Control of Emissions of Air Pollution From Nonroad Diesel Engines and Fuel [pp. 38957-39006]

[Federal Register: June 29, 2004 (Volume 69, Number 124)]
[Rules and Regulations]
[Page 38957-39006]
From the Federal Register Online via GPO Access [wais.access.gpo.gov]
[DOCID:fr29jn04-21]
[[Page 38958]]

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ENVIRONMENTAL PROTECTION AGENCY
40 CFR Parts 9, 69, 80, 86, 89, 94, 1039, 1048, 1051, 1065, and 1068
[OAR-2003-0012; FRL-7662-4]
RIN 2060-AK27

Control of Emissions of Air Pollution From Nonroad Diesel Engines
and Fuel

AGENCY: Environmental Protection Agency (EPA).
ACTION: Final rule.

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SUMMARY: Nonroad diesel engines contribute considerably to our nation's
air pollution. These engines, used primarily in construction,
agricultural, and industrial applications, are projected to continue to
contribute large amounts of particulate matter, nitrogen oxides, and
sulfur oxides, all of which contribute to serious public health
problems in the United States. These problems include premature
mortality, aggravation of respiratory and cardiovascular disease,
aggravation of existing asthma, acute respiratory symptoms, chronic
bronchitis, and decreased lung function. We believe that diesel exhaust
is likely to be carcinogenic to humans by inhalation.
Today, EPA is adopting new emission standards for nonroad diesel
engines and sulfur reductions in nonroad diesel fuel that will
dramatically reduce harmful emissions and will directly help States and
local areas recently designated as 8-hour ozone nonattainment areas to
improve their air quality. This comprehensive national program
regulates nonroad diesel engines and diesel fuel as a system. New
engine standards will begin to take effect in the 2008 model year,
phasing in over a number of years. These standards are based on the use
of advanced exhaust emission control devices. We estimate particulate
matter reductions of 95 percent, nitrogen oxides reductions of 90
percent, and the virtual elimination of sulfur oxides from nonroad
engines meeting the new standards. Nonroad diesel fuel sulfur
reductions of more than 99 percent from existing levels will provide
significant health benefits as well as facilitate the introduction of
high-efficiency catalytic exhaust emission control devices as these
devices are damaged by sulfur. These fuel controls will be phased-in
starting in mid-2007. Today's nonroad final rule is largely based on
the Environmental Protection Agency's 2007 highway diesel program.
To better ensure the benefits of the standards are realized in-use
and throughout the useful life of these engines, we are also adopting
new test procedures, including not-to-exceed requirements, and related
certification requirements. The rule also includes provisions to
facilitate the transition to the new engine and fuel standards and to
encourage the early introduction of clean technologies and clean
nonroad diesel fuel. We have also developed provisions for both the
engine and fuel programs designed to address small business considerations.
The requirements in this rule will result in substantial benefits
to public health and welfare through significant reductions in
emissions of nitrogen oxides and particulate matter, as well as
nonmethane hydrocarbons, carbon monoxide, sulfur oxides, and air
toxics. We are now projecting that by 2030, this program will reduce
annual emissions of nitrogen oxides and particulate matter by 738,000
and 129,000 tons, respectively. These emission reductions will prevent
12,000 premature deaths, over 8,900 hospitalizations, and almost a
million work days lost, and will achieve other quantifiable benefits
every year. The total benefits of this rule will be approximately $80
billion annually by 2030. The substantial health and welfare benefits
we are projecting for this final action exceed those we anticipated at
the time of this proposal. Costs for both the engine and fuel
requirements will be many times less, at approximately $2 billion annually.

DATES: This final rule is effective on August 30, 2004.
The incorporation by reference of certain publications listed in
this regulation is approved by the Director of the Federal Register as
of August 30, 2004.

ADDRESSES: EPA has established a docket for this action under Docket ID
Nos. OAR-2003-0012 and A-2001-28. All documents in the docket are
listed in the EDOCKET index at http://www.epa.gov/edocket. Although
listed in the index, some information is not publicly available, i.e.,
CBI or other information whose disclosure is restricted by statute.
Certain other material, such as copyrighted material, is not placed on
the Internet and will be publicly available only in hard copy form.
Publicly available docket materials are available either electronically
in EDOCKET or in hard copy at the Air Docket in the EPA Docket Center,
EPA/DC, EPA West, Room B102, 1301 Constitution Ave., NW, Washington,
DC. The Public Reading Room is open from 8:30 a.m. to 4:30 p.m., Monday
through Friday, excluding legal holidays. The telephone number for the
Public Reading Room is (202) 566-1744, and the telephone number for the
Air Docket is (202) 566-1742.

FOR FURTHER INFORMATION CONTACT: Carol Connell, Assessment and
Standards Division, Office of Transportation and Air Quality,
Environmental Protection Agency, 2000 Traverwood Drive, Ann Arbor, MI
48105; telephone number: (734) 214-4349; fax number: (734) 214-4050; e-
mail address: connell.carol@epa.gov, or Assessment and Standards
Division Hotline; telephone number: (734) 214-4636; e-mail address:
asdinfo@epa.gov.

SUPPLEMENTARY INFORMATION:

Does This Action Apply To Me?

This action may affect you if you produce or import new diesel
engines which are intended for use in nonroad vehicles or equipment,
such as agricultural and construction equipment, or if you produce or
import such nonroad vehicles or equipment. It may also affect you if
you convert nonroad vehicles or equipment, or the engines used in them,
to use alternative fuels. It may also affect you if you produce,
import, distribute, or sell nonroad diesel fuel.
The following table gives some examples of entities that may have
to follow the regulations. But because these are only examples, you
should carefully examine the regulations in 40 CFR parts 80, 89, 1039,
1065, and 1068. If you have questions, call the person listed in the
FOR FURTHER INFORMATION CONTACT section of this preamble:

------------------------------------------------------------------------
Examples of
Category NAICS SIC potentially
codes\a\ codes\b\ regulated entities
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Industry.................... 333618 3519 Manufacturers of new
nonroad diesel
engines.
Industry.................... 333111 3523 Manufacturers of
farm machinery and
equipment.
Industry.................... 333112 3524 Manufacturers of
lawn and garden
tractors (home).
Industry.................... 333924 3537 Manufacturers of
industrial trucks.
Industry.................... 333120 3531 Manufacturers of
construction
machinery.

[[Page 38959]]

Industry.................... 333131 3532 Manufacturers of
mining machinery
and equipment.
Industry.................... 333132 3533 Manufacturers of oil
and gas field
machinery and
equipment.
Industry.................... 811112 7533 Commercial importers
of vehicles and
vehicle components.
811198 7549 ....................
Industry.................... 324110 2911 Petroleum refiners.
Industry.................... 422710 5171 Diesel fuel
marketers and
distributors.
422720 5172 ....................
Industry.................... 484220 4212 Diesel fuel
carriers.
484230 4213 ....................
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Notes:
\a\ North American Industry Classification System (NAICS).
\b\ Standard Industrial Classification (SIC) system code.

How Can I Get Copies of This Document and Other Related Information?

Docket. EPA has established an official public docket for this
action under Docket ID No. OAR-2003-0012 at http://www.epa.gov/edocket.
The official public docket consists of the documents specifically
referenced in this action, any public comments received, and other
information related to this action. Although a part of the official
docket, the public docket does not include Confidential Business
Information (CBI) or other information whose disclosure is restricted
by statute. The official public docket is the collection of materials
that is available for public viewing at the Air Docket in the EPA
Docket Center, (EPA/DC) EPA West, Room B102, 1301 Constitution Ave.,
NW, Washington, DC. The EPA Docket Center Public Reading Room is open
from 8:30 a.m. to 4:30 p.m., Monday through Friday, excluding legal
holidays. The telephone number for the Reading Room is (202) 566-1742,
and the telephone number for the Air Docket is (202) 566-1742.
Electronic Access. You may access this Federal Register document
electronically through the EPA Internet under the ``Federal Register''
listings at http://www.epa.gov/fedrgstr/.
An electronic version of the public docket is available through
EPA's electronic public docket and comment system, EPA Dockets. You may
use EPA Dockets at http://www.regulations.gov/ to view public comments,
access the index listing of the contents of the official public docket,
and to access those documents in the public docket that are available
electronically. Although not all docket materials may be available
electronically, you may still access any of the publicly available
docket materials through the docket facility identified above. Once in
the system, select ``search,'' then key in the appropriate docket
identification number.

Outline of This Preamble

I. Overview
A. What Is EPA Finalizing?
B. Why Is EPA Taking This Action?
II. Nonroad Engine Standards
A. What Are the New Engine Standards?
B. Are the New Standards Feasible?
C. Why Do We Need 15ppm Sulfur Diesel Fuel?
III. Requirements for Engine and Equipment Manufacturers
A. Averaging, Banking, and Trading
B. Transition Provisions for Equipment Manufacturers
C. Engine and Equipment Small Business Provisions (SBREFA)
D. Certification Fuel
E. Temporary In-Use Compliance Margins
F. Test Cycles
G. Other Test Procedure Issues
H. Engine Power
I. Auxiliary Emission Control Devices and Defeat Devices
J. Not-To-Exceed Requirements
K. Investigating and Reporting Emission-Related Defects
L. Compliance With the Phase-In Provisions
M. Incentive Program for Early or Very Low Emission Engines
N. Labeling and Notification Requirements
O. General Compliance
P. Other Issues
Q. Highway Engines
R. Changes That Affect Other Engine Categories
IV. Our Program for Controlling Nonroad, Locomotive and Marine
Diesel Fuel Sulfur
A. Nonroad, Locomotive and Marine Diesel Fuel Quality Standards
B. Hardship Relief Provisions for Qualifying Refiners
C. Special Provisions for Alaska and the Territories
D. NRLM Diesel Fuel Program Design
E. How Are State Diesel Fuel Programs Affected by the Sulfur
Diesel Program?
F. Technological Feasibility of the 500 and 15 ppm Sulfur Diesel
Fuel Program
G. What Are the Potential Impacts of the 15 ppm Sulfur Diesel
Program on Lubricity and Other Fuel Properties?
H. Refinery Air Permitting
V. Nonroad, Locomotive and Marine Diesel Fuel Program: Details of
the Compliance and Enforcement Provisions
A. Special Fuel Provisions and Exemptions
B. Additional Requirements for Refiners and Importers
C. Requirements for Parties Downstream of the Refinery or Import
Facility
D. Diesel Fuel Sulfur Sampling and Testing Requirements
E. Selection of the Marker for Heating Oil
F. Fuel Marker Test Method
G. Requirements for Record-keeping, Reporting, and PTDs
H. Liability and Penalty Provisions for Noncompliance
I. How Will Compliance With the Sulfur Standards Be Determined?
VI. Program Costs and Benefits
A. Refining and Distribution Costs
B. Cost Savings to the Existing Fleet From the Use of Low Sulfur Fuel
C. Engine and Equipment Cost Impacts
D. Annual Costs and Cost Per Ton
E. Do the Benefits Outweigh the Costs of the Standards?
F. Economic Impact Analysis
VII. Alternative Program Options Considered
A. Summary of Alternatives
B. Introduction of 15 ppm Nonroad Diesel Sulfur Fuel in One Step
C. Applying the 15 ppm Sulfur Cap to Locomotive and Marine Diesel Fuel
D. Other Alternatives
VIII. Future Plans
A. Technology Review
B. Test Procedure Issues
C. In-use Testing
D. Engine Diagnostics
E. Future NO_X Standards for Engines in Mobile
Machinery Over 750 hp
F. Emission Standards for Locomotive and Marine Diesel Engines
G. Retrofit Programs
H. Reassess the Marker Specified for Heating Oil
IX. Public Participation
X. Statutory and Executive Order Reviews
A. Executive Order 12866: Regulatory Planning and Review
B. Paperwork Reduction Act
C. Regulatory Flexibility Act (RFA), as amended by the Small
Business Regulatory Enforcement Fairness Act of 1996 (SBREFA), 5
U.S.C. 601 et. seq
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

[[Page 38960]]

H. Executive Order 13211: Actions That Significantly Affect
Energy Supply, Distribution, or Use
I. National Technology Transfer Advancement Act
J. Congressional Review Act
XI. Statutory Provisions and Legal Authority

I. Overview

EPA today is completing the third recent major program to reduce
emissions from the nation's mobile sources. Today's final rule
establishes standards for nonroad diesel engines and fuel and builds on
the recently adopted Tier 2 program for cars and light trucks and the
2007 highway diesel program for on-highway diesel engines. These three
programs have in common large reductions in sulfur levels in fuel that
will not only achieve public health benefits but also facilitate the
introduction of advanced emissions control technologies. In 1996,
emissions from land-based nonroad, marine, and locomotive diesel
engines were estimated to be about 40 percent of the total mobile
source inventory of PM_2.5 (particulate matter less than 2.5
microns in diameter) and 25 percent of the NO_X (nitrogen
oxides) inventory. Without today's final rule, these contributions
would be expected to grow to 44 percent and 47 percent by 2030 for
PM_2.5 and NO_X, respectively. By themselves, land-
based nonroad diesel engines are a very large part of the diesel mobile
source PM_2.5 inventory, contributing about 47 percent in
1996, and growing to 70 percent of this inventory by 2020 without
today's final rule. In order to meet the Clean Air Act's goal of
cleaning up the nation's air, emissions reductions from the nonroad
sector are necessary.
This program begins to get important emission reductions in 2008,
and by 2030 we estimate that this program will reduce over 129,000 tons
PM_2.5 and 738,000 tons of NO_X annually. These
emission reductions will be directly helpful to the 474 counties
nationwide that have been recently designated as nonattainment areas
for the 8-hour ozone standard and for counties that will be designated
as nonattainment for PM_2.5 later this year. The resulting
ambient PM_2.5 and NO_X reductions correspond to
public health improvements in 2030 including approximately 12,000 fewer
premature mortalities, 15,000 fewer heart attacks, 1 million fewer lost
days of work due to adults with respiratory symptoms, 5.9 million fewer
days when adults have to restrict their activities due to respiratory
symptoms, and almost 6,000 emergency room visits for asthma attacks in
children. Our projections in this final rule for public health and
welfare improvements are greater than estimated at proposal.
This final rule sets out emission standards for nonroad diesel
engines--engines used mainly in construction, agricultural, industrial
and mining operations--that will achieve reductions in PM and
NO_X emissions levels in excess of 95 percent and 90 percent
respectively. This action also regulates nonroad diesel fuel for the
first time by reducing sulfur levels in this fuel more than 99 percent
to 15 parts per million (ppm). These provisions mirror those already in
place for highway diesel engines, which will lead to the introduction
of 15 ppm sulfur diesel fuel, followed by stringent engine standards in
that sector beginning in 2007 based on advanced aftertreatment
technologies. We believe it is highly appropriate to bring the same
types of expected advanced aftertreatment technologies to the nonroad
market as soon as possible and we believe today's nonroad fuel and
engine program represents the next step in a feasible progression in
the application of clean technologies to nonroad diesel engines and the
associated diesel fuel.
As we did with the proposed nonroad rulemaking, we followed
specific principles when developing this final rule. First, the program
achieves reductions in NO_X, sulfur oxides (SO_X),
and PM emissions as early as possible. Second, it does so by
implementing the fuel program as soon as possible while at the same
time not interfering with the implementation and expected benefits of
introducing ultra low sulfur fuel (diesel fuel containing no greater
than 15 ppm sulfur) in the highway market as required by the 2007
highway diesel rule. Next, we are generally treating vehicles and fuels
as a system, that is promulgating engine and fuel standards in tandem
in order to cost-effectively achieve the greatest emission reductions.
Lastly, the program provides sufficient lead time to allow the
migration of advanced emissions control technologies from the highway
sector to nonroad diesel engines as well as the expansion of ultra low
sulfur diesel fuel production to the nonroad market.
The May 2003 proposed rulemaking culminated a multi-year effort to
develop control strategies for nonroad engines. EPA worked
collaboratively with stakeholders from industry, state and local
government, and public health organizations in putting together its
comprehensive (and widely praised) new engine standards and sulfur fuel
controls. We received about 150,000 comments on the proposal, almost
all of them in support. We held three public hearings on the proposal
and have participated in scores of meetings with commenters in
developing the provisions of today's final rule. An important aspect of
this collaborative development effort has been EPA's coordination with
other governments in helping to further world harmonization of nonroad
engine controls and fuel sulfur levels. Information gathered in these
comments and discussions, taken in context with the principles
described above, has been the basis for our action today.
In summary, this rule sets out engine standards and emission test
procedures (including not-to-exceed requirements) for new nonroad
diesel engines, and sulfur control requirements for diesel fuel used in
land-based nonroad, locomotive, and marine engines (NRLM fuel).
Beginning in 2008, the new Tier 4 engine standards for five power
categories for engines from under 25 horsepower (hp) to above 750
horsepower will be phased in. New engine emissions test procedures will
be phased in along with these new standards to better ensure emissions
control over real-world engine operation and to help provide for
effective compliance determination. The sulfur reductions to land-based
nonroad diesel fuel will be accomplished in two steps, with an interim
step from currently uncontrolled levels to a 500 ppm cap starting in
June, 2007 and the final step to 15 ppm in June, 2010. This change in
fuel quality will directly lead to important health and welfare
benefits associated with the reduced generation of sulfate PM and
SO_X. Even more important, introduction of 15 ppm sulfur
nonroad diesel fuel facilitates the introduction of advanced
aftertreatment devices for nonroad engines.
Although we did not propose to control locomotive and marine diesel
fuel sulfur levels to 15 ppm in the NPRM, recognizing the important
environmental and public welfare benefits that such a program could
enable, we have decided to finalize this second step to 15 ppm sulfur
fuel control program for locomotive and marine diesel fuel beginning in
2012. Locomotive and marine diesel fuel will first be reduced from
current uncontrolled levels to a 500 ppm cap starting in June 2007 and
the second step down to a 15 ppm cap will take place in June, 2012.
While we have chosen to reduce sulfur levels in locomotive and marine
diesel fuel to 15 ppm in this rulemaking without adopting corresponding
engine controls, we note that the Agency has already begun work to
promulgate appropriate

[[Page 38961]]

new standards for these engines.\1\ The monetized health and welfare
benefits associated with further sulfur reduction to 15 ppm outweigh
the costs of the sulfur reductions. Also, doing so now allows for the
promulgation of a single integrated fuel program and provides the
refining industry with long term predictability for sulfur control.
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\1\ EPA is issuing an Advanced Notice of Proposed Rulemaking for
locomotive and marine engine standards as part of this effort.
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The requirements in this rule will result in substantial benefits
to public health and welfare and the environment through significant
reductions in NO_X and PM as well as nonmethane hydrocarbons
(NMHC), carbon monoxide (CO), SO_X, and air toxics. As noted,
by 2030 this program will reduce annual emissions of NO_X and
PM by 738,000 and 129,000 tons, respectively. We estimate these annual
emission reductions will prevent 12,000 premature deaths, over 8,900
hospitalizations, 15,000 nonfatal heart attacks, and approximately 1
million days that people miss work because of respiratory symptoms,
among quantifiable benefits. The overall quantifiable benefits will
total $83 billion annually by 2030 using a 3 percent discount rate and
$78 billion using a 7 percent discount rate at a cost of approximately
$2 billion, with a 30-year net present value for the benefits of $805
billion at 3 percent discounting and $352 billion at 7 percent
discounting at a net present value cost of $27 billion at 3 percent
discounting and $14 billion at 7 percent discounting. Clearly the
benefits of this program dramatically outweigh its cost at a ratio of
approximately 40:1 in 2030.

A. What Is EPA Finalizing?

As part of the proposed rulemaking, we set out very detailed
provisions for new engine exhaust emission controls, sulfur limitations
in nonroad and locomotive/marine diesel fuels, test procedures,
compliance requirements, and other information. We also looked at a
number of alternative program options, such as requiring refiners to
reduce sulfur from uncontrolled levels to 15 ppm in one step in 2008.
We continue to believe that the main program options set out in the
proposal are feasible and the most cost-effective requirements, taking
into account other factors such as lead time and interaction with the
highway diesel program, so we are generally adopting the engine and
fuel provisions which we proposed.
1. Nonroad Diesel Engine Emission Standards
Today's action adopts Tier 4 standards for nonroad diesel engines
of all horsepower ratings. These standards are technology-neutral in
the sense that manufacturers are the responsible party in determining
which emission control technologies will be needed to meet the
requirements. Applicable emissions standards are determined by model
year for each of five engine power band categories. For engines less
than 25 hp, we are adopting a new engine standard for PM of 0.30 g/bhp-
hr (grams per brake-horsepower-hour) beginning in 2008, and leaving the
previously-set 5.6 g/bhp-hr combined standard for NMHC+NO_X
in place. For engines of 25 to 75 hp, we are adopting standards
reflecting approximately 50 percent reductions in PM control from
today's engines, again applicable beginning in 2008. Then, starting in
2013, standards of 0.02 g/bhp-hr for PM and 3.5 g/bhp-hr for
NMHC+NO_X will apply for this power category. For engines of
75 to 175 hp, the standards will be 0.01 g/bhp-hr for PM, 0.30 g/bhp-hr
for NO_X and 0.14 g/bhp-hr for NMHC starting in 2012, with
the NO_X and NMHC standards phased in over a period of three
to four years in order to address lead time, workload, and feasibility
considerations. These same standards will apply to engines of 175 to
750 hp as well starting in 2011, with a similar phase-in. These PM,
NO_X, and NMHC standards and phase-in schedules are similar
in stringency to the 2007 highway diesel standards and are expected to
require the use of high-efficiency aftertreatment systems to ensure
compliance.
For engines above 750 hp, we are requiring PM and NMHC control to
0.075 g/bhp-hr and 0.30 g/bhp-hr, respectively, starting in 2011. More
stringent standards take effect in 2015 with PM standards of 0.02 g/
bhp-hr (for engines used in generator sets) and 0.03 g/bhp-hr (for non-
generator set engines), and an NMHC standard of 0.14 g/bhp-hr. The
NO_X standard in 2011 will be 0.50 g/bhp-hr for generator set
engines above 1200 hp, and 2.6 g/bhp-hr for all other engines in the
above 750 hp category. This application of advanced NO_X
emission control technologies to generator set engines above 1200 hp
will provide substantial NO_X reductions and will occur
earlier than we had proposed in the NPRM. In 2015, the 750-1200 hp
generator set engines will be added to the stringent 0.50 g/bhp-hr
NO_X requirement as well. The long-term NO_X
standard for engines not used in generator sets (mobile machinery) will
be addressed in a future action (we are currently considering such an
action in the 2007 time frame).
We are also continuing the averaging, banking, and trading
provisions engine manufacturers can use to demonstrate compliance with
the standards. We also are continuing provisions providing
flexibilities which equipment manufacturers may use to facilitate
transition to compliance with the new standards. In addition, we are
including turbocharged diesels in the existing regulation of crankcase
emissions, effective in the same year that the new standards first
apply in each power category.
As discussed at length in the proposal, new test procedures and
compliance provisions, especially the not-to-exceed and transient
tests, are necessary to ensure the benefits of the standards being
adopted today are achieved when the aftertreatment-based standards go
into place. We are therefore adopting the proposed test procedures and
compliance provisions, with slight modifications designed to better
implement the provisions, in today's rule. We continue to believe the
new transient test, cold start transient test, and not-to-exceed test
procedures and standards will all help achieve our goal of emissions
reductions being achieved in actual engine operation.
As noted, the final rule also continues, and in some cases
modifies, existing provisions that will facilitate the transition to
the new engine and fuel standards. Many of these provisions will help
small business engine and equipment manufacturers meet the
requirements. They will also aid manufacturers in managing their
development of engines and equipment that will meet our new standards.
2. Nonroad, Locomotive, and Marine Diesel Fuel Quality Standards
The fuel program requirements are very similar to those included in
the proposal, with two notable exceptions. The first involves the
standards themselves with the inclusion of locomotive and marine diesel
fuel in the 15 ppm standard. The second addresses the compliance
provisions designed to ensure the effectiveness of the program.
We are adopting the two-step approach to sulfur control, with all
land-based nonroad, locomotive, and marine diesel fuel going from
uncontrolled sulfur levels of approximately 3,000 ppm sulfur to 500 ppm
in June, 2007. The interim step will by itself achieve significant PM
and SO_X emission reductions with associated important health
benefits as early as is practicable. Then, in June

[[Page 38962]]

2010, the sulfur cap for land-based nonroad engine diesel fuel will be
reduced to the final standard of 15 ppm. Two years later, in 2012, the
15 ppm cap for locomotive and marine engine diesel fuel will go into
effect. The reduction to 15 ppm sulfur provides additional direct
control of PM and SO_X emissions and is an enabling
technology for the application of advanced catalyst-based emission
control technologies.
Although we did not propose to control locomotive and marine diesel
fuel to 15 ppm in the NPRM, after careful consideration and reviewing
substantial comments from stakeholders, we have decided to include fuel
used in locomotive and marine applications in the final step to 15 ppm
beginning in 2012. The incremental PM health and welfare benefits
associated with this standard outweigh the costs. The locomotive and
marine diesel fuel program provides a near-term positive impact on
public health and welfare. Also, the 15 ppm sulfur diesel fuel provides
an opportunity that may enable the application of advanced catalyst-
based emission control technologies to locomotive and marine diesel
engines. We are issuing an Advance Notice of Proposed Rulemaking for
locomotive and marine diesel engines that investigates this potential.
Recognizing the value that a locomotive and marine fuel program could
have for public health and welfare, State and local authorities and
public health advocacy organizations provided a large number of
comments encouraging us to take action in this rulemaking to address
emissions from this category.
Including locomotive and marine fuel in the 15 ppm sulfur diesel
fuel pool also simplifies the overall design of the fuel program and
will simplify the distribution of diesel fuel. At the same time, we
have finalized this standard with flexibilities designed specifically
to address fuel program implementation issues raised in the comments.
Noting that sulfur levels in highway diesel fuel will generally be
at or below 15 ppm starting in 2006 and not wanting to reduce the
benefits of introducing this clean fuel, we spent considerable time
developing a compliance assurance scheme for introducing our nonroad
diesel sulfur program to mesh with the highway program requirements. We
initially thought that a ``baseline'' approach essentially requiring
refiners to maintain a constraint on sulfur levels of various
distillate fuels, based on historical production volumes, was the most
appropriate mechanism. Subsequently we learned that the other mechanism
we discussed in the proposal, a ``designate and track'' type approach,
is better suited to address our priorities and commitments for the
nonroad diesel sulfur control program. This approach allows refiners to
designate volumes of nonroad fuel into various categories and these
designations would follow the fuel throughout the distribution system.
We have successfully worked through our enforceability and other
concerns with this approach and are now including it as our compliance
mechanism for the fuel standards of today's program.

B. Why Is EPA Taking This Action?

As we have discussed extensively in both the proposal and today's
action, EPA strongly believes it is appropriate to take steps now to
reduce future emissions from nonroad, locomotive, and marine diesel
engines. Emissions from these engines contribute greatly to a number of
serious air pollution problems and would continue to do so in the
future absent further reduction measures. Such emissions lead to
adverse health and welfare effects associated with ozone, PM,
NO_X, SO_X, and volatile organic compounds,
including toxic compounds. In addition, diesel exhaust is of specific
concern because it is likely to be carcinogenic to humans by inhalation
as well as posing a hazard from noncancer respiratory effects. Ozone,
NO_X, and PM also cause significant public welfare harm such
as damage to crops, eutrophication, regional haze, and soiling of
building materials.
Millions of Americans continue to live in areas with unhealthy air
quality that may endanger public health and welfare. As discussed in
more detail below, there are approximately 159 million people living in
areas that either do not meet the 8-hour ozone National Ambient Air
Quality Standards (NAAQS) or contribute to violations in other counties
as noted in EPA's recent nonattainment designations for part or all of
474 counties. In addition, approximately 65 million people live in
counties where air quality measurements violate the PM_2.5
NAAQS. These numbers do not include the tens of millions of people
living in areas where there is a significant future risk of failing to
maintain or achieve the ozone or PM_2.5 NAAQS. Federal,
state, and local governments are working to bring ozone and PM levels
into compliance with the NAAQS attainment and maintenance plans and the
reductions included in today's rule will play a critical part in these
actions. Reducing regional emissions of SO_X is critical to
this strategy for attaining the PM NAAQS and meeting regional haze
goals in our treasured national parks. SO_X levels can
themselves pose a respiratory hazard.
Although controlling air pollution from nonroad diesel exhaust is
challenging, we strongly believe it can be accomplished through the
application of high-efficiency emissions control technologies. As
discussed in much greater detail in section II, very large emission
reductions (in excess of 90 percent) are possible, especially through
the use of catalytic emission control devices installed in the nonroad
equipment's exhaust system and integrated with the engine controls. To
meet the standards being adopted today, application of such
technologies for both PM and NO_X control will be needed for
most engines. High-efficiency PM exhaust emission control technology
has been available for several years, and it is the same technology we
expect to be applied to meet the PM standards for highway diesel
engines in 2007. For NO_X, we expect the same high-efficiency
technologies being developed for the 2007 highway diesel engine program
will be used to meet our new nonroad requirements. All of these
technologies are dependent on the 15 ppm maximum sulfur levels for
nonroad diesel fuel being adopted today. The fuel control program being
adopted today also yields significant and important reductions in
SO_X from these sources.
1. Basis for Action Under the Clean Air Act
Section 213 of the Clean Air Act (``the Act'' or CAA) gives us the
authority to establish emissions standards for nonroad engines and
vehicles. Section 213(a)(3) authorizes the Administrator to set
standards for NO_X, volatile organic compounds (VOCs), and CO
which ``standards shall achieve the greatest degree of emission
reduction achievable through the application of technology which the
Administrator determines will be available for the engines or
vehicles.'' As part of this determination, the Administrator must give
appropriate consideration to cost, lead time, noise, energy, and safety
factors associated with the application of such technology. The
standards adopted today for NO_X implement this provision.
Section 213(a)(4) authorizes the Administrator to establish standards
to control emissions of pollutants (other than those covered by section
213(a)(3)) which ``may reasonably be anticipated to endanger public
health and welfare.'' Here, the Administrator may promulgate
regulations that are deemed appropriate for new nonroad vehicles and
engines

[[Page 38963]]

which cause or contribute to such air pollution, taking into account
costs, noise, safety, and energy factors. EPA believes the new controls
for PM in today's rule are an appropriate exercise of EPA's discretion
under the authority of section 213(a)(4).
We believe the evidence provided in section II of this preamble and
in the Regulatory Impact Analysis (RIA) indicates that the stringent
emission standards adopted today are feasible and reflect the greatest
degree of emission reduction achievable in the model years to which
they apply. We have given appropriate consideration to costs in
promulgating these standards. Our review of the costs and cost-
effectiveness of these standards indicate that they will be reasonable
and comparable to the cost-effectiveness of other emission reduction
strategies for the same pollutants that have been required or could be
required in the future. We have also reviewed and given appropriate
consideration to the energy factors of this rule in terms of fuel
efficiency and effects on diesel fuel supply, production, and
distribution, as discussed below, as well as any safety factors
associated with these new standards.
The information in this section and chapters 2 and 3 of the RIA
regarding air quality and the contribution of nonroad, locomotive, and
marine diesel engines to air pollution provides strong evidence that
emissions from such engines significantly and adversely impact public
health or welfare. First, as noted earlier, there is a significant risk
that several areas will fail to attain or maintain compliance with the
NAAQS for 8-hour ozone concentrations or the NAAQS for PM_2.5
during the period that these new vehicle and engine standards will be
phased into the vehicle population, and that nonroad, locomotive, and
marine diesel engines contribute to such concentrations, as well as to
concentrations of other criteria pollutants. This risk will be
significantly reduced by the standards adopted today, as also noted
above. However, the evidence indicates that some risk remains even
after the reductions achieved by these new controls on nonroad diesel
engines and nonroad, locomotive, and marine diesel fuel. Second, EPA
believes that diesel exhaust is likely to be carcinogenic to humans.
The risk associated with exposure to diesel exhaust includes the
particulate and gaseous components among which are benzene,
formaldehyde, acetaldehyde, acrolein, and 1,3-butadiene, all of which
are known or suspected human or animal carcinogens, or have noncancer
health effects. Moreover, these compounds have the potential to cause
health effects at environmental levels of exposure. Third, emissions
from nonroad diesel engines (including locomotive and marine diesel
engines) contribute to regional haze and impaired visibility across the
nation, as well as to odor, acid deposition, polycyclic organic matter
(POM) deposition, eutrophication and nitrification, all of which are
serious environmental welfare problems.
EPA has already found in previous rules that emissions from new
nonroad diesel engines contribute to ozone and CO concentrations in
more than one area which has failed to attain the ozone and CO NAAQS
(59 FR 31306, June 17, 1994). EPA has also previously determined that
it is appropriate to establish standards for PM from new nonroad diesel
engines under section 213(a)(4), and the additional information on
diesel exhaust carcinogenicity noted above reinforces this finding. In
addition, we have already found that emissions from nonroad engines
significantly contribute to air pollution that may reasonably be
anticipated to endanger public welfare due to regional haze and
visibility impairment (67 FR 68242-68243, Nov. 8, 2002). We find here,
based on the information in this section of the preamble and chapters 2
and 3 of the RIA, that emissions from the new nonroad diesel engines
covered by this final action likewise contribute to regional haze and
to visibility impairment that may reasonably be anticipated to endanger
public welfare. Taken together, these findings indicate the
appropriateness of the nonroad diesel engine standards adopted today
for purposes of section 213(a)(3) and (4) of the Act. These findings
were unchallenged by commenters.
These standards must take effect at ``the earliest possible date
considering the lead time necessary to permit development and
application of the requisite technology,'' giving ``appropriate
consideration'' to cost, energy, and safety.\2\ The compliance dates we
are adopting reflect careful consideration of these factors. The
averaging, banking, and trading (ABT), equipment manufacturer
flexibilities, and phase-in provisions for NO_X are elements
in our determination that we have selected appropriate lead times for
the standards.
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\2\ See Clean Air Act section 213(b).
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Section 211(c) of the CAA allows us to regulate fuels where
emission products of the fuel either: (1) Cause or contribute to air
pollution that reasonably may be anticipated to endanger public health
or welfare, or (2) will impair to a significant degree the performance
of any emission control device or system which is in general use, or
which the Administrator finds has been developed to a point where in a
reasonable time it will be in general use were such a regulation to be
promulgated. This rule meets both of these criteria. Sulfur dioxide
(SO₂)and sulfate PM emissions from nonroad, locomotive,
marine and diesel vehicles are due to sulfur in diesel fuel. As
discussed above, emissions of these pollutants cause or contribute to
ambient levels of air pollution that endanger public health and
welfare. Control of sulfur to 15 ppm for this fuel through a two-step
program would lead to significant, cost-effective reductions in
emissions of these pollutants. Control of sulfur to 15 ppm in nonroad
diesel fuel will also enable emissions control technology that will
achieve significant, cost-effective reduction in emissions of these
pollutants, as discussed in section I.B.2 below. The substantial
adverse effect of high sulfur levels on the performance of diesel
emission control devices or systems that would be expected to be used
to meet the nonroad standards is discussed in detail in section II.
Control of sulfur to 15 ppm for locomotive and marine diesel fuel, as
with nonroad diesel fuel, will provide meaningful additional benefits
that outweigh the costs. In addition, our authority under section
211(c) is discussed in more detail in Appendix A to chapter 5 of the RIA.
2. What Is the Air Quality Impact of This Final Rule?
a. Public Health and Environmental Impacts
With this rulemaking, we are acting to extend advanced emission
controls to another major source of diesel engine emissions: Nonroad
land-based diesel engines. This final rule sets out emission standards
for nonroad land-based diesel engines--engines used mainly in
construction, agricultural, industrial and mining operations--that will
achieve reductions in PM and NO_X standards in excess of 95
percent and 90 percent, respectively for this class of vehicles. This
action also regulates nonroad diesel fuel for the first time by
reducing sulfur levels in this fuel more than 99 percent to 15 ppm. The
diesel fuel sulfur requirements will decrease PM and SO₂
emissions for land-based diesel engines, as well as for three other
nonroad source categories: Commercial marine diesel vessels,
locomotives, and recreational marine diesel engines.

[[Page 38964]]

These sources are significant contributors to atmospheric pollution
of (among other pollutants) PM, ozone and a variety of toxic air
pollutants. In 1996, emissions from these four source categories were
estimated to be 40 percent of the mobile source inventory for
PM_2.5 and 25 percent for NO_X, and 10 percent and
13 percent of overall emissions for these potential health hazards,
respectively. Without further controls beyond those we have already
adopted, these sources will emit 44 percent of PM_2.5 from
mobile sources and 47 percent of NO_X emissions from mobile
sources by the year 2030.
Nonroad engines, and most importantly nonroad diesel engines,
contribute significantly to ambient PM_2.5 levels, largely
through direct emissions of carbonaceous and sulfate particles in the
fine (and even ultrafine) size range. Nonroad diesels also currently
emit high levels of NO_X which react in the atmosphere to
form secondary PM_2.5 (namely ammonium nitrate) as well as
ozone. Nonroad diesels also emit SO₂ and hydrocarbons which
react in the atmosphere to form secondary PM_2.5 (namely
sulfates and organic carbonaceous PM_2.5). This section
summarizes key points regarding the nonroad diesel engine contribution
to these pollutants and their impacts on human health and the
environment. EPA notes that we are relying not only on the information
presented in this preamble, but also on the more detailed information
in chapters 2 and 3 of the RIA and technical support documents, as well
as information in the preamble, RIA, and support documents for the
proposed rule.
When fully implemented, this final rule will reduce nonroad
(equipment such as construction, agricultural, and industrial), diesel
PM_2.5 and NO_X emissions by 95 percent and 90
percent, respectively. It will also virtually eliminate nonroad diesel
SO₂ emissions, which amounted to approximately 234,000 tons
in 1996, and would otherwise grow to approximately 326,000 tons by
2020. These dramatic reductions in nonroad emissions are a critical
part of the effort by federal, state and local governments to reduce
the health related impacts of air pollution and to reach attainment of
the NAAQS for PM and ozone, as well as to improve other environmental
effects such as atmospheric visibility. Based on the most recent data
available for this rule, such problems are widespread in the United
States. There are almost 65 million people living in 120 counties with
monitored PM_2.5 levels (2000-2002) exceeding the
PM_2.5 NAAQS, and 159 million people living in areas recently
designated as exceeding 8-hour ozone NAAQS. Figure I-1 illustrates the
widespread nature of these problems. Shown in this figure are counties
exceeding the PM_2.5 NAAQS or designated for nonattainment
with the 8-hour ozone NAAQS plus mandatory Federal Class I areas, which
have particular needs for reductions in atmospheric haze.
Our air quality modeling also indicates that similar conditions are
likely to continue to persist in the future in the absence of
additional controls and that the emission reductions would assist areas
with attainment and future maintenance of the PM and ozone NAAQS.\3\
For example, in 2020, based on emission controls currently adopted, we
project that 66 million people will live in 79 counties with average
PM_2.5 levels above 15 micrograms per cubic meter (ug/m\3\).
In 2030, the number of people projected to live in areas exceeding the
PM_2.5 standard is expected to increase to 85 million in 107
counties. An additional 24 million people are projected to live in
counties within 10 percent of the standard in 2020, which will increase
to 64 million people in 2030. Furthermore, for ozone, in 2020, based on
emission controls currently adopted, the number of counties violating
the 8-hour ozone standard is expected to decrease to 30 counties where
43 million people are projected to live. Thereafter, exposure to
unhealthy levels of ozone is expected to begin to increase again. In
2030 the number of counties violating the 8-hour ozone NAAQS is
projected to increase to 32 counties where 47 million people are
projected to live. In addition, in 2030, 82 counties where 44 million
people are projected to live will be within 10 percent of violating the
ozone 8-hour NAAQS.
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\3\ Note this analysis does not include the effects of the
proposed Rule to Reduce Interstate Transport of Fine Particulate
Matter and Ozone (Interstate Air Quality Rule). 69 FR 4566 (January
30, 2004). See http://www.epa.gov/interstateairquality/rule.html.

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EPA is still developing the implementation process for bringing the
nation's air into attainment with the PM_2.5 and 8-hour ozone
NAAQS. Based on section 172(a) provisions in the Act, designated areas
will need to attain the PM_2.5 NAAQS in the 2010 (based on
2007-2009 air quality data) to 2015 (based on 2012 to 2014 air quality
data) time frame, and then be required to maintain the NAAQS
thereafter. Similarly, we expect that most areas covered under subpart
1 and 2 will attain the ozone standard in the 2007 to 2014 time frame,
depending on an area's classification and other factors, and then be
required to maintain the NAAQS thereafter.
Since the emission reductions expected from this final rule would
begin in this same time frame, the projected reductions in nonroad
emissions would be used by states in meeting the PM_2.5 and
ozone NAAQS. In their comments on the proposal, states told EPA that
they need nonroad diesel engine reductions in order to be able to meet
and maintain the PM_2.5 and ozone NAAQS as well as to make
progress toward visibility requirements.\4\ Furthermore, this action
would ensure that nonroad diesel emissions will continue to decrease as
the fleet turns over in the years beyond 2014; these reductions will be
important for maintenance of the NAAQS following attainment.
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\4\ The following are sample comments from states and state
associations on the proposed rule, which corroborate that this rule
is a critical element in States' NAAQS attainment efforts. Fuller
information can be found in the Summary and Analysis of Comments.
--``Unless emissions from nonroad diesels are sharply reduced,
it is very likely that many areas of the country will be unable to
attain and maintain health-based NAAQS for ozone and PM.'' (STAPPA/ALAPCO)
--``Adoption of the proposed regulation * * * is necessary for
the protection of public health in California and to comply with air
quality standards * * * The need for 15 ppm sulfur diesel fuel
cannot be overstated.'' (California Air Resources Board)
--``The EPA's proposed regulation is necessary if the West is to
make reasonable progress towards improving visibility in our
nation's Class I areas.'' (Western Regional Air Partnership (WRAP))
--``Attainment of the NAAQS for ozone and PM_2.5 is of
immediate concern to the states in the northeast region.* * * Thus,
programs * * * such as the proposed rule for nonroad diesel engines
are essential.'' (NESCAUM)
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Scientific studies show ambient PM is associated with a series of
adverse health effects. These health effects are discussed in detail in
the EPA Criteria Document for PM as well as the draft updates of this
document released in the

[[Page 38966]]

past year.5, 6 EPA's ``Health Assessment Document for Diesel
Engine Exhaust,'' (the ``Diesel HAD'') also reviews health effects
information related to diesel exhaust as a whole including diesel PM,
which is one component of ambient PM.\7\ In the Diesel HAD, we note
that the particulate characteristics in the zone around nonroad diesel
engines are likely to be substantially the same as published air
quality measurements made along busy roadways. This conclusion supports
the relevance of health effects associated with highway diesel engine-
generated PM to nonroad applications.
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\5\ U.S. EPA (1996.) Air Quality Criteria for Particulate
Matter--Volumes I, II, and III, EPA, Office of Research and
Development. Report No. EPA/600/P-95/001a-cF. This material is
available electronically at http://www.epa.gov/ttn/oarpg/ticd.html.
\6\ U.S. EPA (2003). Air Quality Criteria for Particulate
Matter--Volumes I and II (Fourth External Review Draft) This
material is available electronically at
http://cfpub.epa.gov/ncea/cfm/partmatt.cfm.
\7\ U.S. EPA (2002). Health Assessment Document for Diesel
Engine Exhaust. EPA/600/8-90/057F Office of Research and
Development, Washington, DC. This document is available
electronically at http://cfpub.epa.gov/ncea/cfm/recordisplay.cfm?deid=29060.

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As described in these documents, health effects associated with
short-term variation in ambient PM have been indicated by epidemiologic
studies showing associations between exposure and increased hospital
admissions for ischemic heart disease, heart failure, respiratory
disease, including chronic obstructive pulmonary disease (COPD) and
pneumonia. Short-term elevations in ambient PM have also been
associated with increased cough, lower respiratory symptoms, and
decrements in lung function. Additional studies have associated changes
in heart rate and/or heart rhythm in addition to changes in blood
characteristics with exposure to ambient PM. Short-term variations in
ambient PM have also been associated with increases in total and
cardiorespiratory mortality. 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, suggest
an association between long-term exposure to ambient PM_2.5
and premature mortality, including deaths attributed to lung
cancer.\8\, \9\ Two studies further analyzing the Harvard
Six Cities Study's air quality data have also established a specific
influence of mobile source-related PM_2.5 on daily mortality
and a concentration-response function for mobile source-associated
PM_2.5 and daily mortality. Another recent study in 14 U.S.
cities examining the effect of PM₁₀ (particulate matter less
than 10 microns in diameter) on daily hospital admissions for
cardiovascular disease found that the effect of PM₁₀ was
significantly greater in areas with a larger proportion of
PM₁₀ coming from motor vehicles, indicating that
PM₁₀ from these sources may have a greater effect on the
toxicity of ambient PM₁₀ when compared with other
sources.\10\
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\8\ 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.
\9\ Pope, CA, III; Burnett, RT; Calle, EE; et al. (2002) Lung
cancer, cardiopulmonary mortality, and long-term exposure to fine
particulate air pollution. JAMA 287: 1132-1141.
\10\ Janssen, NA; Schwartz J; Zanobetti A; et al. (2002) Air
conditioning and source-specific particles as modifiers of the
effect of PM₁₀ on hospital admissions for heart and lung
disease. Environ Health Perspect 110(1):43-49.
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Of particular relevance to this rule is a recent cohort study which
examined the association between mortality and residential proximity to
major roads in the Netherlands. Examining a cohort of 55 to 69 year-
olds from 1986 to 1994, the study indicated that long-term residence
near major roads, an index of exposure to primary mobile source
emissions (including diesel exhaust), was significantly associated with
increased cardiopulmonary mortality.\11\ Other studies have shown
children living near roads with high truck traffic density have
decreased lung function and greater prevalence of lower respiratory
symptoms compared to children living on other roads.\12\ A recent
review of epidemiologic studies examining associations between asthma
and roadway proximity concluded that some coherence was evident in the
literature, indicating that asthma, lung function decrement,
respiratory symptoms, and other respiratory problems appear to occur
more frequently in people living near busy roads.\13\ As discussed
later, nonroad diesel engine emissions, especially particulate, are
similar in composition to those from highway diesel vehicles. Although
difficult to associate directly with PM_2.5, these studies
indicate that direct emissions from mobile sources, and diesel engines
specifically, may explain a portion of respiratory health effects
observed in larger-scale epidemiologic studies. Recent studies
conducted in Los Angeles have illustrated that a substantial increase
in the concentration of ultrafine particles is evident in locations
near roadways, indicating substantial differences in the nature of PM
immediately near mobile source emissions.\14\ For additional
information on health effects, see the RIA.
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\11\ Hoek, G; Brunekreef, B; Goldbohm, S; et al. (2002)
Association between mortality and indicators of traffic-related air
pollution in the Netherlands: a cohort study. Lancet 360(9341):1203-1209.
\12\ Brunekreef, B; Janssen NA; de Hartog, J; et al. (1997) Air
pollution from traffic and lung function in children living near
motor ways. Epidemiology (8): 298-303.
\13\ Delfino RJ. (2002) Epidemiologic evidence for asthma and
exposure to air toxics: linkages between occupational, indoor, and
community air pollution research. Env Health Perspect Suppl 110(4):
573-589.
\14\ Yifang Zhu, William C. Hinds, Seongheon Kim, Si Shen and
Constantinos Sioutas Zhu Y; Hinds WC; Kim S; et al. (2002) Study of
ultrafine particles near a major highway with heavy-duty diesel
traffic. Atmos Environ 36(27): 4323-4335.
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In addition to its contribution to ambient PM concentrations,
diesel exhaust is of specific concern because it has been judged to
pose a lung cancer hazard for humans as well as a hazard from noncancer
respiratory effects. In this context, diesel exhaust PM is generally
used as a surrogate measure for diesel exhaust. Further, nonroad diesel
engine emissions also contain several substances known or suspected as
human or animal carcinogens, or that have noncancer health effects as
described in the Diesel HAD. Moreover, these compounds have the
potential to cause health effects at environmental levels of exposure.
These other compounds include benzene, 1,3-butadiene, formaldehyde,
acetaldehyde, acrolein, dioxin, and POM. For some of these pollutants,
nonroad diesel engine emissions are believed to account for a
significant proportion of total nation-wide emissions. All of these
compounds were identified as national or regional ``risk drivers'' in
the 1996 NATA.\15\ That is, these compounds pose a significant portion
of the total inhalation cancer risk to a significant portion of the
population. Mobile sources contribute significantly to total emissions
of these air toxics. As discussed in more detail in the RIA, this final
rulemaking will result in significant reductions of these emissions.
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\15\ U.S. EPA (2002). National-Scale Air Toxics Assessment. This
material is available electronically at http://www.epa.gov/ttn/atw/nata/.

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In EPA's Diesel HAD.\16\ diesel exhaust was classified as likely to
be carcinogenic to humans by inhalation at environmental exposures, in
accordance with the revised draft 1996/1999 EPA cancer guidelines. A
number of other agencies (National Institute for Occupational Safety
and Health, the International Agency for Research on Cancer, the World
Health Organization,

[[Page 38967]]

California EPA, and the U.S. Department of Health and Human Services)
have made similar classifications.
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\16\ U.S. EPA (2002). Health Assessment Document for Diesel
Engine Exhaust. EPA/600/8-90/057F Office of Research and
Development, Washington DC. This document is available
electronically at http://cfpub.epa.gov/ncea/cfm/recordisplay.cfm?deid=29060.

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EPA generally derives cancer unit risk estimates to calculate
population risk more precisely from exposure to carcinogens. In the
simplest terms, the cancer unit risk is the increased risk associated
with average lifetime exposure of 1 ug/m3. EPA concluded in
the Diesel HAD that it is not possible currently to calculate a cancer
unit risk for diesel exhaust due to a variety of factors that limit the
current studies, such as lack of an adequate dose-response relationship
between exposure and cancer incidence.
However, in the absence of a cancer unit risk, the EPA Diesel HAD
sought to provide additional insight into the significance of the
cancer hazard by estimating possible ranges of risk that might be
present in the population. The possible risk range analysis was
developed by comparing a typical environmental exposure level for
highway diesel sources to a selected range of occupational exposure
levels and then proportionally scaling the occupationally observed
risks according to the exposure ratios to obtain an estimate of the
possible environmental risk. A number of calculations are needed to
accomplish this, and these can be seen in the EPA Diesel HAD. The
outcome was that environmental risks from diesel exhaust exposure could
range from a low of 10-4 to 10-5 or be as high as
10-3 this being a reflection of the range of occupational
exposures that could be associated with the relative and absolute risk
levels observed in the occupational studies. Because of uncertainties,
the analysis acknowledged that the risks could be lower than
10-4 or 10-5 and a zero risk from diesel exhaust
exposure was not ruled out. Although the above risk range is based on
environmental exposure levels for highway mobile sources only, the 1996
NATA estimated exposure for nonroad diesel sources as well. Thus, the
exposure estimates were somewhat higher than those used in the risk
range analysis described above. The EPA Diesel HAD, therefore, stated
that the NATA exposure estimates result in a similar risk perspective.
The ozone precursor reductions expected as a result of this rule
are also important because of health and welfare effects associated
with ozone, as described in the Air Quality Criteria Document for Ozone
and Other Photochemical Oxidants. Ozone can irritate the respiratory
system, causing coughing, throat irritation, and/or uncomfortable
sensation in the chest.17, 18 Ozone can reduce lung function
and make it more difficult to breathe deeply, and breathing may become
more rapid and shallow than normal, thereby limiting a person's normal
activity. Ozone also can aggravate asthma, leading to more asthma
attacks that require a doctor's attention and/or the use of additional
medication. In addition, ozone can inflame and damage the lining of the
lungs, which may lead to permanent changes in lung tissue, irreversible
reductions in lung function, and a lower quality of life if the
inflammation occurs repeatedly over a long time period (months, years,
a lifetime). People who are of particular concern with respect to ozone
exposures include children and adults who are active outdoors. Those
people particularly susceptible to ozone effects are people with
respiratory disease, such as asthma, and people with unusual
sensitivity to ozone, and children. Beyond its human health effects,
ozone has been shown to injure plants, which has the effect of reducing
crop yields and reducing productivity in forest
ecosystems.19, 20
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\17\ U.S. EPA (1996). Air Quality Criteria for Ozone and Related
Photochemical Oxidants, EPA/600/P-93/004aF. Docket No. A-99-06.
Document Nos. II-A-15 to 17.
\18\ U.S. EPA (1996). Review of National Ambient Air Quality
Standards for Ozone, Assessment of Scientific and Technical
Information, OAQPS Staff Paper, EPA-452/R-96-007. Docket No. A-99-
06. Document No. II-A-22.
\19\ U.S. EPA (1996). Air Quality Criteria for Ozone and Related
Photochemical Oxidants, EPA/600/P-93/004aF. Docket No. A-99-06.
Document Nos. II-A-15 to 17.
\20\ U.S. EPA (1996). Review of National Ambient Air Quality
Standards for Ozone, Assessment of Scientific and Technical
Information, OAQPS Staff Paper, EPA-452/R-96-007. Docket No. A-99-
06. Document No. II-A-22.
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New research suggests additional serious health effects beyond
those that were known when the 8-hour ozone health standard was set.
Since 1997, over 1,700 new health and welfare studies relating to ozone
have been published in peer-reviewed journals.\21\ Many of these
studies investigate 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 and emergency room visits for asthma
and other respiratory causes, and premature mortality. EPA is currently
evaluating these and other studies as part of the ongoing review of the
air quality criteria and NAAQS for ozone. A revised Air Quality
Criteria Document for Ozone and Other Photochemical Oxidants will be
prepared in consultation with EPA's Clean Air Science Advisory
Committee (CASAC). Key new health information falls into four general
areas: Development of new-onset asthma, hospital admissions for young
children, school absence rate, and premature mortality. In all, the new
studies that have become available since the 8-hour ozone standard was
adopted in 1997 continue to demonstrate the harmful effects of ozone on
public health and the need for areas with high ozone levels to attain
and maintain the NAAQS.
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\21\ New Ozone Health and Environmental Effects References,
Published Since Completion of the Previous Ozone AQCD, National
Center for Environmental Assessment, Office of Research and
Development, U.S. Environmental Protection Agency, Research Triangle
Park, NC 27711 (7/2002) Docket No. A-2001-28, Document II-A-79.
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Finally, nonroad diesel emissions contribute to nine categories of
non-health impacts: visibility impairment, soiling and material damage,
acid deposition, eutrophication of water bodies, plant and ecosystem
damage from ozone, water pollution resulting from deposition of toxic
air pollutants with resulting effects on fish and wildlife, and odor.
In particular, EPA determined that nonroad engines contribute
significantly to unacceptable visibility conditions where people live,
work and recreate, including contributing to visibility impairment in
Federally mandated Class I areas that are given special emphasis in the
Clean Air Act (67 FR 68242, November 8, 2002). Visibility is impaired
by fine PM and precursor emissions from nonroad diesel engines subject
to this final rule. Reductions in emissions from this final rule will
improve visibility as well as other environmental outcomes as described
in the RIA.
As supplementary information, we have made estimates using air
quality modeling to illustrate the types of change in future
PM_2.5 and ozone levels that we would expect to result from a
final rule like this as described in chapter 2 of the RIA. That
modeling shows that control of nonroad emissions would produce
nationwide air quality improvements in PM_2.5 and ozone
levels as well as visibility improvements. On a population-weighted
basis, the average modeled change in future-year PM_2.5
annual averages is projected to decrease by 0.42 [mu]g/m\3\ (3.3%) in
2020, and 0.59 [mu]g/m3 (0.6%) in 2030. In addition, the population-
weighted average modeled change in future year design values for ozone
would decrease by 1.8 parts per billion (ppb) in 2020, and 2.5 ppb in
2030. Within areas predicted to violate the ozone NAAQS in the
projected base case, the average decrease would be somewhat higher: 1.9
ppb in 2020 and 3.0 ppb in 2030.

[[Page 38968]]

The PM air quality improvements expected from this final rule are
anticipated to produce major benefits to human health and welfare, with
a combined value in excess of half a trillion dollars between 2007 and
2030. For example, in 2030, we estimate that this program will reduce
approximately 129,000 tons PM_2.5 and 738,000 tons of
NO_X. The resulting ambient PM reductions correspond to
public health improvements in 2030, including 12,000 fewer premature
mortalities, 15,000 fewer heart attacks, 200,000 fewer asthma
exacerbations in children, and 1 million fewer days when adults miss
work due to their respiratory symptoms, and 5.9 million fewer days when
adults have to restrict their activities due to respiratory symptoms.
The reductions will also improve visibility and reduce diesel odor. For
further details on the economic benefits of this rule, please refer to
the benefit-cost discussion in section VI of this preamble and chapter
9 of the RIA.
b. Emissions From Nonroad Diesel Engines
The engine and fuel standards in this final rule will affect
emissions of direct PM_2.5, SO₂, NO_X,
VOCs, and air toxics for land-based nonroad diesel engines. \22\ For
locomotive, commercial marine vessel (CMV), and recreational marine
vessel (RMV) engines, the final fuel standards will affect direct
PM_2.5 and SO₂ emissions. Each sub-section below
discusses one of these pollutants,\23\ including expected emission
reductions associated with the final standards.\24\ Table I.B-1
summarizes the impacts of this rule for 2020 and 2030. Further details
on our inventory estimates, including results for other years, are
available in chapter 3 of the RIA.
---------------------------------------------------------------------------

\22\ We are also adopting a few minor adjustments of a technical
nature to current CO standards. Emissions effects from these
standards are discussed in the RIA.
\23\ The estimates of baseline emissions and emissions
reductions from the final rule reported here for nonroad land-based,
recreational marine, locomotive, and commercial marine vessel diesel
engines are based on 50 state emissions inventory estimates. A 48
state inventory was used for air quality modeling that EPA conducted
for this rule, of which Alaska and Hawaii are not a part. In cases
where land-based nonroad diesel engine emissions are compared with
non-mobile source portions of the inventory, we use a 48 state
emissions inventory, to match the 48 state nature of those other
inventories.
\24\ Please see the Summary and Analyses of Comments document
for discussions of issues raised about the emission inventory
estimates during the comment period for the NPRM.

Table I.B-1.--Estimated National (50 State) Reductions in Emissions From
Nonroad Land-Based, Locomotive, Commercial Marine, and Recreational
Marine Diesel Engines
------------------------------------------------------------------------
Pollutant [short tons]
2020 2030
------------------------------------------------------------------------
Direct PM2.5:
PM2.5 Emissions Without Rule.............. 167,000 181,000
PM2.5 Emissions With 500 ppm Sulfur in 144,000 155,000
2007 and No Other Controls...............
PM2.5 Emissions With 15 ppm Sulfur in 2012 141,000 152,000
and No Other Controls....................
PM2.5 Emissions With Entire Rule.......... 81,000 52,000
PM2.5 Reductions Resulting from this Rule. 86,000 129,000
SO2:
SO2 Emissions Without Rule................ 326,000 379,000
SO2 Emisions With 500 ppm Sulfur in 2007.. 37,000 43,000
SO2 Emissions With Entire Rule (15 ppm 3,000 3,000
Sulfur in 2012)..........................
SO2 Reductions Resulting from this Rule... 323,000 376,000
NOX--Land-Based Nonroad Engines Only\a\:
NOX Emissions Without Rule................ 1,125,000 1,199,000
NOX Emissions With Rule................... 681,000 461,000
NOX Reductions Resulting from this Rule... 444,000 738,000
VOC--Land-Based Nonroad Engines Only\a\:
VOC Emissions Without Rule................ 98,000 97,000
VOC Emissions With Rule................... 75,000 63,000
VOC Reductions Resulting from this Rule... 23,000 34,000
------------------------------------------------------------------------
Notes:
\a\ NOX and VOC numbers only include emissions for land-based nonroad
diesel engines because the Tier 4 controls will not be applied to
locomotive, commercial marine, and recreational marine engines; and no
NOX and VOC emission reductions are generated through the lowering of
fuel sulfur levels.

i. Direct PM_2.5
As described earlier, the Agency believes that reductions of diesel
PM_2.5 emissions are needed as part of the nation's progress
toward clean air. Direct PM_2.5 emissions from land-based
nonroad diesel engines amount to increasingly large percentages of
total man-made diesel PM_2.5. Between 1996 and 2030, we
estimate that the percentage of total man-made diesel PM_2.5
emissions coming from land-based nonroad diesel engines will increase
from about 46 percent to 72 percent (based on a 48 state inventory).
Emissions of direct PM_2.5 from land-based nonroad diesel
engines based on a 50 state inventory are shown in table I.B-1, along
with our estimates of the reductions in 2020 and 2030 we expect would
result from our final rule for a PM_2.5 exhaust emission
standard and from changes in the sulfur level in land-based nonroad,
locomotive, and marine diesel fuel. Land-based nonroad, locomotive, and
marine diesel fuel sulfur levels will be lowered to about 340 ppm in-
use (500 ppm maximum) in 2007. Land-based nonroad diesel fuel sulfur
will be lowered further to about 11 ppm in-use (15 ppm maximum) in 2010
and locomotive and marine diesel fuel sulfur will be lowered to the
same level in 2012. In addition to PM_2.5 emissions estimates
with the final rule, emissions estimates based on lowering diesel fuel
sulfur without any other controls are shown in table I.B-1 for 2020 and
2030.
Figure I.B-1a shows our estimate of PM_2.5 emissions
between 2000 and 2030 both without and with the final standards and
fuel sulfur requirements of this rule. We estimate that
PM_2.5 emissions from this source would be reduced by 71
percent in 2030.
ii. SO₂
We estimate that land-based nonroad, CMV, RMV, and locomotive
diesel engines emitted about 234,000 tons of

[[Page 38969]]

SO₂ in 1996, accounting for about 33 percent of the
SO₂ from mobile sources (based on a 48 state inventory).
With no reduction in diesel fuel sulfur levels, we estimate that these
emissions will continue to increase, accounting for about 44 percent of
mobile source SO₂ emissions by 2030.
As part of this final rule, sulfur levels in fuel will be
significantly reduced, leading to large reductions in nonroad,
locomotive, and marine diesel SO₂ emissions. By 2007, the
sulfur in diesel fuel used by all land-based nonroad, locomotive, and
marine diesel engines will be reduced from the current average in-use
level of between 2,300 to 2,400 ppm \25\ to an average in-use level of
about 340 ppm, with a maximum level of 500 ppm. By 2010, the sulfur in
diesel fuel used by land-based nonroad engines will be reduced to an
average in-use level of 11 ppm with a maximum level of 15 ppm. Sulfur
in diesel fuel used by locomotive and marine engines will be reduced to
the same level by 2012. Table II.B-1 and figure II.B-1b show the
estimated reductions from these sulfur changes.
---------------------------------------------------------------------------

\25\ Highway fuel is currently used in a significant fraction of
land based nonroad equipment, locomotives, and marine vessels,
reducing the in-use average sulfur level from about 3,000 ppm for
uncontrolled high-sulfur fuel to 2,300 or 2,400 ppm.
---------------------------------------------------------------------------

iii. NO_X
Table I.B-1 shows the 50 state estimated tonnage of NO_X
emissions for 2020 and 2030 without the final rule and the estimated
tonnage of emissions eliminated with the final rule in place. These
results are shown graphically in Figure I.E-1c at the end of this
section. We estimate that NO_X emissions from these engines
will be reduced by 62 percent in 2030.
We note that the magnitude of NO_X reductions determined
in the final rule analysis is somewhat less than what was reported in
the proposal's preamble and RIA, especially in the later years when the
fleet has mostly turned over to Tier 4 designs. The greater part of
this is due to the fact that we have deferred setting a long-term
NO_X standard for mobile machinery over 750 horsepower to a
later action. When this future action is completed, we would expect
roughly equivalent reductions between the proposal and the overall
final program, though there are some other effects reflected in the
differing NO_X reductions as well, due to updated modeling
assumptions and the adjusted NO_X standards levels for
engines over 750 horsepower. Section II.A.4 of this preamble contains a
detailed discussion of the NO_X standards we are adopting for
engines over 750 horsepower as well as the basis for those standards.
iv. VOCs and Air Toxics
Based on a 48 state emissions inventory, we estimate that land-
based nonroad diesel engines emitted over 221 thousand tons of VOC in
1996. Between 1996 and 2030, we estimate that land-based nonroad diesel
engines will contribute about 2 to 3 percent of mobile source VOC
emissions. Without further controls, land-based nonroad diesel engines
will emit about 97 thousand tons/year of VOC in 2020 and 2030 nationally.
Table I.B-1 shows our projection of the reductions in 2020 and 2030
for VOC emissions that we expect from implementing the final NMHC
standards. This estimate is based on a 50 state emissions inventory. By
2030, VOC emissions from this category would be reduced by 35 percent
from baseline levels.
While we are not adopting any specific gaseous air toxics standards
in today's rule, air toxics emissions would nonetheless be
significantly reduced through the NMHC standards included in the final
rule. By 2030, we estimate that emissions of air toxics pollutants,
such as benzene, formaldehyde, acetaldehyde, 1,3-butadiene, and
acrolein, would be reduced by 35 percent from land-based nonroad diesel
engines. Diesel PM reductions were discussed above. For specific air
toxics reduction estimates, see chapter 3 of the RIA.

[[Page 38970]]
[GRAPHIC]
[TIFF OMITTED]
TR29JN04.001

II. Nonroad Engine Standards

In this section we describe the emission standards for nonroad
diesel engines that we are setting to address the serious air quality
problems discussed in section I. These Tier 4 standards, which take
effect starting in 2008, are very similar to those proposed, and obtain
very similar emissions reductions. The long-term PM filter-based
standards that apply to all engines over 25 hp, combined with the fuel
change and new requirements to ensure robust control in the field, will
yield PM reductions of over 95% from the in-use levels of today's
cleanest Tier 2 engines. Likewise, the long-term NO_X
standards we are adopting for nearly all engines above 75 hp will yield
NO_X reductions of about 90% from the NO_X levels
expected from even the low-emitting Tier 3 engines due to first reach
the market in 2006 or later. The Tier 4 standards will bring about large

[[Page 38971]]

reductions in toxic hydrocarbon emissions as well.
In this final rule we are largely adopting the standards and timing
we proposed, with the exception of those that apply to engines over 750
hp. We restructured and modified the standards and timing for these
engines to address technical concerns and to focus on achieving
comparable emission reductions through the introduction of advanced
technology as early as feasible from specific applications within this
power category. See section II.A.4 for a detailed discussion. We also
are not adopting the proposed minor adjustments to the CO standard
levels for some engines under 75 hp, as explained in section II.A.6. In
addition, there are minor changes from the proposal in the phase-in
approach we are adopting for NO_X and NMHC standards, as
detailed in this section.
In this section we discuss:
? The Tier 4 engine standards, and the schedule for implementing them;
? The feasibility of the Tier 4 standards (in conjunction
with the low-sulfur nonroad diesel fuel requirement discussed in
section IV); and
? How diesel fuel sulfur affects an engine's ability to meet
the new standards.
Additional provisions for engine and equipment manufacturers are
discussed in detail in section III. These include:
? The averaging, banking, and trading (ABT) program.
? The transition program for equipment manufacturers.
? The addition of a ``not-to-exceed'' program to ensure in-
use emissions control. This program includes new emission standards and
related test procedures to supplement the standards discussed in this
section.
? The test procedures and other compliance requirements
associated with the emission standards.
? Special provisions to aid small businesses in implementing
our requirements.
? An incentive program to encourage innovative technologies
and the early introduction of new technologies.

A. What Are the New Engine Standards?

The Tier 4 exhaust emissions standards for PM, NO_X, and
NMHC are summarized in tables II.A-1, 2, and 4.\26\ Crankcase emissions
control requirements are discussed in section II.A.7. Previously
adopted CO emission standards continue to apply as well. All of these
standards apply to covered nonroad engines over the useful life periods
specified in our regulations, except where temporary in-use compliance
margins apply as discussed in section III.E. To help ensure that these
emission reductions will be achieved in use, we have adopted test
procedures for measuring compliance with these standards tailored to
both steady-state and transient nonroad engine operating
characteristics. These test procedures are discussed in several
subsections of section III. Another component of our program to ensure
control of emissions in-use is the new ``not-to-exceed'' (NTE) emission
standards and associated test procedures, discussed in section III.J.
---------------------------------------------------------------------------

\26\ Consistent with past EPA rulemakings for nonroad diesel
engines, our regulations express standards, power ratings, and other
quantities in international SI (metric) units--kilowatts, gram per
kilowatt-hour, etc. This aids in achieving harmonization with
standards-setting bodies outside the U.S., and in laboratory
operations in which these units are the norm. However, in this
preamble and in other rulemaking documents for the general reader,
we have chosen to use terms more common in general usage in the U.S.
Hence standards are expressed in units of grams per brake
horsepower-hour, power ratings in horsepower, etc. In any compliance
questions that might arise from differences in these due to, for
example, rounding conventions, the regulations themselves establish
the applicable requirements.

Table II.A-1.--Tier 4 PM Standards (g/bhp-hr) and Schedule
----------------------------------------------------------------------------------------------------------------
Model year
Engine power -----------------------------------------------------------------
2008 2009 2010 2011 2012 2013
----------------------------------------------------------------------------------------------------------------
hp < 25 (kW < 19)............................. \a\ 0.30 ......... ......... ......... ......... .........
25 < = hp < 75 (19 < = kW < 56)................. \b\ 0.22 ......... ......... ......... ......... 0.02
75 < = hp < 175 (56 < = kW < 130)............... ......... ......... ......... ......... 0.01 .........
175 < = hp < = 750 (130 < = kW < = 560)........... ......... ......... ......... 0.01 ......... .........
------------
hp 750 (kW > 560)............................. See table II.A-4
----------------------------------------------------------------------------------------------------------------
Notes:
\a\ For air-cooled, hand-startable, direct injection engines under 11 hp, a manufacturer may instead delay
implementation until 2010 and demonstrate compliance with a less stringent PM standard of 0.45 g/bhp-hr,
subject also to additional provisions discussed in section II.A.3.a.
\b\ A manufacturer has the option of skipping the 0.22 g/bhp-hr PM standard for all 50-75 hp engines. The 0.02 g/
bhp-hr PM standard would then take effect one year earlier for all 50-75 hp engines, in 2012.

Table II.A-2.--Tier 4 NOX and NMHC Standards and Schedule
----------------------------------------------------------------------------------------------------------------
Standard (g/bhp-hr) Phase-in schedule (model year) (percent)
Engine power -----------------------------------------------------------------
NOX NMHC 2011 2012 2013 2014
----------------------------------------------------------------------------------------------------------------
25 < = hp < 75 (19 < = kW < 56)................. 3.5 NMHC+NOX\a\ ......... ......... 100% .........
75 < = hp < 175 (56 < = kW < 130)............... 0.30 0.14 \b\50 \b\50 \b\100
175 < = hp < = 750 (130 < = kW < = 560)........... 0.30 0.14 50 50 50 100
------------
hp > 750 (kW > 560)........................... See table II.A-4
----------------------------------------------------------------------------------------------------------------
Notes: Percentages indicate production required to comply with the Tier 4 standards in the indicated model year.

\a\ This is the existing Tier 3 combined NMHC+NOX standard level for the 50-75 hp engines in this category. In
2013 it applies to the 25-50 hp engines as well.
\b\ Manufacturers may use banked Tier 2 NMHC+NOX credits from engines at or above 50 hp to demonstrate
compliance with the 75-175 hp engine NOX standard in this model year. Alternatively, manufacturers may forego
this special banked credit option and instead meet an alternative phase-in requirement of 25/25/25% in 2012,
2013, and 2014 through December 30, with 100% compliance required beginning December 31, 2014. See sections
III.A and II.A.2.b.

[[Page 38972]]

The long-term 0.01 and 0.02 g/bhp-hr Tier 4 PM standards for 75-750
hp and 25-75 hp engines, respectively, combined with the fuel change
and new requirements to ensure robust control in the field, represent a
reduction of over 95% from in-use levels expected with Tier 2/Tier 3
engines.\27\ The 0.30 g/bhp-hr Tier 4 NO_X standard for 75-
750 hp engines represents a NO_X reduction of about 90% from
in-use levels expected with Tier 3 engines. Emissions reductions from
engines over 750 hp are discussed in section II.A.4.
---------------------------------------------------------------------------

\27\ Note that we are grouping all standards in this rule,
including those that take effect in 2008, under the general
designation of ``Tier 4 standards.'' As a result, there are no
``Tier 3'' standards in the multi-tier nonroad program for engines
below 50 hp or above 750 hp.
---------------------------------------------------------------------------

In general, there was widespread support in the comments for the
proposed Tier 4 engine standards and for the timing we proposed for
them. Some commenters raised category-specific concerns, especially for
the smaller and the very large engine categories. These comments are
discussed below.
1. Standards Timing
a. 2008 Standards
The timing of the Tier 4 engine standards is closely tied to the
timing of fuel quality changes discussed in section IV, in keeping with
the systems approach we are taking for this program. The earliest Tier
4 engine standards take effect in model year 2008, in conjunction with
the introduction of 500 ppm maximum sulfur nonroad diesel fuel in mid-
2007. This fuel change serves a dual environmental purpose. First, it
provides a large immediate reduction in PM and SO_X emissions
for the existing fleet of engines in the field. Second, its widespread
availability by the end of 2007 aids engine designers in employing
emissions controls capable of achieving the Tier 4 standards for model
year 2008 and later engines; this is because the performance and
durability of such technologies as exhaust gas recirculation (EGR) and
diesel oxidation catalysts is improved by lower sulfur fuel.\28\ The
reduction of sulfur in nonroad diesel fuel will also provide sizeable
economic benefits to machine operators as it will reduce wear and
corrosion and will allow them to extend oil change intervals (see
section VI.B). These economic benefits will occur for all diesel
engines using the new fuel, not just for those built in 2008 or later.
---------------------------------------------------------------------------

\28\ ``Nonroad Diesel Emissions Standards Staff Technical
Paper,'' EPA420-R-01-052, October 2001.
---------------------------------------------------------------------------

As we proposed, these 2008 Tier 4 engine standards apply only to
engines below 75 hp. We are not setting Tier 4 standards taking effect
in 2008 for larger engines. The reasons for this differ depending on
the engines' hp rating. Setting Tier 4 2008 standards for engines at or
above 100 hp would provide an insufficient period of stability (an
element of lead time) between Tier \2/3\ and Tier 4, and so would not
be appropriate. This is because these engines become subject to
existing Tier 2 or 3 NMHC+NO_X standards in 2006 or 2007.
Setting new 2008 standards for them thus would provide only one or two
years of Tier 2/Tier 3 stability before another round of design changes
would have to be made in 2008 for Tier 4.
It is also inappropriate to establish 2008 Tier 4 standards for
engines of 75-100 hp. The stability issue just noted for larger engines
is not present for these engines, because these engines are subject to
Tier 3 NMHC+NO_X standards starting in 2008, so that our
setting a Tier 4 PM standard for them in the same year would not create
the situation in which engines have to be redesigned twice to comply
with new standards within a space of one or two years. However, EPA
believes the more significant concern for these engines is meeting the
stringent aftertreatment-based standards for PM and NO_X in
2012. We are concerned that adopting interim 2008 standards for these
engines would divert resources needed to achieve these 2012 standards
and indeed jeopardize attaining them. Thus, although early emission
reductions from these engines in 2008 would of course be desirable, we
felt that the focus we are putting on obtaining much larger reductions
from them in 2012, together with the fact that we already have a Tier 3
NMHC+NO_X standard taking effect for 75-100 hp engines in
2008, warrants our not adding additional control requirements for these
engines during this interim period.
We note that the 50-75 hp engines also have a Tier 3
NMHC+NO_X standard taking effect in 2008 and, as noted above,
we are setting a new Tier 4 2008 PM standard for them. Unlike the
larger 75-100 hp engines, however, the 50-75 hp engines have one
additional year, until 2013, before filter-based PM standards take
effect, and also have no additional NO_X control requirement
being set beyond the 2008 Tier 3 standard. These differences justify
including the interim Tier 4 PM standard for these engines. We note too
that achieving the 2008 PM standard is enabled in part by the large
reduction in certification fuel sulfur that applies in 2008 (see
section III.D). Fuel sulfur has a known correlation to PM generation,
even for engines without aftertreatment. Moreover, for any
manufacturers who believe that accomplishing this PM pull-ahead will
hamper their Tier 3 compliance efforts for these engines, there is an
alternative Tier 4 compliance option. Instead of meeting new Tier 4 PM
standards in both 2008 and 2013, manufacturers may skip the Tier 4 2008
PM standard, and instead focus design efforts on introducing PM filters
for these engines one year earlier, by complying with the
aftertreatment-based standard for PM in 2012. These options are
discussed in more detail in section II.A.3.b.
We view the 2008 portion of the Tier 4 program as highly important
because it provides substantial PM and SO_X emissions
reductions during the several years prior to 2011. Initiating Tier 4 in
2008 also fits well with the lead time (including stability), cost, and
technology availability considerations of the overall program.
Initiating the Tier 4 engine standards in 2008 provides three to four
years of stability after the start of Tier 2 for engines under 50 hp.
As mentioned above, it also coincides with the start date of Tier 3
NMHC+NO_X standards for 50-75 hp engines and so introduces no
stability issues for these engines (as redesign for both PM and
NO_X occurs at the same time). The 2008 start date provides
almost 4 years of lead time to accomplish redesign and testing. The
evolutionary character of the 2008 standards, based as they are on
proven technologies, and the fact that some certified engines already
meet these standards as discussed in section II.B, leads us to conclude
that the standards are appropriate within the meaning of section
213(a)(4) of the Clean Air Act and that we are providing adequate lead
time to achieve those standards.
Engine and equipment manufacturers argued in their comments that
the PM pull-ahead option for 50-75 hp engines is inappropriate because
it constitutes a re-opening of the Tier 3 rule, involving as it does a
Tier 4 PM standard in 2008, the same year that the Tier 3
NMHC+NO_X takes effect. They further argued that the non-
pull-ahead option is not a real option because PM aftertreatment cannot
be implemented for these engines in 2012.
We disagree with both contentions. We determined, as part of our
feasibility analysis for Tier 4, that it is feasible to design engines
to meet the 2008 PM standard in the same year that a Tier 3
NMHC+NO_X standard takes effect. See section II.B and RIA
sections 4.1.4 and 4.1.5. One reason is that a substantial

[[Page 38973]]

part of the 2008 PM emission reductions do not result from engine
redesign, but rather are due to the reduction in certification test
fuel maximum sulfur levels from 2000 to 500 ppm that results from the
fuel change in the field. This reduction in sulfur levels also aids
engine designers in employing emission control technologies that are
detrimentally affected by sulfur, not only for PM control, but also for
NMHC and NO_X control. Examples of these sulfur-sensitive
technologies are oxidation catalysts, which can substantially reduce PM
and NMHC, and EGR, which is effective at reducing NO_X. We
note further that designing engines to meet the 2008 PM standard is
also made less difficult by our not requiring engine designers to
consider the transient test, cold start, and not-to-exceed requirements
that are otherwise part of the Tier 4 program. These requirements do
not take effect for these engines until the 0.02 g/bhp-hr standard is
implemented in 2012 or 2013. See section III.F for details.
We also believe that the second option (compliance with the
aftertreatment-based PM standard in 2012, with no interim 2008
standard) is viable, and may be an attractive choice especially for
engine families on the higher side of the 50-75 hp range that share a
design platform with larger engines being equipped with PM filters to
meet the Tier 4 standard for 75-175 hp engines in 2012. We believe 75
hp is the appropriate cutpoint for setting and timing emissions
standards (see section II.A.5), but it obviously is not a hard-and-fast
separator between engine platforms for all manufacturers in all product
lines. Even for many 50-75 hp engines that do not share a design
platform with larger engines, we believe that a 2012 implementation
date for PM filter technology may be practical, considering the 4-year
lead time it affords after Tier 3 begins for these engines (in 2008),
8-year lead time after the last PM standard change (in 2004), and 5-
year lead time after full-scale PM filter technology implementation on
highway engines (in 2007).
Engine manufacturers also commented that the two-options approach
would cause their customers to switch engine suppliers in 2012 to get
the least expensive engines possible in every year, thus compromising
the environmental objectives and creating market disruptions. We have
addressed these concerns as discussed in section II.A.3.b.
b. 2011 and Later Standards
The second fuel change for nonroad diesel fuel, to 15 ppm maximum
sulfur in mid-2010, and the related engine standards for PM,
NO_X, and NMHC that begin to phase-in in the 2011 model year,
provide most of the environmental benefits of the program. Like the
2008 standards, these standards are timed to provide adequate lead time
for engine and equipment manufacturers. They also are phased in over
time to allow for the orderly transfer of technology from the highway
sector, and to spread the overall workload for engine and equipment
manufacturers engaged in redesigning a large number and variety of
products for Tier 4.
As we explained at proposal, we believe that the high-efficiency
exhaust emission control technologies being developed to meet our 2007
emission standards for heavy-duty highway diesel engines can be adapted
to most nonroad diesel applications. The engines for which we believe
this adaptation from highway applications will be most straightforward
are those in the 175-750 hp power range, and thus these engines are
subject to new standards requiring high-efficiency exhaust emission
controls as soon as the 15 ppm sulfur diesel fuel is widely available,
that is, in the 2011 model year. Engines of 75-175 hp are subject to
the new standards in the following model year, 2012, reflecting the
need to spread the redesign workload and, to some extent, the greater
effort that may be involved in adapting highway technologies to these
engines. Engines between 25 and 75 hp are subject to new standards for
PM based on high-efficiency exhaust emission controls in 2013,
reflecting again the need to spread the workload and the challenge of
adapting this technology to these engines which typically do not have
highway counterparts. Engines over 750 hp involve a number of special
considerations, necessitating an implementation approach unique to
these engines as explained in section II.A.4. Lastly , there are
additional provisions discussed in sections III.B.2 and III.M to
encourage early technology introduction and to further draw from the
highway technology experience.
This approach of implementing Tier 4 standards by power category
over 2011-2013 provides for the orderly migration of technology and
distribution of redesign workload over three model years, as EPA
provided in Tier 3. Overall, this approach provides 4 to 6 years of
real world experience with the new technology in the highway sector,
involving millions of engines (in addition to the several additional
years provided by demonstration fleets on the road in earlier years),
before the new standards take effect. We consider the implementation of
Tier 4 standard start dates over 2011-2013 as described above to be
responsive to the technology migration and workload distribution concerns.
2. Phase-In of NO_X and NMHC Standards for 75-750 hp Engines
a. Percent-of-Production Phase-In for NO_X and NMHC
We are finalizing the percent-of-production phase-in for
NO_X and NMHC that we proposed for 75-750 hp engines. Because
Tier 4 NO_X emissions control technology is expected to be
derived from technology first introduced in highway heavy-duty diesels,
we proposed to adopt the implementation pattern for the Tier 4
NO_X standard which we adopted for the heavy-duty highway
diesel program. This will help to ensure a focused, orderly development
of robust high-efficiency NO_X control in the nonroad sector
and will also help to ensure that manufacturers are able to take
maximum advantage of the highway engine development program, with
resulting cost savings.
The heavy-duty highway rule allows for a gradual phase-in of the
NO_X and NMHC requirements over multiple model years: 50% of
each manufacturer's U.S.-directed production volume must meet the new
standard in 2007-2009, and 100% must do so by 2010. Through the use of
emissions averaging, this phase-in approach also provides the
flexibility for highway engine manufacturers to meet that program's
environmental goals by allowing somewhat less-efficient NO_X
controls on more than 50% of their production during the 2007-2009
phase-in years.
We follow the same pattern in this rule. As proposed, we are
phasing in the NO_X standards for nonroad diesels over 2011-
2013 as indicated in table II.A-2, based on compliance with the Tier 4
standards for 50% of a manufacturer's U.S.-directed production in each
power category between 75 and 750 hp in each phase-in model year. The
phase-in of standards for engines over 750 hp is discussed in section
II.A.4. With a NO_X phase-in, all manufacturers are able to
introduce their new technologies on a limited number of engines,
thereby gaining valuable experience with the technology prior to
implementing it on their entire product line. In tandem with the
equipment manufacturer transition program discussed in section III.B,
the phase-in ensures timely progress to the Tier 4 standard levels
while providing a great degree of implementation flexibility for the
industry.

[[Page 38974]]

This ``percent of production phase-in'' is intended to take maximum
advantage of the highway program technology development. It adds a new
dimension of implementation flexibility to the staggered ``phase-in by
power category'' used in the nonroad program for Tiers 1-3 (and also in
this Tier 4) which, though structured to facilitate technology
development and transfer, is more aimed at spreading the redesign
workload. Because the Tier 4 program involves challenges in addressing
both technology development and redesign workload, we believe that
incorporating both of these phase-in mechanisms into the program is
warranted, resulting in the coordinated phase-in plan shown in table
II.A-2, which we are finalizing essentially as proposed. Note that this
results in the new NO_X requirements for 75-175 hp engines
taking effect starting in the second year of the 2011-2013 general
phase-in, in effect creating a 50-50% phase-in in 2012-2013 for this
category. This then staggers the Tier 4 start years by power category
as in past tiers: 2011 for engines at or above 175 hp, 2012 for 75-175
hp engines, and 2013 for 25-75 hp engines (for which no NO_X
adsorber-based standard and thus no percentage phase-in is being
adopted), while still providing a production-based phase-in for
advanced NO_X control technologies.
Comments from the States and environmental organizations argued for
the completion of the phase-in by the end of 2012, contending that
technology progress for NO_X control in the highway sector
has been good to date and would support an accelerated phase-in in the
nonroad sector. However, our assessment continues to show unique
(though surmountable) challenges in adapting advanced technologies to
nonroad engines, especially for engines least like highway diesels, and
it is these engines that would be most affected by a truncated phase-in
schedule. Furthermore, even if we were to conclude that advanced
technologies will be ready earlier than expected, we would not be able
to move up the start of phase-in dates because these dates also depend
on low-sulfur fuel availability. Thus an end-of-2012 phase-in
completion date would result in phase-ins as short as one year, thus
degrading the industry's opportunity to distribute the redesign
workload and departing from the pattern set by the highway program.
Both of these are critical factors in our assessment that the proposed
engine standards are feasible, and so a change to shorter phase-ins
would jeopardize achievement of our environmental objectives for
nonroad diesels. Therefore we are not adopting the suggested earlier
completion of the phase-in.
As proposed, we are phasing in the Tier 4 NMHC standard for 75-750
hp engines with the NO_X standard, as is being done in the
highway program. Engines certified to the new NO_X
requirement would be expected to certify to the NMHC standard as well.
The ``phase-out'' engines (those not certified to the new Tier 4
NO_X and NMHC standards) would continue to be certified to
the applicable Tier 3 NMHC+NO_X standard. As discussed in
section II.B, we believe that the NMHC standard is readily achievable
through the application of PM traps to meet the PM standard, which does
not involve such a phase-in. However, in the highway program we chose
to phase in the NMHC standard with the NO_X standard to
simplify the phase-in under the percent-of-production approach taken
there, thus avoiding subjecting the ``phase-out'' engines to separate
standards for NMHC and NMHC+NO_X (which could lead to
increased administrative costs with essentially no different
environmental result). The same reasoning applies here because, as in
the highway program, the previous-tier standards are combined
NMHC+NO_X standards. No commenters objected to this approach.
Because of the tremendous variety of engine sizes represented in
the nonroad diesel sector, we are finalizing our proposed requirement
that the phase-in requirement be met separately in both of the power
categories with a phase-in (75-175 hp and 175-750 hp).\29\ For example,
a manufacturer that produces 1000 engines for the 2011 U.S. market in
the 175 to 750 hp range would have to demonstrate compliance with the
NO_X and NMHC standards on at least 500 of these engines,
regardless of how many complying engines the manufacturer produces in
the 75-175 hp category. (Note however that we are allowing averaging of
emissions between these engine categories through the use of power-
weighted ABT program credits.) We believe that this restriction
reflects the availability of emissions control technology, and is
needed to avoid erosion of environmental benefits that might occur if a
manufacturer with a diverse product offering were to meet the phase-in
with relatively low cost smaller engines, thereby delaying compliance
on larger engines with much higher lifetime emissions potential. Even
so, the horsepower ranges for these power categories are fairly broad,
so this restriction allows ample freedom to manufacturers to structure
compliance plans in the most cost-effective manner. There were no
adverse comments on this approach.
---------------------------------------------------------------------------

\29\ Note exceptions to the percent phase-in requirements during
the phase-in model years discussed in sections III.L and III.M.
These deal with differences between a manufacturer's actual and
projected production levels, and with incentives for early or very
low emission engine introductions.
---------------------------------------------------------------------------

b. Special Considerations for the 75-175 hp Category
As discussed in the proposal, the 75-175 hp category of engines and
equipment may involve added workload challenges for the industry to
develop and transfer technology. Though spanning only 100 hp, this
category represents a great diversity of applications, and comprises a
disproportionate number of the total nonroad engine and machine models.
Some of these engines, though having characteristics comparable to many
highway engines such as turbocharging and electronic fuel control, are
not directly derived from highway engine platforms and so are likely to
require more development work than larger engines to transfer emission
control technology from the highway sector. Furthermore, the engine and
equipment manufacturers have greatly varying market profiles in this
category, from focused one- or two-product offerings to very diverse
product lines with a great many models.
Therefore, in addition to the flexibility provided through the
phase-in mechanism, we proposed two optional measures to provide added
flexibility in implementing the Tier 4 NO_X standards, while
keeping a priority on bringing PM emissions control into this diverse
power category as quickly as possible. First, we proposed to allow
manufacturers to use NMHC+NO_X credits generated by any Tier
2 engines over 50 hp (in addition to any other allowable credits) to
demonstrate compliance with the Tier 4 requirement for 75-175 hp
engines in 2012, 2013, and 2014 only. Second, we proposed allowing a
manufacturer to instead demonstrate compliance with a reduced phase-in
requirement of 25% for NO_X and NMHC in each of 2012, 2013,
and the first 9 months of 2014. Full compliance (100% phase-in) with
the Tier 4 standards would have needed to be demonstrated beginning
October 1, 2014.
Engine manufacturers reinforced the points we made in the proposal
regarding added workload challenges for this diverse category of
engines and machines. However, they suggested that the first of the
proposed options to address these challenges (allowing use

[[Page 38975]]

of Tier 2 credits) is not likely to be used due to a lack of available
Tier 2 credits, and therefore should be dropped, and that the second
option (allowing a slower phase-in) provided too short a stability
period, and should be modified to delay final compliance by an
additional 3 months, to December 31, 2014 or January 1, 2015. In
addition to describing the very large redesign workload, they pointed
out that engines and machines in this category typically do not have a
model year that differs from the calendar year, and so the substantial
changes required for Tier 4 compliance in October 2014 could force the
need to change the product for all of 2014, effectively shortening the
phase-in to two years. One manufacturer argued that the compliance date
for the 75-100 hp engines in this category should be delayed an
additional year, to 2016, and that the start of the phase-in for these
engines should be likewise delayed from 2012 to 2013.
We do not feel that the first option (allowing use of Tier 2
credits) should be dropped, as it provides an alternative flexibility
mechanism for a power category in which flexibility is clearly
important, and is environmentally helpful as it provides an option for
manufacturers to achieve NO_X emission reductions earlier
than under the second option. By providing an opportunity to use Tier 2
credits in the 75-175 hp category, it coordinates well with the Tier 2
credit use opportunity we are providing for the 50-75 hp engines
meeting the 2008 PM standard (see section III.A), and allows for
coordinated redesign and credit use planning by a manufacturer over
this wide power range over many years. Nonetheless, recognizing that
the second option may be more attractive to manufacturers, and
considering the comments they provided on it, we have concluded that a
three month phase-in extension until the end of 2014 is warranted to
address the workload burden and to align product cycle dates. Thus we
are adopting the December 31, 2014 implementation date suggested in
comments for completion of the 75-175 hp engine phase-in.
We do not agree that an additional year of delay is appropriate for
the 75-100 hp engines in this category. The comment expressing interest
in our doing so did not provide any basis for it in technological
feasibility or in workload burden, and we do not see any basis for it
ourselves.
Therefore, we are adopting both of the proposed optional measures
for the 75-175 hp engine phase-in, except that in the second option,
full compliance (100% phase-in) with the Tier 4 standards will need to
be demonstrated beginning December 31, 2014. As proposed, manufacturers
using this reduced phase-in option will not be allowed to generate
NO_X credits from engines in this power category in 2012,
2013, and 2014, except for use in averaging within the 75-175 hp
category (that is, no banking or trading, or averaging with engines in
other power categories). We believe that this restriction on credit use
is appropriate, considering that larger engine categories will be
required to demonstrate a substantially greater degree of compliance
with the 0.30 g/bhp-hr NO_X standard several years earlier
than engines built under this option. As the purpose of this option is
to aid manufacturers in implementing Tier 4 NO_X standards
for this challenging power category, we do not want any manufacturers
who might be capable of building substantially greater numbers of
cleaner engines to use this option as an easy and copious source of
credits (owing to its slower phase-in of stringent standards) that in
turn can be used to delay building clean engines in other categories or
model years.
c. Alternative Phase-In Standards
To ensure that Tier 4 engine development is able to take maximum
advantage of highway diesel technology advances, we proposed to adopt
nonroad diesel provisions in the averaging, banking, and trading
program that would parallel the heavy-duty highway engine program's
``split family provisions'' (see 68 FR 28470, May 23, 2003). In
essence, these allow a manufacturer to declare an engine family during
the phase-in years that is certified at NO_X levels roughly
midway between the phase-out standard and phase-in standard, without
the complication of tracking credit generation and use. Because they
constitute a calculational simplification of the emissions averaging
provisions, these split family provisions do not result in a loss in
environmental benefits compared to what the phase-in can achieve.
The nonroad proposal also included specific emission levels for
these split families, rather than just describing how they are
calculated. Commenters suggested that we go one step further still and
express these levels as alternative standards. They argued that this
would facilitate attempts at harmonizing standards globally, especially
for standards-setting bodies such as the European Commission that do
not have emissions averaging programs. We are also aware that most
manufacturers of highway diesel engines are now planning to comply with
our 2007 standards using this emissions averaging approach, increasing
the significance of comments on the topic from nonroad engine
manufacturers, many of whom also make highway engines.\30\
---------------------------------------------------------------------------

\30\ See the recently published ``Highway Diesel Progress Review
Report 2,'' EPA420-R-04-004, available at
http://www.epa.gov/otaq/diesel.htm#progreport2.

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

After carefully considering the issues involved, we agree that the
proposed approach lends itself to expression in terms outside of the
averaging, banking, and trading program and that it makes sense to do
so. We are creating such an alternative in the final regulations
accordingly. These alternative standards do not substantively change
our Tier 4 program from what we proposed, but rather respond to
manufacturers' suggestions for administrative simplifications to what
is essentially an averaging-based flexibility option in demonstrating
compliance with the percent-of-production NO_X phase-in. The
alternative NO_X phase-in standards are shown in table II.A-
3. They apply only during the NO_X phase-in years.
Manufacturers may use both approaches within a power category if
desired, certifying some engines to the alternative standards, with the
rest subject to the phase-in percentage requirement. Note that engines
under 75 hp subject to Tier 4 NO_X standards do not have an
alternative standard because they do not have a NO_X phase-
in, and engines over 750 hp do not have an alternative standard because
of the separate standards we are adopting for these engines (explained
in section II.A.4).

Table II.A-3.--Tier 4 Alternative NOX Phase-in Standards (g/bhp-hr)
------------------------------------------------------------------------
NOX standard
Engine power (g/bhp-hr)
------------------------------------------------------------------------
75 < = hp < 175 (56 < = kW < 130)........................ \a\ 1.7
175 < = hp < = 750 (130 < = kW < = 560).................... 1.5
------------------------------------------------------------------------
Notes: \a\ Under the option identified in footnote b of table II.A-2, by
which manufacturers may meet an alternative phase-in requirement of 25/
25/25% in 2012, 2013, and 2014 through December 30, the corresponding
alternative NOX standard is 2.5 g/bhp-hr.

The engines certified under these standards will of course also
need to meet the Tier 4 PM and crankcase control requirements that take
effect for all engines in the first phase-in year. They will also need
to comply with all Tier 4 provisions that would apply to

[[Page 38976]]

phase-in engines, including the 0.14 g/bhp-hr NMHC standard and the NTE
and transient test requirements for all pollutants. We recognize that
this differs from what is required under the phase-in approach, in
which these requirements would not apply to the 50% of engines
categorized as ``phase-out'' engines. However, under the alternative
standards approach, what would have been two different engine families
(one meeting phase-in requirements and one meeting phase-out
requirements, with NO_X and PM emissions averaging allowed
between them under the ABT provisions) are replaced by a single engine
family meeting the one set of alternative standards. Therefore all of
the engines in this family must by default meet the phase-in
requirements for provisions that lack any sort of averaging mechanism
(NMHC standard, NTE, etc). As a result, any manufacturer choosing to
design to the alternative standards rather than using the phase-in
approach provides some additional environmental benefit as an indirect
result of choosing this approach.
We also believe that this alternative standards provision makes
appropriate a further adjustment to the NO_X phase-in scheme
to better preserve both the advanced technology phase-in approach, for
those manufacturers choosing that compliance path, and the alternative
standards approach, for those choosing that path. Under the proposal,
the provision for certifying a split engine family at a pre-designated
NO_X level would not allow credit generation by or credit use
on engines in the split family (other than for averaging within the
family). This was consistent with our goal of providing a simple,
single average NO_X standard level for the family, equivalent
to arbitrarily designating a portion of the engines in the family as
``phase-out'' engines (credit generators) and the rest as ``phase-in''
engines (credit users) with a net credit balance of zero, while
avoiding the burden of actually calculating and tracking credits. This
was also consistent with our approach under the 2007 highway engine
program from which this concept is derived.
However, because this split family provision has evolved into a set
of alternative standards, there is no longer a need to prohibit the
generation and use of ABT credits for these engines to preserve a de
facto net zero credit balance, and so, considering that it is also not
environmentally detrimental, we believe it is appropriate to allow
credit use and generation for these engines as for other engines. A
consequence of doing so, consistent with all of our ABT programs, is
the adoption of NO_X FEL caps for these engines. To maintain
the character of this compliance path as producing engines during the
phase-in years that emit at NO_X levels which are roughly
averaged between Tier 3 and final Tier 4 levels, we are setting
NO_X FEL caps for these engines at levels reasonably close to
the alternative standards. (See section III.A for details.) Because we
are also maintaining the original phase-in/phase-out compliance path, a
manufacturer wishing to build engines with NO_X levels higher
than these FEL caps, at or approaching the Tier 3 levels, could still
do so; in fact these would in actuality fit the description of a phase-
out engine. This manufacturer would also, of course, have to produce a
corresponding number of phase-in engines meeting the aftertreatment-
based Tier 4 NO_X standards.
We also observe that the creation of alternative standards provides
the opportunity to adjust the phase-in/phase-out provisions so as to
reinforce their focus on introducing high-efficiency NO_X
aftertreatment technology during the phase-in years, which is, of
course, their aim. We are doing this by setting NO_X family
emission limit (FEL) caps for phase-in engines at the same low levels
as for Tier 4 engines produced in the post-phase-in years. (Again, see
section III.A for details.) Although the engine manufacturers indicated
in their comments that they did not believe it likely that anyone would
choose this phase-in/phase-out compliance path, we believe that
preserving it and focusing it on encouraging very low-NO_X
engines as early as possible provides a potentially useful and
environmentally desirable alternative path. Thus these two concepts
have been developed to provide complementary compliance paths obtaining
equivalent overall NO_X reductions, one focused on phasing in
high-efficiency NO_X aftertreatment and the other on
achieving NO_X control for all subject engines during the
phase-in years at an average level between the Tier 3 and final Tier 4
standards levels.
3. Standards for Smaller Engines
a. Engines Under 25 hp
We are finalizing the Tier 4 program we proposed for engines under
25 hp. In the proposal we presented our view that standards based on
the use of PM filters should not be set at this time for the very small
diesel engines below 25 hp. We also discussed our plan to reassess the
appropriate long-term standards in a technology review. However, for
the nearer-term, we concluded that other proven PM-reducing
technologies such as diesel oxidation catalysts and engine optimization
could be applied to engines under 25 hp. Accordingly, we proposed Tier
4 PM standards to take effect beginning in 2008 for these engines based
on use of these technologies.
In contrast to our proposals for other engine categories, the
proposed Tier 4 standards for this category elicited very little
comment from the engine manufacturers other than an expression of
support for deferring consideration of any more stringent standards
pending results of a future technology review. The States and
environmental organizations expressed disappointment that EPA had not
proposed more stringent standards for these engines, given the very
large number of these engines in the field and the significant risk
they pose due to individuals' exposure to diesel PM and air toxics.
They urged more stringent 2008 PM standards and the adoption of
standards obtaining emission reductions of 90% or more by the end of
2012. Emissions control manufacturers argued that more stringent 2008
standards based on the use of more efficient oxidation catalysts are
feasible.
As discussed in section II.B.4, we continue to believe that the
standards we proposed for engines under 25 hp are feasible, and
commenters in the nonroad diesel industry provided no comments to the
contrary. Our reasons for not proposing more stringent Tier 4 standards
for these engines based on the use of PM filters and NO_X
aftertreatment were mainly focused on the cost of equipping these
relatively low cost engines with such devices, especially considering
the prerequisite need for electronic fuel control systems to facilitate
regeneration. The comments supporting more stringent standards were not
convincing, as they did not address these cost issues. However, we do
agree that these small engines likely have a large impact on human
health, and, as discussed in section VIII.A, we are reaffirming the
plan we described in the proposal to reassess the appropriate long-term
standards for these engines in a technology review to take place in
2007. We will set more stringent standards for these engines at that
time, if appropriate.
We also disagree with comments supporting more stringent 2008
standards that would require the use of diesel oxidation catalysts on
all small engines. Although we agree that these catalysts can be
applied so as to achieve emission reductions on some small engines, the
emissions performance data

[[Page 38977]]

we have analyzed do not support our setting a more stringent standard.
Section 4.1.5 of the RIA summarizes such data showing a very wide range
of engine-out PM emissions in this power category. Applying oxidation
catalyst technology to these engines, though capable of some PM
reduction if properly designed and matched to the application, is
limited by sulfur in the diesel fuel. Specifically, precious-metal
oxidation catalysts (which have the greatest potential for reducing PM)
can oxidize the sulfur in the fuel and form particulate sulfates. Even
with the 500 ppm maximum sulfur fuel available after 2007, the sulfate
production potential is large enough to limit what can be done to set
more stringent 2008 PM standards through the use of these catalysts.
The 15 ppm maximum sulfur fuel available after 2010 will greatly
improve the potential for use of oxidation catalysts, but as we
discussed above, we believe that the much larger potential reduction
afforded by PM filter technology warrants our waiting until the
technology review in 2007 to evaluate the appropriate long-term
standards for these engines. See section II.B.5 and RIA section 4.1.5
for further discussion.
When implemented, the Tier 4 PM standard and related provisions we
are adopting today for engines under 25 hp will yield an in-use PM
reduction of over 50% for these engines, and large reductions in toxic
hydrocarbons as well. Achieving these emission reductions is very
important, considering the fact that many of these smaller engines
operate in populated areas and in equipment without closed cabs--in
mowers, portable electric power generators, small skid steer loaders,
and the like.
We are also adopting the alternative compliance option that we
proposed for air-cooled, direct injection engines under 11 hp that are
startable by hand, such as with a crank or recoil starter. As we
explained in the proposal, the alternative is justified due (among
other things) to these engines' need for loose design fit tolerances,
their small cylinder displacement and bore sizes, and the difficulty in
obtaining components for them with tight enough tolerances (68 FR
28363, May 23, 2003). This alternative allows manufacturers of these
engines to delay Tier 4 compliance until 2010, and in that year to
certify them to a PM standard of 0.45 g/bhp-hr, rather than to the 0.30
g/bhp-hr PM standard applicable beginning in 2008 to the other engines
in this power category. As proposed, engines certified under this
alternative compliance requirement will not be allowed to generate
credits as part of the ABT program, although credit use by these
engines will still be allowed.
We received no adverse comments on this proposed alternative for
qualifying engines under 11 hp. Euromot commented that there are hand-
startable engines in the 11-25 hp range, and that we should extend the
alternative compliance option to these engines as well. However, hand-
startability is not the sole defining feature of engines for which we
established this alternative. Rather, the alternative is for a class of
engines typified by a combination of characteristics (very small, air-
cooled, direct injection, hand-startable), which give rise to the
potential technical difficulties noted above. To extend the alternative
to other engines simply because they have a hand-start is not
justified, because they do not share these technical difficulties (or
do not share them to the same degree). Such an extension could also
potentially encourage manufacturers of the many models of these larger
engines to market a hand-start option simply to avoid more stringent
standards.
b. Standards for 25-75 hp Engines
We proposed a 0.22 g/bhp-hr PM standard for 25-75 hp engines, to
take effect in 2008. We also proposed a filter-based 0.02 g/bhp-hr PM
standard for these engines, to take effect in 2013, the year in which
filter-based technology for these engines is expected to be applicable
on a widespread basis (see section II.A.1). Also in 2013, the 25-50 hp
engines would be subject to the 3.5 g/bhp-hr NMHC+NO_X
standard already adopted for 50-75 hp engines (taking effect in 2008 as
part of Tier 3). We are adopting all of these proposed standards in
this final rule.
The 2008 PM standard for these engines should maximize reduction of
PM emissions using technology available in that year. We believe that
the 2008 PM standard is feasible for these engines, based on the same
engine or oxidation catalyst technologies feasible for engines under 25
hp in 2008, following the introduction of nonroad diesel fuel with
sulfur levels reduced below 500 ppm. We expect in-use PM reductions for
these engines of over 50% (and large reductions in toxic hydrocarbons
as well) over the five model years this standard would be in effect
(2008-2012). These engines will constitute a large portion of the in-
use population of nonroad diesel engines for many years after 2008.
Although we are finalizing the 2013 standards for 25-75 hp engines
today, we are also reaffirming our commitment to conducting a
technology review for these standards in 2007. This planned review is
discussed in section VIII.A. Additional discussion of our feasibility
assessment for the 2008 and 2013 standards can be found in section
II.B.4 and RIA section 4.1.4.
In comments, emissions controls manufacturers argued that more
stringent 2008 standards for PM and NMHC based on the use of more
efficient oxidation catalysts are feasible and should be adopted.
Environmental organizations argued that PM and NO_X standards
for 2008 should be set at more stringent levels, based on the use of
oxidation catalysts and improved engine optimization. The California
Air Resources Board argued for more stringent 2008 standards for
HC+NO_X, PM and toxics, based on the use of oxidation catalysts.
We disagree with the comments calling for more stringent 2008
standards than proposed for 25-75 hp engines, based on the use of
diesel oxidation catalysts. The standards we proposed and are adopting
for these engines pull ahead sizeable PM reductions starting three
years ahead of the earliest PM filter-based standards for any engine
size. The pull-ahead standard level balances early reductions with the
need to ensure that the PM filter-based standards and Tier 3
NMHC+NO_X standards are not jeopardized by an overemphasis on
early reductions. Although we agree that oxidation catalysts can be
applied to these engines, the emissions performance data we have
analyzed do not support our setting a more stringent standard, for the
same reasons described above in section II.A.3.a for engines under 25
hp. Refer to section II.B.4 and to section 4.1.4 of the RIA for
additional discussion. For a discussion of comments opposed to new
standards in 2008, see sections II.A.1 and II.B of this preamble.
We also do not agree that more stringent NO_X
requirements based on improved engine optimization are appropriate for
these engines in 2008. In 2001 we reviewed and confirmed the previously
set NMHC+NO_X emission standards that will be in effect for
these engines during the time frame in question.\31\ Because of the
focus we are putting on achieving large PM reductions from these
engines as early as possible, we felt that it was important to strike a
balance between PM and NO_X control. As a result, we did not
propose more stringent NO_X standards for 50-75 hp engines,
and we proposed to apply

[[Page 38978]]

the 3.5 g/bhp-hr NMHC+NO_X standard to 25-50 hp engines in
2013 because this is the year in which the PM filter-based standard is
being implemented. Requiring new NO_X controls for these
engines earlier than 2013 would add a third redesign step to those
already called for in 2008 and 2013. This would add a potentially
unacceptable amount of redesign workload, to a point that it could
jeopardize our objective of bringing stringent PM control to these
engines as early as possible.
---------------------------------------------------------------------------

\31\ ``Nonroad Diesel Emissions Standards Staff Technical
Paper,'' EPA420-R-01-052, October 2001.
---------------------------------------------------------------------------

Consistent with the proposal, we are not setting more stringent
NO_X standards for engines below 75 hp at this time based on
the use of NO_X aftertreatment. As discussed in section
4.1.2.3 of the RIA, a high degree of complexity and engine/
aftertreatment integration will be involved in applying NO_X
adsorber technology to nonroad diesel engines. The similarity of larger
nonroad engines (above 75 hp) to highway diesel engines, which will
provide the initial experience base for this integration process, is
key to our assessment that NO_X adsorbers are feasible for
these engines. On the other hand, although engines under 75 hp are
gradually increasing in sophistication over time, the accumulation of
experience with designing and operating these engines with more
advanced technology clearly lags significantly behind the sizeable
experience base already developed for larger engines. At this point, we
are unable to forecast how quickly adequate experience may accrue.
Because this experience is crucial to ensuring the successful
integration of the engines with NO_X adsorber technology, we
are not adopting NO_X adsorber-based standards for engines
under 75 hp in this final rule. Rather, as discussed in section VIII.A,
we plan to undertake a technology assessment in the 2007 time frame
which would evaluate the status of engine and emission control
technologies, including NO_X controls, for engines less than
75 hp.
As described in section II.A.1.a, we are providing two PM standard
compliance options to engine manufacturers for 50-75 hp engines. As
part of this, we also proposed a measure to ensure that it would not be
abused by equipment manufacturers who use engines that do not meet the
PM pull-ahead standard in 2008-2011, but who then switch engine
suppliers to avoid PM filter-equipped engines in 2012 as well (68 FR
28360, May 23, 2003). We proposed that an equipment manufacturer making
a product with engines not meeting the pull-ahead standard in any of
the years 2008-2011 must use engines in that product in 2012 meeting
the 0.02 g/bhp-hr PM standard; that is, the equipment manufacturer
would have to use an engine from the same engine manufacturer or from
another engine manufacturer choosing the same compliance option. We
also solicited comment on possible alternative solutions using a
numerical basis, describing an example that would require the
percentage of 50-75 hp machines equipped with PM filters in 2012 to be
no less than the same percentage of 50-75 hp machines produced with
non-pull-ahead engines in 2008-2011.
The Engine Manufacturers Association (EMA) and Deere commented on
the unenforceability of the proposed ``no switch'' measure as part of a
broader objection to our proposal for 50-75 hp engines. They pointed
out that changing equipment model designations could easily allow an
equipment manufacturer seeking to avoid PM filter-equipped engines in
2012 to declare a product in this model year a ``new product,'' not the
same as the 2008-2011 product. We have concluded that there is indeed
potential for this abuse to occur and, although no one commented
specifically on the alternative approach, we believe it clearly
addresses this problem because it does not depend on product designations.
Therefore, we are adopting a provision to discourage engine
switching based on this alternative approach. An equipment manufacturer
who uses 50-75 hp engines will have three options:

(1) The manufacturer may exclusively use engines certified to
the 0.22 g/bhp-hr PM standard (including through use of ABT credits)
over the 2008-2011 period. This manufacturer is then free to use any
number of 50-75 hp engines not certified to the 0.02 g/bhp-hr
standards in 2012.
(2) The manufacturer may exclusively use engines not certified
to the 0.22 g/bhp-hr PM standard over the 2008-2011 period. This
manufacturer must then use only 50-75 hp engines that are certified
to the 0.02 g/bhp-hr standards in 2012 (including through use of ABT
credits).
(3) The manufacturer may use a mix of engines in 2008-2011. In
this case, the manufacturer must calculate the percentage of 50-75
hp engines used (in U.S.-directed equipment) over the 2008-2010
period that are not certified to the 0.22 g/bhp-hr PM pull-ahead
standard. Then the percentage of 50-75 hp engines this manufacturer
uses in 2012 that are certified to the 0.02 g/bhp-hr PM standard
must be no less than this 2008-2010 non-pull-ahead percentage figure
minus a 5% margin.\32\

\32\ The 2011 production is not included in the percentage
calculation to avoid the need for post-2011 confirmation of
production volumes which, as it would occur in 2012, would be too
late to easily re-focus 2012 production if the confirmed volumes
differ from projections. It is not likely that manufacturers would
abuse the program by switching engine suppliers for this one year of
production.
---------------------------------------------------------------------------

As an example of this third option, consider an equipment
manufacturer who does not use the transition flexibility provisions
(described in section III.B), and over the 2008-2010 period makes 1000
50-75 hp machines for use in the U.S., 200 (20%) of which use engines
not certified to the 0.22 g/bhp-hr standard. In 2012, that manufacturer
must make at least 15% of his 50-75 hp machines for use in the U.S.
using engines certified to the 0.02 g/bhp-hr standard. We feel that the
5% margin is needed to allow for some reasonable sales shifts within
the manufacturer's product offering over time, but is small enough to
ensure that any possible advantage gained from selling higher-emissions
products remains minimal. Equipment manufacturers must keep production
records sufficient to prove compliance. This restriction and the
percentage calculation will not apply to any 2008-2012 engines at issue
that are being produced under the equipment manufacturer transition
flexibility provisions discussed in section III.B. For example, if in
addition to the 200 engines in 2008-2010 not certified to the 0.22 g/
bhp-hr standard in the above example, this manufacturer also used 500
previous-tier engines in 2008-2010 under the flexibility allowance
program, his percentage target for PM filter-equipped engines in 2012
would be 35% of all the engines used in 2012 that are not previous-tier
engines under the flexibility allowance program. \33\
---------------------------------------------------------------------------

\33\ That is: [200/(1000-500)]
= 40%; subtracting the 5% margin
then yields 35%.
---------------------------------------------------------------------------

4. Standards for Engines Above 750 hp
We are adopting different Tier 4 standards for over 750 hp engines
from those we proposed, and we are also adopting different
implementation dates for these engine standards, though both the
proposed and final programs have as their primary focus the
implementation of high-efficiency exhaust emission controls as quickly
as possible. The approach being adopted reflects our careful review of
the technical issues presented by these engines. For some of these
engines, we are accelerating standards based on the use of
aftertreatment controls. For others, we are deferring a decision on
such aftertreatment-based standards. This approach represents a
feasible and efficient approach to redesigning

[[Page 38979]]

engines and installing aftertreatment in a coordinated, orderly manner
over a decade or more, and will achieve major reductions in PM and
NO_X from these large diesel engines.
Under the proposal, all engines above 750 hp were treated the same,
with a phase-in of PM and NO_X aftertreatment technology that
started in 2011 and finished in 2014. The final standards are based on
our evaluation of the differing technical issues presented by the two
primary kinds of equipment in this category, mobile power generation
equipment (generator sets) and mobile machinery. For both generator
sets and mobile machinery, PM aftertreatment-based standards will start
in 2015, with no prior phase-in. EPA is replacing the proposed phase-in
with a PM standard starting in 2011 that is comparable to the overall
level of control that the proposed phase-in would achieve. Differences
within these applications, however, call for different approaches to
the implementation of NO_X aftertreatment technology. For
generator sets above 1200 hp, an aftertreatment-based NO_X
standard will start in 2011, three years earlier than the date we
proposed for full implementation of such standards. For generator sets
below 1200 hp, the same aftertreatment-based NO_X standard
will start in 2015. As with the PM standard, there is no phase-in. For
engines used in mobile machinery, which is assumed to include all
equipment that is not a generator set, EPA is deferring a decision on
setting aftertreatment-based NO_X standards to allow
additional time to evaluate the technical issues involved in adapting
NO_X adsorber technology to these applications and engines.
However, EPA is adopting a NO_X standard for these engines
starting in 2011 that will achieve large NO_X reductions by
relying on engine-based emissions control technology. Consistent with
the different approaches we are taking to setting standards for engines
above and below 750 hp, we are also adopting restrictions on ABT credit
use between these power categories, as described in section III.A.
Consistent with the approach we took in previous standard-setting
for these engines, we proposed that nonroad diesels above 750 hp be
given more lead time than engines in other power categories to fully
implement Tier 4 standards, due primarily to the relatively long
product design cycles typical of these high-cost, low-sales volume
engines and machines. Specifically, we proposed that this category of
engines move directly from Tier 2 to Tier 4, and that the Tier 4 PM
standard be phased in for these engines on the same 50-50-50-100%
schedule as the NO_X and NMHC phase-in schedule, over the
2011-2014 model years. This would provide engine manufacturers with up
to 8 years of design stability to address concerns specific to this
category. Although we expressed our belief that these proposed
provisions would enable the manufacturers to meet proposed Tier 4
engine standards, we also acknowledged concerns the manufacturers had
expressed to us, and asked for comment on whether this category, or
some subset of it defined by hp or application, should have a later
phase-in start date, a later phase-in end date, adjusted standards,
additional equipment manufacturer transition flexibility provisions, or
some combination of these (68 FR 28364, May 23, 2003).
Comments from manufacturers of engines and equipment in this power
category expressed their widespread view that the proposed standards
were inappropriate in critical respects. In addition to reiterating the
need for extra lead time due to long product design cycles, they
pointed to difficulties with aftertreatment placement, with fabrication
of the large filters that would be needed for these engines, with
potential failures caused by uneven soot loading and regeneration in
large filters, with stresses due to thermal gradients across large
filters, and with mechanical stresses in mining applications with high
shock loads. The manufacturers noted that aftertreatment-based
standards for NO_X and PM were feasible for engines used in
large mobile power generators. However, manufacturers did not believe
aftertreatment-based NO_X standards could be implemented in
the time frame proposed for engines used in large mobile machinery such
as bulldozers and mine haul trucks. States, environmental
organizations, and manufacturers of emissions controls, on the other
hand, expressed support for the standards we proposed for these engines.
After evaluating these issues, EPA is adopting an approach that
tailors the standards to the circumstances presented by the different
kinds of engines in this power category. The NO_X standards
we are adopting will achieve effective NO_X control by
accelerating the proposed schedule for final NO_X standards
based on high-efficiency NO_X aftertreatment for the largest
generator sets, and by requiring engines in other generator sets to
also meet aftertreatment-based NO_X standards, although we
are delaying the implementation date for these standards compared to
the implementation schedule we proposed. We believe that NO_X
adsorber technology will be feasible for these generator set engines.
We also believe that they may be an especially attractive application
for Selective Catalytic Reduction (SCR) technology, which relies on the
injection of urea into the exhaust stream. There are many stationary
diesel generator sets using SCR today. Large mobile generator sets,
though moved from location to location, operate much like stationary
units once in place, with fuel (and potentially urea) delivered and
replenished periodically. See section II.B.3 for further discussion.
For equipment other than generator sets, we are deferring a
decision on setting aftertreatment-based NO_X standards to
allow additional time to evaluate the technical issues involved in
adapting NO_X control technology to these applications and
engines. We are still evaluating the issues involved for these engines
to achieve a more stringent NO_X standard, and believe that
these issues are resolvable. We intend to continue evaluating the
appropriate long-term NO_X standard for mobile machinery over
750 hp and expect to announce further plans regarding these issues (we
are currently considering such an action in the 2007 time frame). The
basis for the 0.50 g/bhp-hr NO_X standard we are adopting for
generator sets over 750 hp is discussed in section II.B.3. We are also
modifying the PM and NMHC standards we proposed (as well as certain
implementation dates for these provisions), and modifying our proposed
approach to ensuring transient emissions control for these engines
(discussed in section III.F). The Tier 4 standards for engines over 750
hp are shown in table II.A-4.

[[Page 38980]]

Table II.A-4.--Tier 4 Standards for Engines Over 750 hp (g/bhp-hr)
----------------------------------------------------------------------------------------------------------------
2011 2015
----------------------------------------------------------------------------------
PM NOX NMHC PM NOX NMHC
----------------------------------------------------------------------------------------------------------------
Engines used in:
generator sets < =1200 hp. 0.075 2.6 0.30 0.02 0.50 0.14
generator sets >1200 hp.. 0.075 0.50 0.30 0.02 No new standard 0.14
all other equipment...... 0.075 2.6 0.30 0.03 No new standard 0.14
----------------------------------------------------------------------------------------------------------------

Unlike NO_X control technology, we believe that the more
advanced state of PM filter technology development today makes their
availability for these engines by 2015, with over ten years of
development lead time, more certain, and so we are setting PM standards
for both mobile machinery and generator sets based on use of this
technology. We note in section II.B.3 that achieving durable PM filter
designs for these large applications will likely require the use of
wire mesh filter technology rather than the somewhat more efficient
wall flow ceramic-based technology applicable to smaller engines,
justifying the somewhat higher level for the 2015 PM standards shown in
table II.A-4 (0.03 or 0.02 g/bhp-hr compared to 0.01 g/bhp-hr). Section
II.B.3 also contains discussion of our bases for the other Tier 4
standard levels in this category. We believe that the 2015
implementation year (versus the proposed 2014 date for the fully
phased-in standard) is necessary to allow development of the requisite
technologies for these large engines, and to deal with the redesign
workload Tier 4 will create for the many engine and equipment models in
this category which, as noted, typically have very low production
volumes and long product cycles.
For the purpose of determining which nonroad engines are subject to
the generator set standards, we are defining a generator set engine as:
``An engine used primarily to operate an electrical generator or
alternator to produce electric power for other applications.'' This
definition makes it clear that generator set engines do not include
engines used in machines such as mine trucks that do mechanical work
but that employ engine-powered electric motors to propel the machine,
but they do include engines in nonroad equipment for which the primary
purpose is to generate electric power, even if the machine is also
self-propelled.
Similar to other power categories, we proposed a 50% phase-in to
the final Tier 4 PM, NO_X and NMHC standards, with
opportunity to average PM and NO_X between phase-in and
phase-out engines in the 2011-2013 phase-in years via the ABT program.
Because in this rule we are no longer phasing in to a final
NO_X standard for some engines over 750 hp, it no longer
makes sense to express the 2011 standards for these engines in this
manner. Instead we are setting brake-specific emission standards
effective in 2011. Furthermore, to avoid further complicating an
already complex standards structure, we are adopting this pattern for
the entire category, even with engines such as those used in generator
sets for which the standards could still be expressed as a percent
phase-in to final standards. Except for the pull-ahead of the long-term
NO_X standard for large generator sets (which will increase
the environmental benefit compared to the proposal), these 2011 PM and
NO_X standards essentially correspond to averaged standards
under a 50% phase-in to aftertreatment-based standards, hence our
conclusion that the Tier 4 program will provide a level of control in
2011 that is substantially equivalent to that of the proposal. In
addition, PM and NO_X emissions averaging through the ABT
program will allow a manufacturer to comply by phasing in
aftertreatment technologies as in the proposed program, should they
desire to do so. Although there is no such averaging program for NMHC,
the 2011 NMHC standard can be achieved without the use of advanced
aftertreatment (as explained in section II.B.3), thus helping to enable
a manufacturer to pursue this compliance strategy if desired.
This approach involving separate 2011 and 2015 standards is
comparable to the proposed percent phase-in approach with emissions
averaging. We believe that it enables manufacturers to redesign engines
and equipment in a coordinated, orderly manner over a decade or more,
and effectively gives targeted additional flexibility to the industry.
Given the continuing availability of emissions averaging, we do not
view this change as the creation of an additional, separate tier of
standards compared to the proposal's phase-in of the Tier 4 standards.
5. Establishment of New Power Categories
We are finalizing our proposal to regroup the nine power categories
established for previous tiers into the five Tier 4 power categories
shown in table II.A-1. As we explained in the proposal, this regrouping
will more closely match the degree of challenge involved in
transferring advanced emissions control technology from highway engines
to nonroad engines. The proposed choice of 75 hp as the appropriate
cutpoint for applying aftertreatment-based NO_X control drew
particular attention. In the proposal, we recognized that there is not
an abrupt power cutpoint above and below which the highway-derived
nonroad engine families do and do not exist, but noted further that 75
hp is a more appropriate cutpoint to generally identify nonroad engines
in Tier 4 that will most likely be using highway-like engine technology
than either of the closest previously-adopted power category cutpoints
of 50 or 100 hp. Nonroad diesels produced today with rated power above
75 hp (up to several hundred hp) are mostly variants of nonroad engine
platforms with four or more cylinders and per-cylinder displacements of
one liter or more. These in turn are largely derived from or are
similar to heavy-duty highway engine platforms. Even where nonroad
engine models above 75 hp are not so directly derived from highway
models, they typically share many common characteristics such as
displacements of one liter per cylinder or more, direct injection
fueling, turbocharging, and, increasingly, electronic fuel injection.
These common features provide key building blocks in transferring high-
efficiency exhaust emission control technology from highway to similar
nonroad diesel engines. We therefore proposed to regroup power ratings
using the 75 hp cutpoint.
The Engine Manufacturers Association and Euromot, which together
represent the companies that make all but a tiny fraction of nonroad
diesel engines sold in the U.S., expressed their support for the 75 hp
cutpoint, as did every individual engine

[[Page 38981]]

manufacturer who commented on this subject. These companies generally
endorsed EPA's reasoning that the 75 hp level is appropriate to
``delineate those engines (and applications) for which the application
of on-highway like NO_X aftertreatment technologies is not
likely to be feasible or practical'' (EMA Comments p.10).
However, the Association of Equipment Manufacturers (AEM) and the
equipment manufacturer Ingersoll-Rand commented that 100 hp is the more
appropriate cutpoint for application of advanced NO_X control
technology. They based this view on their observations that 75-100 hp
engines do not share many of the characteristics of highway diesels,
thus making technology transfer from the highway sector very costly,
and customers will be negatively affected due to the relatively large
cost impacts of NO_X aftertreatment on these smaller engines.
They also argued that the 75 hp cutpoint would create significant
misalignment in the global marketplace because European regulations do
not use this cutpoint.
We agree with the equipment manufacturers' observation that there
are engines above 75 hp without turbocharging or electronic controls.
However, EPA did not choose the 75 hp cutpoint with the expectation
that all engines above it had the same technology characteristics.
There is a continuum in the degree to which key technology
characteristics exist on engines throughout the power spectrum, and the
75 hp cutpoint was based on information from the current fleet of
engines and on manufacturers' and EPA's expectations for future design
trends, showing there is a marked difference in the prevalence of these
and other key engine design characteristics for engines above and below
75 hp, and that, over time, 75-100 hp engines increasingly share
advanced technology characteristics common in larger engines. Clear
evidence of this trend over recent model years is documented in the
RIA, section 4.1.4. As discussed in section II.B.2, the kind of engine
technology generally employed by engines in the 75-100 hp range,
combined with the lead time and phase-in provided for the Tier 4
NO_X standards, leads us to conclude that highway-like
NO_X aftertreatment can be transferred to these engines. In
addition, since our proposal, the Council of the European Union (EU)
has issued a revised final version of new nonroad diesel emission
standards that essentially aligns their power cutpoints with our own,
including adoption of the 75 hp cutpoint for advanced technology
NO_X control. EPA does not believe that the costs of meeting
the NO_X standard for engines in the 75-100 hp range are
unreasonable, and we refer the reader to section VI for a detailed
discussion of our cost analysis for engines and equipment meeting Tier
4 standards in this power range. Moreover, EPA firmly believes such
standards are technologically feasible for 75-100 hp engines. (See
section II.B.2.)
Ingersoll-Rand also expressed concern that the proposed
consolidation of 3 previous power categories into a single 175-750 hp
category creates significant hardship by requiring the introduction of
aftertreatment technologies in a single year, contrasting this with the
Tier 2 standards, which phased in over 2001-2003 for these engines. In
response, we note that the Tier 3 standards, which were set in the same
rule that established the Tier 2 standards, will be introduced in a
single year for these engines (2006), and that the Tier 2 phase-in over
3 years was established in response to particular issues and
opportunities that were identified, specific to that time frame (see 62
FR 50181, September 24, 1997). In addition to the gradual phase-in of
Tier 4 standards over several years, we are adopting significant
flexibility provisions specifically to provide adequate lead time for
equipment manufacturers to make the transition to the new standards,
including some provisions that provide additional flexibility from what
we proposed, as explained in section III.B.
6. CO Standards
We proposed minor changes in CO standards for some engines solely
for the purpose of helping to consolidate power categories. We stated
in the proposal that we were not exercising our authority to revise the
CO standard for the purpose of improving air quality, but rather for
purposes of administrative efficiency. However, manufacturers objected
to these proposed changes, citing technological feasibility concerns,
and a lack of parity with highway diesel and nonroad spark-ignition
engines, given that existing CO standards levels for nonroad engines
are already five times lower than the standard level for highway engines.
Because we proposed the CO standard changes for the sake of
simplifying and consolidating power categories and not because of any
technical considerations relating to emission reductions, we do not
believe it productive to take issue with the views expressed that these
proposed changes raise serious feasibility concerns. We instead are
withdrawing this aspect of the proposal, the result being that the
existing CO standards remain in place. In doing so, we are not
considering or reexamining (and at proposal did not consider or
reexamine) the substantive basis for those standards. Having multiple
CO standards within a power category will, at worst, create minor
inconveniences in certification and compliance efforts. As a result, in
the less than 25 hp category, Tier 4 engines below 11 hp will continue
to be subject to a different CO standard than 11-25 hp engines,
identical to Tier 2. Likewise, different CO standards will continue to
apply in Tier 4 to engines above and below 50 hp in the 25-75 hp category.
We do note, however, that we are applying new certification tests
to all pollutants covered by the rule, the result being that Tier 4
engines will have to certify to CO standards measured by the transient
test (NRTC) (which includes a cold start test), and the NTE. Our intent
in adopting these new certification requirements is not to alter the
level of stringency of the standard but rather to ensure robust control
of emissions to this standard in use. The CO standards remain readily
achievable using these tests, and we anticipate that no additional
engine adjustments are necessary for the standards to be achievable (so
there are no significant associated costs). We also explain there that
the CO standards can be achieved without jeopardizing the ability to
achieve all of the other engine standards.
7. Crankcase Emissions Control
We currently require the control of crankcase emissions from
naturally-aspiriated nonroad diesel engines. We proposed to extend this
requirement to turbocharged nonroad diesel engines as well, starting in
the same model year that Tier 4 exhaust emission standards first apply
in each power category.
EMA opposed the proposed extension, reiterating concerns expressed
in comments on a similar proposed provision in the 2007 heavy-duty
highway rule, including concerns over the impact that recirculating
crankcase emissions may have on the feasibility of engine standards
over the full useful life. These concerns are addressed in the Summary
and Analysis of Comments document for that rule, which is included in
the docket for today's rule. Besides the feasibility issues raised by
EMA for nonroad diesels that are addressed in the highway rule, two
nonroad-specific issues were raised as well: (1) The need to design
crankcase emission control systems that operate at the high angularity
experienced by some

[[Page 38982]]

nonroad machines on uneven ground, and (2) the concern that this
requirement adds to the large number of ``first time'' requirements
being adopted for Tier 4. We agree that high angularity operation may
add new design considerations for these controls, but do not see how it
would pose a serious barrier that could not be overcome in time. The
grouping of new EPA requirements in a specific model year is an
important objective of our program aimed at providing stability to the
design process, a goal much supported by the engine manufacturers. We
have accounted for this in assessing feasibility, costs, and
flexibility needs for the program. One flexibility we are providing is
the three-path opportunity to satisfy our crankcase control
requirement, as described below. In fact, in its written comments EMA
recommended that, if EPA were to proceed with crankcase emission
control requirements for Tier 4, it adopt all three options for
demonstrating compliance. This is indeed what we are doing.
Thus, as proposed, in addition to allowing for compliance through
the routing of crankcase emissions to the engine air intake system, we
are also allowing manufacturers to instead meet the requirement by
routing the crankcase gases into the exhaust stream, provided they keep
the combined total of the crankcase emissions and the exhaust emissions
below the applicable exhaust emission standards. Also as proposed, we
are allowing manufacturers to instead meet the requirement by measuring
crankcase emissions instead of completely eliminating them, provided
manufacturers add these measured emissions to exhaust emissions in
assessing compliance with exhaust emissions standards. Manufacturers
using this option must also modify their exhaust deterioration factors
or develop separate deterioration factors to account for increases in
crankcase emissions as the engine ages, and must ensure that crankcase
emissions can be readily measured in use. We see no reason to treat
naturally-aspirated engines differently than turbocharged engines, and
so are allowing these options for all Tier 4 engines subject to the
crankcase control requirement, both turbocharged and naturally-
aspirated. The wording of the proposed regulations limiting the options
to turbocharged engines was inadvertent.
8. Prospects for International Harmonization
We received numerous comments, especially from engine and equipment
manufacturers, stressing the need for EPA to work with other
governmental standards-setting bodies to harmonize standards. We
recognize the importance of harmonization of international standards
and have worked diligently with our colleagues in Europe and Japan to
achieve that objective. Harmonization of these standards will allow
manufacturers continued access to world markets and lower the required
research and development and tooling costs needed to meet different
standards. We will continue to work with standards-setting governmental
entities and with foreign and domestic manufacturers.
In October 2003, the Council and Parliament of the European Union
reached agreement on revisions to a proposal developed by the European
Commission that would amend Directive 97/68/EC to include nonroad
diesel emissions standards similar to those in our Tier 4 program, and,
as in the U.S., coordinated with low sulfur diesel fuel requirements in
Europe. This revised proposal has since been finalized.\34\ This
revised Directive aligns well with our program in the Tier 4 time
frame, even more so than did the original Commission proposal. It also
closely aligns with our Tier 3 standards in the Tier 3 time frame.
---------------------------------------------------------------------------

\34\ Council of the European Union, ``Directive of the European
Parliament and of the Council amending Directive 97/68/EC'', March
15, 2004.
---------------------------------------------------------------------------

For engines of 50-750 hp, the Directive's standards are very
closely aligned with our own Tier 4 standards, including emissions
levels, implementation dates, the defined power categories, and the
lower hp limit of NO_X control based on high-efficiency
exhaust emission controls (75 hp). Exceptions are noted below:
? The 2008 PM standard level for 50-75 hp engines (the
equivalent of 0.3 g/bhp-hr vs our 0.22 g/bhp-hr level). Note, however,
that we do allow certification to the 0.3 g/bhp-hr level as an option,
provided the manufacturer must then meet our 0.02 g/bhp-hr standard in
2012, one year earlier than otherwise.
? The 2013 PM standard level for 50-75 hp engines (the
equivalent of 0.01 g/bhp-hr vs our 0.02 g/bhp-hr level).
? An October 1, 2014 start for the final 75-175 hp
NO_X standard (the same as our proposed date), compared to
the December 31, 2014 date we are adopting in this final rule.
? For constant speed engines: no Tier 4-equivalent
standards. Also, the EU's Tier 3-equivalent standards are not
implemented on these engines until 2011-2012.
As the EU program does not provide for emissions averaging, the
alternative NO_X standards we are setting for 75-750 hp
engines are the NO_X levels at which the EU standards are
generally aligned during our NO_X phase-in years. The EU
Directive also includes transition flexibility provisions for equipment
manufacturers similar to those in our program, discussed in section III.B.
The EU program for nonroad diesels has not adopted or proposed any
current or future standards for engines above 750 hp or below 25 hp,
and its revised Directive for 25-50 hp engines does not subject them to
any future standards beyond those entering into force in 2007
(equivalent to 0.45 g/bhp-hr PM and 5.6 g/bhp-hr
hydrocarbon+NO_X), in contrast to our 2013 standards based
the use of PM filters and more advanced engine-based control
technologies (0.02 g/bhp-hr PM and 3.5 g/bhp-hr NMHC+NO_X).
However, as discussed further in section VIII.A, the EU Directive
includes plans to conduct a future technology review of appropriate
standards for engines below 50 hp and above 750 hp. The year that this
is planned for is 2007, the same year in which we are planning a
technology review for engines below 75 hp. Considering progress to
date, and announced plans for reviews in 2007, we believe that
prospects for harmonized standards are excellent.
9. Exclusion of Marine Engines
For reasons outlined in the proposal, we are not applying Tier 4
standards to the marine diesel engines under 50 hp that are covered
under our Tier 1 and 2 standards. We believe it is more appropriate to
consider more stringent standards for a range of marine diesel engines,
including these, in a future action. It should be noted that the
existing Tier 2 standards will continue to apply to marine diesel
engines under 50 hp until that future action is completed. We did not
receive any adverse comments on this proposed approach.

B. Are the New Standards Feasible?

Today we are finalizing a program of stringent new standards for a
broad category of nonroad diesel engines coupled with a new nonroad
diesel fuel standard that dramatically lowers the sulfur level in
nonroad diesel fuel ultimately to 15 ppm. We believe these standards
are technically feasible in the leadtime provided given the
availability of 15 ppm sulfur fuel and the rapid progress to develop
the needed emission control technologies. We acknowledge, as pointed
out by a number of commenters, that these standards will be challenging
for industry to meet, in

[[Page 38983]]

part due to differences in operating conditions and duty cycles for
nonroad equipment and the diesel engines used in that equipment. Also,
we recognize that transferring and effectively applying these
technologies, which have largely been developed for highway engines,
will require additional time after the application of the technology to
on-highway engines. Diesel engine industry commenters and environmental
stakeholder commenters on our proposal consistently agreed with our
position that for most engine horsepower categories the technologies to
meet the standards exist and that the transfer of these technologies to
nonroad is possible. The biggest difference of opinions in the range of
comments received by the Agency concerns the timing of the emission
standards and the flexibility provisions (i.e., the leadtime necessary
to transfer the technology). One of the most important tasks for a
feasibility analysis is to determine the appropriate amount of
development time needed to successfully bring new technologies to
market. We have carefully weighed the desire to have clean engines
sooner, with the challenges yet to be overcome in applying the
technologies to nonroad engines and equipment, in determining the
appropriate timing and emission levels for the standards finalized today.
The RIA associated with today's action contains a detailed
description and analysis of diesel emission control technologies,
issues specific to applying these technologies to nonroad engines, and
why we believe the new emission standards are feasible. Additional in-
depth discussion of these technologies can be found in the final RIA
for the HD2007 emission standards, the final RIA for the HD2004
emission standards, the 2002 Highway Diesel Progress Review and the
recently released Highway Diesel Progress Review Report
2.\35\ \36\ \37\ \38\ The following
sections summarize the challenges to applying these technologies to
nonroad engines and why we believe the emission standards finalized
today are technically feasible in the leadtime provided.
---------------------------------------------------------------------------

\35\ Regulatory Impact Analysis: Heavy-Duty Engine and Vehicle
Standards and Highway Diesel Fuel Sulfur Control Requirements,
United States Environmental Protection Agency, December 2000,
EPA420-R-00-026. Copy Available in EPA Air Docket A-2001-28 Item II-A-01.
\36\ Regulatory Impact Analysis: Control of Emissions of Air
Pollution from Highway Heavy-Duty Engines, United States
Environmental Protection Agency, June 2000, EPA420-R-00-010. Copy
available in EPA Air Docket A-2001-28 Item II-A-02.
\37\ Highway Diesel Progress Review, United States Environmental
Protection Agency, June 2002, EPA 420-R-02-016. Copy available in
EPA Air Docket A-2001-28 Item II-A-52.
\38\ Highway Diesel Progress Review Report 2, United States
Environmental Protection Agency, March 2004, EPA420-R-04-004. Copy
available in Docket OAR-2003-0012-0918.
---------------------------------------------------------------------------

1. Can Advanced Diesel Emission Control Technologies Be Applied to
Nonroad Engines and Equipment?
The emission standards and the introduction dates for those
standards, as described earlier in this section, are premised on the
transfer of diesel engine technologies being or already developed to
meet light-duty and heavy-duty vehicle standards that begin in 2007.
The advanced technology standards that we are finalizing today for
engines over 25 horsepower will begin to go into effect four years
later. This time lag between equivalent highway and nonroad diesel
engine standards is necessary in order to allow time for engine and
equipment manufacturers to further develop these highway technologies
for nonroad engines and to align this program with nonroad Tier 3
emission standards that begin to go into effect in 2006.
This section summarizes the engineering challenges to applying
advanced emission control technologies to nonroad engines and
equipment, and why we believe that technologies developed for highway
diesel engines can be further refined to address these issues in a
timely manner for nonroad engines consistent with the emission
standards finalized today.
a. Nonroad Operating Conditions and Exhaust Temperatures
Nonroad equipment is highly diverse in design, application, and
typical operating conditions. This variety of operating conditions
affects emission control systems through the resulting variety in the
torque and speed demands (i.e., power demands). In our proposal, we
highlighted the challenge for design and implementation of advanced
emission control technologies posed by this wide range in what
constitutes typical nonroad operation. Some commenters emphasized their
concerns regarding this issue as well, and their belief that these
issues make the application of the technology to nonroad infeasible.
While we recognize and agree with the commenters regarding the nature
of the challenges, we disagree with their conclusion regarding
feasibility because, as described in the following section, we see a
clear path to overcome the challenges.
The primary concern for catalyst-based emission control
technologies is exhaust temperature. In general, exhaust temperature
increases with engine power and can vary dramatically as engine power
demands vary. For catalyzed diesel particulate filters (CDPFs), exhaust
temperature determines the rate of filter regeneration, and if too low,
causes a need for supplemental means to ensure proper filter
regeneration. In the case of the CDPF, it is the aggregate soot
regeneration rate that is important, not the regeneration rate at any
particular moment in time. A CDPF controls PM emissions under all
conditions and can function properly (i.e., not plug) even when exhaust
temperatures are low for an extended time and the regeneration rate is
lower than the soot accumulation rate, provided that occasionally
exhaust temperatures and thus the soot regeneration rate are increased
enough to regenerate the CDPF. Similarly, there is a minimum
temperature (e.g., 200 [deg]C) for NO_X adsorbers below which
NO_X regeneration is not readily possible and a maximum
temperature (e.g., 500 [deg]C) above which NO_X adsorbers are
unable to effectively store NO_X. Therefore, there is a need
to match diesel exhaust temperatures to conditions for effective
catalyst operation under the various operating conditions of nonroad
engines.
Although the range of products for highway vehicles is not as
diverse as for nonroad equipment, the need to match exhaust
temperatures to catalyst characteristics is still present. This is an
important concern for highway engine manufacturers and has been a focus
of our ongoing 2007 diesel engine progress review. There we have
learned that substantial progress is being made to broaden the
operating temperature window of catalyst technologies while at the same
time to design engine systems to better control average exhaust
temperatures (for ongoing catalyst performance) and to attain
periodically higher temperatures (to control PM filter regeneration and
NO_X adsorber desulfation). Highway diesel engine
manufacturers are working to address this need through modifications to
engine design, modifications to engine control strategies, and
modifications to exhaust system designs. New engine control strategies
designed to take advantage of engine and exhaust system modifications
can be used to manage exhaust temperatures across a broad range of
engine operation. The technology solutions being developed for highway
engines to better manage exhaust temperature are built upon the same
emission control technologies (i.e., advanced air handling systems and
electronic fuel injection systems) that we expect nonroad engine

[[Page 38984]]

manufacturers to use in order to comply with the existing Tier 3
emission standards.
Matching the emission control technology and the operating
temperature window of the broad range of nonroad equipment may be
somewhat more challenging for nonroad engines than for many highway
diesel engines simply because of the diversity in equipment design and
equipment use. Nonetheless, the problem has been successfully solved in
highway applications facing low exhaust temperature performance
situations as difficult to address as any encountered by nonroad
applications. The most challenging temperature regime for highway
engines are encountered at very light-loads as typified by congested
urban driving with periods of extended idle operation. Under congested
urban driving conditions, exhaust temperatures may be too low for
effective NO_X reduction with a NO_X adsorber
catalyst. Similarly, exhaust temperatures may be too low to ensure
passive CDPF regeneration. To address these concerns, light-duty diesel
engine manufacturers have developed active temperature management
strategies that provide effective emissions control even under these
difficult light-load conditions. Toyota has shown with their prototype
diesel particulate NO_X reduction (DPNR) vehicles that
changes to EGR and fuel injection strategies can realize an increase in
exhaust temperatures of more than 100 [deg]F under even very light-load
conditions allowing the NO_X adsorber catalyst to function
under these normally cold exhaust conditions.\39\ Similarly, PSA
Peugeot Citroen (PSA) has demonstrated effective CDPF regeneration
under demanding light-load taxi cab conditions with current production
technologies. \40\ Both of these are examples of technology paths
available to nonroad engine manufacturers to increase temperatures
under light-load conditions.
---------------------------------------------------------------------------

\39\ Sasaki, S., Ito, T., and Iguchi, S., ``Smoke-less Rich
Combustion by Low Temperature Oxidation in Diesel Engines,'' 9th
Aachener Kolloquim Fahrzeug--und Motorentechnik 2000. Copy available
in EPA Air Docket A-2001-28 Item II-A-56.
\40\ Jeuland, N., et al., ``Performances and Durability of DPF
(Diesel Particulate Filter) Tested on a Fleet of Peugeot 607 Taxis
First and Second Test Phases Results,'' October 2002, SAE 2002-01-2790.
---------------------------------------------------------------------------

While a number of commenters expressed concerns about low
temperature operation for nonroad equipment, no commenters provided
data showing that nonroad equipment in-use operating cycles would be
more demanding of low temperature performance than passenger car urban
driving. Both the Toyota and PSA systems are designed to function even
with extended idle operation as would be typified by a taxi waiting to
pick up a fare.
It is our conclusion that by actively managing exhaust
temperatures, for example through engine management to increase exhaust
temperatures, engine manufacturers can ensure highly effective
catalyst-based emission control performance (i.e., compliance with the
emission standards across the applicable tests) and reliable filter
regeneration across a wide range of engine operation as would be
typified by the broad range of in-use nonroad duty cycles. Active
methods of regenerating PM filters have been shown to be reliable under
all operating conditions and can be applied to nonroad diesel engines
in the time frame required by these regulations. The additional cost
for active regeneration, beyond the cost for the PM filter alone, has
been accounted for in the cost analysis summarized in section VI of
this preamble.
We have conducted an analysis of various nonroad equipment
operating cycles and various nonroad engine power density levels to
better understand the matching of nonroad engine exhaust temperatures,
catalyst installation locations and catalyst technologies. This
analysis, documented in the RIA, shows that for many engine power
density levels and equipment operating cycles, exhaust temperatures are
quite well matched to catalyst temperature window characteristics. In
particular, the nonroad transient cycle (NRTC), the cycle we are
finalizing to use for certification for most engines with rated power
less than 750 hp, was shown to be well matched to the NO_X
adsorber characteristics with estimated performance in excess of 90
percent for a turbocharged diesel engine tested under a range of power
density levels. The analysis also indicated that the exhaust
temperatures experienced over the NRTC are better matched to the
NO_X adsorber catalyst temperature window than the
temperatures that would be expected over the highway FTP test cycle.
This suggests (when coupled with the fact that PM filters function with
equal effectiveness at essentially all conditions) that compliance
based on testing with the nonroad Tier 4 standards on the NRTC will be
somewhat easier, using similar technology, than complying with the
highway 2007 emission standards on the highway transient test cycle.
In sum, we believe based on our analysis of nonroad engines and
equipment operating characteristics, that, in use, some nonroad engines
will experience conditions that require the use of temperature
management strategies (e.g., active regeneration) in order to
effectively use the NO_X adsorber and CDPF systems. We have
assumed in our cost analysis that all nonroad engines complying with a
PM standard of 0.03 g/bhp-hr or lower will have an active means to
control temperature (i.e. we have costed a backup regeneration system,
although some applications likely may not need one). We have made this
assumption believing, as indicated by a number of commenters, that
manufacturers will not be able to accurately predict in-use conditions
for every piece of equipment and will thus choose to provide the
technologies on a back-up basis. As explained earlier, the technologies
necessary to accomplish this temperature management are enhancements of
both the Tier 3 emission control technologies that will form the
starting point for Tier 4 engines larger than 50 hp, and the control
strategies being developed for highway diesel engines.\41\ Based on our
analyses, we believe that there are no nonroad engine applications
above 25 horsepower for which these highway engine approaches for
temperature management will not work. However, we agree with commenters
that given the diversity in nonroad equipment design and application,
additional time will be needed in order to match the engine performance
characteristics to the full range of nonroad equipment.
---------------------------------------------------------------------------

\41\ We do not have Tier 3 emission standards for engines in the
horsepower category from 25-50 hp. However, we expect that similar
Tier 3 emission control technologies will form part of the emission
control technology package used for compliance with the Tier 4
standards for these engines in 2013. Our cost analysis reflects the
additional cost to apply these technologies for NO_X and
PM control.
---------------------------------------------------------------------------

We have concluded that, given the timing of the emissions standards
finalized today, and the availability and continuing development of
technologies to address temperature management for highway engines
which technologies are transferrable to all nonroad engines with
greater than 25 hp power rating, nonroad engines can be designed to
meet the new standards in the lead time provided, and can be provided
to equipment makers in a timely manner within that lead time.
b. Nonroad Operating Conditions and Durability
Nonroad equipment is designed to be used in a wide range of tasks,
from mining equipment to crop cultivation and harvesting to excavation and

[[Page 38985]]

loading, and operated in harsh environments. In the normal course of
equipment operation the engine and its associated hardware will
experience levels of vibration, impacts, and dust that may exceed
conditions typical of highway diesel vehicles. For this reason, some
commenters said that the PM filter technology was infeasible for
nonroad equipment. We disagree with this assertion and continue to
believe that PM filter technologies can be applied to a wide range of
nonroad equipment.
Specific efforts to design for the nonroad operating conditions
will be required in order to ensure that the benefits of these new
emission control technologies are realized for the life of nonroad
equipment. Much of the engineering knowledge and experience to address
these issues already exists with the nonroad equipment manufacturers.
Vibration and impact issues are fundamentally mechanical durability
concerns (rather than issues of technical feasibility of achieving
emissions reductions) for any component mounted on a piece of equipment
(e.g., an engine coolant overflow tank). Equipment manufacturers must
design mounting hardware such as flanges, brackets, and bolts to
support the new component without failure. Further, the catalyst
substrate material itself must be able to withstand the conditions
encountered on nonroad equipment without itself cracking or failing.
There is a large body of real world testing with retrofit emission
control technologies on engines up to 750 hp that demonstrate the
durability of the catalyst components themselves even in the harshest
of nonroad equipment applications. The evidence for even larger engines
(i.e., those above 750 hp) is less conclusive because of the limited
number of applications.
Deutz, a nonroad engine manufacturer, sold approximately 2,000
diesel particulate filter systems for nonroad equipment in the period
from 1994 through 2000. The very largest of these systems were limited
to engine sizes below 850 hp. The majority of these systems were sold
into significantly smaller applications. Many of these systems were
sold for use in mining equipment. Mining equipment is exposed to
extraordinarily high levels of vibration, experiences impacts with the
mine walls and face, and encounters high levels of dust. Yet in
meetings with the Agency, Deutz shared their experience that no system
had failed due to mechanical failure of the catalyst or catalyst
housing.\42\ The Deutz system utilized a conventional cordierite PM
filter substrate as is commonly used for heavy-duty highway truck CDPF
systems. The canning and mounting of the system was a Deutz design.
Deutz was able to design the catalyst housing and mounting in such a
way as to protect the catalyst from the harsh environment as evidenced
by its excellent record of reliable function.
---------------------------------------------------------------------------

\42\ ``Summary of Conference Call between U.S. EPA and Deutz
Corporation on September 19, 2002 regarding Deutz Diesel Particulate
Filter System'', EPA Memorandum to Air Docket A-2001-28 Item II-B-31.
---------------------------------------------------------------------------

A number of commenters asserted that it was not possible to apply
conventional CDPF technologies (i.e., ceramic wall-flow filter media)
to the largest diesel engines with power ratings above 750 hp. In the
draft RIA for the proposal, we described our expectation that these
highway-based systems could be assembled into larger systems to work
well for these largest diesel engines. While we continue to believe
that it may be possible in the time frame of this rulemaking for these
conventional CDPFs to be applied to engines with more than 750 hp,
based on the evidence provided by the commenters, we now agree that too
much uncertainty remains for us to reach that conclusion today. We
cannot clearly today describe a method to monitor the soot loading of
individual filter elements in a parallel system made up of a
significant number of smaller components. This is because for parallel
systems the pressure drop (the best current method to monitor filter
condition) across all of the parallel components is exactly the same.
If a single filter begins to plug and needs to be regenerated it may
not be detected in such a system. Therefore, we believe that instead of
a massively parallel filter system, an alternate PM filtering media may
be more appropriate in order to address issues of scalability,
durability and packaging for these largest engines. Fortunately, there
are other filter media technologies (e.g., wire or fiber mesh depth
filters) that can be successfully scaled to any size and which we have
confidence in projecting today will be a more appropriate solution for
the bulk of the engines in this size category. Because these depth
filtration technologies are not quite as efficient at filtering PM as
the ceramic systems that are the dominant solution for the smaller
highway diesel engines, we are finalizing a set of PM filter-based
standards for engines greater than 750 hp which are slightly higher
than the proposed PM standards for these engines. Those standards are
discussed in sections II.A and II.B.3 below. Our cost estimates
summarized in section VI for engines greater than 750 hp are consistent
with the use of either silicon carbide or wire mesh PM filter technologies.
Certain nonroad applications, including some forms of harvesting
equipment, consumer lawn and garden equipment, and mining equipment,
may have specific limits on maximum surface temperature for equipment
components in order to ensure that the components do not serve as
ignition sources for flammable dust particles (e.g., coal dust or fine
crop/lawn dust). Some commenters have raised concerns that these design
constraints might limit the equipment manufacturers ability to install
advanced diesel catalyst technologies such as NO_X adsorbers
and CDPFs. This concern seems to be largely based upon anecdotal
experience with gasoline catalyst technologies where under certain
circumstances catalyst temperatures can exceed 1,000 [deg]C and without
appropriate design considerations could conceivably serve as an
ignition source. We do not believe that these concerns are justified in
the case of either the NO_X adsorber catalyst or the CDPF
technology. Catalyst temperatures for NO_X adsorbers and
CDPFs should not exceed the maximum exhaust manifold temperatures
already commonly experienced by diesel engines (i.e., catalyst
temperatures are expected to be below 800 [deg]C).\43\ CDPF
temperatures are not expected to exceed approximately 700 [deg]C in
normal use and are expected to only reach the 650 [deg]C temperature
during periods of active regeneration. Similarly, NO_X
adsorber catalyst temperatures are not expected to exceed 700 [deg]C
and again only during periods of active sulfur regeneration as
described in section III.C below. Under conditions where diesel exhaust
temperatures are naturally as high as 650 [deg]C, no supplemental heat
addition from the emission control system will be necessary for
regeneration and therefore exhaust temperatures will not exceed their
natural level. When natural exhaust temperatures are too low for
effective emission system regeneration

[[Page 38986]]

then supplemental heating, as described earlier, may be necessary but
would not be expected to produce temperatures higher than the maximum
levels normally encountered in diesel exhaust. Furthermore, even if it
were necessary to raise exhaust temperatures to a higher level in order
to promote effective emission control, there are technologies available
to isolate the higher exhaust temperatures from flammable materials
such as dust. One approach would be the use of air-gapped exhaust
systems (i.e., an exhaust pipe inside another concentric exhaust pipe
separated by an air-gap) that serve to insulate the inner high
temperature surface from the outer surface which could come into
contact with the dust. The use of such a system also may be desirable
in order to maintain higher exhaust temperatures inside the catalyst in
order to promote better catalyst function. Another technology to
control surface temperature already used by some nonroad equipment
manufacturers is water cooled exhaust systems.\44\ This approach is
similar to the air-gapped system but uses engine coolant water to
actively cool the exhaust system.
---------------------------------------------------------------------------

\43\ The hottest surface on a diesel engine is typically the
exhaust manifold which connects the engines exhaust ports to the
inlet of the turbocharger. The hot exhaust gases leave the engine at
a very high temperature (800 [deg]C at high power conditions) and
then pass through the turbocharger where the gases expand driving
the turbocharger providing work. The process of extracting work from
the hot gases cools the exhaust gases. The exhaust leaving the
turbocharger and entering the catalyst and the remaining pieces of
the exhaust system is cooler (as much as 200 [deg]C at very high
loads) than in the exhaust manifold.
\44\ ``Engine Technology and Application Aspects for Earthmoving
Machines and Mobile Cranes,'' Dr. E. Brucker, Liebherr Machines
Bulle, SA, AVL International Commercial Powertrain Conference,
October 2001. Copy available in EPA Air Docket A-2001-28, Docket
Item #II-A-12.
---------------------------------------------------------------------------

We thus do not believe that flammable dust concerns will prevent
the use of either a NO_X adsorber or a CDPF because catalyst
temperatures are not expected to be unacceptably high and because
remediation technologies exist to address these concerns. In fact,
exhaust emission control technologies (i.e., aftertreatment) have
already been applied on both an original equipment manufacturer (OEM)
basis and for retrofit to nonroad equipment for use in potentially
explosive environments. Many of these applications must undergo
Underwriters Laboratory (UL) approval before they can be used.\45\
Therefore, while we appreciate the commenters' concerns regarding
safety, we remain convinced that the application of these emission
control technologies will not compromise (or decrease) equipment safety.
---------------------------------------------------------------------------

\45\ Phone conversation between Byron Bunker, United States
Environmental Protection Agency and Dale McKinnon, Manufacturers of
Emission Control Association (MECA), 9 April, 2003 confirming the
use of emission control technologies on nonroad equipment used in
coal mines, refineries, and other locations where explosion proofing
may be required.
---------------------------------------------------------------------------

We agree that nonroad equipment must be designed to address safety
and durable performance for a wide range of operating conditions and
applications that would not commonly be experienced by highway
vehicles. We believe further as demonstrated by retrofit experiences
around the world that technical solutions exist which allow catalyst-
based emission control technologies to be applied to nonroad equipment.
2. Are the Standards for Engines 75-750 hp Feasible?
There are three primary test provisions and associated standards in
the Tier 4 program we are finalizing today. These are the Nonroad
Transient Cycle (NRTC), the existing International Organization for
Standardization (ISO) C1 steady-state cycle, and the highway-based Not-
To-Exceed (NTE) provisions.\46\ Under today's rules, most nonroad
diesel engines must meet the new standards for each of these three test
cycles (the exceptions are noted below). Compliance on the transient
test cycle includes weighting the results from a cold start and hot
start test with the cold start emissions weighted at 1/20 and hot start
emissions weighted at 19/20. Additionally, we have alternative optional
test cycles including the existing ISO-D2 steady-state cycle and the
Transportation Refrigeration Unit (TRU) cycle which a manufacturer can
choose to use for certification in lieu of the NRTC and the ISO-C1,
provided that the manufacturer can demonstrate to the Agency that the
engine will only be used in a limited range of nonroad equipment with
known operating conditions. A complete discussion of these various test
cycles can be found in chapter 4.2, 4.3, and 4.4 of the RIA.
---------------------------------------------------------------------------

\46\ As an alternative to compliance with the ISO C1 test
procedure, a manufacturer can show compliance with the standards by
testing over the Ramped Modal Cycle (RMC) as described in section III.F.
---------------------------------------------------------------------------

The standards we are finalizing today for nonroad engines with
rated power from 75 to 750 hp are based upon the performance of
technologies and standards for highway diesel engines which go into
effect in 2007. As explained above, we believe these technologies,
namely NO_X adsorbers and catalyzed diesel particulate
filters enabled by 15 ppm sulfur diesel fuel, can be applied to nonroad
diesel engines in a similar manner as for highway diesel engines. The
combustion process and the means to modify that process are
fundamentally the same for highway and nonroad diesel engines
regardless of engine size. The formation mechanism and quantity of
pollutants formed in diesel engines are fundamental characteristics of
engine design and are not inherently different for highway and nonroad
engines regardless of engine size. The effectiveness of NO_X
adsorbers to control NO_X emissions and CDPFs to control PM,
NMHC, and CO emissions are determined by fundamental catalyst and
filter characteristics. Therefore, we disagree with commenters who
suggest that these highway technology based emission standards are
infeasible for nonroad engines. We acknowledge the comments raised
regarding the unique characteristics nonroad diesel engines which must
be considered in setting these standards, and we have addressed those
issues by allowing (where appropriate) for additional lead time or
slightly less stringent standards for nonroad diesel engines in
comparison to highway diesel engines (and likewise have made
appropriate cost estimates to account for the technology and
engineering needed to address these issues).
PM Standard. We are finalizing a PM standard for engines in this
category of 0.01 g/bhp-hr based upon the emissions reductions possible
through the application of a CDPF and 15 ppm sulfur diesel fuel. This
is the same emissions level as for highway diesel engines in the heavy-
duty 2007 (HD2007) program (66 FR 5001, January 18, 2001). While
emission levels of engine-out soot (the solid carbon fraction of PM)
may be somewhat higher for some nonroad engines when compared to
highway engines, these emissions are virtually eliminated (reduced by
99 percent) by the CDPF technology. With application of the CDPF
technology, the soluble organic fraction (SOF) portion of diesel PM is
predicted to be all but eliminated. The primary emissions from a CDPF
equipped engine are sulfate PM emissions formed from sulfur in diesel
fuel. The emissions rate for sulfate PM is determined primarily by the
sulfur level of the diesel fuel and the rate of fuel consumption. With
the 15 ppm sulfur diesel fuel, the PM emissions level from a CDPF
equipped nonroad diesel engine will be similar to the emissions rate of
a comparable highway diesel engine. Therefore, the 0.01 g/bhp-hr
emission level is feasible for nonroad engines tested on the NRTC cycle
and on the steady-state cycles, ISO-C1 and ISO-D2. Put another way,
control of PM using CDPF technology is essentially independent of duty
cycle given active catalyst technology (for reliable regeneration and
SOF oxidation), adequate control of temperature (for reliable
regeneration) and low sulfur diesel fuel (for reliable regeneration and
low PM emissions). While some commenters argued that PM filters will

[[Page 38987]]

not enable the 0.01 PM emission standard for nonroad engines, we remain
convinced by the demonstration of 0.01 or lower PM emission levels from
a number of diesel engines described in the RIA, that the standard is
feasible given the leadtime provided and the availability of 15 ppm
sulfur diesel fuel. Likewise, the NTE provisions for nonroad engines
are the same as for on-highway engines meeting an equivalent PM control
level. The maximum PM emission level from a CDPF equipped diesel engine
is primarily determined by the maximum fuel sulfur conversion level
experienced at the highest operating conditions. As documented in RIA
chapter 4.1.1.3, testing of diesel engines at conditions representative
of the highest sulfate PM formation rates shows PM levels below the
level required by the NTE provisions when tested on less than 15 ppm
sulfur diesel fuel.
NO_X Standard. We are finalizing a NO_X
standard of 0.30 g/bhp-hr for engines in this category based upon the
emission reductions possible from the application of NO_X
adsorber catalysts and the expected emission levels for Tier 3
compliant engines which form the baseline technology for Tier 4
engines. The Tier 3 emission standards are a combined
NMHC+NO_X standard of 3.0 g/bhp-hr for engines greater than
100 hp and less than 750 horsepower. For engines less than 100 hp but
greater than 50 horsepower the Tier 3 NMHC+NO_X emission
standard is 3.5 g/bhp-hr. We believe that in the time-frame of the Tier
4 emission standards, all engines from 75 to 750 hp can be developed to
control NO_X emissions to engine-out levels of 3.0 g/bhp-hr
or lower.\47\ This means that all engines will need to apply Tier 3
emission control technologies (i.e., turbochargers, charge-air-coolers,
electronic fuel systems, and for some manufacturers EGR systems) to get
to this baseline level. As discussed in more detail in the RIA, our
analysis of the NRTC and the ISO-C1 cycles indicates that the
NO_X adsorber catalyst can provide a 90 percent or greater
NO_X reduction level on the cycles. The standard of 0.30 g/
bhp-hr reflects a baseline emissions level of 3.0 g/bhp-hr and a
greater than 90 percent reduction of NO_X emissions through
the application of the NO_X adsorber catalyst. The additional
lead time available to nonroad engine manufacturers and the substantial
learning that will be realized from the introduction of these same
technologies to highway diesel engines, plus the lack of any
fundamental technical impediment, makes us confident that the new
NO_X standards can be met.
---------------------------------------------------------------------------

\47\ For engines between 75 and 100 horsepower, this may require
re-optimization of the engine to lower NO_X emissions if
they are higher than 3.0, but we would not expect any new hardware
beyond the Tier 3 hardware to be required in the Tier 4 timeframe to
accomplish this reduction.
---------------------------------------------------------------------------

Given the fundamental similarities between highway and nonroad
diesel engines, we believe that the NO_X adsorber technology
developed for highway engines can be applied with equal effectiveness
to nonroad diesel engines with additional developments in engine
thermal management (as discussed in section II.B.2 above) to address
the more widely varied nonroad operating cycles. In fact, as discussed
previously, the NO_X adsorber catalyst temperature window is
particularly well matched to transient operating conditions as typified
by the NRTC.
As pointed out by some commenters, compliance with the NTE
provisions will be challenging for the nonroad engine industry due to
the diversity of nonroad products and operating cycles. However, the
technical challenge is reduced somewhat by the 1.5 multiplier used to
calculate the NTE standard as discussed in section III.J. Controlling
NO_X emissions under NTE conditions is fundamentally similar
for both highway and nonroad engines. The range of control is the same
and the amount of reduction required is also the same. We know of no
technical impediment, nor were any raised by commenters, that would
prevent achieving the NTE standard under the zone of operating
conditions required by the NTE.
NMHC Standard. Meeting the NMHC standard under the lean operating
conditions typical of the biggest portion of NO_X adsorber
operation should not present any special challenges to nonroad diesel
engine manufacturers. Since CDPFs and NO_X adsorbers contain
platinum and other precious metals to oxidize NO to NO₂,
they are also very efficient oxidizers of hydrocarbons. NMHC reductions
of greater than 95 percent have been shown over transient and steady-
state test procedures.\48\ Given that typical engine-out NMHC is
expected to be in the 0.40 g/bhp-hr range or lower for engines meeting
the Tier 3 standards, this level of NMHC reduction will mean that under
lean conditions emission levels will be well below the standard. For
the same reasons, there is no obstacle which would prevent achieving
the NTE standard.
---------------------------------------------------------------------------

\48\ ``The Impact of Sulfur in Diesel Fuel on Catalyst Emission
Control Technology,'' report by the Manufacturers of Emission
Controls Association, March 15, 1999, pp. 9 & 11. Copy available in
EPA Air Docket A-2001-28 Item II-A-67.
---------------------------------------------------------------------------

Under the brief episodic periods of rich operation necessary to
regenerate NO_X adsorber catalysts, it is possible to briefly
experience higher levels of NMHC emissions. Absent a controlling
standard, it is possible that these NMHC emissions could be high. There
are two possible means to control the NMHC emissions during these
periods in order to meet the NMHC standard finalized today.
Manufacturers can design the regeneration system and the oxygen storage
(oxidation function under rich conditions) of the NO_X
adsorber catalyst such that the NMHC emissions are inherently
controlled. This is similar to the control realized on today's three-
way automotive catalysts which also experience operation that toggles
between rich and lean conditions. Secondly, a downstream clean-up
catalyst can be used to oxidize the excess NMHC emissions to a level
below the standard. This approach has been used in the NO_X
adsorber demonstration program at EPA described in the RIA. Our cost
analysis for engines in the 75 to 750 hp category includes a cost for a
clean-up catalyst to perform this function.
Cold Start. The standards include a cold start provision for the
NRTC procedure. This means that the results of a cold start transient
test will be weighted with the emissions of a hot start test in order
to calculate the emissions for compliance against the standards. In a
change from the proposed rule, the weightings are 1/20 cold start and
19/20 for the hot start (as opposed to the proposed weightings of 1/10
and 9/10, respectively) as described more fully in chapter 4.2 of the
RIA and section III.F below. Because exhaust temperatures are so
important to catalyst performance, a cold start provision is an
important tool to ensure that the emissions realized in use are
consistent with the expectations of this program. Achieving this
standard represents an additional technical challenge for
NO_X control and to a lesser extent CO and NMHC control
(i.e., control of gaseous pollutants). PM control with a CDPF is not
expected to be significantly impacted by cold-start provisions due to
the primary filter mechanism being largely unaffected by temperature.
With respect to achievability of the NO_X, CO and NMHC
standards, during the initial start and warmup period for a diesel
engine, the exhaust temperatures are typically below the light-off
temperature of a catalyst. As a result, exhaust stack emissions may
initially be higher during this period of

[[Page 38988]]

operation. The cold start test procedure is designed to quantify these
emissions to ensure that emission control systems are designed
appropriately to minimize the contribution of cold-start emissions.
Cold-start emissions can be minimized by improving catalyst technology
to allow for control at lower exhaust temperatures (i.e., by lowering
the catalyst light-off temperature) and by applying strategies to
quickly raise the exhaust temperature to a level above the catalyst
light-off temperature.
There are a number of technologies available to the engine
manufacturer to promote rapid warmup of the exhaust and emission
control system. These include retarding injection timing, increasing
EGR, and potentially late cycle injection, all of which are
technologies we expect manufacturers to apply as part of the normal
operation of the NO_X adsorber catalyst system. These are the
same technologies we expect highway engine manufacturers to use in
order to comply with the highway cold start FTP provision which weights
cold start emissions more heavily with a 1/7 weighting. As a result, we
expect the transfer of highway technology to be well matched to
accomplish this control need for nonroad engines as well. Using these
technologies we expect nonroad engine manufacturers to be able to
comply with the new Tier 4 NO_X, CO, and NMHC emission
standards including the cold start provisions of the transient test
procedure.
One commenter has raised the concern that if diesel engines are no
cleaner than 3 g/bhp-hr NO_X and if NO_X adsorbers
can be no more efficient than 90 percent, then any increase in
NO_X emissions above the 0.30 g/bhp-hr level on a cold-start
test will make the emission standards infeasible. We should clarify,
when discussing the emission reduction potential of the NO_X
adsorber catalyst generically in the NPRM, we have sometimes simply
stated that it is 90 percent or more effective without plainly saying
that this refers to our expectation for average performance considering
both cold and hot start emissions. More precisely then, we would expect
lower effectiveness over the cold-start test procedure with somewhat
higher effectiveness realized over the hot-start test procedure.
Because of the relative weightings of the two test cycles (i.e., 1/20
for the cold-start and 19/20 for the hot-start), although the
degradation of performance below 90 percent over the cold-start cycle
can be substantially greater than the performance above 90 percent
realized over the hot-start cycle, the standards remain feasible. For
example, even if the average NO_X adsorber performance over
the cold-start test cycle was only 70 percent, the average
NO_X adsorber performance over the hot-start portion of the
test cycle would only need to be 91 percent in order to realize a
weighted average performance of 90 percent. Similarly, were the cold-
start test cycle performance only 50 percent, the hot-start performance
would only need to be 92 percent in order to realize a weighted average
performance of 90 percent.\49\ We are confident, based on our estimates
of NO_X adsorber performance over the nonroad test cycle
summarized in the RIA, that NO_X adsorber performance in
excess of 92 percent can be expected in the time frame of the
requirements finalized today.
---------------------------------------------------------------------------

\49\ The combined weighted average performance is calculated as
1/20 (cold-start) + 19/20 (hot-start). Hence it can be seen that 1/
20 (70%) + 19/20 (91%) = 90% and likewise that 1/20 (50%) + 19/20
(92%) = 90%.
---------------------------------------------------------------------------

Complying with the PM standard given consideration of the cold
start test procedure is not expected to be as challenging as compliance
with the NO_X standard. The effectiveness for PM filtration
is not significantly effected by exhaust temperatures, as noted
earlier. Thus, PM emission levels are similar over the cold and hot
start tests.
The standards that we are finalizing today for nonroad engines with
rated horsepower levels from 75 to 750 hp are based upon the same
emission control technologies, clean 15 ppm or lower sulfur diesel
fuel, and relative levels of emission control effectiveness as the HD
2007 emission standards. We have given consideration to the diversity
of nonroad equipment for which these technologies must be developed and
the timing of the Tier 3 emissions standards in determining the
appropriate timing for the Tier 4 standards. Based upon the
availability of the emission control technologies, the proven
effectiveness of the technologies to control diesel emissions to these
levels, the technology paths identified here to address constraints
specific to nonroad equipment, and the additional lead time afforded by
the timing of the standards, we have concluded that the standards are
technically feasible in the leadtime provided.
3. Are the Standards for Engines Above 750 hp Feasible?
The preceding discussion of the standards for engines of 75 to 750
hp highlights the main thrust of our new Tier 4 program, a focus on
realizing very low on-highway like emission levels for the vast
majority of nonroad diesel engines. The emission standards and the
combination of technologies that we expect will be used to meet those
standards are virtually identical to the HD2007 program for on-highway
engines. The following three sections (II.B.3, II.B.4, and II.B.5)
describing the feasibility of the standards for engines above 750 hp,
from 25 to 75 hp, and below 25 hp, while following the same pattern and
objective, take additional consideration of the fact that engines and
equipment in these size categories have no direct on-highway equivalent
and differ from highway engines in substantial ways that cause us to
reach differing conclusions regarding the appropriate standards and
timing for those standards. Whether in scale, or use, or operating
conditions, the characteristics of these engines and equipment are such
that we have taken particular consideration of them in setting the
timing and level of the standards. The remainder of this section
(II.B.3) discusses what makes the above 750 hp category unique and why
the standards which we are adopting are technologically feasible.
a. What Makes the Over 750 hp Category Different?
The first and most obvious difference for engines in this
horsepower category is scale. No on-highway engines come close to the
size of the largest engines in this category which can produce in
excess of 3,000 horsepower, consist of 16 or more cylinders and have 12
or more turbochargers. The engines, and the equipment that they power,
are quite simply significantly larger than any on-highway diesel
engine. Many commenters argued that emission technologies from on-
highway vehicles could not be simply scaled up for these larger engines
and that if they were, the consequences of this resizing would include
structural weakness and reduced system robustness. As discussed below,
our review of the information provided with these comments and our
subsequent analysis of the technical characteristics of some emission
control components has led us to conclude that revised emission
standards (based on performance of different technologies that those
whose performance formed the basis for the proposed rule) from those we
proposed for this horsepower category are appropriate and available.
We have concluded that it is appropriate to distinguish between two
broad categories of engines over 750 hp grouped by application: Mobile
machines and generator sets. Mobile machines include the very largest
nonroad equipment used in mining trucks and large excavation equipment.

[[Page 38989]]

The environment and operating conditions (especially for vibration)
represent the harshest application into which nonroad engines are
applied. Design considerations for technologies used to control
emissions from engines in these applications must first consider
robustness to the harsh environments that will be experienced in use.
In contrast, mobile nonroad generator sets operate in relatively good
operating environments. In addition, while mobile nonroad generator
sets can, and are moved between operating locations, they are always
stationary during actual operation. Thus the levels of vibration and
the general environment for engine operation are significantly less
demanding for generator sets than for mobile machines. Also the dynamic
range of operation is significantly narrower and less demanding for
generator sets. Designed to operate at a set engine speed, synchronous
to the frequency cycle desired for electric generation (i.e., 1200 or
1800 RPM for 60 hz), diesel engines designed for generator set
applications can be optimized for operation in this narrow range.
We have given specific consideration to the unique engineering
challenges for engines in this horsepower category in determining the
appropriate emission standards set in today's action. We have also
taken into account the important differences between generator set
applications and other mobile applications in developing standards for
this horsepower category.
b. Are the New Tier 4 Standards for Over 750 hp Engines Technologically
Feasible?
The emission standards described in section II.A above describe a
comprehensive program for engines over 750 hp that give consideration
to both the physical size of these engines and the applications into
which these engines are applied. Engines in this power category must
show compliance with the C1 or D2 steady-state test cycles as
appropriate as well as with the NTE provisions finalized today. As
described in sections III.F and III.G, these engines will not be tested
over the NRTC nor will they be subject to a cold-start test procedure.
The feasibility discussion in this section describes expected
performance of the engines over the required test cycles and the NTE.
This section will briefly summarize the feasibility analysis contained
in the RIA for these engines.
PM Standards. Beginning in 2011 all nonroad diesel engines above
750 hp must meet a PM standard of 0.075 g/bhp-hr. We believe that this
PM standard is feasible based on the substantial reductions in sulfate
PM due to the use of 15 ppm sulfur diesel fuel and the potential to
improve the combustion process to reduce PM emissions formed in the
engine. Specifically, we believe based on the evidence in the RIA that
increasing fuel injection pressure, improving electronic controls and
optimizing the combustion system geometry will allow engine
manufacturers to meet this level of PM control in 2011. Some engine
manufacturers have in fact indicated to the Agency that this level of
control represents an achievable goal by 2011. One commenter argued
however, that a more relaxed standard of 0.1 g/bhp-hr based on today's
on-highway diesel engine performance would be appropriate. We disagree
with this comment, believing that given the substantial leadtime
available and the potential for further improvements in combustion
systems, that it is appropriate to set a forward looking PM standard of
0.075 g/bhp-hr. Conversely, other commenters argued that future on-
highway PM filter technology should be applied to this class of engines
as early as 2011 (i.e., that a standard of 0.01 g/bhp-hr PM is
appropriate). While we agree with the commenters that in the long-term
it will be appropriate to apply filter-based emission control
technologies to these engines, we do not agree that such control is
appropriate as early as 2011. As the following section explains, we
believe that there are remaining technical challenges to be addressed
prior to the application of PM filters to these engines and that it is
necessary to allow additional leadtime for those challenges to be
addressed.
Beginning in 2015 all nonroad engines over 750 hp must meet
stringent PM filter technology-based emission standards of 0.02 g/bhp-
hr for engines used in generator set applications and 0.03 g/bhp-hr for
engines used in mobile machine applications. We are predicating these
emission standards based on the application of a different form of
diesel particulate filter technology, a wire or fiber mesh depth filter
rather than a ceramic wall flow filter. Wire mesh filters are capable
of reducing PM by 70 percent or more. We have not based these standards
upon the more efficient (>90 percent) control possible from ceramic
wall flow style PM filters, because we believe that the application of
the wall flow filter technology on engines of this size has not been
adequately demonstrated at this time. While it would certainly be
possible to apply the ceramic-based technology to these larger engines,
we cannot today conclude with certainty that such systems would be as
robust in-use as needed (see earlier discussion in section II.B.1.b).
Considering the information available to the Agency today, we believe
it appropriate to set the long term PM standard for these very large
engines based on technologies which we can project with confidence will
give high levels of emission reduction, durability, and robustness when
scaled to these very large engine sizes.
The 0.01 g/bhp-hr difference in the PM emission standards between
the standard for generator sets and for other mobile applications in
this category (0.01 g/bhp-hr lower for generator sets) reflects our
expectation that engine-out emissions from generator sets can be
reduced below the level for mobile machines due to generator set
operation at a single engine speed. Without the need to provide full
power and control over the wider range of possible operating conditions
that mobile machines must deliver, we believe that the air handling
systems (especially the turbocharger match to the engine) can be
improved to provide a moderate reduction in engine-out emissions. This,
coupled with the reduction afforded by the PM filter technology, would
allow generator sets to meet a more stringent 0.02 g/bhp-hr standard.
Diesel engines designed for use in generator sets meeting this standard
will need to demonstrate compliance over the appropriate test cycles,
either the ISO C1 or D2 tests. As discussed in RIA chapter 4.3.6.2, PM
emission rates are nearly the same for steady-state testing or for
alternative ramped modal cycle (RMC) testing. These test cycles, like
the engines, are designed to be representative of the range of
operation expected from a generator set.
As discussed previously, PM emission control over the NTE region
for PM filter equipped diesel engines is predominantly a function of
sulfate formation at high exhaust temperatures. Given that fuel
consumption (and thus sulfur) consumption rates on a brake specific
basis tend to be lower for engines above 750 hp, we can conclude that
the increase in PM emissions over the NTE region will likely be lower
for these engines than for engines meeting the 0.01 g/bhp-hr standard.
Thus, we can conclude based on the evidence in the RIA that compliance
with the NTE provisions for PM is feasible for engines over 750 hp.
Although we are projecting that manufacturers will comply with this
standard using a slightly less efficient PM filter technology, we
remain convinced that 15 ppm sulfur diesel fuel

[[Page 38990]]

will still be a necessity for this technology to be applied. Regardless
of the filter media chosen for the PM filter, the filter will still
require catalyst-based systems to ensure robust regeneration and
adequate control of the SOF portion of PM. As these catalyst-based
technologies are adversely impacted by sulfur in diesel fuel as
described in II.C below, 15 ppm sulfur diesel fuel will be required in
order to ensure compliance with the PM standards finalized here for
engines over 750 hp.
NO_X Standards. As with the PM standards, we are setting
distinct NO_X standards for this category of engines
reflecting particular concerns with the application of technologies to
engines of this size and our desire to realize significant
NO_X reductions as soon as possible. There are two sets of
NO_X standards that we are finalizing today, a 0.50 g/bhp-hr
NO_X standard for engines used in generator set applications
and a 2.6 g/bhp-hr NO_X standard for mobile machines.
For engines used in generator set applications we are finalizing a
0.50 g/bhp-hr standard that goes into effect for engines above 1,200 hp
in 2011 and in 2015 for engines above 750 hp. We see two possible
technology options for manufacturers to meet these standards. First,
compliance with this NO_X standard will be possible through
the application of a dual bed NO_X adsorber system (i.e., a
system that allows regeneration to be controlled external to the
engine). This approach can work well for generator set applications
where packaging constraints and vibration issues are greatly reduced.
Since this approach requires limited engine redesign, it would be an
appealing approach for these large engines sold in very low volumes.
NO_X adsorber systems for stationary power generation
(systems that never move) are available today on a retrofit basis, and
we believe with further development to address packaging and durability
concerns that similar systems can be applied to mobile generator sets.\50\
---------------------------------------------------------------------------

\50\ Emerachem EMx\TM\ Datasheet--Describing the EMx IC
(Internal Combustion) System Air Docket OAR-2003-0012-0948.
---------------------------------------------------------------------------

A second possible technology option for engines in this category is
urea SCR. The challenges for urea SCR in mobile applications are well
known, specifically a lack of urea infrastructure to provide urea
refill at diesel fueling locations and a need to ensure that urea is
added as necessary in use.\51\ These hurdles can be addressed more
easily for generator sets than for virtually any other mobile source
emission category. Although nonroad generator sets are mobile, in
operation they remain at a fixed location where fuel is delivered to
them periodically (i.e., a 1,200 hp generator set does not and cannot
pull into the local truck stop for a fuel fill). Therefore, the same
infrastructure that currently provides urea delivery for stationary
power generation can also be utilized for nonroad generator set
applications.\52\ It would still remain for the manufacturer to develop
a mechanism to ensure urea refill, but we believe it is likely that
solutions to this problem can be addressed through monitoring as for
stationary source emissions or other technology options (e.g., a urea
interlock that precludes engine operation without the presence of urea).
---------------------------------------------------------------------------

\51\ See for example 68 FR 28375, May 23, 2003.
\52\ Fleetguard StableGuard\TM\ Urea Premix for use with SCR
NO_X Reduction Systems, Air Docket A-2001-28 Item IV-A-04.
---------------------------------------------------------------------------

Either of these technology approaches could be applied to realize
an approximately 90 percent reduction from the current Tier 2 emission
levels for these engines in order to comply with an emission standard
of 0.50 g/bhp-hr. The 0.50 g/bhp-hr standard is different from our
proposed level of 0.30 g/bhp-hr reflecting the changes we have made in
this final action to the implementation schedule for this class of
engines and therefore our projections for a technology path. At the
time of the proposal, we projected that this class of engine would
follow an integrated two-step technology path. We are now finalizing a
program that anticipates the application of 90 percent effective
NO_X control to diesel engines for use in generator sets
without a reduction in engine-out NO_X levels beyond Tier 2.
This reflects our desire to focus on getting the largest emission
reduction possible in the near term (beginning in 2011) from these
engines. Where we believe additional technology development is needed,
as is the case for mobile machines over 750 hp, we are finalizing a
more gradual emission reduction technology pathway anticipating further
reductions in engine-out NO_X emissions followed by a
possible future action to reduce emissions further as described in
section II.A. RIA chapter 4.1.2.3.3 describes NO_X adsorber
effectiveness to control NO_X emissions including
effectiveness over the NTE region. The discussion there is equally
applicable to engines above and below 750 hp regarding NTE performance
because the key attribute of NTE performance (exhaust temperature) is
similar for engines across the horsepower range.
For engines over 750 hp used in mobile machines (and for 750-1200
hp generator sets from 2011 until 2015) we are setting a new
NO_X standard of 2.6 g/bhp-hr beginning in 2011. We are
predicating this level of emission control (an approximate 50 percent
reduction from Tier 2) on an improved combustion system and proven
engine-based NO_X control technologies. Specifically, we
believe manufacturers can apply either proven cooled EGR technology, or
apply additional levels of engine boost, a limited form of Miller Cycle
operation, and increased intercooling capacity for the two-stage
turbocharging systems that are used on these engines. The second
approach for in-cylinder emissions reductions is similar in description
at least to the Caterpillar ACERT technology which we believe could be
another path for compliance with this standard. We are projecting a
modest increase in heat-rejection to the engine coolant for these in-
cylinder emission control solutions and have accounted for those costs
in our cost analysis. These approaches for NO_X reduction
have been proven for on-highway diesel engines since 2003 including
compliance with NTE provisions similar to those for nonroad engines
finalized here. We can conclude based on the on-highway experience that
the NTE provisions can be met for engines in this horsepower category.
One commenter suggested that a standard of 3.5 g/bhp-hr would be
achievable in this time frame. As described here, we believe that
further emission reductions to 2.6 g/bhp-hr are possible in this time
frame. Engine manufacturers have indicated to the Agency that they
believe this level of in-cylinder emission control can be realized for
these very large diesel engines by 2011. We are deferring any decision
on setting aftertreatment based NO_X standards for mobile
machinery above 750 hp to allow additional time to evaluate the
technical issues involved, as discussed in section II.A.4.
NMHC Standards. We are setting two different NMHC emission
standards for engines in this category linked to the technologies used
to control PM emissions. We are requiring all engines over 750 hp to
meet an NMHC standard of 0.30 g/bhp-hr starting in 2011. As explained
earlier, in 2011 all engines over 750 hp must meet a PM emission
standard of 0.075 g/bhp-hr. We are projecting that manufacturers will
meet this standard through improvements in in-cylinder emission control
of PM (in conjunction with use of 15 ppm sulfur diesel fuel). These PM
control technologies, increased fuel injection

[[Page 38991]]

pressure, improved electronic controls and enhanced combustion system
designs will concurrently lower NMHC emissions to the NMHC standard of
0.30 g/bhp-hr.
The second step in our NMHC standards is to a level of 0.14 g/bhp-
hr, consistent with the standard for on-highway diesels beginning in
2007 and for other nonroad diesel engines from 75 to 750 hp beginning
in 2011. This change in NMHC standards is timed to coincide with the
requirement that engines over 750 hp meet stringent PM emission
standards that we believe will require the use of catalyst-based diesel
particulate filter systems. These systems are expected to incorporate
oxidation catalyst functions to control the SOF portion of diesel PM
and to promote robust soot regeneration within the filter. This same
oxidation function is highly effective at controlling NMHC emissions
(the RIA documents reductions of more than 80 percent) and will result
in a reduction in NMHC emissions below the 0.14 g/bhp-hr standard for
these engines. As the high level of NMHC control afforded by the
application of this technology is broadly realized across the wide
range of diesel engine operation, it will allow for compliance with the
NTE provisions as well. Although in practice we expect that NMHC
emissions may be lower than the 0.14 g/bhp-hr standard, we have not
finalized a more stringent standard for NMHC in order to maintain
consistency with the NMHC standard we are finalizing for engines from
75 hp to 750 hp, for which the NMHC standard is in part based on
feasibility considerations for NO_X adsorber catalyst systems
that use diesel fuel to regenerate themselves (with consequent
increased NMHC emissions during regeneration events). We believe this
is appropriate considering our expectation that NO_X adsorber
technology will be found feasible for all nonroad engines over 750 hp.
4. Are the New Tier 4 Standards for Engines 25-75 hp Feasible?
As discussed in section II.B, our standards for 25-75 hp engines
consist of a 2008 transitional standard and long-term 2013 standards.
The transitional standard is a 0.22 g/bhp-hr PM standard. The 2013
standards consist of a 0.02 g/bhp-hr PM standard and a 3.5 g/bhp-hr
NMHC+NO_X standard.\53\ As discussed in section II.A, the
transitional standard is optional for 50-75 hp engines, as the 2008
implementation date is the same as the effective date of the Tier 3
standards. Manufacturers may decide, at their option, not to undertake
the 2008 transitional PM standard, in which case their implementation
date for the 0.02 g/bhp-hr PM standard begins in 2012. The remainder of
this section discusses what makes the 25-75 hp category unique and why
the standards are technologically feasible.
---------------------------------------------------------------------------

\53\ The 2013 NO_X+NMHC standard is a new standard
only for engines in the 25-50 hp category. For engines in the 50-75
hp category, 3.5 g/bhp-hr NO_X+NMHC is the existing Tier 3
emission standard which will now also apply across the new regulated
test cycles (e.g., NRTC).
---------------------------------------------------------------------------

a. What Makes the 25-75 hp Category Unique?
As EPA explained in the proposal, and as discussed in section II.A,
one cannot assume that highway technologies are automatically
transferable to 25-75 hp nonroad engines. In contrast with 75-750 hp
engines, which share similarities in displacement, aspiration, fuel
systems, and electronic controls with highway diesel engines, engines
in the 25-75 hp category have a number of technology differences from
the larger engines. These include a higher percentage of indirect-
injection fuel systems, and a low fraction of turbocharged engines (see
generally RIA chapter 4.1). The distinction in the under 25 hp category
is even more pronounced, with no turbocharged engines, nearly one-fifth
of the engines have two cylinders or less, and a significant majority
of the engines have indirect-injection fuel systems.
The distinction is particularly marked with respect to
electronically controlled fuel systems. These are commonly available in
the power categories greater than or equal to 75 hp, but, based on the
available certification data as well as our discussions with engine
manufacturers, we believe there are very limited numbers, if any, in
the 25-75 hp category (and no electronic fuel systems in the less than
25 hp category). The research and development work being performed
today for the heavy-duty highway market is targeted at engines which
are 4-cylinders or more, direct-injection, electronically controlled,
turbocharged, and with per-cylinder displacements greater than 0.5
liters. As discussed in more detail below, as well as in section II.B.5
(regarding the under 25 hp category), these engine distinctions are
important from a technology perspective and warrant a different set of
standards for the 25-75 hp category (as well as for the under 25 hp
category).
b. Are the New Tier 4 Standards for 25-75 hp Engines Technologically
Feasible?
This section will discuss the technical feasibility of both the
interim 2008 PM standard and the 2013 standards. For an explanation and
discussion of the implementation dates, please refer to section II.A.
i. 2008 PM Standards \54\
---------------------------------------------------------------------------

\54\ As discussed in section II.B., manufacturers can choose, at
their option, to pull-ahead the 2013 PM standard for the 50-75 hp
engines to 2012, in which case they do not need to comply with the
transitional 2008 PM standard.
---------------------------------------------------------------------------

We are today finalizing the interim PM control program as proposed
for engines in the power category from 25-75 hp. The new PM standard
for 2008 is 0.22 g/bhp-hr over the appropriate steady-state test cycle
(the NRTC and NTE do not apply, for the reasons explained below).\55\
The standard is premised on the use of 500 ppm sulfur diesel fuel and
the potential for improvements in engine-out emission control where
possible or the application of a diesel oxidation catalyst (DOC). Some
commenters raised concerns that this level of emission control from
diesel engines may not be possible in 2008 without fuel cleaner than
500 ppm or without changes in the Tier 3 NMHC+NO_X emission
standards. Other commenters, including some engine manufacturers,
supported this interim program. As explained in the following sections,
we continue to believe that these standards are appropriate and
feasible in the leadtime provided.
---------------------------------------------------------------------------

\55\ However, a manufacturer can choose to comply over the TRU
cycle including the associated NTE provisions. Compliance with the
NTE for engines selecting to certify on the TRU cycle is
straightforward because by the very nature of the products, their
operation is directly limited to a small range of operating modes
over which compliance with the emission standard has already been shown.
---------------------------------------------------------------------------

Engines in the 25-50 hp category must meet Tier 2
NMHC+NO_X and PM standards today. We have examined the model
year 2004 engine certification data for engines in the 25-50 hp
category. These data indicate that over 35 percent of the engine
families meet the 2008 0.22 g/bhp-hr PM standard and 5.6 g/bhp-hr
NMHC+NO_X standard (unchanged from Tier 2 in 2008) today
(even without 500 ppm sulfur diesel fuel). At the time of the proposal,
we had analyzed model year 2002 data for this power range, which at
that time indicated approximately 10 percent of the engine families
complied with the 2008 requirements. The most recent data for model
year 2004 indicates substantial progress has already been made in just
the past few year in lowering emissions from these engines. This is
primarily due to the implementation of the Tier 2 standards in model
year 2004. The model year

[[Page 38992]]

2001 certification data also showed the 2008 standard were achievable
using a mix of engine technologies (IDI and DI, turbocharged and
naturally aspirated) tested on a variety of certification test
cycles.\56\ A detailed discussion of these data is contained in the RIA.
---------------------------------------------------------------------------

\56\ The Tier 1 and Tier 2 standards for this power category
must be demonstrated on one of a variety of different engine test
cycles. The appropriate test cycle is selected by the engine
manufacturer based on the intended in-use application of the engine.
---------------------------------------------------------------------------

At the time of the proposal, no certification data was available
for engines in the 50-75 hp range, because those engines were not
subject to a Tier 1 standard and were not subject to Tier 2 standards
until model year 2004. We have now had an opportunity to analyze the
model year 2004 certification data for engines in the 50-75 hp range.
These data shows that more than 70 percent of the engine families in
this power range are capable of meeting the 2008 PM standards today.
However, most of these engines do not yet meet the 3.5 g/bhp-hr Tier 3
NMHC+NO_X standard, which is required in 2008. We expect that
to comply with the Tier 3 standards, these engines will use
technologies such as EGR and electronically controlled fuel injection
systems (and we included the costs of these technologies in assessing
the costs of the Tier 3 standards). These technologies have been shown
to reduce NO_X emissions by 50 percent without increasing PM
emissions. The certification data show that for the 70 percent of the
engine families which meet the 2008 Tier 4 PM standard (0.22 g/bhp-hr),
a NO_X reduction of less than 50 percent is needed for most
of these engines to meet the 2008 Tier 4 NMHC+NO_X standard.
A detailed discussion of these data is contained in the RIA.
In addition to using known engine-out techniques, we also project
that the 2008 standards can be achieved with the use of DOCs. DOCs are
passive flow-through emission control devices which are typically
coated with a precious metal or a base-metal washcoat. DOCs have been
proven to be durable in use on both light-duty and heavy-duty diesel
applications. In addition, DOCs have already been used to control
carbon monoxide on some nonroad applications.\57\ Some commenters
raised concerns that DOCs could actually increase PM emissions when
used on 500 ppm sulfur diesel fuel due to the potential for oxidation
of the sulfur in the fuel to sulfate PM. While we agree with the
commenters that sulfur reductions are important to control PM and in
the long term that a 15 ppm fuel sulfur level will be the best
solution, we disagree with the assertion that the amount of sulfate PM
formed from a DOC will be such that compliance with the 0.22 g/bhp-hr
standard will be infeasible. While commenters shared data showing
increased PM emissions when DOCs are used, we have similarly found data
(included in the RIA) that shows an overall reduction in emissions. To
understand this discrepancy, it is important to realize that DOCs can
be designed for operation on a range of fuel sulfur levels. The lower
the fuel sulfur level, the more effective the PM oxidation function,
but even at 500 ppm sulfur a properly designed DOC will realize a net
reduction in PM emissions. DOCs have been successfully applied to
diesel engines for on-highway applications for PM control on 500 ppm
fuel since 1994 through careful design of the DOC trading-off PM
reduction potential and sulfur oxidation potential. The RIA contains
additional analysis describing DOC function, and its expected
effectiveness when applied to nonroad diesel engines.
---------------------------------------------------------------------------

\57\ EPA Memorandum ``Documentation of the Availability of
Diesel Oxidation Catalysts on Current Production Nonroad Diesel
Equipment,'' William Charmley. Copy available in EPA Air Docket A-
2001-28 Item II-B-15.
---------------------------------------------------------------------------

Other commenters argued that the application of DOC to diesel
engines in this category would lead to an even greater emission
reduction than estimated in our proposal, thus allowing the Agency to
finalize a lower PM standard. While we agree that some engines will
have lower emissions than required to meet the standard and that in the
long term (once 15 ppm fuel is widely available) the PM emissions will
be further reduced, we do not believe that an emission level lower than
0.22 g/bhp-hr will be generally feasible in 2008 due to the sulfur
level of diesel fuel of 500 ppm sulfur and the potential for sulfate PM
formation.
In summary then, there are two likely means by which companies can
comply with the interim 2008 PM standard. First, engine manufacturers
can comply with this standard using known engine-out techniques (e.g.,
optimizing combustion chamber designs, fuel-injection strategies). In
fact, some fraction of engines already would comply with the emission
standard. In addition, some engine manufacturers may choose to use
diesel oxidation catalysts to meet this standard. Our cost analysis
makes the conservative assumption (i.e., the higher cost assumption)
that all manufacturers will use DOC catalysts to comply with these
emission standards.
Based on the existence of a number of engine families which already
comply with the 0.22 g/bhp-hr PM standard (and the 2008
NMHC+NO_X standard), and the availability of well known PM
reduction technologies such as engine-out improvements and diesel
oxidation catalysts, we project that the 0.22 g/bhp-hr PM standards is
technologically feasible by model year 2008.
ii. 2013 Standards
For engines in the 25-50 range, we are finalizing standards
commencing in 2013 of 3.5 g/bhp-hr for NMHC+NO_X and 0.02 g/
bhp-hr for PM. For the 50-75 hp engines, we are finalizing a 0.02 g/
bhp-hr PM standard which will be implemented in 2013, and for those
manufacturers who choose to pull-ahead the standard one-year, 2012
(manufacturers who choose to pull-ahead the 2013 standard for engines
in the 50-75 range do not need to comply with the transitional 2008 PM
standard). A more complete discussion of the options available to
manufacturers and the nature of the transitional program can be found
in section II.A. These standards are measured using the NRTC and
steady-state tests. These engines also will be subject to the NTE
starting with the 2013 model year.
PM Standard. For engines in the horsepower category from 25-75 hp,
we are finalizing a PM standard of 0.02 g/bhp-hr based on the
application of catalyzed diesel particulate filters to engines in this
category. We received a wide range of comments on our proposal with
some arguing that the emission standard could be met earlier than 2013
and others arguing that while technically possible to apply PM filters
to engines in this category, that it was not economically or otherwise
practical to do so.
The RIA discusses in detail catalyzed diesel particulate filters,
including explanations of how CDPFs reduce PM emissions, and how to
apply CDPFs to nonroad engines. We have concluded, as explained above,
that CDPFs can be used to achieve the 0.01 g/bhp-hr PM standard for 75-
750 hp engines. As also discussed in section II.B.2.a above, PM filters
will require active back-up regeneration systems for many nonroad
applications above and below 75 hp because low temperature operation is
an issue across all power categories. One commenter raised concerns
regarding the low exhaust temperatures possibly experienced by small
nonroad engines and argued that such low temperatures make PM filter
regeneration impossible absent the use of active regeneration
technologies. We agree with the commenter that active regeneration, as
described previously, may be necessary and have included the cost for such

[[Page 38993]]

systems in our cost estimates. See section II.B.1.a. A number of
secondary technologies are likely required to enable proper
regeneration, including possibly electronic fuel systems such as common
rail systems which are capable of multiple post-injections which can be
used to raise exhaust gas temperatures to aid in filter regeneration.
Particulate filter technology, with the requisite trap regeneration
technology, can also be applied to engines in the 25 to 75 hp range. As
explained earlier, the fundamentals of how a filter is able to reduce
PM emissions are not a function of engine power, so that CDPF's are
just as effective at capturing soot emissions and oxidizing SOF on
smaller engines as on larger engines. The PM filter regeneration
systems described in section II.B.2 are also applicable to engines in
this size range and are likewise feasible. There are specific trap
regeneration technologies which we believe engine manufacturers in the
25-75 hp category may prefer over others. For example, some
manufacturers may choose to apply an electronically-controlled
secondary fuel injection system (i.e., a system which injects fuel into
the exhaust upstream of a PM filter). Such a system has been
commercially used successfully by at least one nonroad engine
manufacturer, and other systems have been tested by technology
companies.\58\ However, we recognize that the application of these
technologies will be challenging and will require additional time to
develop. We therefore disagree with commenters who say that the
standard could be met sooner and have decided to finalize the
implementation schedule as proposed.
---------------------------------------------------------------------------

\58\ ``The Optimized Deutz Service Diesel Particulate Filter
System II,'' H. Houben et. al., SAE Technical Paper 942264, 1994 and
``Development of a Full-Flow Burner DPF System for Heavy Duty Diesel
Engines,'' P. Zelenka et. al., SAE Technical Paper 2002-01-2787, 2002.
---------------------------------------------------------------------------

As we proposed, we are finalizing a slightly higher PM standard
(0.02 g/bhp-hr rather than 0.01) for engines in this power category. As
discussed in the preamble to the proposed rule and in some detail in
the RIA, with the use of a CDPF, the PM emissions emitted by the filter
are primarily derived from the fuel sulfur (68 FR 28389-28390, May 23,
2003). The smaller power category engines tend to have higher fuel
consumption per unit of work than larger engines. This occurs for a
number of reasons. First, the lower power categories include a high
fraction of IDI engines which by their nature consume approximately 15
percent more fuel than a DI engine. Second, as engine displacements get
smaller, the engine's combustion chamber surface-to-volume ratio
increases. This leads to higher heat-transfer losses and therefore
lower efficiency and higher fuel consumption. In addition, frictional
losses are a higher percentage of total power for the smaller
displacement engines which also results in higher fuel consumption.
Because of the higher fuel consumption rate, we expect a higher
particulate sulfate level, and therefore we have set a 0.02 g/bhp-hr
standard for engines in this power category. We did not receive any
comments on our proposal arguing that the technical basis for this
higher PM level was inappropriate.
The 0.02 g/bhp-hr standard applies to all of the test cycles
applicable to engines in this power category (i.e., the NRTC including
cold-start, the ISO C1, D2 and G2 cycles and the alternative TRU and
RMC cycles, as appropriate). Our feasibility analysis summarized here
and detailed in the RIA takes into consideration these different test
cycles. The control technologies work in a similar manner and provide
the same high level of emission control across these different
operating regimes including the NTE. The most significant effect on
emission performance is related to sulfate PM formation at high load,
high temperature operating conditions. As the RIA details, this level
of high sulfate formation rate is not high enough to preclude
compliance with the PM emission standard with 15 ppm fuel sulfur on the
regulated test cycles nor is it high enough to preclude compliance with
the NTE provisions. At higher fuel sulfur levels however, compliance
with the PM emission standard would not be feasible.
The majority of negative comments on our proposal to set a PM
standard based on the control possible from PM filter technologies
focused on the economic and technical challenges to apply these
technologies and the major engine technology enabler, electronic fuel
systems, to smaller diesel engines. Some commenters acknowledged that
the technologies were ``technically feasible'' but not economically
feasible or practical for engines in this power category. While we
acknowledge that the application of these technologies to diesel
engines in this horsepower category will be challenging and have given
consideration to this in setting the timing for the new standard, we
believe that the technical path for compliance is clear and that the
cost estimates we have made for these engines accurately represent this
technical path. As discussed in the RIA, at the time of the proposal we
projected no significant penetration of electronic fuel systems for
engines in the 50-100 hp range prior to the Tier 3 standards (2008).
Since the proposal, new information regarding model year 2004 engine
certifications has become available. That data show 18 percent of the
engines in the 75-100 hp category already use electronically controlled
fuel systems. In model year 2001, no engines in this category used
electronic fuel systems. We believe this strong trend toward the
introduction of more advanced electronic fuel system technology will
continue in the future and, importantly for engines in the 25-75 hp
category, will extend to ever smaller engine categories due to the user
benefits provided by the technology and the falling cost for such
systems. However, acknowledging the substantial time between now and
2012, and the potential for technologies to mature faster or slower
than we are estimating here, we have decided to conduct a technology
review of these standards as described in section II.A above. This
review will provide EPA with another opportunity to confirm that the
technical path laid out here is indeed progressing in a manner
consistent with our expectations.
NMHC+NO_X Standard. As we proposed, we are finalizing a
3.5 g/bhp-hr NMHC+NO_X standard for engines in the 25-50 hp
range for 2013. We received limited comments arguing that the
NMHC+NO_X standard should be less stringent. Like the PM
standard, some commenters argued that the NO_X standard would
be costly and complicated, although not necessarily infeasible to
apply. Other commenters argued that the NO_X standard for
engines in this category like the new standard for larger engines,
should be based upon the application of advanced NO_X
catalyst-based technologies. As described previously in section II.A,
we do not believe that the catalyst-based NO_X technologies
have matured to a state were we can accurately define a feasible
technical path for compliance for engines in this power category. We
intend to revisit this question in our technology review and if we find
that a viable technical path can be described we will consider the
appropriateness of a more stringent catalyst-based standard.
The new standard aligns the NMHC+NO_X standard for
engines in this power range with the Tier 3 standard for engines in the
50-75 hp range which are implemented in 2008. EPA's recent Staff
Technical paper which reviewed the technological feasibility of the
Tier 3 standards contains a detailed discussion of a number of
technologies which are capable of achieving a 3.5 g/bhp-hr standard.
These include cooled EGR, uncooled EGR, as well as advanced in-

[[Page 38994]]

cylinder technologies relying on electronic fuel systems and
turbocharging.\59\ These technologies are capable of reducing
NO_X emissions by as much as 50 percent. Given the Tier 2
NMHC+NO_X standard of 5.6 g/bhp-hr, a 50 percent reduction
would allow a Tier 2 engine to comply with the 3.5 g/bhp-hr
NMHC+NO_X standard set in this action. Therefore, we are
projecting that 3.5 g/bhp-hr NO_X+NMHC standard is feasible
with the addition of cooled EGR (the basis for our cost analysis) or
other equally effective in-cylinder NO_X control technology
as described in the RIA and our recent Staff Technical Paper. In
addition, because this NMHC+NO_X standard is concurrent with
the 0.02 g/bhp-hr PM standards which we project will be achievable with
the use of particulate filters, engine designers will have significant
additional flexibility in reducing NO_X because the PM filter
will lessen the traditional concerns with the engine-out NO_X
vs. PM trade-off.
---------------------------------------------------------------------------

\59\ See section 2.2 through 2.3 in ``Nonroad Diesel Emission
Standards--Staff Technical Paper,'' EPA Publication EPA420-R-01-052,
October 2001. Copy available in EPA Air Docket A-2001-28.
---------------------------------------------------------------------------

Our recent highway 2004 standard review rulemaking (see 65 FR
59896, October 2000) demonstrated that a diesel engine with advanced
electronic fuel injection technology as well as NO_X control
technology such as cooled EGR is capable of complying with an NTE
standard set at 1.25 times the laboratory-based FTP standard. We
project that the same technology (electronic fuel systems and cooled
EGR) are also capable for engine in the 25-75 hp range of complying
with the NTE standard of 4.4 g/bhp-hr NMHC+NO_X (1.25 x 3.5)
in 2013. This is based on the broad NO_X reduction capability
of cooled EGR technology, which is capable of reducing NO_X
emissions across the engine operating map (including the NTE region) by
at least 30 percent even under high load conditions.\60\
---------------------------------------------------------------------------

\60\ See section 8 of ``Control of Emissions of Air Pollution
from 2004 and Later Model Year Heavy-Duty Highway Engines and
Vehicles: Response to Comments,'' EPA document EPA420-R-00-011, July
2000, and chapter 3 of ``Regulatory Impact Analysis: Control of
Emissions of Air Pollution from Highway Heavy-duty Engines,'' EPA
document EPA420-R-00-010, July 2000. Copies of both documents
available in EPA docket A-2001-28.
---------------------------------------------------------------------------

Based on the information available to EPA and presented here, and
giving appropriate consideration to the lead time necessary to apply
the technology as well, we have concluded the 0.02 g/bhp-hr PM standard
for engines in the 25-75 hp category and the 3.5 g/bhp-hr
NMHC+NO_X standards for the 25-50 hp engines are achievable.
5. Are the Standards for Engines Under 25 hp Feasible?
As we explained at proposal and as discussed in section II.A, the
new PM standard for engines less than 25 hp is 0.30 g/bhp-hr beginning
in 2008. The certification test cycle for this standard is the ISO C1
cycle (or other appropriate steady-state test as defined by the
engine's intended use) from 2008 through 2012. Beginning in 2013, the
NRTC (with cold-start) and the NTE will also apply to engines in this
category. As discussed below, we are not setting a new standard more
stringent than the existing Tier 2 NMHC+NO_X standard for
this power category at this time. This section describes what makes the
less than 25 hp category different and why the standards are
technologically feasible.
a. What Makes the Under 25 hp Category Unique?
As we explained at proposal and in the RIA, nonroad engines less
than 25 hp are the least sophisticated nonroad diesel engines from a
technological perspective. All of the engines currently sold in this
power category lack electronic fuel systems and turbochargers. Nearly
20 percent of the products have two-cylinders or less, and 14 percent
of the engines sold in this category are single-cylinder products, a
number of these have no batteries and are crank-start machines, much
like today's simple walk behind lawnmower engines. In addition, given
what we know today and taking into account the Tier 2 standards which
have not yet been implemented, we are not projecting any significant
penetration of advanced engine technology, such as electronically
controlled fuel systems, into this category in the next 5 to 10 years.
b. What Data Indicate That the Standards Are Feasible?
We project the Tier 4 PM standard can be met by 2008 based on: The
existence of a large number of engine families which meet the new
standards today; the use of engine-out reduction techniques; and the
use of diesel oxidation catalysts.
Engines in the less than 25 hp category must meet Tier 1
NMHC+NO_X and PM standards today. We have examined the 2004
model year engine certification data for nonroad diesel engines less
than 25 hp. These data indicate that a number of engine families meet
the new Tier 4 PM standard (and the 2008 NMHC+NO_X standard,
unchanged from Tier 2) today. The data show that 31 percent of the
engine families are at or below the PM standard today, while meeting
the 2008 NMHC+NO_X standard. At the time of the proposal, we
examined the model year 2002 certification, which indicated
approximately 30 percent of the engine families were at or below the
2008 emission standards. This certification data includes both IDI and
DI engines, as well as a range of certification test cycles.\61\ Many
of the engine families are certified well below the Tier 4 standard
while meeting the 2008 NMHC+NO_X level. Specifically, for the
model year 2002 data, 15 percent of the engine families are cleaner
than the new Tier 4 PM standard by more than 20 percent. The public
certification data indicate that these engines do not use
turbocharging, electronic fuel systems, exhaust gas recirculation, or
aftertreatment technologies. We saw little change between the model
year 2002 and 2004 data for this power category primarily because both
model years are subject to the Tier 1 standards, and many engine
families are simply carried over from the previous model year. Tier 2
standards for these engines will not be implemented until model year
2005. A detailed discussion of these data is contained in the RIA.
---------------------------------------------------------------------------

\61\ The Tier 1 and Tier 2 standards for this power category
must be demonstrated on one of a variety of different engine test
cycles. The appropriate test cycle is selected by the engine
manufacturer based on the intended in-use application(s) of the engine.
---------------------------------------------------------------------------

In summary then, there are two likely means by which companies can
comply with the 2008 PM standard for engines under 25 hp. First, engine
manufacturers can comply with this standard using known engine-out
techniques (e.g., optimizing combustion chamber designs, fuel-injection
strategies). In fact, some fraction of engines already would comply
with the emission standard. In addition, some engine manufacturers may
choose to use diesel oxidation catalysts to meet this standard. Our
cost analysis makes the conservative assumption (i.e., the higher cost
assumption) that all manufacturers will use DOCs to comply with these
emission standards.
As discussed in section II.A, we are finalizing supplemental test
procedures and standards (nonroad transient test cycle and not-to-
exceed requirements) for engines in the under 25 hp category beginning
in 2013. The supplemental test procedures and standards will apply not
only to PM, but also to NMHC+NO_X. The engine technologies
necessary to comply with the supplemental test procedures and standards
are the same as the technology necessary to comply with the 2008
standard, and we have given

[[Page 38995]]

consideration to these test conditions in setting this standard. The
range of operating conditions covered by the various test cycles and
the mechanism for emission control over those ranges of operation are
substantially similar allowing us to conclude that emission control
will be substantially uniform across these test procedures. However, we
are delaying the implementation of the supplemental test procedures and
standards until 2013, as proposed, in order to implement these
supplemental requirements on the larger powered nonroad engines before
the smallest power category. (There were no adverse comments on this
aspect of the proposed rule.) This will also provide engine
manufacturers with additional time to install any emission testing
equipment upgrades they may need in order to implement the new nonroad
transient test cycle.
Based on the existence of a number of engine families which already
comply with the new Tier 4 PM standard (and the 2008
NMHC+NO_X standard), and the availability of PM reduction
technologies such as improved mechanical fuel systems, combustion
chamber improvements, and in particular diesel oxidation catalysts, we
project that the 0.30 g/bhp-hr PM standards is technologically feasible
by model year 2008.
6. Meeting the Crankcase Emissions Requirements
The most common way to eliminate crankcase emissions has been to
vent the blow-by gases into the engine air intake system, so that the
gases can be recombusted. Prior to the HD2007 rulemaking, we have
required that crankcase emissions be controlled only on naturally
aspirated diesel engines. We had made an exception for turbocharged
diesel engines (both highway and nonroad) because of concerns in the
past about fouling that could occur by routing the diesel particulates
(including engine oil) into the turbocharger and aftercooler. However,
this is an environmentally significant exception since most nonroad
equipment over 75 hp use turbocharged engines, and a single engine can
emit over 100 pounds of NO_X, NMHC, and PM from the crankcase
over its lifetime.
Given the available means to control crankcase emissions, we
eliminated this exception for highway engines in 2007 and similarly in
today's action are eliminating the exception for nonroad diesel engines
as well. A number of commenters supported this provision noting that
the necessary technologies are already in application in Europe and
will be required for heavy-duty diesel trucks in the United States
beginning in 2007.
We anticipate that the diesel engine manufacturers will be able to
control crankcase emissions through the use of closed crankcase
filtration systems or by routing unfiltered blow-by gases directly into
the exhaust system upstream of the emission control equipment. However,
the provisions have been written such that if adequate control can be
had without ``closing'' the crankcase then the crankcase can remain
``open.'' Compliance would be ensured by adding the emissions from the
crankcase ventilation system to the emissions from the engine control
system downstream of any emission control equipment. We have limited
this provision for controlling emissions from open crankcases to
turbocharged engines, which is the same as for heavy-duty highway
diesel engines.
Some commenters in essence argued that the Agency was obligated to
show that all potential compliance paths were feasible and absent that
showing that the Agency should reconsider this provision. Our
feasibility analysis is based on the use of closed crankcase
technologies designed to filter crankcase gases sending the clean gas
to the engine intake for combustion and returning the oil filtered from
the gases to the engine crankcase. These systems are proven in use and
the use of this technology to eliminate crankcase emissions is
acceptable to demonstrate compliance. The other options, the option to
vent crankcase emissions into the exhaust or to continue to vent
crankcase emissions to the atmosphere provided the total emissions
including tailpipe and crankcase emissions do not exceed the standards
are provided as alternate solutions that are clearly effective to
control emissions (i.e., if the emissions are measured and are below
the standard they are adequately controlled). The commenter suggests
however, that they may not be able to control the emissions to the
required level using these alternate approaches. In this case, a
manufacturer would need to use the primary approach identified by EPA,
closing the crankcase and routing the filtered gases to the engine's
intake (this is the approach we used in the cost analysis summarized in
section VI). We have allowed the alternative approaches at the
recommendation of some in industry, because if they prove to be
effective we accept that resulting total emissions will be acceptably low.

C. Why Do We Need 15 ppm Sulfur Diesel Fuel?

The new Tier 4 emission standards for most categories of nonroad
diesel engines are predicated on the application of advanced diesel
emission control technologies that are being developed for on-highway
diesel engines to meet the HD2007 emission standards, namely catalyzed
diesel particulate filters and NO_X adsorber catalysts.
Sulfur in diesel fuel significantly impacts the durability, efficiency
and cost of applying these technologies. Therefore, we required that
on-highway diesel fuel produced for use in 2007 or newer on-highway
diesel engines have sulfur content no higher than 15 ppm. Based on the
same concerns outlined in the 2007 rulemaking, discussed in the
proposal at 68 FR 28395-28400, set out in the RIA, and briefly
summarized below, we today are finalizing a requirement that diesel
fuel for nonroad engines be reduced to no higher than 15 ppm beginning
in 2010. There was consensus among commenters that such standards were
necessary if the proposed standards based on advanced diesel emission
control technologies were to be achievable.
Sulfur in diesel fuel acts to poison the oxidation function of
platinum-based catalysts including DOCs and CDPFs reducing the
oxidation efficiency substantially, especially at lower temperatures.
This poisoning limits the effectiveness of DOCs and CDPFs to oxidize CO
and HC emissions. Of even greater concern is the reduction in NO
oxidation efficiency of the CDPF due to sulfur poisoning. NO oxidation
to NO₂ is a fundamental mechanism for PM filter regeneration
necessary to ensure robust operation of the CDPF (i.e., to prevent
filter plugging). Sulfur poisoning from sulfur in diesel fuel at levels
higher than 15 ppm has been shown to increase the likelihood of PM
filter failure due to a depressed NO to NO₂ oxidation
efficiency of the CDPF. The RIA documents substantial field experience
in Europe regarding this phenomenon.
Sulfur in diesel fuel can itself be oxidized to form sulfate PM
emitted into the environment. CDPFs in particular are designed for
robust regeneration and are highly effective at oxidizing sulfur to
sulfate PM (approaching 100 percent conversion under some
circumstances). The sulfate PM emissions from a CDPF when operated on
350 ppm fuel can be so high as to actually increase the PM emission
rate above the baseline level for an engine without a PM filter. In
spite of more than ten years of research,

[[Page 38996]]

no effective means has been found to provide the NO to NO₂
oxidation efficiency needed to ensure robust filter regeneration
without similarly increasing efficiency to oxidize sulfur to sulfate
PM. Conversely, technologies developed to suppress sulfate PM formation
(e.g., the addition of vanadium to DOCs designed to operate on 500 ppm
sulfur fuel) also suppress NO to NO₂ formation. Therefore,
it is not possible to apply the robust CDPF technology to achieve the
PM standards without first having lower diesel fuel sulfur levels. The
RIA documents substantial test data showing the impact of sulfur in
diesel fuel on total PM emissions due to an increase in sulfate PM
emissions.
Sulfur from diesel fuel likewise poisons the storage function of
the NO_X adsorber catalyst. Sulfur in the exhaust in the form
of SO_X is stored on the catalyst in the same way as the
NO_X emissions are stored. Unfortunately, due to the chemical
properties of the materials, the sulfur is stored preferentially to the
NO_X and will actually displace the stored NO_X
emissions. The stored sulfur is not easily removed from the catalyst. A
sulfur removal step, called a desulfation, can be accomplished by
raising exhaust temperatures to a very high level while simultaneously
increasing the reductant content of the exhaust above the
stoichiometric level (i.e., more fuel than oxygen in the exhaust). This
process can be effective to remove sulfur from the catalyst but at the
expense of damaging the catalyst slightly. Over the lifetime of a
diesel engine the cumulative damage from repeated desulfation events,
as would be required if operation on higher than 15 ppm sulfur fuels
were attempted, would lead to excessive damage and loss in
NO_X control. The RIA contains an extensive description of
this phenomena including the tradeoff between higher fuel sulfur levels
and more frequent desulfation events.
The damage that sulfur inflicts on both the CDPF and NO_X
adsorber technologies not only reduces their effectiveness but also
impacts the fuel economy of their application. Reduced soot
regeneration potential due to sulfur poisoning would lead to the need
for more frequent active CDPF regeneration. As each active soot
regeneration event consumes fuel, more frequent regeneration events
with higher fuel sulfur levels leads to an increase in fuel
consumption. Similarly, higher fuel sulfur levels would necessitate
more frequent NO_X adsorber desulfation events and thus
higher fuel consumption. An estimate of the impact of higher fuel
sulfur levels on fuel economy due to more frequent desulfation events
can be found in the RIA.
For all of the reasons documented in the RIA and summarized here,
we remain convinced that a cap of 15 ppm fuel sulfur is necessary for
both on-highway and nonroad diesel engines in order to apply the
advanced emission control technologies necessary to meet the emission
standards we are finalizing today.

III. Requirements for Engine and Equipment Manufacturers

This section describes the regulatory changes being made for the
engine and equipment compliance program. A number of specific items are
discussed in this section, including test procedures, certification
fuels, and credit program provisions. These provisions are important in
that they help us ensure the engines and equipment will meet the new
requirements throughout their entire useful life, thus achieving the
expected emission and public health benefits.
One of the most obvious changes from the Tier 2/Tier 3 program is
that the regulations for Tier 4 engines have been written in a plain
language format. They are structured to contain the provisions that are
specific to nonroad compression ignition (CI) engines in a new part
1039, and to apply the general provisions of existing parts 1065 and
1068. The plain language regulations, however, are not intended to
significantly change the compliance program, except as specifically
noted in today's notice and supporting documents. These plain language
regulations will only apply for Tier 4 engines. The changes from the
existing nonroad program are described below along with other notable
aspects of the compliance program.
As described below, we received comments from a broad range of
commenters for some of these issues. For other issues, we received only
manufacturer comments or no comments at all. See Chapter 9 of the
Summary and Analysis of Comments for more information about the
comments received and our responses to them.

A. Averaging, Banking, and Trading

1. Why Are We Adopting an ABT Program for Tier 4 Nonroad Diesel Engines?
EPA has included averaging, banking, and trading (ABT) programs in
almost all of its recent mobile source emission control programs. Our
existing regulations for nonroad diesel engines include an ABT program
(40 CFR 89.201 through 89.212). With today's action we are retaining
the basic structure of the existing nonroad diesel ABT program, though
we are adopting a number of changes to accommodate implementation of
the newly adopted Tier 4 emission standards. The ABT program is
intended to enhance the ability of engine manufacturers to meet the
stringent standards adopted today. The program is also structured to
limit production of very high-emitting engines and to avoid unnecessary
delay of the transition to the new exhaust emission control technologies.
We view the ABT program as an important element in setting emission
standards that are appropriate under CAA section 213(a) with regard to
technological feasibility, lead time, and cost, given the wide breadth
and variety of engines covered by the standards. As we noted at
proposal, if there are engine families that will be particularly costly
or have a particularly hard time coming into compliance with the
standard, this flexibility allows the manufacturer to adjust the
compliance schedule accordingly, without special delays or exceptions
having to be written into the rule. Emission-credit programs also
create an incentive for the early introduction of new technology (for
example, to generate credits in early years to create compliance
flexibility for later engines), which allows certain engine families to
act as trailblazers for new technology. This can help provide valuable
information to manufacturers on the technology before they apply the
technology throughout their product line. This early introduction of
clean technology improves the feasibility of achieving the standards
and can provide valuable information for use in other regulatory
programs that may benefit from similar technologies. Early introduction
of such engines also secures earlier emission benefits.
In an effort to make information on the ABT program more available
to the public, we intend to issue an annual report summarizing use of
the ABT program by engine manufacturers. The information contained in
the reports will be based on the information submitted to us by engine
manufacturers in their annual reports, and summarized in a way that
protects the confidentiality of individual engine manufacturers. We
believe this information will also be helpful to engine manufacturers
by giving them a better indication of the availability of credits.

[[Page 38997]]

2. What Are the Provisions of the ABT Program?
The following section describes the ABT provisions being adopted
with today's action. Areas in which we have made changes to the
proposed ABT program are highlighted. A complete summary of comments
received on the proposed ABT program and our response to those comments
are contained in the Summary and Analysis of Comments document for this
rule.
The ABT program has three main components. Averaging means the
exchange of emission credits between engine families within a given
engine manufacturer's product line. 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. 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 emissions from all the manufacturer's engine families,
weighted by engine power, regulatory useful life, and production
volume, are at or below the level of the emission standard. (The
inclusion of engine power, useful life, and production volume in the
averaging calculations is designed to reflect differences in the in-use
emissions from the engines.) Averaging results are calculated for each
specific model year. The mechanism by which this is accomplished is
certification of the engine family to a ``family emission limit'' (FEL)
set by the manufacturer, which may be above or below the standard. An
FEL that is established above the standard may not exceed an upper
limit specified in the ABT regulations. Once an engine family is
certified to an FEL, that FEL becomes the enforceable emissions limit
for all the engines in that family for purposes of compliance testing.
Averaging is allowed only between engine families in the same averaging
set, as defined in the regulations.
Banking means the retention of emission credits by the engine
manufacturer for use in future model year averaging or trading. Trading
means the exchange of emission credits between nonroad diesel engine
manufacturers which can then be used for averaging purposes, banked for
future use, or traded to another engine manufacturer.
The existing ABT program for nonroad diesel engines covers
NMHC+NO_X emissions as well as PM emissions. With today's
action and as proposed, we are making the ABT program available for the
Tier 4 NO_X standards (and NMHC+NO_X standards,
where applicable) and the Tier 4 PM standards. As proposed, ABT will
not be available for the Tier 4 NMHC standards for engines above 75
horsepower.
Engine manufacturers commented that ABT will most likely be
necessary for the Tier 4 CO standards, given the reductions in PM and
NO_X emissions. In the Tier 4 proposal, we proposed minor
changes in CO standards for some engines solely for the purpose of
helping to consolidate power categories and improving administrative
efficiency. However, as noted earlier in section II.A.6, we have
withdrawn this aspect of the proposal. We do note, however, that we are
applying new certification tests to all pollutants covered by the rule,
the result being that Tier 4 engines will have to certify to CO
standards measured by the transient test (including a cold start
component), and the NTE. However, as shown in RIA chapter 4.1.1.2 (see
e.g., note F), we believe that application of Tier 4 technologies will
lead to a reduction in CO emissions over the Tier 3 baseline. We thus
believe the CO standards will be readily achievable under the transient
test and NTE. Moreover, we believe that there will not be any
associated costs: The CO standards can be met without any further
technological improvements (i.e., improvements other than those already
necessary to meet the Tier 4 standards) and these tests will already be
used for certification. Since CO standards measured by the new
certification tests are achievable without cost, there is no basis for
allowing ABT because no additional lead time is needed.
As noted earlier, the existing ABT program for nonroad diesel
engines includes FEL caps--limits on how high the emissions from
credit-using engine families can be. No engine family may be certified
above these FEL caps. These limits provide manufacturers with
compliance flexibility while protecting against the introduction of
unnecessarily high-emitting engines. In the past, we have generally set
the FEL caps at the emission levels allowed by the previous standard,
unless there was some specific reason to do otherwise. With today's
action, we are taking a different approach because the level of the
standards being adopted for most engines are significantly lower than
the current level of the standards. The transfer to new technology is
feasible and appropriate. Thus, as proposed, to ensure that the ABT
provisions are not used to continue unnecessarily to produce old-
technology high-emitting engines under the new program, the FEL caps
are not, in general, set at the previous standards. Exceptions have
been made for the NMHC+NO_X standard for engines between 25
and 50 horsepower effective in model year 2013 and the NO_X
standards applicable to engines above 750 horsepower in 2011, where we
are using the estimated NO_X-only equivalent for the
previously applicable NMHC+NO_X standard for the FEL cap
since the gap between the previous and newly adopted standards is
approximately 40 percent (rather than 90 percent for engines between 75
and 750 horsepower), and because the technology basis for these
standards can be a form of engine-out control, like the previous tier
standards. This approach of setting FEL caps at lower levels than the
previously applicable standards is consistent with the level of the FEL
limits set in the 2007 on-highway heavy-duty diesel engine program.
STAPPA/ALAPCO supported the proposed FEL caps. The Engine
Manufacturers Association (EMA) commented that EPA should eliminate the
FEL caps altogether. They believe FEL caps are unnecessary because the
zero-sum requirement of ABT will ensure that there are no adverse
emission impacts. Short of eliminating the FEL caps, they commented
that EPA should set FEL caps at the level of the previous standards,
not the more stringent levels proposed. With today's action, EPA is
adopting the FEL caps as proposed, with some exceptions for engines
above 750 horsepower (where we are adopting different standards than
originally proposed) and for phase-in engines between 75 and 750
horsepower (where we have adopted an option for manufacturers to
certify to alternative NO_X standards during the phase-in
period). We continue to believe that it is important to ensure that
technology turns over in a timely manner and that manufacturers do not
continue producing large numbers of high-emitting, old technology
engines once the Tier 4 standards become fully effective. (As noted
below, however, we are adopting provisions that allow manufacturers to
produce a limited number of 75 to 750 horsepower engines for a limited
period that are certified with FELs as high as the previous tier of
standards.) For the Tier 4 standards, where the standards are being
reduced by an order of magnitude, we believe this goal to be
particularly important, and in keeping with the technology-

[[Page 38998]]

forcing provisions of section 213(a). It simply would not be
appropriate to have long-term FEL caps that allowed engines to
indefinitely have emissions as high as ten times the level of the standard.
For engines between 75 and 750 horsepower certified using the
phase-in/phase-out approach, there will be two separate sets of engines
with different FEL caps. For engines certified to the existing (Tier 3)
NMHC+NO_X standards during the NO_X phase-in
(referred to generally as ``phase-out'' engines), the FEL cap for these
pollutants will (almost necessarily) be the existing FEL caps adopted
in the October 1998 Tier 3 rule. For engines certified to the newly
adopted Tier 4 NO_X standard during the phase-in (referred to
generally as ``phase-in'' engines), we have revised the proposed FEL
cap to be 0.60 g/bhp-hr, consistent with the proposed long-term Tier 4
NO_X FEL cap. As described in section II.A.2.c above, we have
used the creation of alternative NO_X standards for engines
between 75 and 750 horsepower to restate the phase-in/phase-out concept
as a path truly focused on achieving high-efficiency NO_X
aftertreatment during the phase-in years. Setting the NO_X
FEL cap at 0.60 g/bhp-hr for phase-in engines will ensure this happens
if a manufacturer chooses to certify to the phase-in provisions. In
contrast, the higher FEL caps which we proposed (see 68 FR 28467-28468)
would not have achieved this objective.
Beginning in model year 2014 when the Tier 4 NO_X
standards for engines between 75 and 750 horsepower take full effect,
we are adopting a NO_X FEL cap of 0.60 g/bhp-hr for all
engines. We reiterate that given the fact that the Tier 4
NO_X standard is approximately a 90 percent reduction from
the existing standards for engines between 75 and 750 horsepower, we do
not believe the previous standard is appropriate as the FEL cap for
engines having to comply with the Tier 4 NO_X standard of
0.30 g/bhp-hr. We believe that the NO_X FEL caps will ensure
that manufacturers adopt NO_X aftertreatment technology
across all of their engine designs.
For the interim PM standards for engines between 25 and 75
horsepower effective in model year 2008 and for the Tier 4 PM standards
for engines below 25 horsepower, we are adopting the previously
applicable Tier 2 PM standards for the FEL caps (which do vary within
the 25 to 75 horsepower category) because the gap between the previous
standards and the newly adopted standards is approximately 50 percent
(rather than in excess of 90 percent for engines between 75 and 750
horsepower), and the technology basis for the 2008 PM standards can be
a form of engine-out control, like the previous tier standard. For the
Tier 4 PM standard effective in model year 2013 for engines between 25
and 75 horsepower, we are adopting a PM FEL cap of 0.04 g/bhp-hr, and
for the Tier 4 PM standard effective in model years 2011 and 2012 for
engines between 75 and 750 horsepower, we are adopting a PM FEL cap of
0.03 g/bhp-hr. As with the Tier 4 NO_X standards for these
engines, given the fact that these Tier 4 aftertreatment-based PM
standards for engines between 25 and 750 horsepower are over 90 per
cent more stringent than the previous standards, we do not believe the
previous standards are appropriate as FEL caps once the Tier 4
standards take effect. We believe that the newly adopted PM FEL caps
will ensure that manufacturers adopt PM aftertreatment technology
across all of their engine designs (except for a limited number of
engines), yet will still provide substantial flexibility in meeting the
standards.
The final Tier 4 standards for engines above 750 horsepower have
been revised from the proposal. We similarly revised a number of the
proposed ABT provisions for engines above 750 horsepower. Beginning in
2011, all engines above 750 horsepower will be required to meet a
NO_X standard of 2.6 g/bhp-hr, except for those above 1200
horsepower used in generator sets which will be required to meet a
NO_X standard of 0.50 g/bhp-hr. The NO_X FEL cap
for the 2011 standards will be 4.6 g/bhp-hr, which is an estimate of
the NO_X emissions level that is expected under the combined
NMHC+NO_X standards that apply with the previously applicable
tier for engines above 750 horsepower. Beginning in 2011, all engines
above 750 horsepower will have to meet a PM standard of 0.075 g/bhp-hr.
The PM FEL cap for the 2011 PM standard will be the previously-
applicable Tier 2 standard of 0.15 g/bhp-hr. As noted above, because
the 2011 NO_X and PM standards are approximately 50 percent
lower than the previous standard (rather than in excess of 90 percent
for engines between 75 and 750 horsepower), and for most engines are
based on performance of the same type of technology (engine-out), we
are adopting the previously applicable Tier 2 standards for the FEL caps.
Beginning in model year 2015, the 0.50 g/bhp-hr NO_X
standard will apply to all engines above 750 horsepower used in
generator sets. Beginning in model year 2015, the PM standard drops to
0.02 g/bhp-hr for engines greater than 750 horsepower used in generator
sets and 0.03 g/bhp-hr for engines greater than 750 horsepower used in
other machines. Consistent with the Tier 4 FEL caps for lower
horsepower categories where the new standards are significantly lower
than the previously applicable standards and reflect performance of
aftertreatment technology, we are adopting a NO_X FEL cap of
0.80 g/bhp-hr for engines used in generator sets and PM FEL caps of
0.04 g/bhp-hr for engines used in generator sets and 0.05 g/bhp-hr for
engines used in other machines (i.e., mobile machines). We believe that
the FEL caps for engines above 750 horsepower will ensure that
manufacturers adopt PM aftertreament technology across all of their
engine designs and NO_X aftertreatment for generator sets
once the 2015 standards are adopted, while allowing for some meaningful
use of averaging beginning in 2015.
Table III.A-1 contains the FEL caps and the effective model year
for the FEL caps (along with the associated standards adopted for Tier
4). It should be noted that for Tier 4, where we are adopting a new
transient test for most engines, as well as retaining the current
steady-state test, the FEL established by the engine manufacturer will
be used as the enforceable limit for the purpose of compliance testing
under both test cycles. In addition, under the NTE requirements, the
FEL times the appropriate multiplier will be used as the enforceable
limit for the purpose of such compliance testing. This is consistent
with how FELs are used for compliance purposes in the 2007 on-highway
heavy-duty diesel engine program.

[[Page 38999]]

Table III.A-1.--FEL Caps for the Tier 4 Standards in the ABT Program (g/bhp-hr)
----------------------------------------------------------------------------------------------------------------
NOX PM PM FEL
Power category Effective model year standard NOX FEL cap standard cap
----------------------------------------------------------------------------------------------------------------
hp < 25 (kW < 19)................... 2008+................ \a\ 5.6 7.8 \a\ for < 11hp... \c\ 0.30 0.60
7.1 \a\ for >11hp...
25 < = hp < 50 (19 < = kW < 37)...... 2008-2012............ \a\ 5.6 7.1 \a\............. 0.22 0.45
25 < = hp < 50 (19 < = kW < 37)...... 2013+................ \b\3.5 5.6 \b\............. 0.02 f 0.04
50 < = hp < 75 (37 < = kW < 56)...... 2008-2012 \d\........ \a\ 3.5 5.6 \a\............. 0.22 0.30
50 < = hp < 75 (37 < = kW < 56)...... 2013+ \e\............ \a\ 3.5 5.6 \a\............. 0.02 \f\
0.04
75 < = hp < 175 (56 < = kW < 130).... 2012+................ 0.30 0.60 f g h.......... 0.01 \f\
0.03
175 < = hp < = 750 (130 < = kW < = 2011+................ 0.30 0.60 f g h.......... 0.01 \f\
560). 0.03
hp > 750 (kW >560)................ 2011-2014............ 2.6 4.6................. 0.075 0.15
\i\ 0.50 4.6
Generator Sets hp > 750 (kW >560). 2015+................ 0.50 0.80 \f\............ 0.02 \f\
0.04
Other Machines hp > 750 (kW >560). 2015+................ \j\ 2.6 4.6 \j\............. 0.03 \f\
0.05
----------------------------------------------------------------------------------------------------------------
Notes:
\a\ These are the previous tier NMHC+NOX standards and FEL caps. These levels are not being revised with today's
rule and are printed here solely for readers' convenience.
\b\ These are a combined NMHC+NOX standard and FEL cap.
\c\ A manufacturer may delay implementation until 2010 and then comply with a PM standard of 0.45 g/bhp-hr for
air-cooled, hand-startable, direct injection engines under 11 horsepower.
\d\ These FEL caps do not apply if the manufacturer opts out of the 2008 standards. In such cases, the existing
Tier 3 standards and FEL caps continue to apply.
\e\ The FEL caps apply in model year 2012 if the manufacturer opts out of the 2008 standards.
\f\ As described in this section, a small number of engines are allowed to exceed these FEL caps.
\g\ For engines certified as phase-out engines, the NMHC+NOX FEL caps for the Tier 3 standards apply.
\h\ For engines certified to the alternative NOX standards during the phase-in, the NOX FEL caps shown in tables
III.A-3 and III.A-4 apply.
\i\ The 0.50 g/bhp-hr NOX standard applies only to engines above 1200 horsepower used in generator sets.
\j\ The 2011 NOX standard and FEL cap continue to apply unless and until revised by EPA in a future action.

As noted above, we are allowing a limited number of engines to have
a higher FEL than the caps noted in Table III.A-1 in certain instances.
The FEL cap for such engines would be set based on the level of the
standards that applied in the year prior to the new standards and will
allow manufacturers to produce a limited number of engines certified to
these earlier standards in the Tier 4 timeframe. The allowance to
certify up to these higher FEL caps will apply to Tier 4 engines
between 25 and 750 horsepower beginning as early as the 2011 model
year, and will apply to engines above 750 horsepower starting with the
2015 model year. The provisions are intended to provide some limited
flexibility for engine manufacturers as they make the transition to the
aftertreatment-based Tier 4 standards while ensuring that the vast
majority of engines are converted to the advanced low-emission
technologies expected under the Tier 4 program.
Under the proposal, manufacturers would have been allowed to
certify at levels up to these FEL caps for ten percent of its engines
in each of the first four years after the Tier 4 standards took effect
and then five percent for subsequent years. The California Air
Resources Board supported the proposed allowance. The Engine
Manufacturers Association commented that the percentages of engines
allowed to the higher FEL caps may not be sufficient, noting that it is
too early to tell if the proposed amounts provided enough flexibility.
In an effort to provide flexibility to engine manufacturers while
preserving the effective number of engines allowed to certify at levels
up to the higher FEL caps, we are revising the proposed provisions with
today's action. The revised provisions are intended to allow
manufacturers to produce the same number of engines certified to the
higher FEL caps as would have been allowed under the proposal, but
provide added flexibility in how they distribute the allowances over
the first four years of the transition to the new standards. This
additional lead time appears appropriate, given the potential that a
limited set of nonroad engines may face especially challenging
compliance difficulties. Under the provisions adopted today and subject
to the limitations explained below, a manufacturer would be allowed to
certify up to 40 percent of its engines above the FEL caps shown in
Table III.A-1 over the first four years the aftertreatment-based Tier 4
standards take effect (calculated as a cumulative total of the percent
of engines exceeding these FEL caps in each year over the four years),
with a maximum of 20 percent allowed in any given year (provided the
FELs for these engines do not exceed levels specified below). During
this four year period, manufacturers would not be required to perform
transient testing or NTE testing on these engines because we expect
these engines would be carried over directly from the previous tier
without any modification. (NTE testing would apply to engines above 750
horsepower because the previously applicable set of standards required
NTE testing.) Similarly, for engines between 75 and 750 horsepower,
manufacturers would not be required to have closed crankcase controls
on these engines because we also expect that these engines would be
carried over directly from the previous tier without any modification.
(Engines between 25 and 75 horsepower, and engines above 750
horsepower, would be required to have closed crankcase controls because
the previously applicable set of standards require closed crankcase
controls.)
For the purpose of calculating the number of credits such engines
would use, the manufacturer would include an adjustment to the FEL to
be used in the credit calculation equation. The adjustment would be
included by multiplying the steady-state FEL by a Temporary Compliance
Adjustment Factor (TCAF) of 1.5 for PM and 1.1 for NO_X. (The
NO_X TCAF would not apply to engines that are not subject to
the transient testing requirements for NO_X as discussed in
section III.F.) We are adopting TCAFs in part to assure in-use control
of emission from these engines in the absence of transient and NTE
testing, and also to assure that any credits these engines use reflect the

[[Page 39000]]

level of reductions expected in use. The level of the TCAFs are based
on data from pre-control, Tier 1, and Tier 2 engines which show that
the emissions from such engines tested over transient test cycles which
are more representative of real in-use operation are higher than
emissions from those engines tested over the steady-state certification
test cycle. This is a sales weighted version of the Transient
Adjustment Factor used in the NONROAD model. For compliance purposes, a
manufacturer would be held accountable to the unadjusted steady-state
FEL established for the engine family.
As proposed, after the fourth year the Tier 4 standards apply, the
allowance to certify engines using the higher FEL caps shown in Table
III.A-2 will still be available but for no more than five percent of
the engines a manufacturer produces in each power category in a given
year. When the 5 percent allowance takes effect, these engines will be
considered Tier 4 engines and all other requirements for Tier 4 engines
will also apply, including the Tier 4 NMHC standard, transient testing,
NTE testing, and closed crankcase controls. TCAFs thus do not apply
when calculating the number of credits such engines would use.
In the two power categories where we are adopting phase-in
provisions (i.e., 75 to 175 horsepower engines and 175 to 750
horsepower engines), the allowance to use a higher FEL cap will only
apply to PM from phase-out engines during the phase-in years. We
originally proposed that the allowance to use a higher FEL cap would
apply to PM from either phase-in or phase-out engines during the phase-
in years. On reflection, this is inconsistent with our policy that
phase-in engines truly have low emissions reflecting use of
aftertreatment (see also the discussion above where we explain that,
for the same reason, we are adopting a NO_X FEL cap of 0.60
g/bhp-hr for phase-in engines). We consequently are revising the
proposed allowance so that it is available for PM emissions only from
phase-out engines. As proposed, the allowance to use a higher FEL cap
for NO_X will apply starting in 2014 when the phase-in period
is complete.
For the power category between 25 and 75 horsepower, this allowance
to certify engines at levels up to the higher FEL caps will apply
beginning with the Tier 4 standards taking effect in the 2013 model
year and will apply to PM only. For manufacturers choosing to opt out
of the 2008 model year Tier 4 standards for engines between 50 and 75
horsepower and instead comply with the Tier 4 standards beginning in
2012, the 40% allowance would apply to model years 2012 through 2015,
and the 5% allowance would apply to model year 2016 and thereafter. The
allowance to use the higher FEL caps is not applicable for the 2008
standards or the 2013 NMHC+NO_X standards for these engines
because the FEL caps for those standards already are set at the level
of the standard which previously applied.
For engines above 750 horsepower, the allowance to certify a
limited number of engines at levels up to the higher FEL caps would
apply beginning in model year 2015. (As noted, this is because the FEL
caps being adopted for the 2011 standards for engines above 750
horsepower are the previous tier PM standard and the NO_X-
only equivalent of the previous tier standard.) For NO_X, the
allowance to certify a limited number of engines above the FEL cap
beginning in model year 2015 will apply only to engines used in
generator sets. Engines used in other machines are still subject to the
model year 2011 NO_X standard and FEL caps. For PM, the
allowance to certify a limited number of engines above the FEL caps
beginning in model year 2015 will apply to all engines above 750 horsepower.
Table III.A-2 presents the model years, percent of engines, and
higher FEL caps that will apply under these allowances. As noted above,
engines certified under these higher FEL caps during the first four
years would not be required to perform transient testing or NTE testing
and engines between 75 and 750 horsepower would not be required to have
closed crankcase controls on these engines. However, as also noted
earlier, beginning in the fifth year, when the 5 percent allowance
takes effect, these engines will be considered Tier 4 engines and all
other requirements for Tier 4 engines will also apply, including the
Tier 4 NMHC standard, transient testing, NTE testing, and closed
crankcase controls.

Table III.A-2.--Allowance for Limited Use of an FEL Cap Higher than the Tier 4 FEL Caps
----------------------------------------------------------------------------------------------------------------
Engines
allowed to NOX FEL cap (g/bhp- PM FEL cap (g/bhp-
Power category Model years have higher hr) hr)
FELs (%)
----------------------------------------------------------------------------------------------------------------
25 < = hp < 75................... 2013-2016 \a\........ \b\ 40 Not applicable...... 0.22
(19 < = kW < 56)................. 2017+ \a\............ 5
75 < = hp < 175.................. 2012-2015............ \b\ 40 3.3 \c\ for hp < 100. 0.30 \d\ for hp < 100
(56 <= kW <130)................. 2016+................ 5 2.8 \c\ for hp >=100 0.22 \d\ for hp
>=100
175 < = hp < = 750................ 2011-2014............ \b\ 40 2.8 \c\............. 0.15 \d\
(130 < = kW < = 560).............. 2015+................ 5
>750 hp......................... 2015-2018............ \b\ \c\ 40 2.6................. 0.075
(>560 kW)....................... 2019+................ \e\ 5 ....................
----------------------------------------------------------------------------------------------------------------
\a\ For manufacturers choosing to opt out of the 2008 model year Tier 4 standards for engines between 50 and 75
horsepower and instead comply with the Tier 4 standards beginning in 2012, the 40% allowance would apply to
model years 2012 through 2015, and the 5% allowance would apply to model year 2016 and thereafter.
\b\ Compliance with the 40% limit is determined by adding the percent of engines that have FELs above the FEL
caps shown in Table III.A.-1 in each of the four years. A manufacturer may not have more than 20% of its
engines exceed the FEL caps shown in Table III.A-1 in any model year in any power category.
\c\ The allowance to certify to these higher NOX FEL caps is not applicable during the phase-in period.
\d\ These higher PM FEL caps are applicable to phase-out engines only during the phase-in period.
\e\ The limits of 40% or 5% allowed to exceed the NOX FEL cap would apply to engines used in generator sets
only. (Engines >750 hp used in other machines are allowed to have an NOX FEL as high as 4.6 g/bhp-hr.) The
limits of 40% or 5% allowed to exceed the PM FEL cap would apply to all engines above 750 hp.

Under the Tier 4 program, there will be two different groups of 75-
750 horsepower engines during the NO_X phase-in period. In
one group (``phase-out engines''), engines will certify to the
applicable Tier 3 NMHC+NO_X standard

[[Page 39001]]

and will be subject to the NMHC+NO_X ABT restrictions and
allowances previously established for Tier 3. In the other group
(``phase-in engines''), engines will certify to the 0.30 g/bhp-hr
NO_X standard, and will be subject to the restrictions and
allowances in this program. Although engines in each group are
certified to different standards, we are (as proposed) allowing
manufacturers to transfer credits across these two groups of engines
with the following adjustment to the amount of credits generated.
Manufacturers will be able to use credits generated during the phase-
out of engines subject to the Tier 3 NMHC+NO_X standard to
average with engines subject to the 0.30 g/bhp-hr NO_X
standard, but these credits will be subject to a 20 percent discount,
the adjustment reflecting the NMHC contribution. Thus, each gram of
NMHC+NO_X credits from the phase-out engines will be worth
0.8 grams of NO_X credits in the new ABT program. The ability
to average credits between the two groups of engines will give
manufacturers a greater opportunity to gain experience with the low-
NO_X technologies before they are required to meet the final
Tier 4 standards across their full production. The 20 percent discount
will also apply, for the same reason, to all NMHC+NO_X
credits used for averaging purposes with the NO_X standards
for engines greater than 75 horsepower.
The California Air Resources Board supported the proposed discount
of 20 percent on NMHC+NO_X credits used for NO_X
compliance. The Engine Manufacturer's Association commented that we
should eliminate the 20 percent ``discount'' on NMHC+NO_X
credits used for NO_X compliance.
We disagree with the Engine Manufacturer's Association comments. As
noted in the proposal, we have two main reasons for adopting this
adjustment. First, the discounting addresses the fact that NMHC
reductions can provide substantial NMHC+NO_X credits, which
are then treated as though they were NO_X credits. For
example, a 2010 model year 175 horsepower engine emitting at 2.7 g/bhp-
hr NO_X and 0.3 g/bhp-hr NMHC meets the 3.0 g/bhp-hr
NMHC+NO_X standard in that year, but gains no credits. In
2011, that engine, equipped with a PM trap to meet the new PM standard,
will have very low NMHC emissions because of the trap, an emission
reduction already accounted for in our assessment of the air quality
benefit of this program. As a result, without substantially redesigning
the engine to reduce NO_X or NMHC, the manufacturer could
garner nearly 0.3 g/bhp-hr of NMHC+NO_X credit for each of
these engines produced. Allowing these NMHC-derived credits to be used
undiscounted to offset NO_X emissions on the phase-in engines
in 2011 (for which each 0.1 g/bhp-hr of margin can make a huge
difference in facilitating the design of engines to meet the 0.30 g/
bhp-hr NO_X standard) would be inappropriate. Therefore,
while we are reducing the value of credits earned from Tier 2/Tier 3
engines, the adjustment accounts for the NMHC fraction of the credits
which we do not believe should be used to demonstrate compliance with
the NO_X-only Tier 4 standards (such credits would be
``windfalls'' because they would necessarily occur by virtue of the
technology needed to meet the PM standard) (68 FR 28469, May 23, 2003).
Second, the discounting will work toward providing a small net
environmental benefit from the ABT program, such that the more
manufacturers use banked and averaged credits, the greater the
potential emission reductions overall. Most basically, it is inherently
reasonable, in using NO_X+NMHC reductions to show credit with
a NO_X-only standard, to use only that portion which
represents NO_X reductions. (Indeed, for this reason, terming
the 20 per cent a ``discount factor'' is a misnomer; it apportions the
NMHC fraction of the reduction.) As noted, this is further supported by
the fact that the NMHC reductions for phase-out engines are not extra
reductions above and beyond what would otherwise occur, and therefore
don't warrant eligibility as credits.
We are adopting one additional restriction on the use of credits
under the ABT program. For the Tier 4 standards, we proposed that
manufacturers could only use credits generated from other Tier 4
engines or from engines certified to the previously applicable tier of
standards (i.e., Tier 2 for engines below 50 horsepower, Tier 3 for
engines between 50 and 750 horsepower, and Tier 2 engines above 750
horsepower). This proposed restriction was similar to a restriction we
currently have that prohibits the use of Tier 1 credits to demonstrate
Tier 3 compliance. STAPPA/ALAPCO and the Natural Resources Defense
Council supported the proposed approach that limited the use of
previous-tier credits for Tier 4. The Engine Manufacturer's Association
commented that by limiting the use of previous-tier credits, we are
engaged in an unconstitutional taking because EPA had guaranteed in the
previous Tier 2/Tier 3 rulemaking that such credits would not expire.
We disagree that adopting a restriction on the use of the previous tier
ABT credits is an unconstitutional taking. EPA did not, and could not,
decide in the Tier 2/3 rulemaking that Tier 2/3 credits could be used
to show compliance with some future standards that had not yet even
been adopted. Thus, EPA in this rulemaking is not taking away something
previously given. We are not revisiting the Tier 2/3 standards but
establishing a new set of engine standards. In doing so, we necessarily
must evaluate the provisions of previous rules and their potential
impact on the future standards being considered. We are reasonably
concerned that credits from engines certified to relatively high
standards could be used to significantly delay the implementation of
the final Tier 4 program and its benefits, resulting in a situation
where the standards would no longer reflect the greatest degree of
emission reduction available as required under section 213(a)(3) of the
Clean Air Act, or would no longer be appropriate under section
213(a)(4) of the Clean Air Act. Therefore, with today's action, we are
adopting the proposed provisions regarding the use of credits from
previous tier engines, with one minor revision.
Under today's action, manufacturers may only use credits generated
from other Tier 4 engines or from engines certified to the previously
applicable tier of standards--except for engines between 50 and 75
horsepower. Because we are adopting Tier 4 standards that take effect
as early as 2008 for those engines, the same year the previously-
adopted Tier 3 standards are scheduled to take effect (see section
II.A.1.a above), there is no possibility to earn credits against the
Tier 3 standards for manufacturers that certify with the pull-ahead
standards in 2008 for engines between 50 and 75 horsepower. Therefore,
we will allow manufacturers to use credits from engines in the Tier 2
power category that includes 50 to 75 horsepower (i.e., the 50 to 100
horsepower category) that are certified to the Tier 2 standards if they
choose to demonstrate compliance with the pull-ahead Tier 4 standards
in 2008 for engines between 50 and 75 horsepower. Manufacturers that do
not choose to comply with the 2008 Tier 4 standards for engines between
50 and 75 horsepower and instead comply with the 2012 Tier 4 standards
for such engines will not be allowed to use Tier 2 credits in Tier 4,
but instead will be allowed to use Tier 3 credits as allowed under the
standard provisions regarding

[[Page 39002]]

use of previous-tier credits only for Tier 4 compliance demonstration.
With regard to other restrictions on the use of ABT credits, we are
adopting one restriction on the use of credits across the 750
horsepower threshold. In previous rulemakings, EPA has defined
``averaging sets'' within which manufacturers may use credits under the
ABT program. Credits may not be used outside of the averaging set in
which they were generated. As described in section II.A.4 of today's
action, we have revised the Tier 4 standards for engines above 750
horsepower. Because the standards for Tier 4 engines greater than 750
horsepower will not be based on the use of PM aftertreatment technology
in 2011 or NO_X aftertreatment technology for all mobile
machinery engines in 2015, we are adopting provisions that prevent
manufacturers from using credits from model year 2011 and later model
year engines greater than 750 horsepower to demonstrate compliance with
engines below 750 horsepower. Without such a limit, we are concerned
that manufacturers could use credits from such engines to significantly
delay compliance with the numerically lower standards for engines below
750 horsepower. In addition, without such a limit, we are concerned
that manufacturers could use credits from engines below 750 horsepower
to delay implementation of aftertreatment technology for engines above
750 horsepower.
One engine manufacturer commented that EPA should include a barrier
to trading credits across the 75 horsepower level. They cited concerns
over the ability of manufacturers that produce a large range of engine
sizes to use credits from high horsepower engines to offset emissions
from their small horsepower engines. We are not adopting any averaging
set restrictions for Tier 4 engines below 750 horsepower in today's
action. In the current nonroad diesel ABT program, there are averaging
set restrictions. The current averaging sets consist of engines less
than 25 horsepower and engines greater than or equal to 25 horsepower.
We adopted this restriction because of concerns over the ability of
manufacturers to generate significant credits from the existing engines
and use the credits to delay compliance with the newly adopted
standards (63 FR 56977, October 23, 1998). We believe the Tier 4
standards for engines below 750 horsepower are sufficiently rigorous to
limit the ability of manufacturers to generate significant credits from
their engines. In addition, we believe the FEL caps being adopted today
provide sufficient assurance that low-emissions technologies will be
introduced in a timely manner. Therefore, we believe averaging can be
allowed between all engine power categories below 750 horsepower
without restriction effective with the Tier 4 standards. (It should be
noted that the averaging set restriction placed on credits generated
from Tier 2 and Tier 3 engines will continue to apply if they are used
to demonstrate compliance for Tier 4 engines.)
EPA also proposed to allow engine manufacturers to demonstrate
compliance with the NO_X phase-in requirements by certifying
evenly split engine families at, or below, specified NO_X
FELs (68 FR 28470, May 23, 2003). As described in section II.A.2.c
above, EPA is revising the evenly split family provisions for the Tier
4 program and is now codifying them as alternative standards. (As
described in section III.L, we also are adopting the proposed
provisions allowing manufacturers to certify ``split'' engine families
during the phase-in years.) Because the evenly split family provision
has evolved into a set of alternative NO_X standards, we
believe it is appropriate to allow manufacturers to use ABT for them.
Table III.A-3 presents the FEL caps that will apply to engines
certified to the alternative NO_X standards during the phase-
in years. The FEL caps for these alternative standards have been set at
levels reasonably close to the alternative standards and are intended
to ensure sizeable emission reductions from the previously-applicable
Tier 3 standards. (For engines between 75 and 175 horsepower certified
under the reduced phase-in option, the FEL cap is the NO_X-
only equivalent of the previously applicable NMHC+NO_X
standards because the alternative standard is sufficiently close to the
Tier 3 standard.)

Table III.A-3.--NOX FEL Caps for Engines Certified To the Alternative
NOX Standards
------------------------------------------------------------------------
Alternative
Power category NOX standard NOX FEL cap (g/bhp-hr)
(g/bhp-hr)
------------------------------------------------------------------------
50/50/100 phase-in option 1.7 2.2.
for 75 < = hp < 175 (56 < =
kW < 130).
25/25/25/100 phase-in option 2.5 3.3 (for 75-100 hp).
for 75 < = hp < 175 (56 < = 2.8 (for 100-175 hp)
kW < 130).
175 < = hp < = 750 (130 < = kW 1.5 2.0.
< = 560).
------------------------------------------------------------------------

Because we are allowing manufacturers to use ABT for demonstrating
compliance with the alternative standards for engines between 75 and
750 horsepower, we are allowing manufacturers to exceed the FEL caps
noted in table III.A-3 and include them in the count of engines allowed
to exceed the FEL caps (i.e., the 40 percent over the first four years
the Tier 4 standards take effect as described earlier). Table III.A-4
presents the NO_X FEL caps that would apply to engines
certified under the alternative standards (limited by the 40 percent
cap over the first four years). The higher NO_X FEL caps are
set at the estimated NO_X-only equivalent of the previous-
tier NMHC+NO_X standards. For manufacturers certifying under
the reduced phase-in ( 25 percent) option, because the FEL caps are the
NO_X-only equivalent of the Tier 3 NMHC+NO_X
standards, they may not exceed the FEL cap during the years the
alternative standard applies.

Table III.A-4.--Limited-Use NOX FEL Caps Under the Alternative NOX
Standards
------------------------------------------------------------------------
Power category Model years NOX FEL cap (g/bhp-hr)
------------------------------------------------------------------------
50/50/100 phase-in option 2012-2013 3.3 for hp < 100.
for 75 < = hp < 175\a\.
(56 <= kW <130)............. .............. 2.8 for hp >=100.
175 < = hp < = 750............ 2011-2013 2.8.

[[Page 39003]]

(130 < = kW < = 560).......... .............. ..........................
------------------------------------------------------------------------

For reasons explained in section II.A.1.b.i above, we are also
adopting unique phase-in requirements for NO_X standards for
engines between 75 and 175 horsepower in order to ensure appropriate
lead time for these engines. Because of these unique phase-in
provisions, as proposed, we are adopting slightly different provisions
regarding 75 to 175 horsepower engines' use of previous-tier credits.
Under today's action, manufacturers that choose to demonstrate
compliance with these phase-in requirements (i.e., 50 percent in 2012
and 2013 and 100 percent in 2014) or the 1.7 g/bhp-hr alternative
NO_X standard (which is based on the 50 percent phase-in
option) will be allowed to use Tier 2 NMHC+NO_X credits
generated by engines between 50 and 750 horsepower (even though they
are not generated by previous-tier engines), along with any other
allowable credits, to demonstrate compliance with the Tier 4
NO_X standards for engines between 75 and 175 horsepower
during model years 2012, 2013 and 2014 (the years of the phase-in)
only. These Tier 2 credits will be subject to the power rating
conversion already established in our ABT program, and to the 20%
credit adjustment being adopted today for use of NMHC+NO_X
credits as NO_X credits.
The requirements for manufacturers that choose to demonstrate
compliance with the optional reduced phase-in requirement for engines
between 75 and 175 horsepower (i.e, the 25/25/25 percent phase-in
option; see Table II.A.-2, note b) or the 2.5 g/bhp-hr alternative
NO_X standard (which is based on the 25 percent phase-in
option) are different. Under the reduced phase-in requirement, use of
credits will be allowed in accordance with the general ABT program
provisions. In other words, manufacturers will not have the special
allowance to use Tier 2 NMHC+NO_X credits generated by
engines between 50 and 750 horsepower noted above to demonstrate
compliance with the Tier 4 standards. In addition, manufacturers
choosing the reduced phase-in option will not be allowed to generate
NO_X credits from engines in this power category in 2012,
2013, and most of 2014, except for use in averaging within this power
category (i.e., no banking or trading, or averaging with engines in
other power categories will be permitted). This restriction will apply
throughout this period even if the reduced phase-in option is exercised
during only a portion of this period. We believe that this restriction
is important to avoid potential abuse of the added flexibility
allowance, considering that larger engine categories will be required
to demonstrate substantially greater compliance levels with the 0.30 g/
bhp-hr NO_X standard several years earlier than engines built
under the reduced phase-in option.
As described in section II.A.3.a of today's action, and as
proposed, we are adopting an optional PM standard for air-cooled, hand-
startable, direct injection engines under 11 horsepower effective in
2010. In order to avoid potential abuse of this standard, engines
certified under this requirement will not be allowed to generate any
credits as part of the ABT program. Credit use by these engines will be
allowed. The restriction on generating credits should not be a burden
to manufacturers, as it will apply only to those air-cooled, hand-
startable, direct injection engines under 11 horsepower that are
certified under the optional approach, and the production of credit-
generating engines would be contrary to the standard's purpose. No
adverse comments were submitted to EPA on this issue.
The current ABT program contains a restriction on trading credits
generated from indirect injection engines greater than 25 horsepower.
The restriction was originally adopted because of concerns over the
ability of manufacturers to generate significant credits from existing
technology engines (63 FR 56977, October 23, 1998). With today's
action, there will be no restriction prohibiting manufacturers from
trading credits generated on Tier 4 indirect fuel injection engines
greater than 25 horsepower. Based on the certification levels of
indirect injection engines, we do not believe there is the potential
for manufacturers to generate significant credits from their currently
certified engines against the Tier 4 standards. Therefore, as proposed,
we are not adopting any restrictions on the trading of credits
generated on Tier 4 indirect injection engines to other manufacturers.
The restriction placed on the trading of credits generated from Tier 2
and Tier 3 indirect injection engines will continue to apply in the
Tier 4 timeframe. No adverse comments were submitted to EPA on this issue.
As explained in the proposal, we are not applying a specific
discount to Tier 3 PM credits used to demonstrate compliance with the
Tier 4 standards (68 FR 28471, May 23, 2003). PM credits generated
under the Tier 3 standards are based on testing performed over a
steady-state test cycle. Under the Tier 4 standards, the test cycle is
being supplemented with a transient test (see section III.F.1 below).
Because in-use PM emissions from Tier 3 engines will vary depending on
the type of application in which the engine is used (most applications
having higher in-use PM emissions, some having lower in-use PM
emissions), the relative ``value'' of the Tier 3 PM credits in the Tier
4 timeframe will differ. Instead of requiring manufacturers to gather
information to estimate the level of in-use PM emissions compared to
the PM level of the steady-state test, we believe allowing
manufacturers to bring Tier 3 PM credits directly into the Tier 4 time
frame without any adjustment is appropriate because it discounts their
value for use in the Tier 4 timeframe (since the initial baseline being
reduced is higher than measured in the Tier 2 test procedure for most
applications). No adverse comments were submitted to EPA on this issue.
3. Are We Expanding the Nonroad ABT Program To Include Credits From
Retrofit of Nonroad Engines?
In the proposal, we requested comment on expanding the scope of the
standards by setting voluntary new engine emission standards applicable
to the retrofit of nonroad diesel engines (68 FR 28471, May 23, 2003).
As described in the proposal, retrofit nonroad engines would be able to
generate PM and NO_X credits which would be available for use
by new nonroad engines in the certification ABT program. We received a
significant number of comments on a retrofit ABT program. A number of
commenters associated with the agricultural sector were concerned
retrofits would be mandatory. Some commenters were opposed to a
retrofit credit program that would allow use of the credits under the
certification ABT program. However, a number of commenters supported
the concept of a retrofit program, but noted a number of

[[Page 39004]]

concerns regarding the details of such a program, including making sure
that any credits earned would be verifiable and enforceable. Some
commenters suggested that EPA consider the establishment of a retrofit
credit program through a separate rulemaking because there were many
details of the program that needed to be explored more fully before
adopting such a program. In response to the comments, we are not
adopting a retrofit credit program with today's action. Although we
provided a detailed explanation of a potential program at proposal,
\62\ we believe it is important to more fully consider the details of a
nonroad engine retrofit credit program and work with interested parties
in determining whether a viable program can be developed. EPA intends
to explore the possibility of a voluntary, opt-in nonroad retrofit
credit program through a separate action later this year. Such a
program would be based on the generation of credits beyond the scope of
any existing retrofit program. The final rule contains no requirements
for retrofitting existing engines or equipment.
---------------------------------------------------------------------------

\62\ See memorandum referenced at 68 FR 28471 (May 23, 2003),
footnote 299.
---------------------------------------------------------------------------

B. Transition Provisions for Equipment Manufacturers

1. Why Are We Adopting Transition Provisions for Equipment
Manufacturers?
As EPA developed the 1998 Tier 2/3 standards for nonroad diesel
engines, we determined, as an aspect of determining an appropriate lead
time for application of the requisite technology (pursuant to section
213(b) of the Act), that provisions were needed to avoid unnecessary
hardship and to create additional flexibility for equipment
manufacturers. The specific concern is the amount of work required and
the resulting time needed for equipment manufacturers to incorporate
all of the necessary equipment redesigns into their applications in
order to accommodate engines that meet the new emission standards. We
therefore adopted a set of provisions for equipment manufacturers to
provide them with reasonable lead time for the transition process to
the newly adopted standards. The program consisted of four major
elements: (1) A percent-of-production allowance, (2) a small-volume
allowance, (3) availability of hardship relief, and (4) continuance of
the allowance to use up existing inventories of engines (63 FR 56977-
56978, October 23, 1998 and 68 FR 28472-28476, May 23, 2003).
Given the levels of the newly adopted Tier 4 standards, we believe
that there will be engine design and other changes at least comparable
in magnitude to those involved during the transition to Tier 2/3.
Therefore, with a few exceptions described in more detail below, we are
adopting transition provisions for Tier 4 that are similar to those
adopted with the previous Tier 2/3 rulemaking. We also note that
opportunities for greater flexibility arises from the structure of the
Tier 4 rule. For example, Tier 4 consolidates the nine power categories
in Tier 2/3 into five categories, providing opportunities for more
flexibility by allowing more engine families within each power
category, with consequent increased averaging possibilities. The
NO_X phase-in also provides increased flexibility
opportunities, as do the longer Tier 4 lead times.
We are adding new notification, reporting, and labeling
requirements to the Tier 4 program. We believe these additional
provisions are necessary for EPA to gain a better understanding of the
extent to which these provisions will be used and to ensure compliance
with the Tier 4 transition provisions. We are also adopting new
provisions dealing specifically with foreign equipment manufacturers
and the special concerns raised by the use of the transition provisions
for equipment imported into the U.S. The following section describes
the Tier 4 transition provisions available to equipment manufacturers.
(Section III.C of this preamble describes all of the provisions that
will be available specifically for small businesses.)
As under the existing Tier 2/Tier 3 provisions, equipment
manufacturers are not obligated to use any of these provisions, but all
equipment manufacturers are eligible to do so. Also, as under the
existing program, all entities under the control of a common entity,
and that meet the regulatory definition of a nonroad vehicle or nonroad
equipment manufacturer, must be considered together for the purpose of
applying exemption allowances. This will not only provide certain
benefits for the purpose of pooling exemptions, but will also preclude
the abuse of the small-volume allowances that would exist if companies
could treat each operating unit as a separate equipment manufacturer.
2. What Transition Provisions Are We Adopting for Equipment Manufacturers?
The following section describes the transition provisions being
adopted with today's action. Areas in which we have made changes to the
proposed transition program are highlighted. A complete summary of
comments received on the proposed transition program and our response
to those comments are contained in the Summary and Analysis of Comments
document for this rule.
EPA believes that the lead time provided through the equipment
maker transition flexibilities, as adopted in this rule, will be
sufficient, as has proved the case in past tiers. These flexibilities
provide equipment manufacturers with the selective ability to delay use
of the Tier 4 engines in those applications where additional time is
needed to successfully incorporate the redesigned engines into their
equipment.
Ingersoll-Rand, an equipment manufacturer, submitted a number of
comments arguing that significant expansions of the proposed
flexibility program are needed if equipment manufacturers are to
produce compliant applications within the effective dates of the
standards. One suggestion was for EPA to include provisions that
provide a definitive period of lead time for incorporation of Tier 4
engines into nonroad equipment. Ingersoll-Rand would have the rules
specify a ``made available'' date before which each engine supplier
must provide technical and performance specifications, complete
drawings, and a final compliant engine to EPA and the open market.
After the mandated ``made available'' date, equipment manufacturers
should be provided a minimum 18 months of lead time to incorporate the
new engines into nonroad equipment. One form of the suggestion also
entailed a prohibition on design changes once the engine,
specifications, drawings, etc. had been initially provided to EPA and
to the open market. As an alternative, Ingersoll-Rand urged that the
percent of production allowance flexibility be expanded to 150 percent
for the power categories between 75 and 750 horsepower and 120 percent
for the power category between 25 and 75 horsepower. Ingersoll-Rand
believes these levels correspond proportionately to the increased
challenges facing equipment manufacturers during Tier 4 as opposed to
Tier 2 and Tier 3.
As discussed in greater detail in the Summary and Analysis of
Comments, as well as in later parts of this section of this preamble
and elsewhere in the administrative record, we disagree with most of
Ingersoll-Rand's suggestions. Our fundamental disagreement is with
Ingersoll-Rand's premise that Tier 4 will create a situation where need
for

[[Page 39005]]

expanded equipment maker lead time is the norm rather than the
exception so that the rule must provide a drastic, across-the-board
expansion of equipment manufacturer lead time. We believe that the lead
time provided for equipment makers in this rule is adequate, and that
the equipment maker flexibilities we are adopting provide a reasonable
and targeted safety valve to deal with isolated problems. There is no
across-the-board problem necessitating a drastic expansion of equipment
manufacturer lead time, or a drastic expansion of equipment
manufacturer flexibilities. We base these conclusions largely on three
factors: (a) Our investigation and understanding of the engineering
process by which engine makers and equipment manufacturers bring new
products to market; (b) the specific engineering challenges which
equipment manufacturers will address in complying with the Tier 4 rule;
and (c) past practice of equipment manufacturers under previous rules
providing transition flexibilities for nonroad equipment.
Because it is in both parties' interest for new engines and new
equipment applications to reach the market expeditiously, engine makers
and equipment manufacturers usually adopt concurrent engineering
programs whereby the new equipment design process occurs simultaneous
to the new engine development process. We believe that this concurrent
process should work well for Tier 4 because, in many important ways,
the engineering challenges facing equipment manufacturers can be
anticipated and dealt with early in the design process. We expect that
relatively early in the design process, engine manufacturers will be
able to define the size and characteristics of the emission control
technologies (e.g., NO_X adsorbers and CDPFs), based on the
same systems that will be in production for on-highway engines. The
equipment manufacturers will concurrently redesign their equipment to
accommodate these new technologies, including designing, mounting and
supporting the catalytic equipment similar to current exhaust muffler
systems.
Moreover, while we expect the redesign challenge for Tier 4
equipment to be similar to that for Tier 2/3, we also expect the
redesign to be better and more clearly defined well in advance of the
Tier 4 introduction dates. This is because we do not expect the
catalyst system size or shape to change significantly during the last
24 months of the engine design and validation process.\63\
---------------------------------------------------------------------------

\63\ ``Tier 4 Nonroad Diesel Equipment Flexibility Provisions,''
memorandum from Byron Bunker, et al., (EPA) to EPA Air Docket OAR-
2003-0012.
---------------------------------------------------------------------------

We also have studied the extent to which equipment manufacturers
have used their flexibilities under the Tier 2/3 program. Although at
an early stage in the Tier 2/3 process, initial indications are that
the flexibility program is being used by many equipment manufacturers,
but in general, manufacturers do not appear to be using the full level
of allowances.\64\ It appears that the flexibilities are being used as
EPA intended, providing manufacturers with flexibility to deal with
specific limited situations, rather than to deal with an across-the-
board problem.
---------------------------------------------------------------------------

\64\ ``Tier 4 Nonroad Diesel Equipment Flexibility Provisions,''
memorandum from Byron Bunker, et al., (EPA) to EPA Air Docket OAR-
2003-0012.
---------------------------------------------------------------------------

The emerging pattern is thus the one on which the flexibility
program is predicated: there is not a need for across-the-board drastic
expansion of equipment manufacturer lead time. Indeed, such an
expansion would be inconsistent with the lead time-forcing nature of
section 213 (b) of the Act. This is not to say that there is no need
for equipment manufacturer flexibilities, or that the Tier 2/3
flexibility format need not be adjusted to accommodate potential
problems to be faced under the Tier 4 regime. Instances where
additional lead time could be justified are where resource constraints
prevent completion of certain applications, or where for business
reasons it makes sense for equipment manufacturers to delay completion
of small volume families in order to complete larger volume equipment
applications. In addition, the Tier 2/3 experience illustrates that
there can be instances where emission control optimization which
necessitates equipment design changes occurs late in the design cycle,
resulting in a need for additional equipment manufacturer lead time.
The equipment manufacturer flexibilities adopted in today's rule
accommodate these possibilities.
We have specific objections to Ingersoll-Rand's preferred approach
of a mandated made available date, followed by 18 months of additional
lead time for equipment manufacturers. Superimposing a government
mandate on the engine maker--equipment manufacturer business
relationship insinuates EPA into the middle of contractual/market
relationships (e.g., when is an objectively reasonable delivery date?),
forcing EPA to prejudge myriad differing business relationships/
engineering situations. Moreover, selection of any single made
available date is bound to be arbitrary in most situations. We also
believe that the 18-month lead time following a made available date
entails a mandated 18-month period (at least) with no return on
investment to engine suppliers (i.e. the period between when the Tier 4
engine would be produced and when it could lawfully be sold), which
would increase the engine cost, and discourage design changes (since
such changes would entail more investment with delayed return on that
investment). The ultimate result would be a costlier rule and less
environmental benefit due to the delay in introducing Tier 4 engines.
Even were EPA to put forth such a regulation, it is not clear that it
could be enforced or that it would help the situation. It would only be
natural for engine manufacturers to continue to improve its products
even after the predefined ``made available date'' and equipment
manufacturers would want to use this improved product even if it meant
they had to make last minute changes to the equipment design. For EPA
to preclude engine manufacturers from changing their product designs
over the period between the certification date and the equipment
manufacturer date would be both unusual and counterproductive to our
goal of seeing the best possible products available in the market.
Moreover, EPA sees no need to interfere with the concurrent design
market mechanism, which allows engine makers and equipment
manufacturers to negotiate optimal solutions. We believe it is better
to leave to the market participants the actual decision for how and
when to conduct concurrent engineering designs.
The California Air Resources Board commented that EPA should
eliminate or reduce the amount of flexibilities provided for less than
25 horsepower engines, because the Tier 4 engine standards are not
aftertreatment-based. The Engine Manufacturers Association commented
that we should expand the amount of flexibilities for engines greater
than 750 horsepower, given the difficulty of complying with the
proposed standards for engines above 750 horsepower. With today's
action, we are applying the same flexibility for all power categories,
including engines below 25 horsepower and engines above 750 horsepower.
While it is true that the Tier 4 standards for engines below 25
horsepower are not aftertreatment-based, we believe there will be
changes in engine design for many of those engines in response to the
Tier 4 standards. As engine designs change, there is the potential for
impacts on

[[Page 39006]]

equipment design as well (as shown in implementing the Tier 2/3 rule).
Therefore, we believe providing equipment manufacturer flexibility for
engines below 25 horsepower is appropriate and we are adopting the same
flexibilities for engines below 25 horsepower as for other power
categories. With regard to engines above 750 horsepower, we are
retaining the same flexibilities for those engines as for other power
categories. As described in section II.A.4, the Tier 4 standards being
adopted today for engines above 750 horsepower have been revised from
the proposal. We believe that these revisions have appropriately
accommodated concerns for the most difficult to design applications
(i.e., NO_X adsorbers for engines in mobile applications), so
that additional equipment flexibilities are not warranted for these
engines.
The Engine Manufacturers Association commented that some equipment
manufacturers may be capable of making an on-time transition to the
interim Tier 4 standards (e.g. the 2011 standards applicable for 175-
750 horsepower engines) without the use of flexibilities. Such
equipment manufacturers would like the ability to start the seven-year
period in which they may use flexibilities in the year the final Tier 4
standards (the aftertreatment-based standards for both PM and
NO_X) take effect. Put another way, they would not need more
lead time for equipment to meet the interim standards, but could need
more lead time for equipment required to meet the final standards. In
addition, the commenter suggested a modified approach that could lead
to earlier emission reductions than under the proposed rule: Requiring
delayed flexibility engines to meet the interim Tier 4 standards
instead of meeting the Tier 2/3 standards (as would have been allowed
under the proposal if the flexibilities started in the first year of
the interim Tier 4 standards).
EPA wants to encourage the implementation of the Tier 4 standards
as early as possible. Therefore, we believe it makes sense to provide
incentives to equipment manufacturers to use interim Tier 4 compliant
engines in their equipment during the transition to the final Tier 4
standards. Moreover, it is reasonable to expect that more lead time
will be needed for the aftertreatment-based standards than for the
interim standards. Therefore, in response to these comments, we are
revising the proposed flexibility provisions to allow equipment
manufacturers to have the option of starting the seven-year period in
which flexibility engines may be used in either the first year of the
interim Tier 4 standards or the first year of the final Tier 4
standards. For engines between 25 and 75 horsepower, the final Tier 4
standards may begin in 2012 or 2013 depending on whether the
manufacturer chooses to comply with the interim 2008 Tier 4 standards.
An equipment manufacturer who does not use flexibilities in 2008 thus
may need flexibilities as early as 2012. Therefore, the seven-year
period for the final Tier 4 standards for engines between 25 and 75
horsepower will begin in 2012 instead of 2013. Moreover, it is clearly
appropriate that these delayed flexibility engines meet the interim
Tier 4 standards, in order not to backslide from existing levels of
performance.
Table III.B-1 shows the years in which manufacturers could choose
to start the Tier 4 flexibilities given the standards being adopted
today. (The seven-year period for engines below 25 horsepower takes
effect in 2008 as proposed, because there are no interim standards for
such engines.)

Table III.B-1.--Flexibility Periods for the Tier 4 Standards
----------------------------------------------------------------------------------------------------------------
Model year
flexibility Standards to which flexibility engines would have to
Power category period certify
options
----------------------------------------------------------------------------------------------------------------
25 < = hp < 75........................... 2008-2014 Tier 2 standards.
(19 < = kW < 56)......................... 2012-2018 Model Year 2008 Tier 4 standards.
75 < = hp < 175.......................... 2012-2018 Tier 3 standards.
(56 < = kW < 130)......................... 2014-2020 Model Year 2012 Tier 4 standards.
175 < = hp < = 750........................ 2011-2017 Tier 3 standards.
(130 < = kW < = 560)...................... 2014-2020 Model Year 2011 Tier 4 standards.
>750 hp................................. 2011-2017 Tier 2 standards.
(>560 kW)............................... 2015-2021 Model Year 2011 Tier 4 standards.
----------------------------------------------------------------------------------------------------------------

Under today's action, and as proposed, only those nonroad equipment
manufacturers that install engines and have primary responsibility for
designing and manufacturing equipment will qualify for the allowances
or other relief provided under the Tier 4 transition provisions. As a
result of this definition, importers that have little involvement in
the manufacturing and assembling of the equipment will be ineligible to
receive any allowances. The Engine Manufacturers Association and one
engine manufacturer commented that the proposed definition of equipment
manufacturer needed to be revised to cover situations in which a
manufacturer contracts out the design and production of equipment to
another manufacturer. While we understand there are many different
types of relationships between equipment manufacturers, we believe it
is important to establish firm criteria for determining eligibility to
use the equipment manufacturer allowances. We are concerned that the
change to the equipment manufacturer definition suggested by the
commenters would allow entities that have little or no involvement in
the actual design, manufacture and assembly of equipment (e.g.,
companies that only import equipment) to claim they contracted with an
equipment manufacturer to produce equipment for them and therefore
claim allowances. This is the exact situation we are attempting to
prevent with the changes to the eligibility requirements for the
allowances. Therefore, we are adopting the proposed requirement that
only those nonroad equipment manufacturers that install engines and
have primary responsibility for designing, and manufacturing equipment
will qualify for the allowances or other relief provided under the Tier
4 transition provisions. However, we are revising the provisions
regarding which engines an equipment manufacturer may include in its
total count of U.S.-directed equipment production, which in turn
affects the number of allowances an equipment manufacturer may claim.
Under today's action, an equipment

[[Continued on page 39007]]

Notices For
2009
2008
2007
2006
2005
2004
2003
2002
2001
2000
1999
1998
1997
1996
1995
1994

Control of Emissions of Air Pollution From Nonroad Diesel Engines and Fuel [pp. 38957-39006]

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