emissions life of the engines (in engine operating hours) if we 
determine that these engines are likely to operate for a number of 
hours greater than the applicable useful life within 24 months. We will 
not approve an alternate warranty under this paragraph (f) for nonroad 
engines. An alternate warranty period approved under this paragraph (f) 
will be the specified number of engine operating hours or two years, 
whichever comes first. The engine manufacturer shall request this 
alternate warranty period in its application for certification or in an 
earlier submission. We may approve an alternate warranty period for an 
engine family subject to the following conditions:
    (1) The engines must be equipped with non-resettable hour meters.
    (2) The engines must be designed to operate for a number of hours 
substantially greater than the applicable certified emissions life.
    (3) The emission-related warranty for the engines may not be 
shorter than any published warranty offered by the manufacturer without 
charge for the engines. Similarly, the emission-related warranty for 
any component shall not be shorter than any published warranty offered 
by the manufacturer without charge for that component.
0
10. Section 60.4245 is amended by revising paragraph (a)(3) to read as 
follows:


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

* * * * *
    (a) * * *
    (3) If the stationary SI internal combustion engine is a certified 
engine, documentation from the manufacturer that the engine is 
certified to meet the emission standards and information as required in 
40 CFR parts 90, 1048, 1054, and 1060, as applicable.
* * * * *
0
11. Section 60.4247 is amended by revising the section heading, 
paragraphs (a) and (b) to read as follows:


Sec.  60.4247  What parts of the mobile source provisions apply to me 
if I am a manufacturer of stationary SI internal combustion engines or 
a manufacturer of equipment containing such engines?

    (a) Manufacturers certifying to emission standards in 40 CFR part 
90, including manufacturers certifying emergency engines below 130 HP, 
must meet the provisions of 40 CFR part 90. Manufacturers certifying to 
emission standards in 40 CFR part 1054 must meet the provisions of 40 
CFR part 1054. Manufacturers of equipment containing stationary SI 
internal combustion engines meeting the provisions of 40 CFR part 1054 
must meet the provisions of 40 CFR part 1060 to the extent they apply 
to equipment manufacturers.
    (b) Manufacturers required to certify to emission standards in 40 
CFR part 1048 must meet the provisions of 40 CFR part 1048. 
Manufacturers certifying to emission standards in 40 CFR part 1048 
pursuant to the voluntary certification program must meet the 
requirements in Table 4 to this subpart as well as the standards in 40 
CFR 1048.101.
* * * * *

0
12. Section 60.4248 is amended by revising the definitions for 
``Certified emissions life'' and ``Certified stationary internal 
combustion engine'' to read as follows:


Sec.  60.4248  What definitions apply to this subpart?

* * * * *
    Certified emissions life means the period during which the engine 
is designed to properly function in terms of reliability and fuel 
consumption, without being remanufactured, specified as a number of 
hours of operation or calendar years, whichever comes first. The values 
for certified emissions life for stationary SI ICE with a maximum 
engine power less than or equal to 19 KW (25 HP) are given in 40 CFR 
90.105, 40 CFR 1054.107, and 40 CFR 1060.101, as appropriate. The 
values for certified emissions life for stationary SI ICE with a 
maximum engine power greater than 19 KW (25 HP) certified to 40 CFR 
part 1048 are given in 40 CFR 1048.101(g). The certified emissions life 
for stationary SI ICE with a maximum engine power greater than 75 KW 
(100 HP) certified under the voluntary manufacturer certification 
program of this subpart is 5,000 hours or 7 years, whichever comes 
first.
    Certified stationary internal combustion engine means an engine 
that belongs to an engine family that has a certificate of conformity 
that complies with the emission standards and

[[Page 59178]]

requirements in this part, or of 40 CFR part 90, 40 CFR part 1048, or 
40 CFR part 1054, as appropriate.
* * * * *

PART 80--REGULATION OF FUELS AND FUEL ADDITIVES

0
13. The authority citation for part 80 continues to read as follows:

    Authority: 42 U.S.C. 7414, 7521(1), 7545 and 7601(a).

Subpart B--[Amended]

0
14. Section 80.22 is amended by revising paragraph (f) and adding 
paragraph (g) to read as follows:


Sec.  80.22  Controls and prohibitions.

* * * * *
    (f) Every retailer and wholesale purchaser-consumer shall equip all 
gasoline pumps from which gasoline is dispensed into motor vehicles 
with a nozzle spout that meets all the following specifications:
    (1) The outside diameter of the terminal end shall not be greater 
than 0.840 inches (2.134 centimeters).
    (2) The terminal end shall have a straight section of at least 2.5 
inches (6.34 centimeters).
    (3) The retaining spring shall terminate at least 3.0 inches (7.6 
centimeters) from the terminal end.
    (g) The specifications in this paragraph (g) apply for any new 
nozzle installations used primarily for dispensing gasoline into marine 
vessels beginning January 1, 2009. (Note that nozzles meeting the 
specifications of this paragraph (g) also meet the specifications of 
paragraph (f) of this section. Note also that the additional 
specifications in this paragraph (g) do not apply for nozzles used 
primarily for dispensing gasoline into motor vehicles rather than 
marine vessels.) Every retailer and wholesale purchaser-consumer shall 
use nozzles meeting these specifications for any new construction or 
for nozzle replacements. This does not require replacement of existing 
nozzles for refueling marine vessels before they would be replaced for 
other reasons. The following specifications apply to spouts on new or 
replacement nozzles intended for dispensing gasoline into marine 
vessels:
    (1) The outside diameter of the terminal end shall have a diameter 
of 0.824  0.017 inches (2.093  0.043 
centimeters).
    (2) The spout shall include an aspirator hole for automatic shutoff 
positioned with a center that is 0.67  0.05 inches (1.70 
 0.13 centimeters) from the terminal end of the spout.
    (3) The terminal end shall have a straight section of at least 2.5 
inches (6.34 centimeters) with no holes or grooves other than the 
aspirator hole.
    (4) The retaining spring (if applicable) shall terminate at least 
3.0 inches (7.6 centimeters) from the terminal end.
* * * * *

PART 85--CONTROL OF AIR POLLUTION FROM MOBILE SOURCES

0
15. The authority citation for part 85 continues to read as follows:

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

Subpart Q--[Removed and reserved]

0
16. Remove and reserve Subpart Q, consisting of Sec. Sec.  85.1601 
through 85.1606.

Subpart R--[Amended]


Sec.  85.1703  [Amended]

0
17. Section 85.1703 is amended by removing and reserving paragraph (b).

0
18. Section 85.1713 is revised to read as follows:


Sec.  85.1713  Delegated-assembly exemption.

    The provisions of 40 CFR 1068.261 related to shipping engines that 
are not yet in their certified configuration apply for manufacturers of 
heavy-duty highway engines starting in the 2010 model year, with the 
following exceptions and clarifications:
    (a) The relevant prohibitions are in Clean Air Act section 203 (42 
U.S.C. 7522), rather than 40 CFR 1068.101.
    (b) References to equipment should be understood as references to 
vehicles.
    (c) The provisions related to reduced auditing rates in 40 CFR 
1068.261(d)(3)(iii) apply starting with the 2014 model year.
    (d) The provisions related to supplemental labeling described in 40 
CFR 1068.261(c)(7)(i) and (ii) apply starting with the 2010 model year.
    (e) The engine's model year does not change based on the date the 
vehicle manufacturer adds the aftertreatment device.

0
19. A new Sec.  85.1714 is added to subpart R to read as follows:


Sec.  85.1714  Replacement-engine exemption.

    (a) Engine manufacturers may use the provisions of 40 CFR 1068.240 
to exempt new replacement heavy-duty highway engines as specified in 
this section.
    (b) The following provisions from 40 CFR part 1068 apply for all 
complete and partially complete engines produced by an engine 
manufacturer choosing to produce any exempt replacement engines under 
this section:
    (1) The definition of engine in 40 CFR 1068.30.
    (2) The provisions of 40 CFR 1068.260 and 1068.262.
    (c) Notify us in writing that you intend to use the provisions of 
this section prior to producing such engines. An authorized 
representative of your company must approve and sign the notification. 
Your notification is considered to be your agreement to comply with all 
the requirements of this section.
    (d) Engine manufacturers choosing to use the provisions of this 
section may opt out by sending us written notice that they will no 
longer introduce into U.S. commerce engines exempted under this 
section.

0
20. Subpart Y is revised to read as follows:

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


Sec.  85.2401  Assessment of fees.

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

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

0
21. The authority citation for part 86 continues to read as follows:

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

Subpart N--[Amended]

0
22. Section 86.1305-2010 is amended by adding paragraph (h) to read as 
follows:


Sec.  86.1305-2010  Introduction; structure of subpart.

* * * * *
    (h) This paragraph (h) describes how testing performed prior to 
July 1, 2010 may be conducted using the test procedures of this subpart 
N rather than the corresponding provisions of 40 CFR part 1065 
otherwise required by this section. You must use good engineering 
judgment when testing under this paragraph (h), and must comply with 
the following provisions of 40 CFR part 1065:
    (1) Generate a map of your engine according to 40 CFR 
1065.510(b)(5)(ii) and generate test cycles according to 40 CFR 
1065.610. Validate your cycle according to 40 CFR 1065.514.
    (2) Follow the provisions of 40 CFR 1065.342 to verify the 
performance of any sample dryers in your system. Correct your 
measurements according to 40 CFR 1065.659, except use the value

[[Page 59179]]

of Kw in Sec.  1342-90(i) as the value of (1 - 
xH2Oexh) in Equation 1065.659-1.
    (3) Verify your NO2-to-NO converter according to 40 CFR 
1065.378.
    (4) For diesel engine testing, correct NOX emissions for 
intake-air humidity according to 40 CFR 1065.670.
    (5) You must comply with the provisions related to analyzer range 
and drift in 40 CFR 1065.550. If drift correction is required, correct 
your measurements according to 40 CFR 1065.672, but use the emission 
calculations specified in this subpart N rather than those specified in 
40 CFR 1065.650.
    (6) You must comply with 40 CFR 1065.125, 1065.127, and 1065.130, 
except for references to 40 CFR 1065.530(a)(1)(i), 1065.640, and 
1065.655.
    (7) Follow the provisions of 40 CFR 1065.370 to verify the 
performance of your CLD analyzer with respect to CO2 and 
H2O quench. You are not required to follow 40 CFR 
1065.145(d)(2), 1065.248, or 1065.750, which are referenced in 40 CFR 
1065.370.

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

0
23. The authority citation for part 89 continues to read as follows:

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

Subpart G--[Amended]


Sec.  89.614  [Removed]

0
24. Section 89.614 is removed.

Subpart K--[Amended]

0
25. Section 89.1003 is amended by revising paragraphs (b)(7)(iii), 
(b)(7)(iv), and (b)(7)(v) to read as follows:


Sec.  89.1003  Prohibited acts.

* * * * *
    (b) * * *
    (7) * * *
    (iii) If the engine being replaced was not subject to any emission 
standards under this part, the replacement engine must have a permanent 
label with your corporate name and trademark and 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.
    (iv) If the engine being replaced was subject to emission standards 
less stringent than those in effect when you produce the replacement 
engine, the replacement engine must have a permanent label with your 
corporate name and trademark and the following language, or similar 
alternate language approved by the Administrator:
    THIS ENGINE COMPLIES WITH U.S. EPA NONROAD EMISSION REQUIREMENTS 
FOR [Identify the appropriate emission standards (by model year, tier, 
or emission levels) for the replaced engine] ENGINES UNDER 40 CFR 
89.1003(b)(7). SELLING OR INSTALLING THIS ENGINE FOR ANY PURPOSE OTHER 
THAN TO REPLACE A [Identify the appropriate emission standards (by 
model year, tier, or emission levels) for the replaced engine] ENGINE 
MAY BE A VIOLATION OF FEDERAL LAW SUBJECT TO CIVIL PENALTY.
    (v) If the old engine was subject to emission standards less 
stringent than those in effect when you produce the replacement engine, 
you must make the replacement engine in a configuration identical in 
all material respects to the old engine. You may alternatively make the 
replacement engine in a configuration identical in all material 
respects to another certified engine of the same or later model year, 
as long as the engine is not certified with a family emission limit 
higher than that of the engine being replaced.
* * * * *

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

0
26. The authority citation for part 90 continues to read as follows:

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

Subpart A--[Amended]

0
27. Section 90.1 is amended by revising paragraphs (d)(1) and (d)(5) 
and adding paragraph (d)(8) to read as follows:


Sec.  90.1  Applicability.

* * * * *
    (d) * * *
    (1) Engines that are certified to meet the requirements of 40 CFR 
part 1051 or are otherwise subject to 40 CFR part 1051 (for example, 
engines used in snowmobiles and all-terrain vehicles). This part 
nevertheless applies to engines used in recreational vehicles if the 
manufacturer uses the provisions of 40 CFR 1051.145(a)(3) to exempt 
them from the requirements of 40 CFR part 1051. Compliance with the 
provisions of this part is a required condition of that exemption.
* * * * *
    (5) Engines certified to meet the requirements of 40 CFR part 1048 
or are otherwise subject to 40 CFR part 1048, subject to the provisions 
of Sec.  90.913.
* * * * *
    (8) Engines that are subject to emission standards under 40 CFR 
part 1054. See 40 CFR 1054.1 to determine when part 1054 applies. Note 
that certain requirements and prohibitions apply to engines built on or 
after January 1, 2010 if they are installed in equipment that will be 
used solely for competition, as described in 40 CFR 1054.1 and 40 CFR 
1068.1; those provisions apply instead of the provisions of this part 
90.
* * * * *

0
28. Section 90.2 is amended by adding paragraphs (d) and (e) to read as 
follows:


Sec.  90.2  Effective dates.

* * * * *
    (d) Engines used in emergency and rescue equipment as described in 
Sec.  90.1(d)(7) are subject to the provisions of this part through 
December 31, 2009. Starting January 1, 2010 the provisions in 40 CFR 
1054.660 apply instead of those in Sec.  90.1(d)(7).
    (e) Engines imported for personal use are subject to the provisions 
of Sec.  90.611 through December 31, 2009. Starting January 1, 2010 the 
provisions in 40 CFR 1054.630 apply instead of those in Sec.  90.611.

0
29. Section 90.3 is amended by adding a definition for ``Fuel line'' in 
alphabetical order to read as follows:


Sec.  90.3  Definitions.

* * * * *
    Fuel line has the meaning given in 40 CFR 1054.801.
* * * * *

Subpart B--[Amended]

0
30. Section 90.101 is revised to read as follows:


Sec.  90.101  Applicability.

    (a) The requirements of this subpart B are applicable to all 
nonroad engines and vehicles subject to the provisions of subpart A of 
this part.
    (b) In a given model year, you may ask us to approve the use of 
procedures for certification, labeling, reporting and recordkeeping, or 
other administrative requirements specified in 40 CFR part 1054 or 1068 
instead of the comparable procedures specified in this part 90. We may 
approve the request as long as it does not prevent us from ensuring 
that

[[Page 59180]]

you fully comply with the intent of this part.

0
31. Section 90.107 is amended as follows:
0
a. By revising paragraph (d)(11)(ii).
0
b. By revising paragraph (d)(12).
0
c. By adding paragraphs (d)(13) and (d)(14) to read as follows:


Sec.  90.107  Application for certification.

* * * * *
    (d) * * *
    (11) * * *
    (ii) Provide the applicable useful life as determined under Sec.  
90.105;
    (12) A statement indicating whether you expect the engine family to 
contain only nonroad engines, only stationary engines, or both;
    (13) Identification of an agent for service located in the United 
States. Service on this agent constitutes service on you or any of your 
officers or employees for any action by EPA or otherwise by the United 
States related to the requirements of this part; and
    (14) For imported engines, identification of the following starting 
with the 2010 model year:
    (i) The port(s) at which the manufacturer has imported engines over 
the previous 12 months.
    (ii) The names and addresses of the agents authorized to import the 
engines.
    (iii) The location of test facilities in the United States where 
the manufacturer can test engines if EPA selects them for testing under 
a selective enforcement audit, as specified in subpart F of this part.
* * * * *

0
32. Section 90.114 is amended by revising paragraph (g) to read as 
follows:


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

* * * * *
    (g) Manufacturers may add appropriate features to prevent 
counterfeit labels. For example, manufacturers may include the engine's 
unique identification number on the label.

0
33. Section 90.116 is amended by revising paragraph (d)(5) and removing 
and reserving paragraph (e)(1) to read as follows:


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

* * * * *
    (d) * * *
    (5) The engine class. Engines of different displacements that are 
within 15 percent of the largest displacement may be included within 
the same engine family as long as all the engines are in the same 
class;
* * * * *
    (e) * * *
    (1) [Reserved]
* * * * *

0
34. Section 90.120 is amended by adding paragraph (b)(3) to read as 
follows:


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

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

0
35. A new Sec.  90.127 is added to subpart B to read as follows:


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

    The following permeation standards apply to new nonhandheld engines 
and equipment with respect to fuel lines:
    (a) Emission standards and related requirements. New nonhandheld 
engines and equipment with a date of manufacture of January 1, 2009 or 
later that run on a volatile liquid fuel (such as gasoline) must meet 
the emission standards specified in paragraph (a)(1) or (a)(2) of this 
section as follows:
    (1) New nonhandheld engines and equipment must use only fuel lines 
that meet a permeation emission standard of 15 g/m\2\/day when measured 
according to the test procedure described in 40 CFR 1060.515.
    (2) Alternatively, new nonhandheld engines and equipment must use 
only fuel lines that meet standards that apply for these engines and 
equipment in California for the same model year (see 40 CFR 1060.810). 
This may involve SHED-based measurements for equipment or testing with 
fuel lines alone. If this involves SHED-based measurements, all 
elements of the emission control system must remain in place for fully 
assembled engines and equipment.
    (3) The emission standards in this section apply with respect to 
discrete fuel line segments of any length. Compliance may also be 
demonstrated using aggregated systems that include multiple sections of 
fuel line with connectors, and fittings. The standard applies with 
respect to the total permeation emissions divided by the wetted 
internal surface area of the assembly. Where it is not practical to 
determine the wetted internal surface area of the assembly, the 
internal surface area per unit length of the assembly may be assumed to 
be equal to the ratio of internal surface area per unit length of the 
hose section of the assembly.
    (4) The emission standards in this section apply over a useful life 
of five years.
    (5) Starting with the 2010 model year, fuel lines must be labeled 
in a permanent and legible manner with one of the following approaches:
    (i) By meeting the labeling requirements that apply for these 
engines and equipment in California.
    (ii) By identifying the certificate holder's corporate name or 
trademark, or the fuel line manufacturer's corporate name or trademark, 
and the fuel line's permeation level. For example, the fuel line may 
identify the emission standard from this section, the applicable SAE 
classification, or the family number identifying compliance with 
California standards. A continuous stripe or other pattern may be added 
to help identify the particular type or grade of fuel line.
    (6) The requirements of this section do not apply to auxiliary 
marine engines.
    (b) Certification requirements. Fuel lines subject to the 
requirements in this section must be covered by a certificate of 
conformity. Fuel line manufacturers or equipment manufacturers may 
apply for certification. Certification under this section must be based 
on emission data using the appropriate procedures that demonstrate 
compliance with the standard, including any of the following:
    (1) Emission data demonstrating compliance with fuel line 
permeation requirements for model year 2008 equipment sold in 
California. You may satisfy this requirement by presenting an approved 
Executive Order from the California Air Resources Board showing that 
the fuel lines meet the applicable standards in California. This may 
include an Executive Order from the previous model year if a new 
certification is pending.
    (2) Emission data demonstrating a level of permeation control that 
meets any of the following industry standards:
    (i) R11A specifications in SAE J30 as described in 40 CFR 1060.810.

[[Page 59181]]

    (ii) R12 specifications in SAE J30 as described in 40 CFR 1060.810.
    (iii) Category 1 specifications in SAE J2260 as described in 40 CFR 
1060.810.
    (iv) Emission data demonstrating compliance with the fuel line 
permeation standards in 40 CFR 1051.110.
    (c) Prohibitions. (1) Except as specified in paragraph (c)(2) of 
this section, introducing engines or equipment into U.S. commerce 
without meeting all the requirements of this section violates Sec.  
90.1003(a)(1).
    (2) It is not a violation to introduce your engines into U.S. 
commerce if equipment manufacturers add fuel lines when installing your 
engines in their equipment. However, you must give equipment 
manufacturers any appropriate instructions so that fully assembled 
equipment will meet all the requirements in this section, as described 
in Sec.  90.128.

0
36. A new Sec.  90.128 is added to subpart B to read as follows:


Sec.  90.128  Installation instructions.

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

0
37. A new Sec.  90.129 is added to subpart B to read as follows:


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

    The permeation standards of this section apply to certain new 
handheld engines and equipment with respect to fuel tanks. For the 
purposes of this section, fuel tanks do not include fuel caps.
    (a) Emission standards and related requirements. (1) New handheld 
engines and equipment with a date of manufacture of January 1, 2009 or 
later that run on a volatile liquid fuel (such as gasoline) and have 
been certified to meet applicable fuel tank permeation standards in 
California must meet one of the following emission standards:
    (i) Engines and equipment must use only fuel tanks that meet a 
permeation emission standard of 2.0 g/m2/day when measured according to 
the applicable test procedure specified by the California Air Resources 
Board.
    (ii) Engines and equipment must use only fuel tanks that meet the 
fuel tank permeation standards in 40 CFR 1060.103.
    (iii) Engines and equipment must use only fuel tanks that meet 
standards that apply for these engines in California for the same model 
year. This may involve SHED-based measurements for equipment or testing 
with fuel tanks alone. If this involves SHED-based measurements, all 
elements of the emission-control system must remain in place for fully 
assembled engines and equipment.
    (2) Engine and equipment manufacturers may generate or use emission 
credits to show compliance with the requirements of this section under 
the averaging program as described in 40 CFR part 1054, subpart H.
    (3) The emission standards in this section apply over a useful life 
of two years.
    (4) Equipment must be labeled in a permanent and legible manner 
with one of the following approaches:
    (i) By meeting the labeling requirements that apply for equipment 
in California.
    (ii) By identifying the certificate holder's corporate name or 
trademark, or the fuel tank manufacturer's corporate name or trademark. 
Also include the family number identifying compliance with California 
standards or state: ``THIS FUEL TANK COMPLIES WITH U.S. EPA 
STANDARDS.'' This label may be applied to the fuel tank or it may be 
combined with the emission control information label required in Sec.  
90.114. If the label information is not on the fuel tank, the label 
must include a part identification number that is also permanently 
applied to the fuel tank.
    (5) The requirements of this section do not apply to engines or 
equipment with structurally integrated nylon fuel tanks (as defined in 
40 CFR 1054.801).
    (b) Certification requirements. Fuel tanks subject to the 
requirements in this section must be covered by a certificate of 
conformity. Fuel tank manufacturers or equipment manufacturers may 
apply for certification. Certification under this section must be based 
on emission data using the appropriate procedures that demonstrate 
compliance with the standard. You may satisfy this requirement by 
presenting an approved Executive Order from the California Air 
Resources Board showing that the fuel tanks meet the applicable 
standards in California. This may include an Executive Order from the 
previous model year for cases where new certification based on 
carryover of emission data from the previous model year is pending.
    (c) Prohibitions. Introducing equipment into U.S. commerce without 
meeting all the requirements of this section violates Sec.  
90.1003(a)(1).

Subpart C--[Amended]

0
38. Section 90.201 is revised to read as follows:


Sec.  90.201  Applicability.

    (a) The requirements of this subpart C are applicable to all Phase 
2 spark-ignition engines subject to the provisions of subpart A of this 
part except as provided in Sec.  90.103(a). These provisions are not 
applicable to any Phase 1 engines. Participation in the averaging, 
banking and trading program is voluntary, but if a manufacturer elects 
to participate, it must do so in compliance with the regulations set 
forth in this subpart. The provisions of this subpart are applicable 
for HC+NOX (NMHC+NOX) emissions but not for CO 
emissions.
    (b) See 40 CFR 1054.740 for special provisions for using emission 
credits generated under this part 90 from Phase 2 engines to 
demonstrate compliance with engines certified under 40 CFR part 1054.
    (c) To the extent specified in 40 CFR part 60, subpart JJJJ, 
stationary engines certified under this part and subject to the 
standards of 40 CFR part 60, subpart JJJJ, may participate in the 
averaging, banking and trading program described in this subpart.

0
39. Section 90.210 is amended by adding paragraph (i) to read as 
follows:


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

* * * * *
    (i) For 2007 and later model years, include in your end-of-year and 
final reports an accounting to show a separate balance of emission 
credits for handheld and nonhandheld engines. Use your best judgment to 
differentiate your current balance of banked credits for

[[Page 59182]]

handheld and nonhandheld engines. You may exchange handheld and 
nonhandheld credits to demonstrate compliance with the requirements of 
this part 90. However, emission credits you generate for banking under 
this part 90 will be restricted for engines subject to the requirements 
of 40 CFR part 1054.

Subpart E--[Amended]

0
40. Section 90.426 is amended as follows:
0
a. By revising paragraph (b).
0
b. By revising paragraph (c)(1).
0
c. By revising paragraph (d).
0
d. By revising paragraph (i).
0
e. By adding paragraph (j).


Sec.  90.426  Dilute emission sampling calculations--gasoline fueled 
engines.

* * * * *
    (b) The mass flow rate, Wi in g/hr, of an emission for 
mode i is determined from the following equation:

[GRAPHIC] [TIFF OMITTED] TR08OC08.081

Where:

QI = Volumetric flow rate [m\3\/HR at stp].
Density = Density of a specific emission (DensityHC, DensityCO, 
DensityCO2, Density NOX) [g/m\3\].
DFi = Dilution factor of the dilute exhaust during mode 
i.
CDi = Concentration of the emission (HC, CO, 
NOX) in dilute exhaust extracted from the CVS during mode 
i [ppm].
CBi = Concentration of the emission (HC, CO, 
NOX) in the background sample during mode i [ppm].
STP = Standard temperature and pressure. All volumetric calculations 
made for the equations in this section are to be corrected to a 
standard temperature of 20 [deg]C and a standard pressure of 101.3 
kPa.

    (c) * * *
    (1) The value of DensityHC above is calculated based on 
the assumption that the fuel used has a hydrogen to carbon ratio of 
1:1.85. For other fuels DensityHC can be calculated from the 
following formula:
[GRAPHIC] [TIFF OMITTED] TR08OC08.082

Where:

MHC = The molecular weight of the hydrocarbon molecule 
divided by the number of carbon atoms in the molecule [g/mole].
RSTP = Ideal gas constant for a gas at STP = 0.024065 
[m\3\[middot]mole]
* * * * *
    (d) The dilution factor, DF, is teh ratio of the volumetric flow 
rate of the background air to that of the raw engine exhaust. The 
following formula is used to determine DF:
[GRAPHIC] [TIFF OMITTED] TR08OC08.083

Where:

CDHC = Concentration of HC in the dilute sample [ppm].
CDCO = Concentration of CO in the dilute sample [ppm].
CDCO2 = Concentration of CO2 in the dilute 
sample [ppm].
* * * * *
    (i) The mass of fuel consumed during the mode smpling period, 
MFUEL, can be calculated from the following equation:
[GRAPHIC] [TIFF OMITTED] TR08OC08.084

Where:

GS = Mass of carbon measured during the mode sampling 
period [g].
R2 = The fuel carbon weight fraction, which is the mass 
of carbon in fuel per mass of fuel [g/g].

    (j) The grams of carbon measured during the mode, GS, 
can be calculated from the following equation:
[GRAPHIC] [TIFF OMITTED] TR08OC08.085

Where:

HCmass = mass of hydrocarbon emissions for the mode 
sampling period [grams].
COmass mass of carbon monoxide emissions for the mode 
sample period [grams].
CO2mass = mass of carbon dioxide emissions for the mode 
sample period [grams].
[alpha] = The atomic hydrogen-to-carbon ratio of the fuel.

Subpart G--[Amended]

0
41. Section 90.601 is amended by adding paragraph (c) to read as 
follows:


Sec.  90.601  Applicability.

* * * * *
    (c) Importers must complete the appropirate EPA declaration form 
before importing an engine. These forms are available on the Internet 
at http://www.epa.gov/OTAQ/imports/ or by phone at 734-214-4100. 
Importers must keep the forms for five years and make them available 
promptly upon request.
0
42. Section 90.615 is revised to read as follows:


Sec.  90.615  Model year restrictions related to imported engines and 
equipment.

    The provisions of 40 CFR 1068.360 apply starting January 1, 2009. 
These provisions limit the importation of engines or equipment after 
new emission standards have started to apply if the engines or 
equipment were built before the emission standards took effect.

Subpart K--[Amended]

0
43. Section 90.1003 is amended by revising paragraph (b)(3) to read as 
follows:


Sec.  90.1003  Prohibited acts.

* * * * *
    (b) * * *
    (3) The followiong provisions apply for converting nonroad engines 
to use alternative fuels.
    (i) Until December 31, 2009, converting an engine to use a clean 
alternative fuel (as defined in Title II of the Act) is not considered 
a prohibited act under paragraph (a) of this section if the engine 
complies with the applicable standard when operating on the alternative 
fuel. Also, in the case of engines converted to dual fuel or flexible 
use, the action must result in the proper functioning of the nonroad 
engine when it operates on conventional fuel.
    (ii) The provisions of 40 CFR 1054.645 apply starting January 1, 
2010.
* * * * *

0
44. A new Sec.  90.1007 is added to subpart K to read as follows:


Sec.  90.1007  Bonding requirements related to compliance, enforcement, 
and warranty assurance.

    The bonding provisions of 40 CFR 1054.120(f)(4) and 1054.690 apply 
for all 2010 and later model year engines starting January 1, 2010. 
These provisions include measures to ensure that certifying 
manufacturers are able to cover any potential compliance or enforcement 
actions under the Clean Air Act and to meet their warranty obligations.

Subpart L--[Amended]

0
45. Section 90.1103 is amended by adding paragraph (e) to read as 
follows:


Sec.  90.1103  Emission warranty, warranty period.

* * * * *

[[Page 59183]]

    (e) Starting with the 2010 model year, you must meet the conditions 
specified in 40 CFR 1054.120(f) to ensure that owners will be able to 
promptly obtain warranty repairs.
    Describe in your application for certification how you will meet 
these conditions.

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

0
46. The authority citation for part 91 continues to read as follows:

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

Subpart A--[Amended]

0
47. Section 91.1 is amended by adding paragraph (d) to read as follows:


Sec.  91.1  Applicability.

* * * * *
    (d) This part does not apply to engines that are subject to 
emission standards under 40 CFR part 1045. See 40 CFR 1045.1 to 
determine when that part 1045 applies. Note that certain requirements 
and prohibitions apply to engines built on or after January 1, 2010 if 
they are installed in equipment that will be used solely for 
competition, as described in 40 CFR 1045.1 and 40 CFR 1068.1; those 
provisions apply instead of the provisions of this part 91.

Subpart B--[Amended]

0
48. Section 91.101 is revised to read as follows:


Sec.  91.101  Applicability.

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

0
49. Section 91.107 is amended by adding paragraph (d)(12) to read as 
follows:


Sec.  91.107  Application for certification.

* * * * *
    (d) * * *
    (12) Identification of an agent for service located in the United 
States. Service on this agent constitutes service on you or any of your 
officers or employees for any action by EPA or otherwise by the United 
States related to the requirements of this part.
* * * * *
0
50. Section 91.119 is amended by adding paragraph (b)(3) to read as 
follows:


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

* * * * *
    (b) * * *
    (3