Control of Emissions from Nonroad Spark-Ignition Engines and Equipment

[Federal Register: May 18, 2007 (Volume 72, Number 96)]
[Proposed Rules]
[Page 28097-28146]
From the Federal Register Online via GPO Access [wais.access.gpo.gov]
[DOCID:fr18my07-17]
[[Page 28098]]

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ENVIRONMENTAL PROTECTION AGENCY
40 CFR Parts 60, 63, 85, 89, 90, 91, 1027, 1045, 1048, 1051, 1054,
1060, 1065, 1068, and 1074
[EPA-HQ-OAR-2004-0008; FRL-8303-7]
RIN 2060-AM34

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

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SUMMARY: We are proposing emission standards for new nonroad spark-
ignition engines that will substantially reduce emissions from these
engines. The proposed exhaust emission standards would apply in 2009
for new marine spark-ignition engines, including first-time EPA
standards for sterndrive and inboard engines. The proposed exhaust
emission standards would apply starting in 2011 and 2012 for different
sizes of new land-based, spark-ignition engines at or below 19
kilowatts (kW). These small engines are used primarily in lawn and
garden applications. We are also proposing evaporative emission
standards for vessels and equipment using any of these engines. In
addition, we are making other minor amendments to our regulations. We
estimate that by 2030, the proposed standards would result in
significant annual reductions of pollutant emissions from regulated
engine and equipment sources nationwide, including 631,000 tons of
volatile organic hydrocarbon emissions, 98,200 tons of NO_X
emissions, and 6,300 tons of direct particulate matter
(PM_2.5) emissions. These reductions correspond to
significant reductions in the formation of ground-level ozone. We also
expect to see annual reductions of 2,690,000 tons of carbon monoxide
emissions, with the greatest reductions in areas where there have been
problems with individual exposures. The requirements in this proposal
would result in substantial benefits to public health and welfare and
the environment. We estimate that by 2030, on an annual basis, these
emission reductions would prevent 450 PM-related premature deaths,
approximately 500 hospitalizations, 52,000 work days lost, and other
quantifiable benefits every year. The total estimated annual benefits
of this rule in 2030 are approximately $3.4 billion. Estimated costs in
2030 are many times less at approximately $240 million.

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

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

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

SUPPLEMENTARY INFORMATION:

Does This Action Apply to Me?

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

[[Page 28099]]

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

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

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

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

Table of Contents

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

[[Page 28100]]

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

I. Introduction

A. Overview

Air pollution is a serious threat to the health and well-being of
millions of Americans and imposes a large burden on the U.S. economy.
Ground-level ozone is linked to potentially serious health problems,
especially respiratory effects, and environmental degradation. Carbon
monoxide emissions are also related to health problems. Over the past
quarter century, state and federal agencies have established emission
control programs that make significant progress in addressing these
concerns.
This proposal includes steps that would reduce the mobile-source
contribution to air pollution in the United States. In particular, we
are proposing standards that would require manufacturers to
substantially reduce emissions from marine spark-ignition engines and
from nonroad spark-ignition engines below 19 kW that are generally used
in lawn and garden applications.\1\ We refer to these as Marine SI
engines and Small SI engines, respectively. The proposed standards are
a continuation of the process of establishing standards for nonroad
engines and vehicles as required by Clean Air Act section 213. All the
nonroad engines subject to this proposal are already regulated under
existing emission standards, except sterndrive and inboard marine engines,
which will be subject to EPA emission standards for the first time.
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\1\ Otto-cycle engines (referred to here as spark-ignition or SI
engines) typically operate on gasoline, liquefied petroleum gas, or
natural gas. Diesel-cycle engines, referred to simply as ``diesel
engines'' in this document, may also be referred to as compression-
ignition or CI engines. These engines typically operate on diesel
fuel, but other fuels may also be used.
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Nationwide, emissions from Marine SI engines and Small SI engines
contribute significantly to mobile source air pollution. By 2020
without the proposed requirements these engines will account for about
27 percent (1,352,000 tons) of mobile source volatile organic
hydrocarbon compounds (VOC) emissions, 31 percent (16,374,000 tons) of
mobile source carbon monoxide (CO) emissions, 4 percent (202,000 tons)
of mobile source oxides of nitrogen (NO_X) emissions, and 16
percent (39,000 tons) of mobile source particulate matter
(PM_2.5) emissions. The proposed standards will reduce
exposure to these emissions and help avoid a range of adverse health
effects associated with ambient ozone, CO, and PM levels. In addition,
the proposed standards will help reduce acute exposure to CO, air
toxics, and PM for persons who operate or who work with or are
otherwise active in close proximity to these engines. They will also
help address other environmental problems associated with Marine SI
engines and Small SI engines, such as visibility impairment in our
national parks and other wilderness areas. These effects are described
in more detail in subsequent sections of this Preamble.

B. Why Is EPA Taking This Action?

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

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

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

[[Page 28101]]

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

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

[[Page 28102]]

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

[[Page 28103]]

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

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

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

D. Putting This Proposal Into Perspective

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

[[Page 28104]]

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

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

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

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

E. What Requirements Are We Proposing?

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

[[Page 28105]]

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

F. How Is This Document Organized?

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

II. Public Health and Welfare Effects

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

[[Page 28106]]

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

A. Ozone

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

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

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

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

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

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

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

[[Page 28107]]

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

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

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

\15\ Technical Support Document for the Final Clean Air
Interstate Rule Air Quality Modeling. This document is available in
Docket EPA-HQ-OAR-2004-0008, Document # EPA-HQ-OAR-2004-0008-0484.
\16\ We expect many of the 8-hour ozone nonattainment areas to
adopt additional emission reduction programs but we are unable to
quantify or rely upon future reductions from additional state and
local programs that have not yet been adopted.
---------------------------------------------------------------------------

States with 8-hour ozone nonattainment areas will be required to
take action to bring those areas into compliance in the future. Based
on the final rule designating and classifying 8-hour ozone
nonattainment areas (69 FR 23951, April 30, 2004), most 8-hour ozone
nonattainment areas will be required to attain the 8-hour ozone NAAQS
in the 2007 to 2014 time frame and then be required to maintain the 8-
hour ozone NAAQS thereafter.\17\ Emissions of ozone precursors from the
engines, vessels and equipment subject to the proposed standards
contribute to ozone in many, if not all, of these areas. Therefore, the
expected HC and NO_X reductions from the standards proposed
in this action will be useful to states in attaining or maintaining the
8-hour ozone NAAQS.
---------------------------------------------------------------------------

\17\ The Los Angeles South Coast Air Basin 8-hour ozone
nonattainment area will have until June 15, 2021 to reach attainment.
---------------------------------------------------------------------------

EPA's review of the ozone NAAQS is currently underway and a
proposed decision in this review is scheduled for June 2007 with a
final rule scheduled for March 2008. If the ozone NAAQS is revised then
new nonattainment areas could be designated. While EPA is not relying
on it for purposes of justifying this rule, the emission reductions
from this rulemaking would also be helpful to states if there is an
ozone NAAQS revision.
(4) Air Quality Modeling for Ozone
To model the ozone air quality benefits of this rule we used the
Comprehensive Air Quality Model with Extension (CAMx). CAMx simulates
the numerous physical and chemical processes involved in the formation,
transport, and destruction of ozone. This model is commonly used in
developing attainment demonstration State Implementation Plans (SIPs)
as well as estimating the ozone reductions expected to occur from a
reduction in emitted pollutants. Meteorological data are developed by a
separate program, the Regional Atmospheric Modeling System (RAMS), and
input into CAMx. The simulation periods modeled by CAMx include several
multi-day periods when ambient measurements were representative of
ozone episodes over the eastern United States: June 12-24, July 5-15
and August 7-21, 1995. The modeling domain we used includes the 37
eastern states modeled in the Clean Air Interstate Rule (CAIR). More
detailed information is included in the Air Quality Modeling Technical
Support Document (TSD), which is located in the docket for this rule.
Note that the emission control scenarios used in the air quality
and benefits modeling are slightly different than the emission control
program in this proposal reflecting further refinement of the
regulatory program since we performed the air quality modeling for this
proposal. Additional detail on the difference between the modeled and
proposed inventories is included in Section 3.6 of the Draft RIA.
(5) Results of the Air Quality Modeling for Ozone
According to air quality modeling performed for this proposal, the
proposed controls for emissions from the engines, vessels and equipment
subject to the proposed standards are expected to provide nationwide
improvements in ozone levels. On a population-weighted basis, the average
modeled future-year 8-hour ozone design values would decrease by 0.7

[[Page 28108]]

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

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B. Particulate Matter

Particulate matter (PM) represents a broad class of chemically and
physically diverse substances. It can be principally characterized as
discrete particles that exist in the condensed (liquid or solid) phase
spanning several orders of magnitude in size. PM is further described
by breaking it down into size fractions. PM₁₀ refers to
particles generally less than or equal to 10 micrometers ([mu]m) in
diameter. PM_2.5 refers to fine particles, those particles
generally less than or equal to 2.5 [mu]m in diameter. Inhalable (or
``thoracic'' ) coarse particles refer to those particles generally
greater than 2.5 [mu]m but less than or equal to 10 [mu]m in diameter.
Ultrafine PM refers to particles with diameters generally less than 100
nanometers (0.1 [mu]m). Larger particles (>10 [mu]m) tend to be removed
by the respiratory clearance mechanisms, whereas smaller particles are
deposited deeper in the lungs.
Fine particles are produced primarily by combustion processes and
by transformations of gaseous emissions (e.g., SO_x,
NO_X and VOCs) in the atmosphere. The chemical and physical
properties of PM_2.5 may vary greatly with time, region,
meteorology and source category. Thus, PM_2.5, may include a
complex mixture of different pollutants including sulfates, nitrates,
organic compounds, elemental carbon and metal compounds. These
particles can remain in the atmosphere for days to weeks and travel
through the atmosphere hundreds to thousands of kilometers.
EPA's final rule to amend the PM NAAQS addressed revisions to the
primary and secondary NAAQS for PM to provide increased protection of
public health and welfare, respectively (71 FR 61144, October 17,
2006). The primary PM_2.5 NAAQS include a short-term (24-
hour) and a long-term (annual) standard. The level of the 24-hour
PM_2.5 NAAQS has been revised from 65[mu]g/m 3 to
35[mu]g/m 3 to provide increased protection against health
effects associated with short-term exposures to fine particles. The
current form of the 24-hour PM_2.5 standard was retained
(e.g., based on the 98th percentile concentration averaged over three
years). The level of the annual PM_2.5 NAAQS was retained at
15[mu]g/m 3, continuing protection against health effects
associated with long-term exposures. The current form of the annual
PM_2.5 standard was retained as an annual arithmetic mean
averaged over three years, however, the following two aspects of the
spatial averaging criteria were narrowed: (1) The annual mean
concentration at each site shall be within 10 percent of the spatially
averaged annual mean, and (2) the daily values for each monitoring site
pair shall yield a correlation coefficient of at least 0.9 for each
calendar quarter. With regard to the primary PM₁₀ standards,
the 24-hour PM₁₀ NAAQS was retained at a level of 150[mu]g/m
3 not to be exceeded more than once per year on average over
a three-year period. Given that the available evidence does not suggest
an association between long-term exposure to coarse particles at
current ambient levels and health effects, EPA has revoked the annual
PM₁₀ standard.
With regard to the secondary PM standards, EPA has revised these
standards to be identical in all respects to the revised primary
standards. Specifically, EPA has revised the current 24-hour
PM_2.5 secondary standard by making it identical to the
revised 24-hour PM_2.5 primary standard, retained the annual
PM_2.5 and 24-hour PM₁₀ secondary standards, and
revoked the annual PM₁₀ secondary standards. This suite of
secondary PM standards is intended to provide protection against PM-
related public welfare effects, including visibility impairment,
effects on vegetation and ecosystems, and material damage and soiling.
(1) Health Effects of PM
Scientific studies show ambient PM is associated with a series of
adverse health effects. These health effects are discussed in detail in
the 2004 EPA Particulate Matter Air Quality Criteria Document (PM AQCD)
as well as the 2005 PM Staff Paper.19 20 Further discussion
of health effects associated with PM can also be found in the Draft RIA.
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\19\ U.S. EPA (2004) Air Quality Criteria for Particulate Matter
(Oct 2004), Volume I Document No. EPA600/P-99/002aF and Volume II
Document No. EPA600/P-99/002bF. This document is available in Docket
EPA-HQ-OAR-2004-0008. This document is available electronically at:
http://cfpub2.epa.gov/ncea/cfm/recordisplay.cfm?deid=87903.
\20\ U.S. EPA (2005) Review of the National Ambient Air Quality
Standard for Particulate Matter: Policy Assessment of Scientific and
Technical Information, OAQPS Staff Paper. EPA-452/R-05-005. This
document is available electronically at
http://www.epa.gov/ttn/naaqs/standards/pm/s_pm_cr_sp.html
and in Docket EPA-HQ-OAR-2004-0008.
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Health effects associated with short-term exposures (e.g. hours to
days) in ambient PM_2.5 include premature mortality,
increased hospital admissions, heart and lung diseases, increased
cough, adverse lower-respiratory symptoms, decrements in lung function
and changes in heart rate rhythm and other cardiac effects. Studies
examining populations exposed to different levels of air pollution over
a number of years, including the Harvard Six Cities Study and the
American Cancer Society Study, show associations between long-term
exposure to ambient PM_2.5 and both total and
cardiorespiratory mortality. In addition, the reanalysis of the
American Cancer Society Study shows an association between fine
particle and sulfate concentrations and lung cancer mortality. The
engines, vessels and equipment covered in this proposal contribute to
both acute and chronic PM_2.5 exposures. Additional information
on acute exposures is available in Section 2.5 of the Draft RIA.
Recently, several studies have highlighted the adverse effects of
PM specifically from mobile sources.21 22 Studies have also
focused on health effects due to PM exposures on or near roadways.\23\
Although these studies include all air pollution sources, including
both spark-ignition (gasoline) and diesel powered vehicles, they
indicate that exposure to PM emissions near roadways, thus dominated by
mobile sources, are associated with health effects. The proposed
controls may help to reduce exposures, and specifically exposures near
the source, to mobile source related PM_2.5.
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\21\ Laden, F.; Neas, L.M.; Dockery, D.W.; Schwartz, J. (2000)
Association of Fine Particulate Matter from Different Sources with
Daily Mortality in Six U.S. Cities. Environmental Health
Perspectives 108: 941-947.
\22\ Janssen, N.A.H.; Schwartz, J.; Zanobetti, A.; Suh, H.H.
(2002) Air Conditioning and Source-Specific Particles as Modifiers
of the Effect of PM₁₀ on Hospital Admissions for Heart
and Lung Disease. Environmental Health Perspectives 110: 43-49.
\23\ Riediker, M.; Cascio, W.E.; Griggs, T.R..; Herbst, M.C.;
Bromberg, P.A.; Neas, L.; Williams, R.W.; Devlin, R.B. (2003)
Particulate Matter Exposures in Cars is Associated with
Cardiovascular Effects in Healthy Young Men. Am. J. Respir. Crit.
Care Med. 169: 934-940.
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(2) Visibility
Visibility can be defined as the degree to which the atmosphere is
transparent to visible light.\24\ Visibility impairment

[[Page 28109]]

manifests in two principal ways: as local visibility impairment and as
regional haze.\25\ Local visibility impairment may take the form of a
localized plume, a band or layer of discoloration appearing well above
the terrain as a result from complex local meteorological conditions.
Alternatively, local visibility impairment may manifest as an urban
haze, sometimes referred to as a ``brown cloud.'' This urban haze is
largely caused by emissions from multiple sources in the urban areas
and is not typically attributable to only one nearby source or to long-
range transport. The second type of visibility impairment, regional
haze, usually results from multiple pollution sources spread over a
large geographic region. Regional haze can impair visibility over large
regions and across states.
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\24\ National Research Council, 1993. Protecting Visibility in
National Parks and Wilderness Areas. National Academy of Sciences
Committee on Haze in National Parks and Wilderness Areas. National
Academy Press, Washington, DC. This document is available in Docket
EPA-HQ-OAR-2004-0008. This book can be viewed on the National
Academy Press Website at http://www.nap.edu/books/0309048443/html/.
\25\ See discussion in U.S. EPA , National Ambient Air Quality
Standards for Particulate Matter; Proposed Rule; January 17, 2006,
Vol71 p 2676. This information is available electronically at
http://epa.gov/fedrgstr/EPA-AIR/2006/January/Day-17/a177.pdf.

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Visibility is important because it has direct significance to
people's enjoyment of daily activities in all parts of the country.
Individuals value good visibility for the well-being it provides them
directly, where they live and work, and in places where they enjoy
recreational opportunities. Visibility is also highly valued in
significant natural areas such as national parks and wilderness areas,
and special emphasis is given to protecting visibility in these areas.
For more information on visibility see the 2004 PM AQCD as well as the
2005 PM Staff Paper.26 27
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\26\ U.S. EPA (2004) Air Quality Criteria for Particulate Matter
(Oct 2004), Volume I Document No. EPA600/P-99/002aF and Volume II
Document No. EPA600/P-99/002bF. This document is available in Docket
EPA-HQ-OAR-2004-0008.
\27\ U.S. EPA (2005) Review of the National Ambient Air Quality
Standard for Particulate Matter: Policy Assessment of Scientific and
Technical Information, OAQPS Staff Paper. EPA-452/R-05-005. This
document is available in Docket EPA-HQ-OAR-2004-0008.
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Fine particles are the major cause of reduced visibility in parts
of the United States. To address the welfare effects of PM on
visibility, EPA set secondary PM_2.5 standards that would act
in conjunction with the establishment of a regional haze program. In
setting this secondary standard, EPA concluded that PM_2.5
causes adverse effects on visibility in various locations, depending on
PM concentrations and factors such as chemical composition and average
relative humidity. The secondary (welfare-based) PM_2.5 NAAQS
was established as equal to the suite of primary (health-based) NAAQS.
Furthermore, section 169 of the Act provides additional authorities to
remedy existing visibility impairment and prevent future visibility
impairment in the 156 national parks, forests and wilderness areas
categorized as mandatory class I Federal areas (62 FR 38680-81, July
18, 1997).\28\ In July 1999 the regional haze rule (64 FR 35714) was
put in place to protect the visibility in mandatory class I federal
areas. Visibility can be said to be impaired in both PM_2.5
nonattainment areas and mandatory class I federal areas.
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\28\ These areas are defined in section 162 of the Act as those
national parks exceeding 6,000 acres, wilderness areas and memorial
parks exceeding 5,000 acres, and all international parks which were
in existence on August 7, 1977.
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(a) Current Visibility Impairment
Recently designated PM_2.5 nonattainment areas indicate
that, as of October 2006, almost 90 million people live in
nonattainment areas for the 1997 PM_2.5 NAAQS. Thus, at least
these populations would likely be experiencing visibility impairment,
as well as many thousands of individuals who travel to these areas. In
addition, while visibility trends have improved in mandatory Class I
federal areas, the most recent data show that these areas continue to
suffer from visibility impairment. In summary, visibility impairment is
experienced throughout the U.S., in multi-state regions, urban areas,
and remote mandatory class I federal areas.29 30 The
mandatory class I federal areas are listed in Chapter 2 of the RIA for
this action. The areas that have design values above the 1997 PM_2.5
NAAQS are also listed in Chapter 2 of the RIA for this action.
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\29\ US EPA, Air Quality Designations and Classifications for
the Fine Particles (PM_2.5) National Ambient Air Quality
Standards, December 17, 2004. (70 FR 943, Jan 5. 2005) This document
is also available on the web at: http://www.epa.gov/pmdesignations/.
\30\ US EPA. Regional Haze Regulations, July 1, 1999. (64 FR
35714, July 1, 1999).
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(b) Future Visibility Impairment
Recent modeling for the CAIR was used to project visibility
conditions in mandatory class I federal areas across the country in
2015. The results for the mandatory class I federal areas suggest that
these areas are predicted to continue to have annual average deciview
levels above background in the future.\31\ Modeling done for the PM
NAAQS projected PM_2.5 levels in 2015. These projections
include all sources of PM_2.5, including the engines, vessels
and equipment covered in this rule, and suggest that PM_2.5
levels above the NAAQS will persist into the future.
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\31\ The deciview metric describes perceived visual changes in a
linear fashion over its entire range, analogous to the decibel scale
for sound. A deciview of 0 represents pristine conditions. The
higher the deciview value, the worse the visibility, and an
improvement in visibility is a decrease in deciview value.
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The engines, vessels and equipment that would be subject to these
proposed standards contribute to visibility concerns in these areas
through both their primary PM emissions and their VOC and
NO_X emissions, which contribute to the formation of
secondary PM_2.5. Reductions in these direct and secondary PM
emissions will help to improve visibility across the nation, including
mandatory class I federal areas.
(3) Atmospheric Deposition
Wet and dry deposition of ambient particulate matter delivers a
complex mixture of metals (e.g., mercury, zinc, lead, nickel, aluminum,
cadmium), organic compounds (e.g., POM, dioxins, furans) and inorganic
compounds (e.g., nitrate, sulfate) to terrestrial and aquatic
ecosystems. The chemical form of the compounds deposited is impacted by
a variety of factors including ambient conditions (e.g., temperature,
humidity, oxidant levels) and the sources of the material. Chemical and
physical transformations of the particulate compounds occur in the
atmosphere as well as the media onto which they deposit. These
transformations in turn influence the fate, bioavailability and
potential toxicity of these compounds. Atmospheric deposition has been
identified as a key component of the environmental and human health
hazard posed by several pollutants including mercury, dioxin and PCBs.\32\
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\32\ U.S. EPA (2000) Deposition of Air Pollutants to the Great
Waters: Third Report to Congress. Office of Air Quality Planning and
Standards. EPA-453/R-00-0005.
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Adverse impacts on water quality can occur when atmospheric
contaminants deposit to the water surface or when material deposited on
the land enters a waterbody through runoff. Potential impacts of
atmospheric deposition to waterbodies include those related to both
nutrient and toxic inputs. Adverse effects to human health and welfare
can occur from the addition of excess particulate nitrate nutrient
enrichment, which contributes to toxic algae blooms and zones of
depleted oxygen, which can lead to fish kills, frequently in coastal
waters. Particles contaminated with heavy metals or other toxins may
lead to the ingestion of contaminated fish, ingestion of contaminated
water, damage to the marine ecology, and limited recreational uses. Several

[[Page 28110]]

studies have been conducted in U.S. coastal waters and in the Great
Lakes Region in which the role of ambient PM deposition and runoff is
investigated.33 34 35 36 37
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\33\ U.S. EPA (2004) National Coastal Condition Report II.
Office of Research and Development/ Office of Water. EPA-620/R-03/002.
\34\ Gao, Y., E.D. Nelson, M.P. Field, et al. 2002.
Characterization of atmospheric trace elements on PM_2.5
particulate matter over the New York-New Jersey harbor estuary.
Atmos. Environ. 36: 1077-1086.
\35\ Kim, G., N. Hussain, J.R. Scudlark, and T.M. Church. 2000.
Factors influencing the atmospheric depositional fluxes of stable
Pb, 210Pb, and 7Be into Chesapeake Bay. J. Atmos. Chem. 36: 65-79.
\36\ Lu, R., R.P. Turco, K. Stolzenbach, et al. 2003. Dry
deposition of airborne trace metals on the Los Angeles Basin and
adjacent coastal waters. J. Geophys. Res. 108(D2, 4074): AAC 11-1 to 11-24.
\37\ Marvin, C.H., M.N. Charlton, E.J. Reiner, et al. 2002.
Surficial sediment contamination in Lakes Erie and Ontario: A
comparative analysis. J. Great Lakes Res. 28(3): 437-450.
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Adverse impacts on soil chemistry and plant life have been observed
for areas heavily impacted by atmospheric deposition of nutrients,
metals and acid species, resulting in species shifts, loss of
biodiversity, forest decline and damage to forest productivity.
Potential impacts also include adverse effects to human health through
ingestion of contaminated vegetation or livestock (as in the case for
dioxin deposition), reduction in crop yield, and limited use of land
due to contamination.
(4) Current and Projected PM_2.5 Levels
In 2005 EPA designated 39 nonattainment areas for the 1997
PM_2.5 NAAQS based on air quality design values (using 2001-
2003 or 2002-2004 measurements) and a number of other factors (70 FR
943, January 5, 2005).\38\ These areas are comprised of 208 full or
partial counties with a total population exceeding 88 million. As
mentioned in Section II.B.2, the 1997 PM_2.5 NAAQS was
recently revised and the 2006 PM_2.5 NAAQS became effective
on December 18, 2006. Table II-1 presents the number of counties in
areas currently designated as nonattainment for the 1997
PM_2.5 NAAQS as well as the number of additional counties
that have monitored data that is violating the 2006 PM_2.5
NAAQS. Nonattainment areas will be designated with respect to the new
2006 PM_2.5 NAAQS in early 2010.
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\38\ The full details involved in calculating a PM_2.5
design value are given in Appendix N of 40 CFR part 50.

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

Based on modeling performed for the PM NAAQS analysis, we estimate
that 52 counties (where 53 million people are projected to live) will
exceed the 2006 PM_2.5 standard in 2015.\39\ In addition, 54
counties (where 27 million people are projected to live) are expected
to be within 10 percent of the 2006 PM_2.5 NAAQS in 2015.
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\39\ US EPA (2006). Regulatory Impact Analysis for the 2006
NAAQS for Particle Pollution. This document is available in Docket
EPA-HQ-OAR-2004-0008.
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Areas designated as not attaining the 1997 PM_2.5 NAAQS
will need to attain these standards in the 2010 to 2015 time frame, and
then be required to maintain the NAAQS thereafter. The attainment dates
associated with the potential new 2006 PM_2.5 nonattainment
areas would likely be in the 2015 to 2020 timeframe. The emission
standards being proposed in this action would become effective as early
as 2009 making the expected HC, NO_X and PM inventory
reductions from this rulemaking useful to states in attaining or
maintaining the PM_2.5 NAAQS.
(5) Current PM₁₀ Levels
As of October 2006 approximately 28.5 million people live in 46
designated PM₁₀ nonattainment areas, which include all or
part of 46 counties. These population numbers do not include the people
living in areas where there is a potential risk of failing to maintain
or achieve the PM₁₀ NAAQS in the future. The expected PM, HC
and NO_X inventory reductions from these proposed standards
would be useful to states in maintaining the PM₁₀ NAAQS.

C. Air Toxics

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

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[[Page 28111]]

Benzene. The EPA's Integrated Risk Information (IRIS) database
lists benzene as a known human carcinogen (causing leukemia) by all
routes of exposure, and that exposure is associated with additional
health effects, including genetic changes in both humans and animals
and increased proliferation of bone marrow cells in
mice.43 44 45 EPA states in its IRIS database that data
indicate a causal relationship between benzene exposure and acute
lymphocytic leukemia and suggests a relationship between benzene
exposure and chronic non-lymphocytic leukemia and chronic lymphocytic
leukemia. A number of adverse noncancer health effects including blood
disorders, such as preleukemia and aplastic anemia, have also been
associated with long-term exposure to benzene.46 47 The most
sensitive noncancer effect observed in humans, based on current data,
is the depression of the absolute lymphocyte count in
blood.48 49 In addition, recent work, including studies
sponsored by the Health Effects Institute (HEI), provides evidence that
biochemical responses are occurring at lower levels of benzene exposure
than previously known.50 51 52 53 EPA's IRIS program has not
yet evaluated these new data.
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\43\ U.S. EPA (2000). Integrated Risk Information System File
for Benzene. This material is available electronically at
http://www.epa.gov/iris/subst/0276.htm.
\44\ International Agency for Research on Cancer, IARC
monographs on the evaluation of carcinogenic risk of chemicals to
humans, Volume 29, Some industrial chemicals and dyestuffs,
International Agency for Research on Cancer, World Health
Organization, Lyon, France, p. 345-389, 1982.
\45\ Irons, R.D.; Stillman, W.S.; Colagiovanni, D.B.; Henry,
V.A. (1992) Synergistic action of the benzene metabolite
hydroquinone on myelopoietic stimulating activity of granulocyte/
macrophage colony-stimulating factor in vitro, Proc. Natl. Acad.
Sci. 89:3691-3695.
\46\ Aksoy, M. (1989). Hematotoxicity and carcinogenicity of
benzene. Environ. Health Perspect. 82: 193-197.
\47\ Goldstein, B.D. (1988). Benzene toxicity. Occupational
medicine. State of the Art Reviews. 3: 541-554.
\48\ Rothman, N., G.L. Li, M. Dosemeci, W.E. Bechtold, G.E.
Marti, Y.Z. Wang, M. Linet, L.Q. Xi, W. Lu, M.T. Smith, N. Titenko-
Holland, L.P. Zhang, W. Blot, S.N. Yin, and R.B. Hayes (1996)
Hematotoxicity among Chinese workers heavily exposed to benzene. Am.
J. Ind. Med. 29: 236-246.
\49\ EPA 2005 ``Full IRIS Summary for Benzene (CASRN 71-43-2)''
Environmental Protection Agency, Integrated Risk Information System
(IRIS), Office of Health and Environmental Assessment, Environmental
Criteria and Assessment Office, Cincinnati, OH
http://www.epa.gov/iris/subst/0276.htm.
\50\ Qu, O.; Shore, R.; Li, G.; Jin, X.; Chen, C.L.; Cohen, B.;
Melikian, A.; Eastmond, D.; Rappaport, S.; Li, H.; Rupa, D.;
Suramaya, R.; Songnian, W.; Huifant, Y.; Meng, M.; Winnik, M.; Kwok,
E.; Li, Y.; Mu, R.; Xu, B.; Zhang, X.; Li, K. (2003). HEI Report
115, Validation & Evaluation of Biomarkers in Workers Exposed to
Benzene in China.
\51\ Qu, Q., R. Shore, G. Li, X. Jin, L.C. Chen, B. Cohen, et
al. (2002). Hematological changes among Chinese workers with a broad
range of benzene exposures. Am. J. Industr. Med. 42: 275-285.
\52\ Lan, Qing, Zhang, L., Li, G., Vermeulen, R., et al. (2004).
Hematotoxically in Workers Exposed to Low Levels of Benzene. Science
306: 1774-1776.
\53\ Turtletaub, K.W. and Mani, C. (2003). Benzene metabolism in
rodents at doses relevant to human exposure from Urban Air. Research
Reports Health Effect Inst. Report No.113.
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1,3-Butadiene. EPA has characterized 1,3-butadiene as carcinogenic
to humans by inhalation.54 55 The specific mechanisms of
1,3-butadiene-induced carcinogenesis are unknown. However, it is
virtually certain that the carcinogenic effects are mediated by
genotoxic metabolites of 1,3-butadiene. Animal data suggest that
females may be more sensitive than males for cancer effects, but there
are insufficient data in humans from which to draw conclusions about
sensitive subpopulations. 1,3-Butadiene also causes a variety of
reproductive and developmental effects in mice; no human data on these
effects are available. The most sensitive effect was ovarian atrophy
observed in a lifetime bioassay of female mice.\56\
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\54\ U.S. EPA. (2002). Health Assessment of 1,3-Butadiene.
Office of Research and Development, National Center for
Environmental Assessment, Washington Office, Washington, DC. Report
No. EPA600-P-98-001F.
\55\ U.S. EPA (1998). A Science Advisory Board Report: Review of
the Health Risk Assessment of 1,3-Butadiene. EPA-SAB-EHC-98.
\56\ Bevan, C.; Stadler, J.C.; Elliot, G.S.; et al. (1996)
Subchronic toxicity of 4-vinylcyclohexene in rats and mice by
inhalation. Fundam. Appl. Toxicol. 32:1-10.
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Formaldehyde. Since 1987, EPA has classified formaldehyde as a
probable human carcinogen based on evidence in humans and in rats,
mice, hamsters, and monkeys.\57\ EPA is currently reviewing recently
published epidemiological data. For instance, recently released
research conducted by the National Cancer Institute (NCI) found an
increased risk of nasopharyngeal cancer and lymphohematopoietic
malignancies such as leukemia among workers exposed to
formaldehyde.58 59 NCI is currently performing an update of
these studies. A recent National Institute of Occupational Safety and
Health (NIOSH) study of garment workers also found increased risk of
death due to leukemia among workers exposed to formaldehyde.\60\ Based
on the developments of the last decade the working group of the
International Agency for Research on Cancer (IARC) concluded in 2004
that formaldehyde is carcinogenic to humans (Group 1), a higher
classification than previous IARC evaluations, on the basis of sufficient
evidence in humans and sufficient evidence in experimental animals.
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\57\ U.S. EPA (1987). Assessment of Health Risks to Garment
Workers and Certain Home Residents from Exposure to Formaldehyde,
Office of Pesticides and Toxic Substances, April 1987.
\58\ Hauptmann, M.; Lubin, J.H.; Stewart, P.A.; Hayes, R.B.;
Blair, A. 2003. Mortality from lymphohematopoetic malignancies among
workers in formaldehyde industries. Journal of the National Cancer
Institute 95: 1615-1623.
\59\ Hauptmann, M.; Lubin, J.H.; Stewart, P.A.; Hayes, R.B.;
Blair, A. 2004. Mortality from solid cancers among workers in
formaldehyde industries. American Journal of Epidemiology 159: 1117-1130.
\60\ Pinkerton, L.E. 2004. Mortality among a cohort of garment
workers exposed to formaldehyde: an update. Occup. Environ. Med. 61:
193-200.
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Formaldehyde exposure also causes a range of noncancer health
effects, including irritation of the eyes (tearing of the eyes and
increased blinking) and mucous membranes.
Acetaldehyde. Acetaldehyde is classified in EPA's IRIS database as
a probable human carcinogen, based on nasal tumors in rats, and is
considered toxic by the inhalation, oral, and intravenous routes.\61\
The primary acute effect of exposure to acetaldehyde vapors is
irritation of the eyes, skin, and respiratory tract.\62\ The agency is
currently conducting a reassessment of the health hazards from
inhalation exposure to acetaldehyde.
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\61\ U.S. EPA (1988). Integrated Risk Information System File of
Acetaldehyde. This material is available electronically at
http://www.epa.gov/iris/subst/0290.htm.
\62\ U.S. EPA (1988). Integrated Risk Information System File of
Acetaldehyde. This material is available electronically at
http://www.epa.gov/iris/subst/0290.htm.

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Acrolein. Acrolein is intensely irritating to humans when inhaled,
with acute exposure resulting in upper respiratory tract irritation and
congestion. EPA determined in 2003 using the 1999 draft cancer
guidelines that the human carcinogenic potential of acrolein could not
be determined because the available data were inadequate. No
information was available on the carcinogenic effects of acrolein in
humans and the animal data provided inadequate evidence of
carcinogenicity.\63\
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\63\ U.S. EPA. 2003. Integrated Risk Information System File of
Acrolein. Research and Development, National Center for
Environmental Assessment, Washington, DC. This material is available
electronically at http://www.epa.gov/iris/subst/0364.htm.

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

[[Page 28112]]

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

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

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

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In addition to reducing VOC, NO_X, CO and
PM_2.5 emissions from these engines, vessels and equipment,
the standards proposed in this document would also reduce air toxics
emitted from these engines, vessels and equipment, thereby helping to
mitigate some of the adverse health effects associated with operation
of these engines, vessels and equipment.

D. Carbon Monoxide

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

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

[[Page 28113]]

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

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

III. Sterndrive and Inboard Marine Engines

A. Overview

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

B. Engines Covered by This Rule

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

[[Page 28114]]

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

C. Proposed Exhaust Emission Standards

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

[[Page 28115]]

Section V for a description of the proposed requirements related to
evaporative emissions.
(1) Standards and Dates
We are proposing exhaust emission standards of 5 g/kW-hr
HC+NO_X and 75 g/kW-hr CO for SD/I engines, starting with the
2009 model year (see Sec. 1045.105). On average, this represents about
a 70 percent reduction in HC+NO_X and a 50 percent reduction
in CO from baseline engine configurations. Due to the challenges of
controlling CO emissions at high load, the expected reduction in CO
emissions from low to mid-power operation is expected to be more than
80 percent. We are proposing additional lead time for small businesses
as discussed in Section III.F.2. The proposed standards would be based
on the same duty cycle that currently is in place for outboard and
personal watercraft engines, as described in Section III.D. Section
III.F discusses the technological feasibility of these standards in
more detail. We request comment on the feasibility and appropriateness
of the proposed standards.
The proposed standards are largely based on the use of small
catalytic converters that can be packaged in the water-cooled exhaust
systems typical for these applications. California ARB also adopted an
HC+NO_X standard of 5 g/kW-hr, but they did not adopt a
standard for CO emissions. We believe the type of catalyst used to
achieve the HC+NO_X standard will also be effective in
reducing CO emissions enough to meet the proposed standard, so no
additional technology will be needed to control CO emissions.
Manufacturers have expressed concern that the proposed
implementation dates may be difficult to meet, for certain engines, due
to anticipated changes in engine block designs produced by General
Motors. As described in the Draft RIA and in the docket, the vast
majority of SD/I engines are based on automotive engine blocks sold by
General Motors.\75\ There are five basic engine blocks used, and
recently GM has announced that it will discontinue production of the
4.3L and 8.1L engine blocks in 2009. GM anticipates that it will offer
a 4.1L engine block and a 6.0L supercharged engine block to the marine
industry as replacements. Full run production of these new blocks is
anticipated in mid to late 2009. SD/I engine manufacturers have
expressed concern that they will not be able to begin the engineering
processes related to marinizing these engines, including the
development of catalyst-equipped exhaust manifolds, until mid-2007,
when they are expecting to see the first prototypes of the two
replacement engine models. In addition, they are concerned that they do
not have enough remaining years of sales of the 4.3L and 8.1L engines
to justify the cost of developing catalyst-equipped exhaust manifolds
for these engines and amortizing the costs of the required tooling
while also developing the two new engine models.
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\75\ ``GM Product Changes Affecting SD/I Engine Marinizers,''
memo from Mike Samulski, EPA, to Docket EPA-HQ-QAR-2004-0008-0528.
---------------------------------------------------------------------------

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

[[Page 28116]]

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

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

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

[[Page 28117]]

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

[[Page 28118]]

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

[[Page 28119]]

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

[[Page 28120]]

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

[[Page 28121]]

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

D. Test Procedures for Certification

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

[[Page 28122]]

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

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

[[Page 28123]]

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

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

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

[[Page 28124]]

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

E. Additional Certification and Compliance Provisions

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

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

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

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

[[Page 28125]]

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

F. Small-Business Provisions

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

[[Page 28126]]

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

[[Page 28127]]

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

G. Technological Feasibility

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

[[Page 28128]]

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

IV. Outboard and Personal Watercraft Engines

A. Overview

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

[[Page 28129]]

B. Engines Covered by This Rule

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

[[Page 28130]]

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

C. Proposed Exhaust Emission Standards

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

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

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

[[Page 28131]]

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

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

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

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

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

[[Page 28132]]

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

[[Page 28133]]

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

D. Changes to Existing OB/PWC Test Procedures

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

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

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

[[Page 28134]]

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

E. Additional Certification and Compliance Provisions

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

[[Page 28135]]

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

Average EL = [Sigma]_i[(STD-CL)_i x
(UL)_i x (Sales)_i x Power_i x
LF_i]
/ [Sigma]_i [(UL)_i x
(Sales)_i x Power_i x LF_i]

Where:

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

[[Page 28136]]

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

F. Other Adjustments to Regulatory Provisions

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

[[Page 28137]]

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

G. Small-Business Provisions

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

H. Technological Feasibility

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

[[Page 28138]]

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

[[Page 28139]]

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

V. Small SI Engines

A. Overview

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

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

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

B. Engines Covered by This Rule

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

[[Page 28140]]

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

[[Page 28141]]

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

C. Proposed Requirements

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

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

[[Page 28143]]

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

[[Page 28144]]

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

[[Page 28145]]

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

[[Page 28146]]

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

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