Control of Emissions From New Marine Compression-Ignition Engines at or Above 30 Liters Per Cylinder

[Federal Register: February 28, 2003 (Volume 68, Number 40)]
[Rules and Regulations]
[Page 9745-9789]
From the Federal Register Online via GPO Access [wais.access.gpo.gov]
[DOCID:fr28fe03-33]

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ENVIRONMENTAL PROTECTION AGENCY
40 CFR Parts 9 and 94
[AMS-FRL-7448-9]
RIN 2060-AJ98

Control of Emissions From New Marine Compression-Ignition Engines
at or Above 30 Liters Per Cylinder

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

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SUMMARY: In this action, we are adopting emission standards for new
marine diesel engines installed on vessels flagged or registered in the
United States with displacement at or above 30 liters per cylinder.
These standards are equivalent to the internationally negotiated
standards for oxides of nitrogen and will be enforceable under U.S. law
for new engines built on or after January 1, 2004. The certification
and compliance program we are adopting is similar to the
internationally negotiated program, but contains additional provisions
reflecting certain Clean Air Act-specific compliance provisions and the
related need to adopt test procedures designed to achieve the emission
reductions called for under Clean Air Act section 213. These standards
will apply until we adopt a second tier of standards in a future
rulemaking. In developing that future rulemaking, which will be
completed no later than April 27, 2007, we will consider the state of
technology that may permit deeper emission reductions and the status of
international action for more stringent standards. We will also
consider the application of such a second tier of standards to engines
on foreign vessels that enter U.S. ports.
We are also adopting additional standards for new engines with
displacement at or above 2.5 liters per cylinder but less than 30
liters per cylinder. These standards, which are currently voluntary,
are also equivalent to the internationally negotiated standards for
oxides of nitrogen. The standards will apply through 2006. Beginning in
2007, the Tier 2 standards we finalized for these engines in 1999 will
go into effect (64 FR 73300, December 29, 1999; 40 CFR part 94).

DATES: This final rule is effective April 29, 2003.
The incorporation by reference of certain publications listed in
this regulation is approved by the Director of the Federal Register as
of April 29, 2003.

ADDRESSES: Materials relevant to this rulemaking are contained in
Public Docket Number A-2001-11 at the following address: EPA Docket
Center (EPA/DC), Public Reading Room, Room B-102, EPA West Building,
1301 Constitution Avenue, NW., Washington, DC. The EPA Docket Center
Public Reading Room is open from 8:30 a.m. to 4:30 p.m., Monday through
Friday, except on government holidays. You can reach the Air Docket and
Reading Room by telephone at (202) 566-1742 and by facsimile at (202)
566-1741. You may be charged a reasonable fee for photocopying docket
materials, as provided in 40 CFR part 2.
For further information on electronic availability of this action,
see SUPPLEMENTARY INFORMATION below.

FOR FURTHER INFORMATION CONTACT: U.S. EPA, Office of Transportation and
Air Quality, Assessment and Standards Division hotline, (734) 214-4636,
asdinfo@epa.gov.

SUPPLEMENTARY INFORMATION:

Affected Entities

This action will affect companies and persons that manufacture,
sell, or import into the United States new marine compression-ignition
engines for use on vessels flagged or registered in the United States;
companies and persons that make vessels that will be flagged or
registered in the United States and that use such engines; and the
owners or operators of such U.S. vessels. Further requirements apply to
companies and persons that rebuild or maintain these engines. Affected
categories and entities include the following:

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Category NAICS Code a Examples of potentially affected entities
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Industry.............................. 333618................... Manufacturers of new marine diesel engines.
Industry.............................. 336611................... Manufacturers of marine vessels.
Industry.............................. 811310................... Engine repair and maintenance.
Industry.............................. 483...................... Water transportation, freight and passenger.
Industry.............................. 324110................... Petroleum refineries.
Industry.............................. 422710, 422720........... Petroleum Bulk Stations and Terminals; Petroleum and Petroleum Products Wholesalers.
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a North American Industry Classification System (NAICS).

This list is not intended to be exhaustive, but rather provides a
guide regarding entities likely to be affected by this action. To
determine whether particular activities may be affected by this action,
you should carefully examine the regulations. You may direct questions
regarding the applicability of this action as noted in FOR FURTHER
INFORMATION CONTACT.

Additional Information About This Rulemaking

Emission standards for new marine diesel engines at or above 30
liters per cylinder were considered by EPA in two previous rulemakings,
in 1996 and in 1999. The notice of proposed rulemaking for the first
rule (for the control of air pollution from new gasoline spark-ignition
and diesel compression-ignition marine engines) can be found at 59 FR
55930 (November 1994); a supplemental notice of proposed rulemaking can
be found at 61 FR 4600 (February 7, 1996); and the final rule can be
found at 61 FR 52088 (October 4, 1996). The notice of proposed
rulemaking for the second rule (for the control of air pollution from
new marine compression-ignition engines at or above 37 kW) can be found
at 63 FR 68508 (December 11, 1998); the final rule can be found at 64
FR 73300 (December 29, 1999). These documents are available on our Web
sites, http://www.epa.gov/otaq/marine.htm and http://www.epa.gov/
otaq/marinesi.htm. In addition, we recently adopted emission standards
for recreational marine diesel engines (67 FR 68242, November 8, 2003).
This final rule relies in part on information obtained for those
rulemakings, which can be found in Public Dockets A-92-28, A-97-50, and
A-2000-01. Those dockets are incorporated by reference into the docket
for this proposal, A-2001-11.

Obtaining Electronic Copies of the Regulatory Documents

The preamble, regulatory language, Final Regulatory Support
Document, and other rulemaking documents are available electronically
from the EPA Internet Web site. This service is free of charge, except
for any cost incurred for

[[Page 9747]]

internet connectivity. The electronic version of this final rule is
made available on the date of publication on the primary Web site
listed below. The EPA Office of Transportation and Air Quality also
publishes Federal Register notices and related documents on the
secondary Web site listed below.
1. http://www.epa.gov/fedrgstr/EPA-AIR (either select desired
date or use Search features).
2. http://www.epa.gov/otaq (look in What's New or under the
specific rulemaking topic).
Please note that due to differences between the software used to
develop the documents and the software into which the document may be
downloaded, format changes may occur.

Table of Contents

I. Introduction
A. Background
B. How Is This Document Organized?
C. What Requirements Are We Finalizing?
1. Category 3 Marine Diesel Engines
2. Category 1 and Category 2 Marine Diesel Engines
3. Foreign-Trade Exemption
4. Fuel Controls
D. Why is EPA Taking This Action?
1. What Are the Health and Welfare Effects of Category 3 Marine
Diesel Engine Emissions?
2. What Is the Inventory Contribution From the Marine Diesel
Engines That Are Subject to This Rule?
E. What Are the Internationally Negotiated Standards and What Is
the Status of the U.S. Ratification of Annex VI?
F. Recent European Union Action
G. Statutory Authority
II. Which Engines Are Covered?
A. What is a Marine Vessel?
B. What are Category 1, 2, and 3 Marine Diesel Engines?
C. What is a New Marine Diesel Engine?
1. ``New'' Engines on Vessels Flagged or Registered in the
United States
2. ``New'' Engines on Vessels Flagged or Registered Elsewhere
D. What is a New Marine Vessel?
1. Newly Manufactured Vessel
2. Modification of an Existing Vessel with Category 1 or
Category 2 Main Propulsion Engines
3. Modification of an Existing Vessel with Category 3 Main
Propulsion Engines
E. Is EPA Retaining the Foreign-Trade Exemption?
III. Standards and Technological Feasibility
A. What are the new emission standards?
B. When do the engine emission standards apply?
C. What technologies will engine manufacturers use to meet the
Tier 1 emission standards?
D. Voluntary Low-Emission Standards
IV. Future Actions
A. Future Rulemaking for Engine Standards
1. What Is the Timetable for the Future Rule?
2. What Standards Will EPA Consider in the Future Rule?
3. What Technologies Will EPA Consider in the Future Rule?
4. Will the International Community Also Consider More Stringent
Standards?
B. Fuel controls
1. Is EPA Adopting Fuel Requirements?
2. What Are the MARPOL Annex VI Fuel Provisions?
3. How Will SO_X Emission-Control Areas Be Designated
in the United States?
4. Are There Other Fuel-based Controls That May Be Considered?
V. Demonstrating Compliance
A. Overview of Certification
1. How do I certify my engines?
2. How are these certification requirements different from those
of the NO_X Technical Code?
3. How does a certificate of conformity relate to a Statement of
Voluntary Compliance or an EIAPP?
4. What are the roles of the engine manufacturer and ship owner
after the engine is installed?
B. Other Certification and Compliance Issues
1. How are engine families defined?
2. Which engines are selected for testing?
3. How does EPA treat adjustable parameters?
4. How must engines be labeled?
5. How does EPA ensure durable emission controls?
6. What are the manufacturer's responsibilities for the emission
warranty and defect reporting?
7. What are deterioration factors?
8. What requirements apply to in-use maintenance?
9.What requirements apply to rebuilding engines?
10.What are the prohibited acts and related requirements?
11.What general exemptions apply?
12.What regulations apply for imported engines?
13.What are a manufacturer's recall responsibilities?
14.What responsibilities apply to ship owners and operators?
C. Test Procedures for Category 3 Marine Engines
1. What duty cycle do I use to test my engines?
2. How do I account for variable test conditions?
3. How does laboratory testing relate to actual in-use
operation?
D. Comparison to NO_X Technical Code Compliance
Requirements
1. How are EPA's compliance requirements different from the
NO_X Technical Code requirements?
2. Can a manufacturer comply with EPA requirements and Annex VI
requirements at the same time?
E. Technical Amendment to 40 CFR Part 94
F. Compliance Issues To Be Considered for Future Rulemaking
1. What are EPA's concerns about parameter adjustment?
2. What are EPA's concerns about off-cycle emissions?
3. What are EPA's concerns about the fuel used for emission
testing?
4. What are EPA's concerns about production variability?
VI. Projected Impacts
VII. The Blue Cruise Program
VIII. Public Participation
IX. Statutory and Executive Order Reviews
A. Executive Order 12866: Regulatory Planning and Review
B. Paperwork Reduction Act
C. Regulatory Flexibility Act
D. Unfunded Mandates Reform Act
E. Executive Order 13132: Federalism
F. Executive Order 13175: Consultation and Coordination with
Indian Tribal Governments
G. Executive Order 13045: Protection of Children from
Environmental Health and Safety Risks
H. Executive Order 13211: Actions that Significantly Affect
Energy Supply, Distribution, or Use
I. National Technology Transfer and Advancement Act
J. Congressional Review Act

I. Introduction

A. Background

Marine diesel engines can be significant contributors to local
ozone, carbon monoxide (CO), and particulate matter (PM) levels,
particularly in commercial ports and along coastal areas.1,2
This rule addresses these air pollution concerns by adopting national
emission standards for the first time for marine diesel engines with
per-cylinder displacement at or above 30 liters or more that are
installed on vessels flagged or registered in the United States.\3\
These engines, also known as Category 3 marine diesel engines, are very
large marine engines used primarily for propulsion power on ocean-going
vessels such as container ships, tankers, bulk carriers, and cruise
ships. Category 3 marine diesel engines have not previously been
regulated under our nonroad engine programs. This rule also adopts
standards for marine diesel engines with per-cylinder displacement at
or above 2.5 liters per cylinder but less than 30 liters per

[[Page 9748]]

cylinder installed on vessels flagged or registered in the United
States.
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\1\ References to diesel-cycle engines, also referred to as
``diesel engines'' in this document are intended to cover a
particular kind of engine technology, i.e., compression-ignition
combustion. Compression-ignition engines are typically operated on
diesel fuel, though other fuels, such as compressed natural gas, may
also be used. This contrasts with otto-cycle engines (also called
spark-ignition or SI engines), which typically operate on gasoline.
The requirements set out in this action apply only to compression-
ignition engines.
\2\ Ground-level ozone, the main ingredient in smog, is formed
by complex chemical reactions of volatile organic compounds (VOC)
and NO_X in the presence of heat and sunlight.
Hydrocarbons (HC) are a large subset of VOC, and to reduce mobile
source VOC levels we set maximum emission standards for
hydrocarbons. VOCs can also be part of the secondary formation of
PM.
\3\ This final rule applies to ``new'' marine diesel engines and
to ``new'' marine vessels that include marine diesel engines. In
general, a ``new'' marine diesel engine or a ``new'' marine vessel
is one that is produced for sale in the United States or that is
imported into the United States (See section II, below). The
emission standards established in this final rule, therefore, will
typically apply to marine diesel engines that are installed on
vessels flagged or registered in the United States.
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The emission-control program we are adopting in this rule is a
continuation of the process of establishing emission standards for
nonroad engines and vehicles under Clean Air Action section 213(a).\4\
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\4\ Section I of the preamble for our proposal contains an
extensive description of the regulatory background for this
rulemaking, which we are not repeating here (67 FR 37548, May 29,
2002).
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This is our third action for emission standards for marine diesel
engines above 37 kW. In our first action, in 1999, we adopted emission
standards for commercial marine engines above 37 kilowatts (kW) (64 FR
73300, December 29, 1999; 40 CFR part 94). The standards adopted in
that rule consist of mandatory standards, referred to as our Tier 2
standards, that apply to engines above 37 kW with per-cylinder
displacement up to 30 liters (also known as Category 1 and Category 2
marine diesel engines).\5\ These Tier 2 standards apply to oxides of
nitrogen (NO_X), hydrocarbon (HC), PM and CO emissions and go
into effect in 2004-2007, depending on engine size. Our Tier 2 marine
diesel engine standards are expected to achieve a 32-percent reduction
in NO_X emissions for Category 1 and Category 2 marine diesel
engines by 2030 relative to uncontrolled levels. The Tier 2 standards
for Category 1 and Category 2 marine diesel engines also contain PM
standards that are expected to achieve a 26-percent reduction in PM
emissions by 2030. We did not adopt mandatory emission standards for
Category 3 marine diesel engines in 1999. Manufacturers of those
engines were expected to comply voluntarily with internationally
negotiated NO_X standards.
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\5\ EPA treats voluntary standards equivalent to the
internationally negotiated oxides of nitrogen standards as Tier 1
standards. The internationally negotiated standards are contained in
MARPOL Annex VI (see footnote 5 and associated text). When they go
into force, the internationally negotiated standards will apply to
new engines above 130 kW installed on vessels constructed on or
after January 1, 2000 and engines that undergo a major conversion on
or after January 1, 2000.
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In our second action for marine diesel engines above 37 kW, we
adopted standards for recreational marine diesel engines (67 FR 68242,
November 8, 2002). These numerical standards are identical to those we
finalized for commercial marine diesel engines in 1999. However, the
engines are tested using a different duty cycle and the effective date
for recreational marine diesel engines is 2006-2009, depending on
engine size.
This third action for marine diesel engines above 37 kW was
proposed on May 29, 2002 (67 FR 37548). At a public hearing on June 13
and during the public comment period, which ended on July 16, 2002, we
heard from over 50 commenters. The emission-control program we are
adopting in this action follows from the approach described in our
proposal, though we have made numerous adjustments in response to the
comments and other information received since the proposal.

B. How Is This Document Organized?

After this introductory section, Section II describes the set of
engines that will be required to comply with the standards. Section III
contains the standards we are finalizing. Section IV describes the
future rulemaking we are committing to pursue. Section V describes
various compliance provisions. Section VI summarizes the projected
impacts of the standards. Section VII gives an update on the Blue
Cruise program we described in our proposal. Finally, Sections VIII and
IX contain information about how we satisfied our administrative
requirements and about the statutory provisions for this final rule.
Additional information on many of these topics can be found in the
Final Regulatory Support Document and the Summary and Analysis of
Comments. These documents and all the comments we received are in
Docket A-2001-11.
The remainder of this section summarizes the new requirements and
the air quality need for the rulemaking. We also provide an update on
the status of U.S. ratification of MARPOL Annex VI.

C. What Requirements Are We Finalizing?

We are adopting emission standards for new marine diesel engines
installed on vessels flagged or registered in the United States. We are
adopting standards for the first time for new Category 3 marine diesel
engines, beginning in 2004. We are also adopting additional standards
for some Category 1 and all Category 2 marine diesel engines, also
beginning in 2004. This section presents a brief description of this
emission-control program. More details can be found in Sections III and
IV of this preamble and in the Final Regulatory Support Document.
1. Category 3 Marine Diesel Engines
Clean Air Act section 213(a)(3) requires EPA to adopt regulations
that contain standards concerning certain pollutants reflecting the
greatest degree of emission reductions achievable through the
application of technology that will be available, taking into
consideration the availability and costs of the technology, and noise,
energy, safety factors and existing motor vehicle standards. EPA is
also to revise these standards from time to time. The emission-control
program we are adopting in this rule meets these criteria through a
two-part approach. First, we are adopting near-term Tier 1 standards
that will go into effect immediately based on readily available
emission-control technology. Second, we are adopting regulations that
set a schedule for a future rulemaking to assess and adopt an
appropriate second tier of standards. We recognize that manufacturers
can achieve additional reductions with more lead time than is provided
by the Tier 1 standards. They can do this by expanding the use and
optimization of in-cylinder controls, combined with the significant
emission reductions that may be achievable with advanced technologies
such as selective catalytic reduction or water injection. We believe,
however, that it is appropriate to defer a final decision on the
longer-term Tier 2 standards to a future rulemaking. While there is a
certain amount of information available about the advanced technologies
at this time, there are several outstanding technical issues concerning
the widespread commercial use of these technologies. Deferring the Tier
2 standards to a second rulemaking will allow us to obtain important
additional information on the use of the these advanced technologies
that we expect to become available over the next few years. This new
information may include (1) new developments as manufacturers continue
to make various improvements to the technology and address any
remaining concerns, (2) data or experience from recently initiated in-
use installations using the advanced technologies, and (3) information
from longer-term in-use experience with the advanced technologies that
will be especially helpful for evaluating the long-term durability of
emission controls. We believe the projected time frame for the future
rulemaking is appropriate to allow us to make the best use of
information that will be available to have a sound technical basis for
assessing the technological capabilities of emission-control systems
that include

[[Page 9749]]

advanced technologies. We will then be best situated to make a
technology-based decision that maximizes emission reductions from these
engines, taking into consideration cost and other appropriate factors.
While deferring adoption of the Tier 2 standards to a future
rulemaking is appropriate for the reasons described above, an
additional reason supporting this approach is to pursue further
negotiations in the international arena to achieve more stringent
global emission standards for marine diesel engines. As discussed
below, adopting appropriate international standards has the potential
to maximize the control of emissions from U.S. and foreign vessels.
The near-term Tier 1 standards we are adopting are equivalent to
the internationally negotiated NO_X standards established by
the International Maritime Organization (IMO) in Annex VI to the
International Convention on the Prevention of Pollution from Ships,
1973, as Modified by the Protocol of 1978 Relating Thereto (more
commonly referred to as MARPOL or MARPOL 73/78; the standards are
referred to as the Annex VI NO_X standards).\6\ As explained
in Section III below and in the Final Regulatory Support Document,
these standards are achievable almost immediately, with less than one
year of lead time, because manufacturers are already achieving and
certifying to these standards under our Voluntary Statement of
Compliance program for Annex VI. These near-term standards are being
achieved through the application of currently available technology,
including optimized turbocharging, higher compression ratios, and
optimized fuel injection. The certification and compliance program we
are adopting is similar to the internationally negotiated program, but
contains additional provisions reflecting certain Clean Air Act-
specific compliance provisions and the related need to adopt test
procedures designed to achieve the emission reductions called for under
Clean Air Act section 213. These certification requirements are
described in Section V of this preamble. These Tier 1 standards are
expected to result in negligible costs because engine manufacturers are
already producing engines that meet the MARPOL Annex VI NO_X
limits. Engine manufacturers should not have to engage in additional
research and development to achieve these standards. Recognizing that
some additional lead time is needed for manufacturers in some cases, we
are including an interim provision that will allow manufacturers to use
their Annex VI test data to show compliance with the Tier 1 standards.
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\6\ Annex VI was adopted by a Conference of the Parties to
MARPOL on September 26, 1997, but has not yet entered into force.
Copies of the conference versions of the Annex and the
NO_X Technical Code can be found in Docket A-97-50,
Document II-B-01. Copies of updated versions can be obtained from
the International Maritime Organization (http://www.imo.org).

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We considered, but rejected, setting near-term Tier 1 standards
that would require a level of emission control greater than that
necessary to meet the MARPOL Annex VI NO_X limits, for a
combination of reasons. We concluded that setting more stringent near-
term Tier 1 standards would likely delay achieving greater
environmental benefits in the longer term. The additional lead time
that would be necessary to set a Tier 1 standard based on further use
and optimization of in-cylinder control would lead to two separate--and
possibly conflicting--design steps, one for Tier 1 and a second for
Tier 2. Dividing manufacturers' resources this way has the potential to
delay the Tier 2 standards. For example, manufacturers would
potentially need to make initial changes to in-cylinder designs, then
pursue an additional development program to optimize the in-cylinder
technologies for controlling emissions in conjunction with advanced
technologies. We believe the best route to achieving the maximum
reductions from Category 3 marine engines is a near-term Tier 1
standard based on the use of existing technologies, followed by a Tier
2 rulemaking in the next few years that focuses on designing the
optimum combination of in-cylinder and advanced technology to reduce
emissions from these engines.
The second phase of our emission-control program for Category 3
marine diesel engines will consist of more stringent standards that
reflect the application of advanced emission-control technologies and
further optimization of in-cylinder controls. We understand that
further use and optimization of in-cylinder control can achieve
emission reductions beyond the levels needed to meet the Tier 1
standards. As discussed in the Final Regulatory Support Document, we
believe that manufacturers can, with additional lead time, make greater
use and optimization of in-cylinder controls to reduce emissions at
least 10 to 15 percent below Tier 1 levels. It is not clear at this
time that in-cylinder controls alone could reduce emissions 30 percent
below Tier 1 levels. However, in combination with advanced
technologies, emission reductions should be greater than 30 percent
below Tier 1 levels. In the Tier 2 rulemaking, we therefore expect to
focus on standards that would be based on achieving greater emission
reductions through optimizing in-cylinder controls and incorporating
advanced technologies such as SCR or water. As discussed above,
adopting Tier 2 standards at this time based only on in-cylinder
controls could lead to two separate and possibly conflicting design
steps, potentially delaying introduction of advanced emission-control
technologies and their anticipated emission reductions.
At this time, however, there are still several outstanding
technical issues involving the use of these advanced emission-control
technologies. For example, there are technical issues concerning the
impacts of fuel sulfur levels on emissions, the ability of these
technologies to achieve emission reductions at low engine loads, and
their impacts on PM emissions. With regard to fuel-sulfur content, most
of the demonstration engines that currently use these technologies are
operated on fuel with a sulfur content ranging from 5,000 to 10,000
ppm. However, the average sulfur content of fuel used by Category 3
marine diesel engines is 27,000 ppm, and it can be as high as 45,000
ppm. At this time, it is not clear how engines will perform with this
higher sulfur fuel and what types of adjustments will need to be made
to accommodate the higher sulfur. Also, it may be the case that this
technology will perform well with fuel at 15,000 ppm, which is the
maximum sulfur content allowable for ships operating in SO_X
Emission Control Areas pursuant to Annex VI. With regard to emissions
at low load, some studies suggest that advanced technologies may not
perform as well when the engine is not operating at its optimal fuel-
consumption rate. This is important because engines typically operate
at low load in port. Once we understand this dynamic better we will be
able to evaluate the extent to which it can be addressed technically.
With regard to PM emissions, some concerns have been raised that using
these advanced technologies to control NO_X emissions may
raise PM emissions. Again, once we understand this dynamic better we
will be able to evaluate the extent to which it can be addressed
technically. Part of this analysis will entail developing a method to
measure PM emissions from these very large engines. Each of these
issues is discussed in greater detail in Section IV and in the Final
Regulatory Support Document.
Engine manufacturers are currently working on many of these issues.
Water emulsification has been applied for

[[Page 9750]]

some time on the land-based counterparts of these engines, which are
primarily used in stationary engines for power generation. Direct water
injection and SCR have also been applied in recent years to several
engines operating on vessels. These projects are discussed in Section
IV and in Chapter 5 of the Final Regulatory Support Document; an
Appendix to Chapter 5 provides a list of these vessels. Most of the
engines using these technologies have been installed in the past five
years. Many of them are on passenger ferries and most are on ships that
operate in European waters, with many being delivered only since 1999.
To date, the advanced technologies have only been applied in cases
where the operating characteristics of the vessels are compatible with
the technology. For instance, SCR has primarily been installed on
vessels using medium-speed engines, which have higher exhaust
temperatures than low-speed engines, and where very low-sulfur fuel is
available. Through these projects, engine manufacturers are
experimenting with different emission-control techniques and learning
about the long-term operation and durability of these systems. These
projects will also provide information about the emission levels that
can be achieved through the application of these technologies.
Based on these outstanding technical issues, we believe it is not
appropriate at this time to attempt to project the engineering answers
and solutions to these technical issues. By waiting a few years, we
will be able to benefit from the manufacturers' experience as they
continue to develop and apply these technologies on marine diesel
engines. We can also develop methods to assess the impact of fuel
sulfur on emissions, to assess the emission-control potential of these
technologies on emissions at low loads, and to measure and address PM
emissions. Consequently, we plan to evaluate more stringent Tier 2
standards in a future rulemaking. In the 2004-2005 time frame, engine
manufacturers will have five or more years of data on a significant
number of vessels. During this period, we will work with manufacturers
to learn more about the advanced technologies discussed above and the
steps they are taking to resolve operational and technological issues.
With this information, we should be in a significantly better position
to determine the emission levels that are achievable and appropriate,
given appropriate lead time for the use of these advanced technologies.
We have concluded that the standards in this final rule (which are
equivalent to the internationally negotiated NO_X standards
established under MARPOL Annex VI) are the appropriate controls for the
near term. Requiring additional near-term reductions from further use
and optimization of in-cylinder controls would potentially delay and
disrupt the second tier of standards, which will focus on emission-
control systems that rely on optimized in-cylinder controls and
advanced technologies to achieve significantly greater reductions. We
have also concluded that it is appropriate to defer adoption of Tier 2
standards to a future rulemaking to allow us to take into account
several important outstanding technical issues concerning the use of
these advanced technologies and address the potential to combine in-
cylinder controls with the advanced technologies.
We expect additional information to become available in the next
few years that will allow us to more reliably and appropriately
determine the level of emission control that is achievable and
appropriate for such technologies, given appropriate lead time.
Based on this, we conclude that the near-term Tier 1 emission
standards in this final rule satisfy the criteria of Clean Air Act
section 213(a)(3) at this time. Section 213(a)(3) directs EPA to
promulgate emission standards and from time to time review and revise
those standards. This final rule adopts near-term standards and puts
EPA on a schedule to review, and if appropriate, revise those standards
in accordance with the criteria in section 213(a)(3). We believe this
two-step approach is the most appropriate means to address emissions
from Category 3 marine engines in the near-term in the face of
incomplete information and the significant changes underway in applying
emission-reduction technology to very large marine engines.
We are including a regulatory provision in 40 CFR 94.8 that
establishes a schedule for a future rulemaking to promulgate additional
emission standards for Category 3 marine engines that we determine are
appropriate under section 213(a)(3). This rulemaking will reassess the
emission standards in light of the developments in and experience with
applying emission-reduction technology to Category 3 marine engines.
The standards in this final rule will remain in effect until we modify
them in a future rulemaking. We are committing to take final action on
appropriate standards for marine diesel engines by April 27, 2007, and
to issue a proposal no later than approximately one year before. This
future rulemaking will allow us to exercise the discretionary authority
under Clean Air Act section 213(a)(3), which directs EPA to ``from time
to time revise'' regulations under that provision. EPA considers this
time as necessary and appropriate to properly take into consideration
additional information expected to become available about emerging
technologies, as well as any developments in the international
negotiations for more stringent emission limits.
In addition to allowing us to benefit from information that engine
manufacturers continue to gather on these advanced technologies,
delaying adoption of the Tier 2 until a future rule allows us to
facilitate negotiations for appropriate consensus international
standards. Adoption of international standards has the potential to
maximize the level of emission reductions achieved from emission
controls on U.S. and foreign vessels. For example, international
standards set at an appropriate level would remove the objections to
controlling emissions from engines on foreign vessels. Since engines on
foreign-flag vessels account for the majority of emissions from
Category 3 marine diesel engines impacting U.S. air quality, successful
negotiation of international standards that achieve the greatest
emission reduction feasible would result in the greatest improvement to
air quality here in the U.S. and around the world. Addressing the long-
term standards in the future rulemaking could facilitate such
international action, but will also allow us to proceed expeditiously
on our own if appropriate international standards are not adopted in a
timely way.
The United States has already taken a leadership role for more
stringent standards at the International Maritime Organization and has
requested that organization to begin consideration of a second tier of
international standards. Those discussions are likely to begin in 2004,
after Annex VI goes into forces, or as part of a review process if
enough countries have not ratified it by the end of 2003.
2. Category 1 and Category 2 Marine Diesel Engines
We proposed to adopt a first tier of standards equivalent to the
internationally negotiated NO_X limits for marine diesel
engines with per-cylinder displacement of 2.5 to 30 liters. We are
adopting these standards in this action. By adopting these standards as
Tier 1 standards, we are making them mandatory and enforceable for new
engines on U.S. vessels. The Tier 1 standards will begin to apply in
2004 and will continue to apply through 2006. Beginning in 2007, the
Tier 2

[[Page 9751]]

standards we finalized in 1999 will go into effect.
We proposed to apply all the Tier 2 certification and compliance
requirements to the proposed Tier 1 standards as well. After
considering the public comments, we are finalizing this approach with
two exceptions. First, we allow manufacturers to use test data
generated using the procedures in the NO_X Technical Code on
an interim basis. Second, we will not require manufacturers to perform
production-line testing on their Tier 1 engines.
3. Foreign-Trade Exemption
We are eliminating the foreign-trade exemption for all marine
diesel engines, which was available for engines installed on U.S.
vessels that spend less than 25 percent of total operating time within
320 kilometers of U.S. territory.
4. Fuel Controls
We are not setting standards for the fuel used by marine diesel
engines in this final rule. With regard to the residual fuel used by
Category 3 marine diesel engines, we remain concerned that regulating
fuel sold in the United States would not necessarily ensure that lower-
sulfur fuel is used in U.S. waters, since ships could purchase their
fuel in other countries. To obtain the benefits of lower-sulfur fuel,
we plan to investigate designation of one or more areas in the United
States as SO_x Emission Control Areas pursuant to the
international process for this purpose. This is described further in
Section IV.B.
With regard to the fuel used by Category 1 and Category 2 marine
diesel engines, we are considering distillate marine diesel fuel
controls as part of the nonroad diesel rule that is currently under
development.

D. Why Is EPA Taking This Action?

Category 3 marine diesel engines generate NO_X, HC, PM
and CO emissions that contribute to ozone and CO levels above the
National Ambient Air Quality Standards (NAAQS) for ozone and CO (i.e.,
they contribute to ozone and CO nonattainment) as well as adverse
health effects associated with ambient concentrations of PM. As
described in more detail below and in the Final Regulatory Support
Document, Category 3 marine diesel engines accounted for about 1.6
percent of nationwide mobile source NO_X emissions in 2000.
They also accounted for about 2.8 percent of nationwide mobile source
PM emissions in 2000. These percentages are expected to increase as a
result of increased trade and decreases in emissions from other nonroad
sources. The contribution of Category 3 marine diesel engines to
nationwide mobile source HC and CO levels is small, at 0.1 and 0.02
percent, respectively, in 2000.
The inventory contribution of Category 3 marine diesel engines can
be higher on a port-specific basis. We estimate that these engines
contribute about 7 percent of mobile source NO_X in Baton
Rouge/New Orleans and Wilmington, NC, and about 5 percent in Miami/
Fort Lauderdale and Corpus Christi. These ships can also have a
significant impact on inventories in areas without large commercial
ports. For example, they contribute about 37 percent of total area
NO_X in the Santa Barbara area.
1. What Are the Health and Welfare Effects of Category 3 Marine Diesel
Engine Emissions?
There are important public health and welfare concerns related to
Category 3 marine diesel engine emissions.\7\ This section contains a
summary of the general health effects associated with exposure to
ozone, PM, and CO. Further information can be found in Chapter 1 of the
Final Regulatory Support Document.
------------------------------------------------------------------------

\7\ Sections II and VI of the preamble for our proposal contain
an extensive description of the air quality problems we are
addressing in this rulemaking, which we are not repeating here.
------------------------------------------------------------------------

a. Ozone. Volatile organic compounds (VOC) and NO_X are
precursors in the photochemical reaction which forms tropospheric
ozone. Ground-level ozone, the main ingredient in smog, is formed by
complex chemical reactions of VOCs and NO_X in the presence
of heat and sunlight. Hydrocarbons are a large subset of VOC, and to
reduce mobile-source VOC levels we set maximum emission limits for
hydrocarbon and particulate emissions.
Based on a large number of studies, we have identified several key
health effects caused when people are exposed to levels of ozone found
today in many areas of the country. A large body of evidence shows that
ozone can cause harmful respiratory effects including chest pain,
coughing, and shortness of breath, which affect people with compromised
respiratory systems most severely. When inhaled, ozone can cause acute
respiratory problems; aggravate asthma; cause significant temporary
decreases in lung function of 15 to over 20 percent in some healthy
adults; cause inflammation of lung tissue; produce changes in lung
tissue and structure; may increase hospital admissions and emergency
room visits; and impair the body's immune system defenses, making
people more susceptible to respiratory illnesses. Children and outdoor
workers are likely to be exposed to elevated ambient levels of ozone
during exercise and, therefore, are at a greater risk of experiencing
adverse health effects. Beyond its human health effects, ozone has been
shown to injure plants, which has the effect of reducing crop yields
and reducing productivity in forest ecosystems.
There is strong and convincing evidence that exposure to ozone is
associated with exacerbation of asthma-related symptoms. Increases in
ozone concentrations in the air have been associated with increases in
hospitalization for respiratory causes for individuals with asthma,
worsening of symptoms, decrements in lung function, and increased
medication use, and chronic exposure may cause permanent lung damage.
The risk of suffering these effects is particularly high for children
and for people with compromised respiratory systems.
In addition to the health effects described above, there exists a
large body of scientific literature that shows that harmful effects can
occur from sustained levels of ozone exposure at low levels.\8\ Studies
of prolonged exposures, those lasting about 7 hours, show health
effects from prolonged and repeated exposures at moderate levels of
exertion to ozone concentrations as low as 0.08 ppm. The health effects
at these levels of exposure include transient pulmonary function
responses, transient respiratory symptoms, effects on exercise
performance, increased airway responsiveness, increased susceptibility
to respiratory infection, increased hospital and emergency room visits,
and transient pulmonary respiratory inflammation.
------------------------------------------------------------------------

\8\ Additional information about these studies can be found in
Chapter 2 of ``Regulatory Impact Analysis: Heavy-Duty Engine and
Vehicle Standards and Highway Diesel Fuel Sulfur Control
Requirements,'' December 2000, EPA420-R-00-026. Docket No. A-2001-
11, Document II-A-55. This document is also available at
http://www.epa.gov/otaq/diesel.htm#documents
_____________________________________

The current primary and secondary ozone National Ambient Air
Quality Standard (NAAQS) is 0.12 ppm daily maximum 1-hour
concentration, not to be exceeded more than once per year on average.
EPA is replacing the previous 1-hour ozone standard with a new 8-hour
standard. The new standard is set at a concentration of 0.08 parts per
million (ppm), and the measurement period is 8 hours. Areas are allowed
to disregard their three worst measurements every year and average
performance over three years to determine if they meet the standard.

[[Page 9752]]

That is, the standard is set by the 4th highest maximum 8-hour
concentration.
Ground level ozone today remains a pervasive pollution problem in
the United States. About 51 million people live in areas with design
values above the level of the 1-hour ozone standard based on three
years of data (1999-2001). In addition, about 111 million people live
in areas with design values above the 8-hour ozone standard based on
those three years of data. Approximately 61 million of these people
live in areas with design values above the 8-hour standard but are
below the design standard for the 1-hour ozone standard (i.e., they are
attaining the 1-hour standard). The remainder of these people live in
areas with design values above the 8-hour ozone standards but are above
the design value for the 1-hour ozone standard (i.e., they are not
attaining the 1-hour standard).\9\ This represents 291 counties with
design values above the level of the 8-hour standard.
------------------------------------------------------------------------

\9\ Memorandum to Docket A-2001-11 from Fred Dimmick, Group
Leader, Air Trends Group, ``Summary of Currently Available Air
Quality Data and Ambient Concentrations for Ozone and Particulate
Matter,'' December 3, 2002, Air Docket A-2001-11, Document No. IV-B-
3.
------------------------------------------------------------------------

Over the last decade, declines in ozone levels were found mostly in
urban areas, where emissions are heavily influenced by controls on
mobile sources and their fuels. Twenty-three metropolitan areas have
realized a decline in ozone levels since 1989, but at the same time
ozone levels in 11 metropolitan areas with 7 million people have
increased.\10\ Regionally, California and the Northeast have recorded
significant reductions in peak ozone levels, while four other regions
(the Mid-Atlantic, the Southeast, the Central and Pacific Northwest)
have seen ozone levels increase. The highest ambient concentrations are
currently found in suburban areas, consistent with downwind transport
of emissions from urban centers. Concentrations in rural areas have
risen to the levels previously found only in cities.
b. Particulate Matter. Category 3 marine engines contribute to
ambient levels of particulate matter through direct emissions of
particulate matter, especially sulfates.
------------------------------------------------------------------------

\10\ National Air Quality and Emissions Trends Report, 1998,
March, 2000, at 28. This document is available at
http://www.epa.gov/oar/aqtrnd98.
Relevant pages of this report can be found
in Memorandum to Air Docket A-2000-01 from Jean Marie Revelt,
September 5, 2001, (incorporated into Docket A-2001-11 at Document
II-A-58).
------------------------------------------------------------------------

Particulate matter 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. All particles equal to
and less than 10 microns are called PM₁₀. Fine particles can
be generally defined as those particles with an aerodynamic diameter of
2.5 microns or less (also known as PM_2.5), and coarse
fraction particles are those particles with an aerodynamic diameter
greater than 2.5 microns, but equal to or less than a nominal 10
microns.
Particulate matter, like ozone, has been linked to a range of
serious respiratory health problems. Scientific studies suggest a
likely causal role of ambient particulate matter (which is attributable
to several sources including mobile sources) in contributing to a
series of health effects.\11\ The key health effects categories
associated with ambient particulate matter include premature mortality,
aggravation of respiratory and cardiovascular disease (as indicated by
increased hospital admissions and emergency room visits, school
absences, work loss days, and restricted activity days), aggravated
asthma, acute respiratory symptoms, including aggravated coughing and
difficult or painful breathing, chronic bronchitis, and decreased lung
function that can be experienced as shortness of breath. Observable
human noncancer health effects associated with exposure to diesel PM
include some of the same health effects reported for ambient PM such as
respiratory symptoms (cough, labored breathing, chest tightness,
wheezing), and chronic respiratory disease (cough, phlegm, chronic
bronchitis and suggestive evidence for decreases in pulmonary
function). Symptoms of immunological effects such as wheezing and
increased allergenicity are also seen. Exposure to fine particles is
closely associated with such health effects as premature mortality or
hospital admissions for cardiopulmonary disease.
---------------------------------------------------------------------------

\11\ EPA (1996) Review of the National Ambient Air Quality
Standards for Particulate Matter: Policy Assessment of Scientific
and Technical Information OAQPS Staff Paper. EPA452-R-96-013. Docket
No. A-2001-11, Document II-A-52. The particulate matter air quality
criteria documents are also available at
http://www.epa.gov/ncea/partmatt.htm.
_____________________________________

PM also causes adverse impacts to the environment. Fine PM is the
major cause of reduced visibility in parts of the United States. Other
environmental impacts occur when particles deposit onto soils, plants,
water or materials. For example, particles containing nitrogen and
sulphur that deposit on to land or water bodies may change the nutrient
balance and acidity of those environments. Finally, PM causes soiling
and erosion damage to materials, including culturally important objects
such as carved monuments and statues. It promotes and accelerates the
corrosion of metals, degrades paints, and deteriorates building
materials such as concrete and limestone.
There are two indicators related to PM NAAQS. The first indicator
is PM₁₀, and the second is PM_2.5. Concentrations
above the PM_2.5 standard are much more widespread than are
violations of the PM₁₀ standard, and emission reductions
needed to attain the PM_2.5 standards will also lead to
attainment of the PM₁₀ standards. The NAAQS for
PM₁₀ was established in 1987. According to these standards,
the short term (24-hour) standard of 150 [mu]g/m\3\ is not to be
exceeded more than once per year on average over three years. The long-
term standard specifies an expected annual arithmetic mean not to
exceed 50 [mu]g/m\3\ over three years. Recent PM₁₀
monitoring data indicates that there are 8 serious and 58 moderate
PM₁₀ nonattainment areas with about 30 million people in 63
mainly western counties. The NAAQS for PM_2.5 indicator was
established in 1997. According to these standards, the short term (24-
hour) standard is set at 65 [mu]g/m\3\ based on the 98th percentile
averaged over three years. The long-term standard specifies an expected
annual arithmetic mean not to exceed 15 [mu]g/m\3\ over three years.
Current PM_2.5 monitored values for 1999-2001, which
cover about a quarter of the nation's counties, indicate that at least
65 million people in 129 counties live in areas where design values of
ambient fine particulate matter levels are at or above the
PM_2.5 NAAQS. Three years of complete data are required to
make regulatory determinations of attainment or nonattainment but,
based on more limited available data, there are an additional 9 million
people in 20 counties where levels exceeding the NAAQS are being
measured, but there are insufficient data at this time to make an
official estimate of the design value. In total, this represents 39
percent of the population in the areas with monitors.\12\ To estimate
the current number of people who live in areas where long-term ambient
fine particulate matter levels are at or above 16 [mu]g/m\3\ but for
which there are no monitors, we can use modeling performed for the
Heavy-Duty Engine and Vehicle Standards and Highway Diesel Fuel Sulfur
Control rule (also called the ``HD07'' rule) described

[[Page 9753]]

elsewhere.\13\ At that time, we conducted 1996 base year modeling to
reproduce the atmospheric processes resulting in formation and
dispersion of PM_2.5 across the U.S. This 1996 modeling
included emissions subject to this final rule. According to our
national model predictions, there were a total of 76 million people
(1996 population) living in areas with modeled annual average
PM_2.5 concentrations at or above 16 [mu]g/m\3\ (29 percent
of the population).\14\
------------------------------------------------------------------------

\12\ Memorandum to Docket A-2001-11 from Fred Dimmick, Group
Leader, Air Trends Group, ``Summary of Currently Available Air
Quality Data and Ambient Concentrations for Ozone and Particulate
Matter,'' December 3, 2002, Air Docket A-2001-11, Document No. IV-B-
3.
\13\ See the Final Regulatory Impact Analysis: Heavy-Duty Engine
and Vehicle Standards and Highway Diesel Fuel Sulfur Control
Requirements (EPA420-R-00-026, December 2000). Docket No. A-2001-11,
Document II-A-55. This document is also available at
http://www.epa.gov/otaq/diesel.htm#documents
\14\ Memorandum to Docket A-99-06 from Eric O. Ginsburg, Senior
Program Advisor, ``Summary of Absolute Modeled and Model-Adjusted
Estimates of Fine Particulate Matter for Selected Years,'' December
6, 2000; Docket No. A-2001-11, Document II-A-61.
------------------------------------------------------------------------

While the final implementation process for bringing the Nation's
air into attainment with the PM_2.5 NAAQS is still being
completed, the basic framework is well defined. EPA's current plans
call for designating PM_2.5 nonattainment areas in late-2004.
Following designation, section 172(b) of the Clean Air Act allows
states up to three years to submit a revision to their state
implementation plan (SIP) that provides for the attainment of the
PM_2.5 standards. We expect states to submit these SIPs in
late-2007. Section 172(a)(2) of the Clean Air Act requires that these
SIP revisions demonstrate that the nonattainment areas will attain the
PM_2.5 standards as expeditiously as practicable but no later
than five years from the date that the area was designated
nonattainment. However, based on the severity of the air quality
problem and the availability and feasibility of control measures, the
Administrator may extend the attainment date ``for a period of no
greater than 10 years from the date of designation as nonattainment.''
Therefore, we expect that areas will be ultimately be required to
attain the PM_2.5 air quality standard in the 2009 to 2014
time frame.
c. Diesel Exhaust. Diesel emissions are of concern beyond their
contribution to ambient PM. There have been health studies specific to
diesel exhaust emissions indicating that potential hazards to human
health are specific to this emission source. For chronic exposure,
these hazards included respiratory system toxicity and carcinogenicity.
Acute exposure also causes transient effects (a wide range of
physiological symptoms stemming from irritation and inflammation mostly
in the respiratory system) in humans though they are highly variable
depending on individual human susceptibility. The chemical composition
of diesel exhaust includes several hazardous air pollutants, or air
toxics.
EPA recently released its final ``Health Assessment Document for
Diesel Engine Exhaust'' (the Diesel HAD).\15\ There, we concluded that
diesel exhaust is likely to be carcinogenic to humans by inhalation and
environmental exposures in accordance with the revised draft 1996/1999
EPA cancer guidelines. A number of other agencies (e.g., National
Institute for Occupational Safety and Health, the International Agency
for Research on Cancer, the World Health Organization, California EPA,
and the U.S. Department of Health and Human Services) have made similar
determinations.
------------------------------------------------------------------------

\15\ U.S. EPA (2000) Health Assessment Document for Diesel
Exhaust: SAB Review Draft. EPA/600/8-90-057E Office of Research and
Development, Washington DC. This document is available
electronically at http://cfpub.epa.gov/ncea/cfm/dieslexh.cfm.
_____________________________________

EPA concluded in the Diesel HAD that it is not possible to
currently calculate a cancer unit risk for diesel particles due to a
variety of factors that limit the current studies such as lack of
adequate dose-response relations between exposure versus cancer
incidence. Even though EPA does not have a carcinogenic potency with
which to accurately estimate the carcinogenic impact of diesel exhaust,
the likely hazard to humans together with the potential for significant
environmental risks leads us to conclude that diesel exhaust emissions
should be reduced from nonroad engines in order to protect public
health.
d. Carbon Monoxide. Carbon monoxide is a colorless, odorless gas
produced through the incomplete combustion of carbon-based fuels.
Carbon monoxide enters the bloodstream through the lungs and reduces
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.
High concentrations of CO generally occur in areas with elevated
mobile-source emissions. Peak concentrations typically occur during the
colder months of the year when mobile-source CO emissions are greater
and nighttime inversion conditions are more frequent. This is due to
the enhanced stability in the atmospheric boundary layer, which
inhibits vertical mixing of emissions from the surface.
The current primary NAAQS for CO are 35 parts per million for the
one-hour average and 9 parts per million for the eight-hour average.
These values are not to be exceeded more than once per year. Air
quality carbon monoxide value is estimated using EPA guidance for
calculating design values. In 1999, 30.5 million people (1990 census)
lived in 17 areas designated nonattainment under the CO NAAQS.\16\
------------------------------------------------------------------------

\16\ National Air Quality and Emissions Trends Report, 1999,
EPA, 2001, at Table A-19. This document is available at
http://www.epa.gov/oar/aqtrnd99.
The data from the Trends report are the
most recent EPA air quality data that have been quality-assured. A
copy of this table can also be found in Docket No. A-2001-11,
Document II-A-59.
------------------------------------------------------------------------

Nationally, significant progress has been made over the last decade
to reduce CO emissions and ambient CO concentrations. Total CO
emissions from all sources have decreased 16 percent from 1989 to 1998,
and ambient CO concentrations decreased by 39 percent. During that
time, while the mobile source CO contribution of the inventory remained
steady at about 77 percent, the highway portion decreased from 62
percent of total CO emissions to 56 percent while the nonroad portion
increased from 17 percent to 22 percent.\17\ Over the next decade, we
would expect there to be a minor decreasing trend from the highway
segment due primarily to the more stringent standards for certain
light-duty trucks (LDT2s).\18\ CO standards for passenger cars and
other light-duty trucks and heavy-duty vehicles did not change as a
result of other recent rulemakings.
------------------------------------------------------------------------

\17\ National Air Quality and Emissions Trends Report, 1998,
March, 2000; this document is available at
http://www.epa.gov/oar/aqtrnd98.
National Air Pollutant Emission Trends, 1900-1998 (EPA-
454/R-00-002), March, 2000. These documents are available at Docket
No. A-2001-11, Document II-A-60. See also Air Quality Criteria for
Carbon Monoxide, U.S. EPA, EPA 600/P-99/001F, June 2000, at page 3-
10; Docket No. A-2001-11, Document II-A-56. This document is also
available at http://www.epa.gov/ncea/coabstract.htm
\18\ LDT2s are light light-duty trucks greater than 3750 pounds
loaded vehicle weight, up through 6000 pounds gross vehicle weight
rating.
------------------------------------------------------------------------

e. Environmental Effects. In addition to the health and welfare
concerns just described, Category 3 marine diesel engines can
contribute to visibility degradation, haze, acid deposition, and
eutrophication and nitrophication. Further information on these effects
can

[[Page 9754]]

be found in Chapter 1 of the Final Regulatory Support Document.
2. What Is the Inventory Contribution From the Marine Diesel Engines
That Are Subject to This Rule?
Category 3 marine diesel engines contribute to the health and
welfare effects described above through their NO_X, PM, HC,
and CO emissions. These emissions are summarized in this section. To
estimate these inventory impacts, we used baseline estimates developed
under contract with E. H. Pechan and Associates, Inc.\19\ Inventory
estimates were developed separately for vessel traffic within 25
nautical miles of port areas and vessel traffic outside of port areas
but within 175 nautical miles of the coastline. The inventories include
all Category 3 traffic, including that on the Great Lakes. Different
techniques were used to develop the port and non-port inventories. For
port areas we developed detailed emissions estimates for nine specific
ports using port activity data including port calls, vessel types and
typical times in different operating modes. Emission estimates for all
other ports were developed by matching each of those ports to one of
the nine specific ports already analyzed based on characteristics of
port activity, such as predominant vessel types, harbor draft and
region of the country. The detailed port emissions were then scaled to
the other ports based on relative port activity. We developed non-port
emission inventories using cargo movements and waterways data, vessel
speeds, average dead weight tonnage per ship, and assumed cargo
capacity factors. More detailed information regarding the development
of the baseline emission inventories can be found in Chapter 6 of the
Final Regulatory Support Document.
------------------------------------------------------------------------

\19\ ``Commercial Marine Emission Inventory Development.'' E. H.
Pechan and Associates, Inc. and ENVIRON International Corporation.
April 2002. Air Docket A-2001-11, item II-A-67.
------------------------------------------------------------------------

In our inventory estimates work for the proposal we included all
Category 3 vessel emissions within 175 nautical miles of the U.S.
coastline on the assumption that emission transport would bring these
emissions on to shore and affect U.S. ambient air quality. We requested
comment on the transport issue, including whether 175 nautical miles
was the appropriate distance from shore to consider or whether we
should consider a range different from 175 nautical miles as our
primary scenario, and whether we should consider different distances
from the coast for different areas of the country. We also asked if
there was additional information available to help us assess the
emission transport issue. In general, the comments received were
supportive of including all emissions within 175 nautical miles of the
coast in the national emission inventory. While some commenters
questioned this distance, we received no substantial new data or
information suggesting that a different distance would be more
appropriate or that would help us determine what distance from shore we
should use in our inventory analysis.
For the purpose of this final rule, we are including all Category 3
vessel emissions within 175 nautical miles of the U.S. coast in our
emission inventory estimates. However, we acknowledge that this
emission transport issue is complex and requires further investigation.
For example, as we noted in the proposal for this rule, the U.S.
Department of Defense (DoD) has presented some information to us that
suggests a different, shorter (offshore distance) limit be established
rather than the proposed 175 nautical miles as the appropriate location
where emissions from marine vessels would affect on-shore air quality.
DoD's modeling work on the marine vessels issue in Southern California
led them to conclude that emissions within 60 nautical miles of shore
could make it back to the coast due to eddies and the nature of the
sea-breeze effects. They note that this distance seems to be confirmed
by satellite data showing a distinct tendency for a curved line of
demarcation separating the offshore (unobstructed) or parallel ocean
wind flow from a region of more turbulent, recirculated air that would
impact on-shore areas. That curved line of demarcation was close to San
Nicolas Island, which is about 60 nautical miles offshore. Studies and
published information on other coastal areas in California indicates
that they experience somewhat a narrower (perhaps 30 nautical miles)
region of ``coastal influence.'' Nevertheless, commenters from
California support a 175 nautical-mile boundary.
Because of the continued data and modeling uncertainties
surrounding this issue, we intend to investigate this issue as part of
our future rule. As part of this investigation, we will consider the
special characteristics of emission transport in separate parts of the
country. For example, we expect that the Gulf Coast and East Coast
areas of the United States would have their own unique meteorological
conditions that might call for different lines of demarcation between
on-shore and off-shore effects due to different prevailing winds in
those parts of the country.
We also requested comment on both our future growth estimates and
our analysis of emissions from U.S. versus foreign vessels. Commenters
suggested that the overall growth that we projected was fine, but that
the U.S. vessel contribution to future inventories would likely not
change and that all of the future growth would be due to increased
foreign vessel traffic. We have modified the future U.S. and foreign
vessel emissions split accordingly. Further, in response to comments
received and new port calls data we have modified our overall estimates
of the relative contributions of U.S. and foreign vessels to be more
heavily weighted toward foreign vessels. A complete discussion of these
changes to the inventories can be found in the Regulatory Support
Document and the Summary and Analysis of Comments.
Baseline emission inventory estimates for Category 3 marine diesel
engines in 2000 are summarized in Table I.D-1 in the context of other
emission sources. This table shows the contributions of the different
mobile-source categories to the overall national mobile-source
inventory. Of the total emissions from mobile sources, Category 3
marine diesel engines contributed about 1.6 percent of NO_X
and 2.8 percent of PM emissions in the year 2000.
Our emission projections for Category 3 marine diesel engines in
2030 show how emissions from these engines are expected to increase
over time after implementation of Tier 1/MARPOL Annex VI NO_X
limits. The projections for 2030 are summarized in Table I.D-2 and
indicate that Category 3 marine diesel engines are expected to
contribute 8.9 percent NO_X and 7.3 percent of PM emissions
in the year 2030. Population growth and the effects of other regulatory
control programs are factored into these projections. The relative
contribution of Category 3 marine diesel engines increases between 2000
and 2030 largely because we have adopted requirements that will
substantially reduce emissions from most other categories of nonroad
engines. Note that the effectiveness of all control programs is offset
by the anticipated growth in engine populations.

[[Page 9755]]

Table I.D-1.--Modeled Annual Emission Levels for Mobile-Source Categories in 2000
[thousand short tons]
--------------------------------------------------------------------------------------------------------------------------------------------------------
NO_X HC CO PM
---------------------------------------------------------------------------------------------
Category Percent of Percent of Percent of Percent of
Tons mobile Tons mobile Tons mobile Tons mobile
source source source source
--------------------------------------------------------------------------------------------------------------------------------------------------------
Total for engines subject to new standards (U.S. flagged 28 0.2 1 0.0 2 0.0 2.5 0.4
commercial marine--Category 3)...........................
============
Commercial Marine CI--Category 3 (U.S. and foreign)....... 214 1.6 9 0.1 19 0.02 19.7 2.8
Commercial Marine CI--Categories 1 and 2.................. 703 5.2 22 0.3 103 0.1 20 2.9
Highway Motorcycles....................................... 8 0.1 84 1.1 331 0.4 0.4 0.1
Nonroad Industrial SI£19 kW..................... 308 2.3 226 3.1 1,734 2.3 1.6 0.2
Recreational SI........................................... 5 0.0 418 5.7 1,120 1.5 12.0 1.7
Recreation Marine CI...................................... 38 0.3 1 0.0 6 0.0 1 0.1
Marine SI Evap............................................ 0 0.0 100 1.4 0 0.0 0 0.0
Marine SI Exhaust......................................... 32 0.2 708 9.6 2,144 2.8 38 5.4
Nonroad SI <19 kW......................................... 106 0.8 1,460 19.8 18,359 24.2 50 7.1
Nonroad CI................................................ 2,625 19.6 316 4.3 1,217 1.6 253 35.9
Locomotive................................................ 1,192 8.9 47 0.6 119 0.2 30 4.3
------------
Total Nonroad............................................. 5,231 39 3,391 46 25,152 33 426 60
Total Highway............................................. 7,981 60 3,811 52 49,813 66 240 34
Aircraft.................................................. 178 1 183 3 1,017 1 39 6
------------
Total Mobile Sources...................................... 13,389 100 7,385 100 75,982 100 705 100
============
Total Man-Made Sources.................................... 24,532 .......... 18,246 .......... 97,735 .......... 3,102 ..........
------------
Mobile Source percent of Total Man-Made Sources........... 55 .......... 40 .......... 78 .......... 23 ..........
--------------------------------------------------------------------------------------------------------------------------------------------------------

Table I.D-2.--Modeled Annual Emission Levels for Mobile-Source Categories in 2030
[Thousand short tons]
--------------------------------------------------------------------------------------------------------------------------------------------------------
NO_X HC CO PM
--------------------------------------------------------------------------------------------
Category Percent of Percent of Percent of Percent of
Tons mobile Tons mobile Tons mobile Tons mobile
source source source source
--------------------------------------------------------------------------------------------------------------------------------------------------------
Total for engines subject to new standards (U.S. flagged 28 0.5 1 0.0 2 0.0 2.5 0.3
commercial marine--Category 3)a...........................
============
Commercial Marine CI--Category 3 (U.S. and foreign)........ 531 8.9 26 0.5 57 0.05 54.0 7.3
Commercial Marine CI--Categories 1 and 2................... 680 11.4 26 0.5 137 0.1 20.0 2.7
Highway Motorcycles........................................ 17 0.3 172 3.4 693 0.7 1.0 0.1
Nonroad Industrial SI £ 19 kW.................... 44 0.7 17 0.3 265 0.3 2.0 0.3
Recreational SI............................................ 20 0.3 294 5.8 1,843 1.9 10.5 1.4
Recreation Marine CI....................................... 52 0.9 2 0.0 11 0.0 1.4 0.2
Marine SI Evap............................................. 0 0.0 122 2.4 0 0.0 0 0.0
Marine SI Exhaust.......................................... 64 1.1 269 5.3 2,083 2.1 29 3.9
Nonroad SI < 19 kW......................................... 126 2.1 1,200 23.7 32,310 33.3 93 12.6
Nonroad CI................................................. 1,994 33.4 158 3.1 1,727 1.8 306 41.6
Locomotive................................................. 531 8.9 30 0.6 119 0.1 18 2.4
------------
Total Nonroad.............................................. 4,059 68 2,316 46 39,245 40 535 73
Total Highway.............................................. 1,648 28 2,496 49 56,303 58 158 22
Aircraft................................................... 262 4 262 5 1,502 2 43 6
------------
Total Mobile Sources....................................... 5,969 100 5,074 100 97,050 100 736 100
============
Total Man-Made Sources..................................... 16,177 .......... 16,094 .......... 121,428 .......... 3,297 ..........
------------

[[Page 9756]]

Mobile Source percent of Total Man-Made Sources............ 37 .......... 32 .......... 80 .......... 22 ..........
--------------------------------------------------------------------------------------------------------------------------------------------------------
\a\ These inventories are the same as for 2000 because, based on comments received, we assumed no future increase in U.S. domestic trade.

Further analysis suggests that Category 3 marine diesel engines
contribute more significantly in individual port areas. For example, we
estimate that these engines contribute about 7 percent of mobile-source
NO_X in the Metropolitan Statistical Areas (MSA) of Baton
Rouge/New Orleans and Wilmington NC, about 5 percent of mobile-source
NO_X in the Miami/ Fort Lauderdale and Corpus Christi MSAs,
and about 4 percent in the Seattle/Tacoma/Bremerton/Bellingham MSA.
In addition, these ships can have a significant impact on
inventories even in areas without large commercial ports. For example,
Santa Barbara estimates that engines on ocean-going marine vessels
currently contribute about 37 percent of total NO_X in their
area. These emissions are from ships that transit the area, and ``are
comparable to (even slightly larger than) the amount of NO_X
produced onshore by cars and truck.'' \20\ By 2015 these emissions are
expected to increase 67 percent, contributing 61 percent of Santa
Barbara's total NO_X emissions. This mix of emission sources
led Santa Barbara to point out that they will be unable to meet air
quality standards for ozone without significant emission reductions
from these vessels, even if they completely eliminate all other sources
of pollution.
------------------------------------------------------------------------

\20\ Memorandum to Docket A-2001-11 from Jean Marie Revelt,
Santa Barbara County Air Quality News, Issue 62, July-August 2001
and other materials provided to EPA by Santa Barbara County,'' March
14, 2002. Air Docket A-2001-11, Document No. II-A-47.
------------------------------------------------------------------------

E. What Are the Internationally Negotiated Standards and What Is the
Status of the U.S. Ratification of Annex VI?

In response to growing international concern about air pollution
and in recognition of the highly international nature of maritime
transportation, the IMO initiated development of international
standards for NO_X, SO_x, and a variety of other
air emissions arising from marine vessel operations.\21,22\ As a result
of these discussions, Annex VI was drafted between 1992 and 1997. The
Annex VI engine emission standards cover only NO_X emissions;
there are no restrictions on PM, HC, or CO emissions. They are based on
engine speed and apply to engines above 130 kW. These standards are set
out in Table III.A-1. Originally, these standards were expected to
reduce NO_X emissions by 30 percent when fully phased in.
More recent analysis by EPA, based on newly estimated emission factors
for these engines, indicates an expected reduction on the order of only
20 percent when compared to uncontrolled emissions by 2030 when the
standards are fully phased-in. The EPA inventory analysis is described
in more detail in the Final Regulatory Support Document.
------------------------------------------------------------------------

\21\ The Annex covers several aspects air emissions from marine
vessels: ozone-depleting substances, NO_X, SO_x,
VOCs from tanker operations, incineration, fuel oil quality. There
are also requirements for reception facilities and platforms and
drilling rigs.
\22\ To obtain copies of this document, see Footnote 5, above.
------------------------------------------------------------------------

The Annex VI NO_X standards apply to each diesel engine
with a power output of more than 130 kW installed on a ship constructed
on or after January 1, 2000, or that undergoes a major conversion on or
after January 1, 2000. The Annex does not distinguish between marine
diesel engines installed on recreational or commercial vessels; all
marine diesel engines above 130 kW are subject to the standards
regardless of the type of vessel they are used on, and the standards
apply to engines installed on vessels only in domestic service as well
as to engines on vessels engaged in international voyages. The test
procedures to demonstrate compliance are set out in the Annex VI
NO_X Technical Code.\23\ They are based on ISO 8178 and are
performed using distillate fuel. Engines can be pre-certified or
certified after they are installed on a vessel. After demonstrating
compliance, pre-certified engines would receive an Engine International
Air Pollution Prevention (EIAPP) certificate. This document, to be
issued by the Administration of the flag country, is needed by the ship
owner as part of the process of demonstrating compliance with all the
provisions of Annex VI and obtaining an International Air Pollution
Prevention (IAPP) certificate for the vessel once the Annex goes into
force. The Annex also contains engine compliance provisions based on a
survey approach. These survey requirements would apply after the Annex
goes into force. An engine is surveyed right after it is installed,
every five years after installation, and at least once between five-
year surveys. Engines are not required to be tested as part of a
survey, however. The surveys can be done by a parameter check, which
can be as simple as reviewing the Record Book of Engine Parameters that
must be maintained for each engine and verifying that current engine
settings are within allowable standards.
------------------------------------------------------------------------

\23\ To obtain copies of this document, see Footnote 5, above.
------------------------------------------------------------------------

After several years of negotiation, the Parties to MARPOL adopted a
final version of Annex VI at a Diplomatic Conference on September 26,
1997. However, it will not enter into force until twelve months after
the date on which not less than fifteen member states, the combined
merchant fleets of which constitute not less than 50 percent of the
gross tonnage of the world's merchant shipping, have ratified the
agreement. To date, more than four years after it was adopted, the
Annex has been ratified by only 6 countries representing about 26
percent of the world's merchant shipping.\24\
------------------------------------------------------------------------

\24\ The countries that have ratified Annex VI are Sweden,
Norway, Bahamas, Singapore, Marshall Islands, and Liberia.
Information about Annex VI ratification can be found at
http://www.imo.org (look under Conventions, Status of Conventions--Complete
List).
------------------------------------------------------------------------

The Annex requires that engines installed on a ship constructed on
or after January 1, 2000 must comply with the specifications set forth
in Regulation 13 of the Annex and the NO_X Technical Code. In
addition, ship owners must bring existing engines into compliance if
the engines undergo a major conversion on or after that date.\25\

[[Page 9757]]

Although the Annex has not yet entered into force and is not yet
legally binding, it is widely recognized that the vast majority of
marine diesel engines manufactured and installed after January 1, 2000
meet the requirements of the Annex. To facilitate implementation while
the Annex is not yet in force and to allow engine manufacturers to
certify their engines before the Annex goes into force, we have set up
a process for manufacturers to obtain a Statement of Voluntary
Compliance.\26\ Once Annex VI goes into effect for the United States we
will develop a process by which an EPA-issued Statement of Voluntary
Compliance can be exchanged for an EIAPP. It should be noted that an
engine certificate (EIAPP) or Statement of Voluntary Compliance for an
engine installed on a U.S. vessel must be issued by the U.S. EPA.
Marine classification or survey societies are not authorized to issue
such certificates on behalf of the U.S. government for U.S. vessels.
------------------------------------------------------------------------

\25\ As defined in Regulation 13 of Annex VI, a major conversion
means either (i) the engine is replaced by a new engine, (ii) it is
substantially modified, or (iii) its maximum continuous rating is
increased by more than 10 percent. Any existing engine that
undergoes a major conversion on or after January 1, 2000 would be
required to comply with the Annex VI NO_X limits. Note
that EPA's marine diesel engine emission control program does not
have a similar provision for marine diesel engines.
\26\ For more information about our voluntary certification
program, see ``Guidance for Certifying to MARPOL Annex VI,'' VPCD-
99-02. This letter is available on our Web site: http://www.epa.gov/
otaq/regs/nonroad/marine/ci/imolettr.pdf and in Docket A-2001-11,
Document No. II-B-01.
------------------------------------------------------------------------

The U.S. government has prepared the appropriate documents for the
President to submit Annex VI to the Senate for its advice and consent
to ratification. Besides setting standards for NO_X
emissions, Annex VI regulates ozone-depleting emissions, sulfur oxides
emissions and shipboard incineration, and contains other
environmentally protective measures. In transmitting Annex VI to the
Senate, the Administration will work with Congress on new legislation
to implement the Annex. The United States government also supports a
new effort to revise the Annex VI standards to include a second tier of
NO_X standards taking into account the emission-reduction
potential of new control technologies. Should the Senate provide its
advice and consent to ratification of the Annex, the United States will
continue its leadership in promoting environmentally responsible
international emission standards at the IMO and recognize the role the
IMO plays in protecting the world's marine environment from pollution.
As described in Section IV.A.4, we have already requested the Marine
Environment Protection Committee to begin consideration of more
stringent NO_X emission standards for marine diesel engines.
In addition, once the Annex goes into force, amendment of
NO_X standards to include a second tier of standards will be
made easier through the tacit amendment process that would then apply.

F. Recent European Union Action

In November 2002, the European Union adopted a new strategy to
address sulfur emissions from marine engines by reducing the sulfur
content of marine fuels used in the European Union. The strategy
consists of two documents: A Communication from the Commission to the
European Parliament and the Council--A European Union strategy to
reduce atmospheric emissions from seagoing ships; and a Proposal for a
Directive of the European Parliament and of the Council--amending
Directive 1999/32/EC as regards the sulphur content of marine fuel.\27\
The strategy contains provisions to push the IMO for more stringent
NO_X limits for marine diesel engines. It also encourages the
development of a Clean Marine award scheme and market-based instruments
to promote emission reductions.
------------------------------------------------------------------------

\27\ More information on the European Union strategy can be found at
www.europa.eu.int/comm/environment/air/transport.htm#3.
_____________________________________

The proposal has two main provisions. The first is a 15,000 ppm
sulfur content limit that would apply to the fuel used by all
oceangoing vessels in the North Sea, English Channel, and Baltic Sea,
and to all regular passenger vessels operating in the EU by 2007. This
provision is consistent with the SO_x Emission Control Areas
designated under MARPOL Annex VI. The second provision would require
ships to use fuel with a maximum sulfur content of 2,000 ppm (0.2%)
while they are at berth in ports inside the European Union. This
provision is intended to reduce sulfur and particulate matter emissions
in populated areas. The analysis accompanying the fuel sulfur proposal
estimates that the proposed standards will reduce SO₂
emissions by 507,000 metric tons and PM emissions by 8,000 metric tons,
saving about 2,000 lives a year. These benefits are monetized at 2.7
billion Euros. The costs, which they note are likely to be born by
shipowners through increased fuel prices, is estimated to be 1.07
billion euros per year.
The strategy was finalized on November 20, 2002. The strategy and
communication documents will be sent to the European Parliament and
Council. The proposal will be discussed in these legislative bodies,
and negotiations are anticipated to take about two years.

G. Statutory Authority

We conducted a study of emissions from nonroad engines, vehicles,
and equipment in 1991, as directed by section 213(a) of the Clean Air
Act (42 U.S.C. 7547(a)). Based on the results of that study, we
determined that emissions of NO_X, volatile organic compounds
(including HC), and CO from nonroad engines and equipment contribute
significantly to ozone and CO concentrations in more than one
nonattainment area (see 59 FR 31306, June 17, 1994). Given this
determination, section 213(a)(3) of the Act requires us to establish
(and from time to time revise) emission standards for those classes or
categories of new nonroad engines, vehicles, and equipment that in our
judgment cause or contribute to such air pollution. We have determined
that marine diesel engines rated over 37 kW cause or contribute to such
air pollution (see also the preamble to the proposed rule).
Where we determine that other emissions from new nonroad engines,
vehicles, or equipment significantly contribute to air pollution that
may reasonably be anticipated to endanger public health or welfare,
section 213(a)(4) of the Act authorizes EPA to establish (and from time
to time revise) emission standards from those classes or categories of
new nonroad engines, vehicles, and equipment that cause or contribute
to such air pollution. We have determined that marine diesel engines
rated over 37 kW cause or contribute to such air pollution. That
finding, which covers PM, was made in our 1999 rulemaking (December 29,
1999, 64 FR 73300; see also the preamble to that proposed rule,
December 11, 1998, 63 FR 68508).
Clean Air Act section 307(d) applies to this final rule, as
provided by section 307(d)(1)(V) (42 U.S.C. 7607(d)(1)(V)).

II. Which Engines Are Covered?

The standards we are adopting in this action will apply to new
marine diesel engines installed on vessels flagged or registered in the
United States. To clarify this scope of application, we are extending
the definitions contained in 40 CFR 94.2 to apply to all sizes of
marine diesel engines, no longer excluding those with per-cylinder
displacement at or above 30 liters. According to those definitions, a
marine diesel engine is subject to the standards if it is:

[[Page 9758]]

? Manufactured after the emission standards become effective,
whether it is made in the United States or is imported;
? Installed for the first time in a marine vessel flagged or
registered in the United States after having been used in another
application subject to different emission standards (or exempt from
emission standards); or
? Installed on a new vessel flagged in the United States.
The standards will apply to new marine diesel engines subject to
this rule regardless of how they are used. In other words, engine
manufacturers will no longer be able to obtain an exemption for engines
used on vessels engaged in foreign trade (defined as vessels flagged or
registered in the United States that would spend less than 25 percent
of total operating time within 320 kilometers of U.S. territory). This
exemption was generally targeted at auxiliary engines, which are
invariably less than 30 liters per cylinder.
In the remainder of this section we discuss the scope of
application of this final rule in greater detail.

A. What Is a Marine Vessel?

For the purpose of our marine diesel engine standards, ``marine
vessel'' has the meaning specified in the General Provisions of the
United States Code, 1 U.S.C. 3 (see 40 CFR 94.2). According to that
definition, the word ``vessel'' includes ``every description of
watercraft or other artificial contrivance used, or capable of being
used, as a means of transportation on water.''

B. What Are Category 1, 2, and 3 Marine Diesel Engines?

In our 1999 commercial marine diesel engine rule, we defined
``marine engine'' as an engine that is installed or intended to be
installed on a marine vessel. We also differentiated between three
types of marine diesel engines. As explained in that rule, this
approach is necessary because marine diesel engines are typically
derivatives of land-based diesel engines and those land-based engines
are not all subject to the same numerical standards, test procedures,
and effective dates.
The definitions for the different categories of marine diesel
engines are contained in 40 CFR 94.2. Category 1 marine diesel engines,
those having a rated power greater than or equal to 37 kilowatts and a
per-cylinder displacement less than 5 liters, are similar to land-based
nonroad engines used in construction and farm equipment. Category 2
marine diesel engines, those with per-cylinder displacement at or above
5 liters but less than 30 liters, are most often similar to locomotive
engines. Category 1 and Category 2 marine diesel engines are used as
propulsion engines (i.e., an engine that moves a vessel through the
water or directs the movement of a vessel (40 CFR 94.2)) on tugboats,
fishing vessels, supply vessels, and smaller cargo vessels. They are
also used as auxiliary engines (i.e., a marine engine that is not a
propulsion engine (40 CFR 94.2)) to provide electricity for navigation
equipment and crew service or other services such as pumping, powering
winches, or handling anchors.
Category 3 marine diesel engines, which are the primary focus of
this final rule, are defined as having per-cylinder displacement at or
above 30 liters. These are very large engines used for propulsion on
large vessels such as container ships, tankers, bulk carriers, and
cruise ships. Most of these engines are installed on ocean-going
vessels, though a few are found on ships in the Great Lakes. Category 3
marine diesel engines have no land-based mobile-source counterpart,
though they are similar to engines used to generate electricity in
certain power-plant applications. In marine applications they are
either mechanical drive or indirect drive. Mechanical drive engines can
be direct drive (engine speed is the same as propeller speed; this is
common on very large ships) or have a gearbox (i.e., they have
reduction gears; this is common on ships using medium-speed Category 3
marine diesel engines). Indirect drive engines are used to generate
electricity that is then used to turn the propeller shaft. These are
common in cruise ships, since they have heavy electricity demands.
Category 3 marine diesel engines typically operate at a lower speed and
higher power than Category 1 and Category 2 engines, with the slowest
speed being about 60 rpm (see Table II.B-1).

Table II.B-1.--Marine Engine Category Definitions
------------------------------------------------------------------------
Displacement per
Category cylinder hp range (kW) rpm range
------------------------------------------------------------------------
1................ Disp. <5 liters (and 37-2,300 1,800-3,000
power =37 kW).
2................ 5 <=disp. <30 liters 1,500-8,000 750-1,500
3................ Disp. £=30 2,500-80,000 60-900
liters.
------------------------------------------------------------------------

C. What Is a New Marine Diesel Engine?

In the proposal for this rule, we proposed that the emission
standards would apply to new engines on vessels flagged or registered
in the United States. We also requested comment on whether to modify
the definition of a ``new marine engine'' to find that the engine
emission standards apply to marine diesel engines that are built after
the standards become effective and that are installed on foreign
vessels that enter U.S. ports. We have decided to finalize the scope of
application as proposed. However, we intend to revisit this issue in
our future rule.
1. ``New'' Engines on Vessels Flagged or Registered in the United
States
As set out in 40 CFR 94.2, a new marine engine is (i) a marine
engine, the equitable or legal title to which has never been
transferred to an ultimate purchaser; (ii) a marine engine installed on
a vessel, the equitable or legal title to such vessel has never been
transferred to an ultimate purchaser; or (iii) a marine engine that has
not been placed into service on a vessel. In cases where the equitable
or legal title to an engine or vessel is not transferred to an ultimate
purchaser prior to its being placed into service, an engine ceases to
be new after it is placed into service.
This means that a marine engine is new and is subject to emission
standards before its initial sale is completed or it is placed into
service. Practically, it means that any engine must meet emission
standards that are in effect the first time it is sold or placed into
service or the first time the vessel on which it is installed is sold
or placed into service. This is true for any engine that is sold for
the first time as a marine engine (placed into service on a marine
vessel), regardless of whether it has previously been used for other
nonroad or highway purposes. This clarification is necessary because
some marine engines are made by ``marinizing'' existing land-based
nonroad or highway engines. Without this clarification, a

[[Page 9759]]

used highway or land-based engine converted for marine installation
would not be subject to the standards, since its title was already
transferred to the initial highway or land-based nonroad user.
With respect to imported marine diesel engines, 40 CFR 94.2 defines
``new'' as an engine that is not covered by a certificate of conformity
at the time of importation and that was manufactured after the starting
date of the emission standards applicable to such an engine (or which
would be applicable to such an engine had it been manufactured for
importation into the United States). According to this definition, the
standards apply to engines that are imported by any person, whether
newly manufactured or used, and whether they are imported as
uninstalled engines or if they are already installed on a marine vessel
that is imported into the United States. In one example, a person may
want to import a vessel with an engine built after the effective date
of the standards, but the engine does not have a certificate of
conformity from EPA because the engines and vessel were manufactured
elsewhere. We would still consider it to be a new engine or vessel, and
it would need to comply with the applicable emission standards. This
provision is important to prevent manufacturers from trying to avoid
the emission standards by building vessels abroad, transferring their
title, and then importing them as used vessels.
2. ``New'' Engines on Vessels Flagged or Registered Elsewhere
This final rule does not apply to Category 1, 2, and 3 marine
diesel engines that are built after the standards become effective and
that are installed on foreign vessels that enter U.S. ports and are not
imported into the United States. Section 213 of the Clean Air Act (42
U.S.C. 7547), authorizes regulation of ``new nonroad engine'' and ``new
nonroad vehicle.'' However, Title II of the Clean Air Act does not
define either ``new nonroad engine'' or ``new nonroad vehicle.''
Section 216 defines a ``new motor vehicle engine'' to include an engine
that has been ``imported.'' EPA modeled the current regulatory
definitions of ``new nonroad engine'' and ``new marine engine'' at 40
CFR 89.2 and 40 CFR 94.2, respectively, after the statutory definitions
of ``new motor vehicle engine'' and ``new motor vehicle.'' This was a
reasonable exercise of the discretion provided to EPA by the Clean Air
Act to interpret ``new nonroad engine'' or ``new nonroad vehicle.'' See
Engine Manufacturers Assoc. v. EPA, 88 F.3d 1075, 1087 (D.C. Cir.
1996).
The 1999 marine engine rule did not apply to marine engines on
foreign vessels. 40 CFR 94.1(b)(3). At that time, we concluded that
engines installed on vessels flagged or registered in another country
that come into the United States temporarily will not be subject to the
emission standards. Those vessels are not considered imported under the
U.S. customs laws and did not meet the definition of ``new'' adopted in
that rule (64 FR 73300, Dec. 29, 1999).
The May 29, 2002 proposed rule solicited comment on whether to
exercise our discretion and modify the definition of a ``new marine
engine'' to find that engine emission standards apply to foreign
vessels that enter U.S. ports. As discussed earlier, the standards in
this rulemaking will go into effect in 2004. We will also conduct a
subsequent rulemaking that will address revisions to these standards
for future model years. In this subsequent rulemaking, we will consider
adopting more stringent standards that require a longer lead time than
the standards adopted in this final rule. The issue of applying these
more stringent standards to foreign vessels will also be considered in
that subsequent rulemaking.
We must therefore determine whether to revise the definition of
``new'' to include foreign vessels for purposes of the near-term
standards adopted in this final rule. EPA need not decide whether we
have the discretion to interpret ``new'' nonroad engine or vessel in
that manner; however, we believe it would be appropriate not to
exercise such discretion at this time even assuming we had the
discretion to interpret ``new'to include foreign vessels.
As noted above, one of the reasons we intend to address a second
phase of more stringent standards in a subsequent rulemaking is to
facilitate the development of more stringent consensus international
requirements. Adoption of international standards has the clear
potential to maximize the level of emission reductions achieved from
emission control on U.S. and foreign vessels. For example, consensus
international standards of appropriate stringency would facilitate and
effectively reduce or remove the legal and policy objections to
controlling emissions from foreign vessels, and therefore would
facilitate achieving the greatest emission reductions from Category 3
vessels. This is one reason we determined to address the second phase
of standards in a subsequent rulemaking timed to facilitate such
international action, but also timed to allow us to proceed
expeditiously on our own if appropriate international standards are not
adopted.
Applying the first phase of standards adopted in this final rule to
foreign vessels would require us to determine that we have the
discretion to interpret new nonroad engine or vessel in that manner,
and that it is a reasonable exercise of discretion to do so. However
even assuming we have the discretion to interpret ``new marine engine''
to include engines on foreign vessels, we believe it would be
appropriate not to exercise such discretion at this time.
The same reasons that counsel deferring adoption of more stringent
standards to a subsequent rulemaking also counsel deferring a decision
on applying Clean Air Act standards to foreign vessels to such a
rulemaking. We believe that deferring this decision may help facilitate
the adoption of more stringent consensus international standards. A new
set of internationally negotiated marine diesel engine standards would
apply to engines on all vessels, regardless of where they are flagged.
Adoption of appropriate international consensus standards has the clear
potential to maximize the level of emission reductions from domestic
and international vessels.
Our decision to defer application of the standards to engines on
foreign flag vessels is not expected to lead to any significant loss in
emission reductions. We fully expect that foreign vessels will comply
with the MARPOL standards whether or not they are also subject to the
equivalent Clean Air Act standards being adopted in this final rule.
Consequently, no significant emission reductions would be achieved by
treating foreign vessels as ``new'' for purposes of the near-term
standards in this final rule and there is no significant loss in
emission reductions by not including them.
In conclusion, we are not including foreign engines and vessels in
this rulemaking and are not revising the definition of ``new marine
engine'' at this time. We do not need to decide now whether we have the
discretion to include foreign vessels under the nonroad provisions of
the Clean Air Act. In the subsequent rulemaking, we will be in a better
position to resolve under what circumstances we may and should define
new nonroad engine and vessel to include foreign engines and vessels.
As part of that determination, we will also assess the progress made by
the international community toward the adoption of new more stringent
international consensus standards that reflect advanced emission-
control technologies.

[[Page 9760]]

D. What Is a New Marine Vessel?

1. Newly Manufactured Vessel
The definition of new vessel is set out in 40 CFR 94.2. This
definition is similar to the definition of new engine: a new marine
vessel is a vessel whose equitable or legal title has never been
transferred to an ultimate purchaser. In the case where the equitable
or legal title to a vessel is not transferred to an ultimate purchaser
prior to its being placed into service, a vessel ceases to be new when
it is placed into service.
2. Modification of an Existing Vessel With Category 1 or Category 2
Main Propulsion Engines
In addition, our definition in 40 CFR 94.2 specifies that a vessel
is considered new when it has been modified such that the value of the
modifications exceeds 50 percent of the value of the modified vessel.
As noted in our 1999 rulemaking, this provision is intended to prevent
someone from re-using the hull or other parts from a used vessel to
avoid emission standards. This provision is based on a similar
provision in our locomotive engine emission control program (see 40 CFR
92.2 definition of ``freshly manufactured locomotive''). Since we
finalized our 1999 commercial marine diesel engine rule we received
several questions about how to apply this provision. The following is
intended to clarify this provision.
When applying this provision, the modifications must be completed
prior to the effective date of the standards that would otherwise
apply. For example, for the Tier 2 engine standards that go into effect
in 2007 for Category 1 and Category 2 marine diesel engines,
modifications that are completed by December 31, 2006 will not trigger
the engine requirements and the engines on that vessel would not have
to meet the standards. However, if the vessel modifications are
completed on or after January 1, 2007, and they exceed 50 percent of
the value of the modified vessel, then the engines on the vessel must
meet the standards regardless of whether they have been changed as part
of the vessel modification.
The definition in 40 CFR 94.2 refers to the ``value'' of the
modifications, rather than the costs. These figures must therefore be
based on the appraised value of the vessel before modifications
compared with the value of the modified vessel. The following equation
demonstrates the calculation, showing that a vessel is new if:

[assessed value after modifications]-[assessed value before
modifications]
£= 0.5 [assessed value after modifications]
If the value of the modifications exceeds 50 percent of the final
value of the modified vessel, we would treat the vessel as new under 40
CFR part 94. To evaluate whether the modified vessel would be
considered new, one would need to project the fair market value of the
modified vessel based on an objective assessment, such as an appraisal
for insurance or financing purposes, or some other third-party
analysis. While the preliminary decision can be based on the projected
value of the modified vessel, the decision must also be valid when
basing the calculations on the actual assessed value of the vessel
after modifications are complete.
3. Modification of an Existing Vessel With Category 3 Main Propulsion
Engines
EPA is adopting a separate definition of ``new vessel'' for those
vessels equipped with a Category 3 engine. A separate definition for
these vessels is reasonable because large ocean-going vessels are
already subject to a different definition of ``new vessel'' pursuant to
the U.S. adoption of the requirements in MARPOL Annex I, Regulations
for the Prevention of Pollution by Oil.\28\ The MARPOL Annex I criteria
for determining when the modifications made to an existing vessel make
that vessel ``new'' and thereby subject to MARPOL Annex I are contained
in its definition for ``major conversion'' of a ship. The goal of the
Annex I provision is similar to the goal of our provision: To require
ships that have been so modified as to make them substantially new, to
comply with the standards otherwise applicable to new vessels.
------------------------------------------------------------------------

\28\ Annex I to the International Convention on the Prevention
of Pollution from Ships, 1973, as Modified by the Protocol of 1978
Relating Thereto.
------------------------------------------------------------------------

Note that while the provisions of MARPOL Annex I apply to all
vessels, Annex I distinguishes between vessels at or above 400 gross
tonnage, which are subject to the specific MARPOL requirements, and
those below 400 gross tonnage, which are subject to potentially
different provisions, adopted by each Member State to ``ensure that it
is equipped as far as practicable and reasonable with [relevant]
installations.'' Vessels above 400 gross tonnage, which are likely to
be ocean-going vessels equipped with Category 3 main propulsion
engines, are therefore subject to the Annex I criteria for determining
when an existing vessel is modified in such a way that it is considered
``new'' and subject to MARPOL Annex VI's requirements.
For the purpose of this Clean Air Act regulation, we are adopting a
definition of ``new vessel'' for vessels with Category 3 main
propulsion engines that is consistent with the way Annex I was adopted
into U.S. law (see 40 U.S.C. 2101). According to this approach, an
existing vessel with a Category 3 main propulsion engine will be
considered a ``new vessel'' and will be subject to the requirements of
using a new engine certified to the emissions standards adopted in this
final rule if that vessel undergoes a modification that:
? Substantially alters the dimensions or carrying capacity of
the vessel;
? Changes the type of the vessel; or
? Substantially prolongs the life of a vessel.
Under our provision, once a vessel with a Category 3 propulsion
engine is determined to be ``new'' according to the above criteria,
then all the engines on that vessel would have to comply with EPA's
marine diesel engine emission limits. To the extent that any judgment
is required in interpreting this provision, EPA intends to implement
this definition consistently with the application of the MARPOL.

E. Is EPA Retaining the Foreign-Trade Exemption?

In addition to their main propulsion engines, which are generally
Category 3 marine diesel engines, ocean-going commercial vessels
typically have several Category 1 and Category 2 engines that are used
in auxiliary power applications. They provide electricity for important
navigational and maneuvering equipment, and crew services.
Several commenters to our earlier marine diesel engine rulemaking
expressed concern that requiring ship owners to obtain and use
compliant Category 1 and Category 2 engines for vessels that spend most
of their time outside the United States could be burdensome for those
vessels if these engines need to be repaired or replaced when they are
away from U.S. ports. Consequently, we provided a foreign-trade
exemption for these engines. A vessel owner could obtain this exemption
for Category 1 and Category 2 marine diesel engines if it was
demonstrated to the Administrator's satisfaction that the vessel: (a)
Will spend less than 25 percent of its total engine operation time
within 320 kilometers of U.S. territory; or (b) will not operate
between two U.S. ports (40 CFR 94.906(d)).
We are eliminating the foreign-trade exemption because the
conditions on

[[Page 9761]]

which it was based no longer apply. Specifically, we have learned that
many spare engine parts are kept onboard vessels to enable ship
operators to perform maintenance and repairs while the ship is
underway. In addition, obtaining parts that are not kept onboard is not
expected to be a problem. Modern package delivery systems allow ship
owners to obtain parts quickly, even overnight, and necessary parts can
be shipped to the next convenient port on a ship's route. In the
unlikely case that an engine fails catastrophically and must be
replaced by a compliant engine, we are confident that the ship operator
will be able to make arrangements to obtain a certified engine, since
the major manufacturers of marine diesel engines operate abroad as well
as in the United States. Because the burden associated with repairing
or replacing engines away from the United States is not significant, we
believe it is appropriate to eliminate the exemption. We do not expect
this change to have any impact on shipowners and operators.

III. Standards and Technological Feasibility

The emission standards we are adopting reflect a two-step approach.
The first step involves near-term standards designed to be achievable
immediately without additional research and development. This section
presents these Tier 1 standards and the technologies that will be used
to achieve them. The second step consists of a set of long-term
standards, discussed in Section IV.

A. What Are the New Emission Standards?

We are adopting standards for marine diesel engines that are
equivalent to the internationally negotiated NO_X standards,
beginning in 2004. These standards, which are presented in Table III.A-
1, apply to marine diesel engines with per-cylinder displacement over
2.5 liters. By adopting these standards, we are making them enforceable
under U.S. law for engines on vessels flagged or registered in the
United States, regardless of whether Annex VI has entered into force or
whether the United States has deposited its instrument of ratification
to MARPOL Annex VI.

Table III.A-1.--NO_X Emission Standards
[g/kW-hr]
------------------------------------------------------------------------
Engine Speed (n)
-------------------------------------------------------------------------
2000 £ n £= 2000 rpm thn-eq>= 130 rpm n < 130 rpm
------------------------------------------------------------------------
9.8 45.0 x n-0.2 17.0
------------------------------------------------------------------------

As described in Section V, we will accept emission data for
certification to the near-term standards based on testing with either
distillate or residual fuel. Because most or all manufacturers have
been using distillate fuel to comply with Annex VI requirements, we
expect manufacturers to meet the near-term standards generally by
submitting their available emission data from testing with distillate
fuels.
For marine diesel engines with per-cylinder displacement between
2.5 and 30 liters, these standards apply from 2004 to 2006, after which
the EPA Tier 2 marine engine emission standards established in December
1999 apply (64 FR 73300, December 29, 1999). Testing to show compliance
for these engines is generally based on emission measurements with
distillate fuels meeting the specifications in 40 CFR 94.108.
We are not adopting the internationally negotiated standards for
engines under 2.5 liters per cylinder. This is because our Tier 2
standards for most of those engines are effective in 2004. Marine
diesel engines below 0.9 liters per cylinder need not meet EPA emission
standards until 2005, but most of those engines are under 130 kW and
are therefore not subject to Annex VI standards.
In the December 1999 final rule, we included a requirement to
measure or prevent crankcase emissions. We have clarified in the final
regulations that this applies only for engines subject to Tier 2
standards. As a result, none of the emission standards in this final
rule include requirements related to crankcase emissions.

B. When Do the Engine Emission Standards Apply?

Adopting emission standards for new Category 3 marine engines
starting in 2004 allows less than the usual lead time for meeting EPA
requirements. We note, however, that manufacturers are generally
already meeting the internationally negotiated standards, which apply
to engines installed on vessels built on or after January 1, 2000. The
near-term standards will require no additional development, design, or
testing beyond what manufacturers are already doing to meet the
internationally negotiated Annex VI NO_X standards.
Engine manufacturers will need to comply with emission standards
for all engines produced after January 1, 2004. For Category 1 and
Category 2 engines, the date of manufacture is the date of the final
assembly of the engine. However, we recognize that Category 3 engines
are often disassembled for shipment to the site at which it is
installed in the ship. Therefore, for Category 3 engines, the date of
manufacture is based on the first full assembly of the engine.
Shipbuilders and owners are not required to certify their vessels
under the program we are adopting in this action. However, shipbuilders
are prohibited from selling vessels with noncompliant engines if they
initiate construction of a vessel after the date that regulations begin
to apply.

C. What Technologies Will Engine Manufacturers Use To Meet the Tier 1
Emission Standards?

The near-term Tier 1 standards are interim standards. They are
intended to ensure that Category 3 engines achieve the greatest
reductions achievable in this time frame, until the more stringent
long-term standards we adopt go into effect. The short lead time
associated with these interim standards means they call for the use of
engine technologies that already have been or can be applied
immediately, with little or no lead time.
The Tier 1 standards are achievable immediately because engine
manufacturers are already producing engines that meet these standards.
The short lead time involved in meeting Tier 1 standards by January
2004 allows manufacturers only enough time to work through this
program's compliance requirements and do all the testing and paperwork
required to complete the certification process.
Setting Tier 1 standards that are more stringent than the
internationally negotiated NO_X standards (for example, one
requiring further development and optimization of in-cylinder
controls), would require more lead time to allow engine manufacturers
to develop and to optimize existing in-cylinder technologies and apply
them to these engines. Moreover, as discussed in Section I.C, adopting
an emission standard now that is based only on in-cylinder control
technologies would likely delay the adoption of future more stringent
emission standards that may be based on optimized in-cylinder controls
in combination with advanced technologies such as SCR or water
injection.

[[Page 9762]]

Similarly, we are not adopting Tier 1 emission standards for HC or
CO emissions because the short lead time does not allow manufacturers
sufficient time to do the testing and design work that would be
necessary to ensure compliance with such standards. As described in the
proposal, the focus of controlling emissions from Category 3 engines is
on NO_X. The standards we contemplated for HC and CO in the
proposal would have achieved modest reductions from baseline levels or,
more likely, merely prevented increases in these pollutants as
manufacturers apply emission-control technologies to address
NO_X emissions. Manufacturers do not have a complete data set
to characterize HC and CO emissions from their Category 3 engines, so
some engines may well have emission rates above the level we would
consider to be a cap that would merely prevent increasing emissions.
The short lead time associated with the Tier 1 standards is too short
to allow manufacturers in these cases to address this potential. As a
result, we believe it is most appropriate to include appropriate
emission standards for HC and CO emissions in the future rulemaking, as
described below.
Engine manufacturers are meeting the Annex VI standards today with
a variety of emission-control technologies. These basic emission-
control technologies include a variety of in-cylinder technologies,
generally including optimized turbocharging, higher compression ratio,
and optimized fuel injection, which may include timing retard or
changes to the number and size of injector holes to increase injection
pressure.

D. Voluntary Low-Emission Standards

Several state and environmental groups and manufacturers of
emission controls have supported our efforts to develop incentive
programs to encourage the use of engine technologies that go beyond
federal emission standards. Some companies have already significantly
developed these technologies. In the final rule for land-based nonroad
diesel engines, we included a program of voluntary standards for low-
emitting engines, referring to these as ``Blue Sky Series'' engines (63
FR 56967, October 23, 1998). We included similar programs in several of
our other nonroad rules, including that for commercial marine diesel
engines. The general purposes of such programs are to provide
incentives to manufacturers to produce clean products as well as create
market choices and opportunities for environmental information for
consumers regarding such products. The voluntary aspects of these
programs, which in part provides an incentive for manufacturers willing
to certify their products to more stringent standards than necessary,
is an important part of the overall application of ``Blue Sky Series''
programs. While these are voluntary standards, they become binding once
a manufacturer chooses to participate. EPA certification will therefore
provide protection against false claims of environmentally beneficial
products. For the program to be most effective, however, incentives
should be in place to motivate the production and sale of these
engines. These incentive programs can be put in place by users and
state and local governments.
To be designated as a Blue Sky engine, an engine must have
emissions at least 80 percent below Annex VI NO_X levels. The
specific voluntary low-emission NO_X standard is expressed as
9.0 x n-0.2 (in g/kW-hr), with a cap of 3.4 g/kW-hr for
engines with rated speed over 130 rpm (no specific standard applies to
engines over 2000 rpm, because Category 3 engines all have engine
speeds well below 2000 rpm). Data suggest that engines utilizing
selective catalytic reduction should be able to meet these emission
levels. Establishing an objective qualifying level for voluntary low-
emission engines allows state and local governments or individual port
authorities to develop meaningful incentive-based programs to encourage
preferential use of these very low-emitting engines.
Engines certified to the voluntary low-emission standards must also
meet HC and CO standards reflecting baseline emission levels for these
pollutants. As described in the proposal, we believe the appropriate
levels to cap emissions of these pollutants are 0.4 g/kW-hr for HC and
3.0 g/kW-hr for CO.

IV. Future Actions

The standards we are adopting in this action are equivalent to the
internationally negotiated standards contained in MARPOL Annex VI and
are expected to achieve a 20-percent reduction in the national Category
3 NO_X inventory by 2030. As noted in Section I, the
inventory contribution of these engines to local NO_X and PM
inventories, particularly around commercial ports and coastal areas,
can be significant. We recognize that manufacturers can achieve
additional reductions with more lead time than is provided by the Tier
1 standards. They can do this by expanding the use and optimization of
in-cylinder controls and by incorporating advanced technologies, such
as selective catalytic reduction or water injection, that may achieve
much greater reductions. We believe, however, that it is appropriate
not to make a final decision on setting the longer-term Tier 2
standards in this final rule. This section describes how we plan to
conduct a future rulemaking that will address a new tier of standards.
Separately, we also intend to pursue additional action to set
controls for the fuels used by these engines. The sulfur content of
these fuels is considerably higher than the fuel used in land-based
nonroad engines. This high sulfur content leads to high PM and
SO_X emissions. MARPOL Annex VI contains a provision that
would require ships to use lower sulfur fuel when operating in
specially designated SO_X Emission Control Areas, or be
equipped with an exhaust gas cleaning system or other system that
reduces the total SO_X emissions from the ship to 6.0 g/kW-hr
or less. If the Annex goes into force, we will assist the other federal
agencies in investigating and developing an application to the IMO by
the United States for designating relevant coastal and port areas as
SO_X Emission Control Areas. If the Annex does not go into
force, we may address this issue under our existing authority in a
future rule. In addition, we are considering fuel controls as part of
the nonroad diesel rule that is currently under development that could
affect the distillate fuels used by marine vessels.

A. Future Rulemaking for Engine Standards

1. What Is the Timetable for the Future Rule?
We are adopting a regulatory provision in 40 CFR 94.8 that
establishes a schedule for a future rulemaking to promulgate additional
engine controls that EPA determines are appropriate under section
213(a)(3) of the Act. This future rulemaking will reassess the
standards in place at the time using information about the feasibility
of optimizing in-cylinder controls and applying advanced NO_X
and PM control technologies to these engines. We intend to consider an
additional tier of standards for all marine diesel engines and will
also consider application of these standards to engines on foreign
vessels that enter U.S. ports. We will also include in our evaluation
an assessment of the status of international action to set more
stringent standards. The standards in this final rule will remain in
effect unless modified by a future rulemaking. We are committing to
take final action

[[Page 9763]]

on appropriate standards for marine diesel engines by April 27, 2007,
and to issue a proposal no later than approximately one year before.
This future rulemaking will allow us to exercise the discretionary
authority under Clean Air Act section 213(a)(3), which directs EPA to
``from time to time revise'' regulations under that provision.
This schedule for our future rule will allow us to coordinate with
future actions of the U.S. government with respect to negotiations for
a future tier of standards under MARPOL. As described in Section IV.A.4
below, in 2000 the United States requested the Marine Environment
Protection Committee to consider more stringent emission controls for
marine diesel engines. We are hopeful that the committee will begin
these discussions in the next year or so. At the same time, while
harmonizing with future, more stringent MARPOL emission limits is
desirable, the standards contained in our future rule will be
promulgated pursuant to the Clean Air Act, as described in the next
section.
EPA considers this time as necessary and appropriate to properly
take into consideration additional information expected to become
available about emerging technologies, as well as any developments in
the international negotiations for more stringent emission limits.
2. What Standards Will EPA Consider in the Future Rule?
a. Standards for Category 3 Marine Diesel Engines. For the future
rule, we intend to set more stringent standards for Category 3 marine
diesel engines based on the greatest degree of emission control
achievable from technologies that will be available with appropriate
lead time. In our proposal, we considered a 30-percent reduction below
Annex VI levels to be the primary option for adopting long-term
standards for Category 3 marine diesel engines. At the time we believed
this could be achieved through the use of in-cylinder controls.
However, further review of information on this technological approach
shows that these technologies are already being used to meet the
internationally negotiated standards. At this point we are not
confident that in-cylinder controls alone would reduce emissions much
more than 10 or 15 percent below the Tier 1 levels.
We are concerned that, if we were to implement standards based on
traditional in-cylinder controls to reduce emissions beyond Annex VI
levels, either in this or a future rule, manufacturers would need to
divert resources from their advanced technology development programs.
In addition, manufacturers would need to optimize their use of in-
cylinder controls again when incorporating the advanced emission-
control technologies. As a result, the readiness of this technology
could be delayed in return for a standard based on traditional in-
cylinder controls alone, which may not be capable of reducing
NO_X emissions by an additional 30 percent.
We are therefore now considering Tier 2 standards that would focus
on optimizing in-cylinder controls with the advanced technologies
presented in the proposal, which together are projected to reduce
NO_X emissions by significantly more than 30 percent. This
approach was supported by commenters representing environmental and
state interests, who strongly objected to emission standards that rely
on engine-based technologies because of the expectation that these
other advanced technologies are available and appear to be cost-
effective.
We are, however, not finalizing such Tier 2 standards in this final
rule because we believe there are substantial outstanding issues
associated with water technologies and selective catalytic reduction.
These issues, which include fuel compatibility, low-load effectiveness,
and PM impacts, are discussed below in Section IV.A.3.
During the next few years we will have the opportunity to develop a
better understanding of the issues that prevent us from adopting
standards based on advanced technologies now. For example, several
vessels have been equipped recently with selective catalytic reduction,
as described in Chapter 5 of the Final Regulatory Support Document.
Observing these installations will allow us to gain insight into the
effectiveness and durability of these systems, while highlighting any
potential technical constraints or problems. We would also have
opportunity to learn with engine manufacturers and other industry
contacts who are actively pursuing development and implementation of
the advanced technologies.
In the future rulemaking, we will also consider the need to adopt
emission standards for HC and CO emissions. Although HC and CO
emissions are generally low from diesel engines, HC emissions
nevertheless combine with NO_X emissions to form ozone; HC
and CO can also have direct health impacts. Setting standards for HC
and CO may achieve modest emission reductions, but more importantly,
may be necessary to prevent HC and CO emission increases that might
otherwise result from controlling NO_X emissions alone.
Regarding PM from Category 3 marine engines, the majority of
emissions comes directly from the high concentration of sulfur in the
residual fuel used by these engines. Short of changing in-use fuel
quality, emission-control technologies only address the remaining
portion of PM, because engine technologies are ineffective at reducing
sulfur-related PM emissions. Furthermore, no acceptable procedure
exists for measuring PM from Category 3 marine engines, because
currently established PM test methods show unacceptable variability
when sulfur levels exceed 0.8 weight percent. Both distillate and
residual marine fuels used in these engines commonly exceed that level.
No PM test method or calculation methodology has yet been developed to
correct that variability. However, the additional time available to
prepare the future rulemaking will allow us to take into account any
developments related to regulation of in-use fuel quality and PM
measurement equipment and procedures as we consider the appropriateness
of adopting a PM standard for Category 3 marine diesel engines.
We also intend to revisit various other issues raised in the
proposal. For example, we continue to be concerned about controlling
emissions at low-power test modes and at operating points between test
modes. As described in the proposal, we would like to take steps to
ensure that engines meet emission standards when operating on residual
fuel, including an appropriate means to correct for the nitrogen
content of the test fuel. We also believe that basing emission
standards on engine displacement instead of rated speed warrants
further consideration. We will also revisit several compliance issues
such as onboard NO_X monitoring, adjustable parameters,
deterioration factors with advanced technologies, post-certification
testing (PLT), broader test conditions, defect reporting, and test
fuel. These compliance issues are discussed in Section V.
b. Standards for Category 1 and Category 2 Marine Diesel Engines.
For Category 1 and Category 2 marine diesel engines, we have already
established Tier 2 emission standards based on in-cylinder controls.
However, there are several differences between these engines and
Category 3 engines, which made this possible. First, for Category 1 and
Category 2 marine diesel engines, manufacturers are able to transfer
emission-control technology already developed for the land-based
counterparts to these engines. Second,

[[Page 9764]]

Category 1 and Category 2 engines are produced in much greater volumes
than Category 3 engines which allows manufacturers to more easily
amortize their research and development costs. Third, because Category
3 engines generally operate on residual fuel, this provides an
additional constraint on what can be achieved through in-cylinder
control.
While this final rule primarily addresses Category 3 engines, we
intend to use the future rulemaking as an opportunity to reconsider
Tier 3 emission standards for Category 1 and Category 2 standards. We
proposed Tier 3 standards for these engines on December 11, 1998 (63 FR
68508, December 11, 1998), but chose not to finalize the Tier 3
standards at that time. Given the current and expected advances in
emission-control technologies for land-based diesel engines and the
need to coordinate standards for all categories of marine engines, we
believe this will be the appropriate context to reopen the proposed
Tier 3 standards. In the future rulemaking we would also be able to
consider applying compliance provisions such as onboard NO_X
monitoring to Category 1 and Category 2 engines. This may be especially
appropriate for certain applications, such as ferries and tugboats that
operate closest to metropolitan areas.
3. What Technologies Will EPA Consider in the Future Rule?
As discussed above, the future rulemaking will focus on
technologies we believe can be used to reduce NO_X emissions
by significantly more than 30 percent below Tier 1 levels for Category
3 marine diesel engines. These emission-control systems are expected to
include a combination of optimized in-cylinder controls and advanced
technologies such as selective catalytic reduction and water. These
advanced technologies are discussed below. Although we do not believe
it is appropriate to set standards for Category 3 marine engines based
on these approaches at this time, we believe that remaining
technological and operational issues can be addressed in the future.
Technologies that could be used to achieve emission reductions beyond
the Tier 2 standards for Category 1 and Category 2 marine diesel
engines were discussed in an earlier proposal (63 FR 68508, December
11, 1998).\29\
------------------------------------------------------------------------

\29\ Further analysis of potential Tier 3 standards for Category
1 and Category 2 marine diesel engines may be found in the Draft
Regulatory Impact Analysis associated with this proposal which is
available in Air Docket A-97-50.
------------------------------------------------------------------------

a. Water-based technologies. We believe that significant
NO_X control of approximately a 50-percent reduction can be
achieved in the future, once certain technical and practical challenges
are overcome, by introducing water into the combustion process in
combination with appropriate in-cylinder controls. Water can be used in
the combustion process to lower maximum combustion temperature, and
therefore lower NO_X formation, with an insignificant
increase in fuel consumption. Water has a high heat capacity, which
allows it to absorb enough of the energy in the cylinder to reduce peak
combustion temperatures. Data presented below and in the Final
Regulatory Support Document suggest that NO_X reductions
significantly more than 30 percent below the Tier 1 standards can be
achieved, depending on the ratio of water to fuel and on the method of
introducing water into the combustion chamber. These data are primarily
based on developmental engines; however, given enough lead time, we
believe that introducing water into the combustion process may become
an effective emission-control strategy.
Water may be introduced into the combustion process through
emulsification with the fuel, direct injection into the combustion
chamber, or saturating the intake air. Water emulsification refers to
mixing the fuel and water prior to injection. This strategy is limited
by the instability of suspending water in fuel. To increase the
effective stability, a system can be used that emulsifies the water
into the fuel just before injection. Another option is to stratify the
fuel and water through a single injector. The Final Regulatory Support
Document presents data on these approaches showing a 30-40 percent
reduction in NO_X with water fuel ratios ranging from 0.3 to
0.4.
More effective control of the water injection process can be
achieved through the use of an independent nozzle for water. Using a
separate injector nozzle for the water allows larger amounts of water
to be added to the combustion process because the water is injected
simultaneously with the fuel, and larger injection pumps and nozzles
can be used for the water injection. In addition, the fuel injection
timing and the amount of water injected can be better optimized. Data
presented in the Final Regulatory Support Document show NO_X
reductions of 40 to 70 percent with water-to-fuel ratios ranging from
0.5 to 0.9 if a separate nozzle is used for injecting water. Direct
water injection has been installed on medium-speed Category 3 engines
on more than a dozen vessels, and there are plans for using it on
additional vessels. These vessels are primarily ferries and roll-on
roll-off (ro-ro) vessels operating in European waters where there are
economic incentives for reducing NO_X emissions. In addition,
they make relatively short trips, so water storage is not a significant
issue.
Other strategies for introducing water into the combustion process
are being developed that will allow much higher water-to-fuel ratios.
These strategies include combustion air humidification and steam
injection. With combustion air humidification, a water nozzle is placed
in the engine intake and an air heater is used to offset condensation.
With steam injection, waste heat is used to vaporize water, which is
then injected into the combustion chamber during the compression
stroke. Data on initial testing, presented in the Final Regulatory
Support Document, show NO_X reductions of more than 80
percent with water-to-fuel ratios as high as 3.5.
We believe that the results from initial testing of water
introduction strategies is encouraging. We will continue to evaluate
this technology in the future. However, we believe there are still
outstanding technical issues concerning the use of water-introduction
technologies for widespread application on marine engines. These issues
are discussed below.
A primary concern with the use of water in the combustion process
is the effect on PM emissions. The water in the cylinder reduces
NO_X, which is formed at high temperatures, by reducing the
temperature in the cylinder during combustion. However, PM oxidation is
most efficient at high temperatures. At this time, we do not have
sufficient information on the effect of water emulsification and
injection strategies on PM emissions to quantify this effect.
Fresh water is necessary for any of these water-based
NO_X-reduction strategies. Introducing salt water into the
engine could result in serious deterioration due to corrosion and
fouling. For this reason, a ship using water strategies would need
either to produce fresh water through the use of a desalination or
distillation system or to store fresh water on board. Cruise ships may
already have a source of fresh water that could be used to enable this
technology. This water source is the ``gray'' water, such as drainage
from showers, which could be filtered for use in the engine. However,
the use of gray water would have to be tested on these engines, and
systems would have to be devised to ensure proper filtering. For
example, it would be necessary to

[[Page 9765]]

ensure that no toxic wastes are introduced into the gray waste-water
stream. One manufacturer stated that today's ships operating with
direct water injection carry the amount needed to operate the system
between ports (two to four days).
Depending on the amount of water necessary, other vessels that use
Category 3 marine engines may not be able to generate sufficient
amounts of water for this technology, especially at low loads where
less heat is available from the engine. These ships would have to carry
the water or be outfitted with new or larger distillation systems. Both
of these options could displace cargo space. Finally, it should be
noted that vessels currently equipped with water-based NO_X-
reduction technologies are four-stroke engines and include fast
ferries, cruise ships, and cargo ships. The specific vessels travel
relatively short distances between stops and need a much smaller volume
of fresh water for a trip than would be required for crossing an ocean.
More information is needed regarding operation on ocean-going vessels.
If the ships were to use this technology only while traveling from 175
nautical miles of the U.S. coast to port, less water-storage capacity
would be needed than if the ship used this NO_X reduction
strategy at all times. However, ships operating primarily within 175
nautical miles of the U.S. coast would need to be able to carry a
volume of water of about one-half the volume of fuel they carry if they
wish to keep the same refueling schedule. Ships making long runs, such
as from California to Alaska, would have to be able to store enough
water for that trip even if the ship travels that route infrequently.
Because the standards would not be retroactive to existing vessels,
ships could be designed to carry this water, however, this space would
not be available to carry cargo or fuel. Lastly, if this technology
were applied to two-stroke engines there may be lubricity concerns with
the cylinder liner. One manufacturer is developing a strategy to use
direct water injection with exhaust gas recirculation to minimize water
requirements on such engines.
b. Selective catalytic reduction. Selective catalytic reduction is
one of the most effective means of reducing NO_X from large
diesel engines. In SCR systems, a reducing agent such as ammonia, is
injected into the exhaust. The exhaust then goes through a catalyst
where NO_X emissions are reduced. As discussed in the Final
Regulatory Support Document, SCR can be used to achieve NO_X
reductions of 90 percent or more below the Tier 1 limits, at exhaust
temperatures above 300 [deg]C. Lower-cost SCR systems can also be
designed for less effective control of NO_X emissions by
reducing the amount of reducing agent used in the SCR unit. These
systems are being successfully used for stationary applications, which
operate under constant, high-load conditions. These systems are also
installed in Category 3 engines used on ferries and cruise ships where
they operate largely at high loads and over short distances so exhaust
temperature and urea storage are not primary issues.
As discussed in the Final Regulatory Support Document,
manufacturers are demonstrating similar NO_X reduction using
SCR technology for marine applications. These SCR demonstrations
include both test systems and in-use vessels. One manufacturer has
demonstrated a standard SCR system on eight vessels and a compact SCR
system, which uses an oxidation catalyst upstream of the SCR reactor to
reduce reactor size, on four vessels. Combined, these twelve vessels
are equipped with a total of 40 medium-speed Category 3 marine engines.
Another manufacturer has installed systems on 56 Category 2 or Category
3 marine engines. The majority of these engines were in ferries and ro-
ros operating in European waters where there are economic incentives to
use SCR. In addition, these engines are four-stroke medium-speed
engines, which have higher exhaust temperatures than two-stroke low-
speed engines which better enables the use of SCR. To prevent sulfur
poisoning of the catalysts, the fuel used by these vessels ranges from
0.1 to 1.0 percent sulfur. This fuel includes both residual fuel and
marine distillate fuel. In addition, they make relatively short trips
between European ports, so urea availability and storage are not
significant issues. Also, the relatively short trips allow time for
maintenance and provide better access to any needed parts compared with
ocean-going trips.
In one case, SCR was equipped on vessels with two-stroke low-speed
engines. The goal of this program was to reduce the emissions emitted
during the transportation of steel to a facility in Pittsburg,
California. Because the vessels were equipped with two-stroke low-speed
engines, the exhaust temperatures were low. In addition, the vessels
operate at low load near the coast; therefore, certain modifications to
the system were necessary. Primarily, the exhaust system was
reconfigured to provide the maximum heat to the reactor, which had
negative impacts on transient response and efficiency. Also, the
catalyst was formulated to be effective at temperatures as low as
270[deg]C. Because such a reactive catalyst is vulnerable to sulfur
poisoning, the vessels operate only on 0.05 percent sulfur fuel when
the SCR unit is active. These vessels make about 6 calls to California
per year and the SCR unit is active for about 12 hours per call, when
the vessel is within about 50 miles from the port.
We believe that the results from initial applications of SCR
systems are encouraging. We will continue to evaluate this technology
in the future. However, we believe there are still outstanding
technical issues concerning the use of SCR for widespread application
on marine engines. These issues are discussed below.
Lower-sulfur fuel is necessary to ensure the durability of the SCR
system because sulfur can be trapped in the active catalyst sites and
reduce the effectiveness of the catalyst. This sulfur poisoning can
require additional maintenance of the system. We need more information
on the impacts of fuel sulfur on SCR. As discussed above, SCR units in
service today are operating on fuel ranging from 500 to 10,000 ppmS.
Even if these systems can be made to operate on 15,000 ppmS fuel, an
infrastructure would be necessary to ensure that ships could refuel
with 15,000 ppmS fuel at ports they visit. Lower-sulfur residual fuel
is available in areas that provide incentives for using such fuel,
including the Baltic Sea; however, such fuel is not yet available at
ports throughout the United States. During the next few years we expect
to develop a better understanding of the availability of lower-sulfur
fuels through the process related to designating SO_X
Emission Control Areas under Annex VI. We also intend to learn more
about the sensitivity of SCR systems to fuel-sulfur concentrations.
Another issue is the effectiveness of SCR during low-load engine
operation. SCR systems available today are effective only over a narrow
range of exhaust temperatures (generally above 300 [deg]C). The
effectiveness of the SCR system is decreased at reduced temperatures
that occur during engine operation at partial loads. Most of the engine
operation in and near commercial ports and waterways close to shore is
likely to be at these partial loads. In fact, reduced-speed zones can
be as large as 100 miles for some ports. Because of the cubic
relationship between ship speed and engine power required, engines may
operate at less than 25 percent power in a reduced-speed zone. During
this low-load operation, no NO_X reduction would be expected,
so SCR would be less effective while operating near ports. Some

[[Page 9766]]

additional heat to the SCR unit can be gained by placing the reactor
upstream of the turbocharger; however, this temperature increase would
not be large at low loads and the volume of the reactor would diminish
turbocharger response when the engine changes load. The engine could be
calibrated to have higher exhaust temperatures; however, this could
affect durability if this calibration also increased temperatures at
high loads (depending on the fuel used). For an engine operating on
residual fuel, vanadium in the fuel can cause damage by reacting with
the valves at higher temperatures. In addition, a catalyst that is
formulated to be more reactive at lower temperatures is also more
sensitive to sulfur poisoning. Any information that becomes available
over the next few years would help us understand the potential for SCR
systems to control emissions at low engine loads and ensure proper
operation in port areas, where emission reductions are most important.
This will help ensure that we adopt requirements with an appropriate
expectation regarding the effectiveness of the anticipated emission-
control technologies.
Sulfur in fuel is also a concern with an oxidation catalyst
because, under the right conditions, sulfur can also be oxidized to
form direct sulfate PM. At higher temperatures, up to 20 percent of the
sulfur could be converted to direct sulfate PM in an oxidation catalyst
compared to about a 2 percent conversion rate for a typical diesel
engine without aftertreatment. Depending on the precious metals used in
the SCR unit, it could be possible to convert some sulfur to direct
sulfate PM in the reactor as well. Manufacturers would have to design
their exhaust system (and engine calibration) such that temperatures
would be high enough to have good conversion of NO, but low enough to
minimize conversion of sulfur to direct sulfate PM. Direct sulfate PM
emissions could be reduced by using lower sulfur fuel such as
distillate.
SCR systems traditionally have required a significant amount of
space on a vessel; in some cases the SCR unit is as large as the engine
itself. However, at least one manufacturer is developing a compact
system that uses an oxidation catalyst upstream of the reactor to
convert some NO to NO₂, thus reducing the reactor size
necessary. The reactor size is reduced because the NO₂ can
be reduced without slowing the reduction of NO. The catalytic reaction
is faster by reducing NO_X through two mechanisms. This
compact SCR unit is designed to fit into the space already used by the
silencer in the exhaust system. If designed correctly, this could also
be used to allow the SCR unit to operate effectively at somewhat lower
exhaust temperatures. The oxidation catalyst and engine calibration
would need to be optimized to convert NO to NO₂ without
significant conversion of sulfur to direct sulfate PM. NO_X
reductions of 85 to 95 percent have been demonstrated with an
extraordinary sound attenuation of 25 to 35 dB(A).\30\
------------------------------------------------------------------------

\30\ Paro, D., ``Effective, Evolving, and Envisaged Emission
Control Technologies for Marine Propulsion Engines,'' presentation
from Wartsila to EPA on September 6, 2001 (Docket A-2001-11;
document II-A-72).
------------------------------------------------------------------------

A vessel using an SCR system would also require an additional tank
to store ammonia (or urea to form ammonia). This storage tank would be
sized based on the vessel use, but could be large for a vessel that
travels long distances in U.S. waters between refueling, such as
between California and Alaska. Urea consumption increases operating
costs. If lower sulfur diesel fuel were required to ensure the
durability of the SCR system or to minimize direct sulfate PM
emissions, this lower sulfur fuel would also increase operating costs.
The operational characteristics of ocean-going vessels may interfere
with correct maintenance of the SCR system. Ferries that have
incorporated this technology do not run continuously and therefore any
maintenance necessary can be performed during regular down times. The
availability of time for repair can be an issue for ocean-going vessels
that operate continuously for long periods.
Because SCR units are so easily adjustable, if allowed, ship
operators may choose to turn off the SCR unit when not operating near
the U.S. coast. If they were to use this approach, they would need to
construct a bypass in the exhaust to prevent deterioration of the SCR
unit when it is not in use. To ensure that the SCR system is operating
properly within 175 nautical miles of the U.S. coast, we would need to
consider continuous monitoring of NO_X emissions for engines
using SCR. This is discussed in more detail below.
If the combustion is not carefully controlled, some of the ammonia
can pass through the combustion process and be emitted as a pollutant.
This is less of an issue for Category 3 marine engines, which generally
operate under steady-state conditions, than for other mobile-source
applications. In addition, in ships where banks of engines are used to
drive power generators, such as cruise ships, the engines generally
operate under steady-state conditions near full load. If ammonia slip
still occurred, an oxidation catalyst could be used downstream of the
reactor to burn off the excess ammonia.
Slow-speed marine engines generally have even lower exhaust
temperatures than medium-speed engines due to their two-stroke design.
However, we are aware of four slow-speed Category 3 marine engines that
have been successfully equipped with SCR units. Because of the low
exhaust temperatures, the SCR unit is placed upstream of the
turbocharger to expose the catalyst to the maximum exhaust heat. Also,
the catalyst design required to operate at low temperatures is very
sensitive to sulfur. Especially at the lower loads, the catalyst is
easily poisoned by ammonium sulfate that forms due to the sulfur in the
fuel. To minimize this poisoning on these four in-service engines,
highway diesel fuel (0.05% sulfur) is required. In addition, these
ships operate with the exhaust routed through the SCR unit only when
they enter port in the United States, which is about 12 hours of
operation every 2 months. Therefore, the sulfur loading on the catalyst
is much lower than it would be for a vessel that continuously used the
SCR system. To prevent damage to the catalyst due to water
condensation, this system needs to be warmed up and cooled down
gradually using an external system. Another issue associated with the
larger slow-speed engines and lower exhaust temperatures is that a much
larger SCR system would be necessary than for a vessel using a smaller
medium-speed engine. Size is an issue because of the limited space on
most ships.
c. Fuel cells. A third advanced technology that may allow for
significant reduction of NO_X emissions involves the use of
fuel cells to power the vessel in place of an internal-combustion
engine. A fuel cell is like a battery, except where batteries store
electricity, a fuel cell generates electricity. The electro-chemical
reaction taking place between two gases, hydrogen and oxygen, generate
the electricity from the fuel cell. The key to the energy generated in
a fuel cell is that the hydrogen-oxygen reaction can be intercepted to
capture small amounts of electricity. The byproduct of this reaction is
the formation of water. Current challenges include the storage or
formation of hydrogen for use in the fuel cell and cost of the catalyst
used within the fuel cell.
Recently, several efforts to apply fuel cells to marine
applications have been conducted. These include grants from the Office
of Naval Research and the U.S. Navy. The Office of Naval Research
initiated a three-phase advanced development program to evaluate fuel

[[Page 9767]]

cell technology for ship service power requirements for surface
combatants in 1997. In early 2000, the U.S. Navy sponsored an effort to
continue the development of the molten carbonate fuel cell for marine
use. The Society of Naval Architects and Marine Engineers released the
technical report ``An Evaluation of Fuel Cells for Commercial Ship
Applications.'' The report examines fuel cells for application in
commercial ships of all types for electricity generation for ship
services and for propulsion.
Fuel cell research is currently supported by several sources
including the U.S. Maritime Administration (MARAD) and the state of
California's Fuel Cell Partnership. MARAD's Division of Advanced
Technology has also included the topic of fuel cells as a low air
emission technology that should be demonstrated. California's Fuel Cell
Partnership seeks to achieve four main goals which include (1)
demonstrate vehicle technology by operating and testing the vehicles
under real-world conditions in California; (2) demonstrate the
viability of alternative fuel infrastructure technology, including
hydrogen and methanol stations; (3) explore the path to
commercialization, from identifying potential problems to developing
solutions; and (4) increase public awareness and enhance opinion about
fuel cell electric vehicles, preparing the market for
commercialization. At this time, we consider fuel cell technology still
be in the early stages of development. Because a mature fuel cell
system could have significant environmental benefits, we will consider
fuel cells in the future rulemaking.
4. Will the International Community Also Consider More Stringent
Standards?
At the time the Annex VI NO_X limits were adopted in
September 1997, several Member States expressed concern that the
NO_X limits were not stringent enough and would not result in
the emission reductions they were intended to achieve. Due to the
efforts of these Member States, the Conference of the Parties adopted a
resolution that provides for review of the emission limits with the aim
of adopting more stringent limits, taking into account the adverse
effects of such emissions on the environment and any technological
developments in marine engines. This review is to occur at a minimum of
five-year intervals after entry into force of the Annex, with amended
NO_X limits to reflect more stringent controls if
appropriate.
In March 2000, the United States requested the Marine Environment
Protection Committee (MEPC) to begin consideration of more stringent
emission limits for marine diesel engines.\31\ EPA's analysis of
emission-control technology for our 1999 rulemaking indicated that more
stringent standards are feasible for all Category 1 and Category 2
marine diesel engines. Engine manufacturers were also beginning to
apply these emission-control strategies to Category 3 marine diesel
engines, as well as more advanced strategies such as water
emulsification and selective catalytic reduction. Reflecting the
potential emission reductions that could be obtained from applying
these strategies to all marine diesel engines, the United States
recommended Annex VI Tier 2 NO_X limits be set at 25 to 30
percent below the existing Annex VI NO_X limits for all
engines subject to the regulation (engines above 130 kW), to go into
effect in 2007. This would allow a seven-year period of stability for
the Annex VI NO_X limits, permit engine manufacturers to
adjust their engine designs to include new emission-control
technologies, and allow manufacturers of marine diesel engines at or
above 30 liters per cylinder to develop emission-control strategies for
those large engines. This recommendation was discussed at the 44th
session of the MEPC (London, March 3-16, 2000), but the committee took
no action.
------------------------------------------------------------------------

\31\ MEPC 44/11/7, Prevention of Pollution from Ships, Revision
of the NO_X Technical Code, Tier 2 Emission Limits for
Marine Diesel Engines at or Above 130 kW, submitted by the United
States. This document is available at Docket A-2001-11, Document No.
II-A-16.
------------------------------------------------------------------------

The United States will continue to promote more stringent standards
at IMO and encourage MEPC to adopt a second tier of emission limits
that will reflect available technology and reduce the impact of marine
diesel engines on the world's air quality. Technology has continued to
advance since we made our request for review in 2000. EPA now believes
that Member States of the IMO should consider further reductions of
significantly more than 30 percent from the NO_X limits
currently stipulated under Regulation 13 of the Annex, to be applicable
to engines installed on vessels constructed on or after a date to be
determined. Consideration should be given to use of emission-control
systems that include a combination of optimized in-cylinder controls
and advanced technologies such as selective catalytic reduction and
water-based control technologies.

B. Fuel Controls

The majority of Category 3 engines are designed to run on residual
fuel. This fuel is made from the very end products of the oil refining
process, formulated from residues remaining after the primary
distilling stages of the refining process. It has higher contents of
ash, metals, and nitrogen that may increase emissions of exhaust
pollutants. Residual fuel also has sulfur content up to 45,000 ppm; the
global average sulfur concentration is currently about 27,000 ppm,
though fuel sold in the United States has sulfur levels somewhat above
the average.\32\ Operating on fuels with such high sulfur contents
results in high SO_X and direct sulfate PM emissions.
------------------------------------------------------------------------

\32\ Sulphur Monitoring 2002. Report to Marine Environmental
Protection Committee, 47th Session. MEPC 47/INF.2, August 28, 2001.
A copy of this document can be found in Docket A-2001-11, Document
No. II-E-9.
------------------------------------------------------------------------

Using a residual fuel with a lower sulfur content would reduce the
fraction of PM emissions from ash and metals. Using distillate fuel
instead of residual fuel could result in even lower emissions. The
simpler molecular structure of distillate fuel may result in more
complete combustion with reduced levels of carbonaceous PM. Operation
on distillate fuel would also reduce NO_X emissions because
distillate fuel generally contains less nitrogen and has better
ignition qualities. In general, engines that are designed to operate on
residual fuel are capable of operating on distillate fuel. For example,
if the engine is to be shut down for maintenance, distillate fuel is
often used to flush out the fuel system. However, there are several
complications associated with using distillate fuel to reduce
emissions. Switching to distillate fuel requires 20 to 60 minutes,
depending on how slowly the operator wants to cool the fuel
temperatures. According to engine manufacturers, switching from a
heated residual fuel to an unheated distillate fuel too quickly could
cause damage to fuel pumps. There could also be fuel pump durability
problems if the engine is operated on distillate fuel for more than a
few days. For continued operation on distillate, ships would need to
have separate (or modified) pumps and lines. In addition, modification
to the fuel tanks may be necessary to ensure sufficient capacity for
lower-sulfur fuel.
1. Is EPA Adopting Fuel Requirements?
In our proposal, we requested comment on whether we should set
standards for the fuel that ships use and, if so, what form the
standards should take. After reviewing the comments and

[[Page 9768]]

other information, we have decided not to set fuel-based regulations at
this time. We remain concerned that regulating fuel sold in the United
States would not necessarily ensure that distillate fuel was used in
U.S. waters. It is not clear under the Clean Air Act whether we can set
standards for more than the fuel sold in the United States. If so, then
a fuel sulfur standard would be unlikely to have a significant impact
on emissions because ships may choose to refuel before entering or
after leaving the United States.
However, as we noted in our proposal, Regulation 14 of MARPOL Annex
VI allows areas in need of SO_X emission reductions to
petition to be designated as SO_X Emission Control Areas.
After the Annex goes into force, ships operating in these designated
areas must use fuel with a sulfur content not to exceed 15,000 ppm or
an exhaust gas cleaning system to reduce total vessel SO_X
emissions to 6.0 g/kW-hr or less. The United States may propose
designation of one or more areas in the future pending a review of the
relevant emissions, the potential benefits, and the associated costs.
However, if the Annex does not go into effect, we will address this
issue in the future to the extent appropriate under the Clean Air Act.
2. What Are the MARPOL Annex VI Fuel Provisions?
MARPOL Annex VI contains requirements for fuels used onboard marine
vessels. These requirements, which will be effective if and when the
Annex goes into force, consist of two parts. First, Annex VI specifies
that the sulfur content of fuel used onboard ships cannot exceed 45,000
ppm (4.5 percent). Information gathered in an international monitoring
program indicates refiners are currently complying with this
requirement and that the current sulfur level of marine bunker fuels
ranges between 5,000 and 45,000 ppm with an average sulfur content of
about 27,000 ppm. Second, the Annex provides a mechanism to designate
SO_X Emission Control Areas, within which ships must either
use fuel with a sulfur content not to exceed 15,000 ppm or an exhaust-
gas cleaning system or other technology to reduce total vessel
SO_X emissions (including both auxiliary and main propulsion
engines) to 6.0 kW-hr or less. To date, two SO_X Emission
Control Areas have been designated: the North East Atlantic (North Sea,
Irish Sea, and English Channel) and the Baltic Sea. After the Annex
goes into forces, ships operating in these designated areas must use
fuel with a sulfur content not to exceed 15,000 ppm or an exhaust gas
cleaning system to reduce total vessel SO_X emissions to 6.0
g/kW-hr or less.
Refiners can produce lower-sulfur residual fuel from a lower-sulfur
crude oil or they can put the fuel through a de-sulfonation step in the
refinery process. They can also produce it by blending marine
distillate fuel, which typically has fuel sulfur levels between 2,000
and 3,000 ppm.
3. How Will SO_x Emission-Control Areas Be Designated in the
United States?
Annex VI stipulates that any proposal for designation of a
SO_x Emission Control Area (SECA) must meet certain
requirements before it will be taken under consideration by the Parties
through IMO's Marine Environment Protection Committee (MEPC). The
specific requirements, as set out in Appendix III to Annex VI, are:
? A clear delineation of the area and its boundaries;
? A description of the land and sea areas at risk from the
impacts of maritime SO_x emissions;
? An assessment that describes the impact of SO_x
emissions on terrestrial and aquatic ecosystems, areas of natural
productivity, critical habitats, water quality, human health, and areas
of cultural and scientific significance, if applicable. The source of
relevant data including methodologies used, shall be identified;
? Relevant information pertaining to the meteorological
conditions in the proposed area of application and the land and sea
areas at risk, in particular prevailing wind patterns, or to
topographical, geological, oceanographic, morphological, or other
conditions that may lead to an increased probability of higher
localized air pollution or levels of acidification;
? The nature of the ship traffic in the proposed area,
including the patterns and density of such traffic; and
? A description of the control measures taken by the
proposing Party or Parties addressing land-based sources of
SO_x emissions affecting the area at risk that are in place
and operating concurrent with the consideration of the proposal.
The Treaty does not establish arbitrary limits to the geographic
extent of the area to be designated. Instead, it stipulates that the
proposing Party or Parties support the size and extent of the proposed
area by the relevant science. The two most important factors in
determining the offshore boundaries of the area are meteorological
conditions in the proposed area and how they influence emission
transport to areas ashore and the volume and patterns of maritime
traffic.
We plan to begin investigating designation of one or more areas in
the future, including a review of the relevant emissions, the potential
benefits that could be attained and the associated costs. The first
step will be to identify the areas we would like to be considered for
SECA designation. Then, we will need to identify data necessary to
support any such applications, and the organizations (other federal
agencies, State agencies, ports, etc.) who are likely to have that
data. Once we obtain the data, we will use it to develop any such
applications. EPA will work with interested states to consider whether
the designation of specific SO_x Emission Control Areas under
the Treaty would offer significant benefits to air quality (including
PM), considering associated costs. Depending upon the outcome of these
consultations and the analysis of the relevant vessel traffic and
emissions, the United States may propose designation of one or more
areas by amendment to Regulation 14(3) of Annex VI.
4. Are There Other Fuel-Based Controls That May Be Considered?
Additional particulate matter emission benefits could be achieved
from engines that use distillate marine diesel fuel by controlling the
sulfur content of that fuel. Distillate marine diesel fuel is used in
Category 1 and Category 2 marine diesel engines, and is used in
Category 3 marine diesel engines for specific purposes such as engine
maintenance and, sometimes, for maneuvering and in-port operations.
Distillate marine diesel fuel is similar to land-based nonroad diesel
fuel and currently has a sulfur content in the range of 2,000 to 3,000
ppm (0.2-0.3 percent).
As noted in Section I.F, above, the European Union is considering a
requirement for ships to use fuel with a maximum sulfur content of
2,000 ppm while at port. This generally means that these vessels would
use distillate marine diesel fuel for those operations.
In the United States, we recently set fuel standards applicable to
distillate highway diesel fuel. Today, the sulfur content of this fuel
is under 500 ppm; a 15-ppm cap will apply beginning in 2007. We are
currently developing a separate rulemaking that will set limits for the
sulfur content of distillate non-road diesel fuel. Among other things,
this rule will address what level of sulfur content would be
appropriate for distillate marine diesel fuel.

[[Page 9769]]

V. Demonstrating Compliance

We are finalizing many, but not all of the compliance provisions
that we proposed. As described earlier, we are only finalizing an
initial tier of standards in this final rule. Given the nature of these
standards, which are equivalent to the internationally negotiated
NO_X standards, we are adopting an interim compliance program
for Category 3 engines that is harmonized with the international
program to the maximum extent possible. This compliance program will
apply only for the initial tier of standards in this final rule.
Nevertheless, we continue to believe that additional compliance
requirements, such as those that we proposed, may be appropriate for
later tiers of standards. See Section V.F. for more information about
the kinds of additional compliance provisions that we expect to include
for later standards. The certification and compliance provisions for
the internationally negotiated NO_X standards contained in
MARPOL Annex VI are set out in the Technical Code on Control of
Emission of Nitrogen Oxides from Marine Diesel Engines (the
NO_X Technical Code).\33\
------------------------------------------------------------------------

\33\ A copy of the conference version of the NO_X
Technical Code can be found in Docket A-97-50, Document II-B-01.
Copies of updated versions can be obtained from the International
Maritime Organization (http://www.imo.org).

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

For those Category 1 and Category 2 engines for which we proposed
Tier 1 emission standards (i.e., engines over 2.5 liters per cylinder),
we proposed to apply all the Tier 2 requirements for the proposed Tier
1 standards. (Note that we established those Tier 2 requirements in a
previous rulemaking, in which we set the Tier 2 standards.) After
considering the public comments, we are finalizing this approach with
two exceptions. First, we allow manufacturers to use test data
generated using the procedures in the NO_X Technical Code on
an interim basis, as described below. Second, we will not require
manufacturers to perform production-line testing on their Tier 1
engines. Commenters expressed concerns about the lead time available to
meet the Tier 1 requirements, and the burdens of deviating from the
Annex VI requirements. We believe that these comments are particularly
relevant to production-line testing. Given the nature of the Tier 1
standards that are being finalized, we do not believe that the burdens
associated with starting a production-line testing program with less
than two years lead time would be appropriate. We do not believe that
the remainder of the existing compliance program for these engines will
be particularly burdensome or require additional lead time. The
compliance program that was promulgated previously for Tier 2 engines
is not being changed, and will remain in effect as specified in 40 CFR
part 94.
Except as noted, the remainder of this section addresses the
compliance program for Category 3 engines.

A. Overview of Certification

1. How Do I Certify My Engines?
We are adopting certification and compliance requirements for new
Category 3 marine engines that are similar to those already in place
for Category 1 and Category 2 marine engines. These provisions are
contained in 40 CFR part 94 and were described in detail in the
preamble to the final rule establishing those regulations (64 FR 73300,
December 29, 1999). In general, these provisions require that a
manufacturer do the following things to certify engines:
? Divide engines into groups of engines with similar emission
characteristics. These groups are called ``engine families''.
? Test the highest emitting engine configuration within the
family.
? Determine deterioration rate for emissions and apply it to
the ``zero-hour'' emission rate. The deterioration rate is essentially
the difference between the emissions of the engine when produced and
the point at which it will need to be rebuilt.
? Determine the emission-related maintenance that will be
necessary to keep the engines in compliance with the standards.
? Submit the test data to EPA along with other information
describing the engines within the engine family. This submission is
called the ``application for certification''.

The certification provisions for new Category 3 engines are discussed
more fully below, including discussions of the differences between the
requirements the NO_X Technical Code (NTC) and this final
rule.
2. How Are These Certification Requirements Different From Those of the
NO_X Technical Code?
Our certification process is similar to the NTC pre-certification
process. However, the Clean Air Act specifies certain requirements for
our certification program that are different from the NTC requirements.
The EPA approach differs from NTC in three areas: (1) We allow, but do
not require witness testing, (2) we include various provisions to hold
the engine manufacturer responsible for the durability of emission
controls (see Section V.B.5), and (3) we specify broader temperature
ranges and allow manufacturers less discretion in setting engine
parameters for testing, with the goal of adopting test procedures that
represent a wide range of normal in-use operation. Note also, as
described in Section III.B, that the timing of the new standards is
based on the date of first full assembly of the engine, while NTC
generally applies the standards based on the start-date of the
manufacture of the vessel, which may occur before the engine is fully
assembled.
We believe the regulations in this final rule are sufficiently
consistent with NTC that manufacturers can use a single harmonized
compliance strategy to certify under both systems. If manufacturers
have used good engineering judgment in exercising their discretion for
test parameters under the TNC, there will be little or no difference
between the two systems. However, we are aware that the short lead time
may not allow manufacturers to take whatever steps may be necessary to
address any potential differences. As a result, we are adopting an
interim provision in 40 CFR 94.12 to allow manufacturers to rely on
test data generated under NTC provisions in place of EPA provisions for
certifying all categories of engines through the 2006 model year.
Beginning with the 2007 model year, EPA may extend this waiver on a
case-by-case basis, provided the manufacturer satisfies EPA that any
differences between its application of the NO_X Technical
Code test procedures and the test procedures contained in this rule
will not adversely affect NO_X emission rates. For the
Category 1 and Category 2 engines subject to this rule, manufacturers
will start certifying to EPA's Tier 2 standards starting in 2007. For
Category 3 engines, the standards don't change in 2007, but this marks
an appropriate time to expect manufacturers to make any minor
adjustments that might be necessary to fully comply with the EPA
provisions for testing and certification.
The relationship between our program and the NTC requirements is
described in more detail in Section V.D.
3. How Does a Certificate of Conformity Relate to a Statement of
Voluntary Compliance or an EIAPP?
The Clean Air Act requires that manufacturers obtain a certificate
of conformity before they introduce a new engine into commerce. Once it
goes into force, MARPOL Annex VI will require manufacturers to obtain
an ``Engine International Air Pollution Prevention

[[Page 9770]]

Certificate'' (EIAPP). We anticipate that engines that receive an EPA
certificate of conformity will also be eligible for an Engine
International Air Pollution Prevention Certificate, since the near-term
emission limits are the same as the Annex VI NO_X limits.
Note that EIAPPs will not be issued until the Annex goes into force
and can be issued only by the flag-state Administration. Prior to entry
into force of the Annex, and to encourage vessel owners to purchase
MARPOL Annex VI compliant engines, we have developed a voluntary
certification program. Under this program, the engine manufacturer can
apply for and obtain a Statement of Voluntary Compliance to the MARPOL
Annex VI NO_X limits.\34\ It is anticipated that ship owners
will be able to exchange this Statement of Voluntary Compliance for an
EIAPP after the Annex enters into force. If a shipowner does not have a
valid Statement of Voluntary Compliance for an engine, it may be
necessary to recertify the engine to obtain an EIAPP after the Annex
enters into force. Finally, note that obtaining an EIAPP in this way
requires a Statement of Voluntary Compliance from EPA. A shipowner with
a Statement of Voluntary Compliance issued by another Administration or
by a classification society will have to apply for EPA certification to
obtain an EIAPP.
4. What Are the Roles of the Engine Manufacturer and Ship Owner After
the Engine Is Installed?
---------------------------------------------------------------------------

\34\ Information on how to obtain a Statement of Voluntary
Compliance can be found on our Web site http://www.epa.gov/otaq/
marine.htm.
_____________________________________

Unlike the provisions of MARPOL Annex VI, the Clean Air Act makes
the engine manufacturer responsible for in-use compliance of properly
maintained engines. Manufacturers must demonstrate that their engines
can meet emission standards through the engine's ``useful life'' (as
described below, the useful life generally refer to the first rebuild
cycle). Manufacturers are responsible for correcting failures that
occur during that period. The ship owner must ensure that all proper
maintenance is performed during the entire ``service life'' of the
engine (service life is the period during which the engine is in
service, including the periods after it has been rebuilt). Under both
Annex VI and the regulations adopted in this final rule for Category 3
engines, the ship owner is also responsible for compliance with the
recordkeeping provisions contained in the NO_X Technical
Code. EPA and Coast Guard will work together to develop procedures to
verify onboard performance of Annex VI requirements, as Coast Guard has
general authority to carry out such procedures on vessels.
While this final rule does not require operators or owners of
Category 1 or Category 2 engines to comply with the recordkeeping
provisions contained in the NO_X Technical Code, we believe
operators will generally choose to comply with these Annex VI
recordkeeping requirements anyway, for three reasons. Most importantly,
once Annex VI is ratified, compliance with these recordkeeping
provisions will be required for U.S. ships that go overseas. Also, full
compliance with the maintenance logging requirements under Annex VI
would be a simple way to show that an operator is not tampering with
the engine. Finally, manufacturers often condition warranty coverage to
some degree on proper maintenance of the engine. Thus, having the Annex
VI log would facilitate warranty claims.

B. Other Certification and Compliance Issues

1. How Are Engine Families Defined?
Engine grouping for the purpose of certification is accomplished
through the application of an ``engine family'' definition. Engines
expected to have similar emission characteristics throughout their
useful life are classified in the same engine family. As a default, we
are defining engine families consistent with Annex VI. However, to
provide for administrative flexibility, we may separate engines
normally grouped together or combine engines normally grouped
separately, based upon a manufacturer's request, substantiated with an
evaluation of emission characteristics over the engine's useful life.
It is worth noting that we are not adopting the Annex VI definition of
``engine groups''. Under Annex VI, manufacturers can choose to certify
their engines under a more narrowly defined engine group than an engine
family. Annex VI allows more in-use adjustment of these engine group-
certified engines.
2. Which Engines Are Selected for Testing?
Manufacturers must select the highest-emitting engine (i.e.,
``worst-case'' engine) in a family for certification testing. This is
consistent with the NTC requirements. In making that determination, the
manufacturer must use good engineering judgment (considering, for
example, all engine configurations and power ratings within the engine
family and the range of installation options allowed). By requiring the
worst-case engine to be tested, we are assured that all engines within
the engine family are complying with emission standards for the
smallest number of test engines. If manufacturers believe that the
engine family is grouped too broadly, they may request separating
engines with dissimilar calibrations (based on an evaluation of
emission characteristics over the engine's useful life) into separate
engine families.
For these large marine engines, conventional emission testing on a
dynamometer becomes more difficult. Often the engine mock-ups that are
used for the development of these engines use a single block for many
years, while the power assemblies are changed out. For Category 3
engines, certification tests may be performed on these engine mock-ups,
as long as their configuration is the same as that of the production
engines. In addition, manufacturers may conduct single-cylinder tests,
since this should give the same brake-specific emission results as a
full engine test, as long as each cylinder in an engine is equivalent
in all material respects.
Manufacturers must allow EPA to perform confirmatory testing using
their certification engines. In other rules, we have required
manufacturers to provide us with actual engines for our confirmatory
testing program. However, this would be impractical for Category 3
engines because of their size and cost. Thus, confirmatory testing of
Category 3 engines would most likely require the manufacturer to test a
specific engine model according to our specifications. For example, we
might require that an engine be retested in our presence or tested with
specific settings for adjustable parameters.
3. How Does EPA Treat Adjustable Parameters?
Diesel engines are often designed with adjustable components. For
example, it is common to be able to adjust the fuel injection timing of
an engine. EPA has historically required that these important
adjustable parameters be physically limited to the range over which an
engine would comply with the standards. Thus, while an uncontrolled
diesel engine would typically have a broad (or even unlimited) range of
adjustability, EPA-certified engines have a very narrow range of
adjustability. Typically, this narrow range is enforced through
physical stops on the adjustable parts. In some cases, manufacturers
seal a component after final assembly to prevent any adjustment in use.
Disabling physical stops, breaking seals, or otherwise adjusting an
engine outside

[[Page 9771]]

of the certified range is considered tampering with the emission
controls, and is a violation of section 203(a) of the Clean Air Act.
For marine engines, broad adjustability allows engines to be
adjusted for maximum efficiency when used in a particular application.
This practice simplifies marine diesel engine production, since the
same basic engine can be used in many applications. While we recognize
the need for this practice, we are also concerned that the engine meet
the proposed emission limits throughout the range of adjustment.
Therefore, the Agency has established provisions for Category 2 engines
to allow manufacturers to specify in their applications for
certification the range of adjustment for these components across which
the engine is certified to comply with the applicable emission
standards, and demonstrate compliance only across that range. We will
also allow such adjustments for Category 3 engines. Practically, this
requirement means that a manufacturer would specify different fuel
injection timing calibrations for different conditions. These different
calibrations would be designed to account for differences in fuel
quality, which can be very significant for Category 3 engines.
Operators would then be prohibited by the anti-tampering provisions
from adjusting engines to a calibration different from the calibration
specified by the manufacturer. The operators have to maintain records
onboard the vessel demonstrating compliance, and must submit these
records to EPA upon request. NTC also allows engines to be adjusted in
use, and requires the engine manufacturer to include a description of
the allowable adjustments in the Technical File for the engine.
4. How Must Engines Be Labeled?
Each new engine must have a permanent emission label on the engine
block or on some other part of the engine that is not normally replaced
during maintenance or rebuild. This label must include specific
emission-related information such as engine family name, model year,
and basic maintenance specifications. The inclusion of this information
on the label is in addition to the recordkeeping requirements specified
in the NO_X Technical Code.
5. How Does EPA Ensure Durable Emission Controls?
To achieve the full benefit of the emission standards, we need to
ensure that manufacturers design and build their engines with durable
emission controls. It is also necessary to encourage the proper
maintenance and repair of engines throughout their lifetime. The goal
is for engines to maintain good emission performance throughout their
in-use operation. Therefore, we believe it is necessary to adopt
measures to address concerns about possible in-use emission performance
degradation. The durability provisions described in the following
sections are intended to help ensure that engines are still meeting
applicable standards when operated in use. Most of these provisions are
carried over from our program for smaller marine diesel engines.
The most fundamental issue related to durability is the concept of
useful life. The Clean Air Act specifies that useful life is the period
during which an engine is required to meet the emission standards. For
Category 3 marine engines subject to our standards, the useful life is
the period during which an engine is expected to be properly
functioning with respect to reliability and fuel consumption without
being rebuilt. For engines that are rebuilt completely at one time, the
useful life would be the expected period between original manufacture
and the first engine rebuild. For engines that are maintained by
replacing individual power assemblies, the useful life would be the
expected period between original manufacture and the point at which the
last power assembly is replaced. We expect that this period will vary
to some degree among engine models. Manufacturers must therefore
specify the useful life for their engines at the time of certification.
The specified useful life is subject to EPA approval and may not be
less than 3 years or 10,000 hours of operation (based on total engine
operation, not just operation in or near U.S. waters). This
specification does not limit in-use operation. Rather it gives the
manufacturer direction for addressing emission deterioration by
defining the period during which the manufacturer must demonstrate to
EPA that the engine will meet the standards. The useful life period may
also not be less than any mechanical warranty that the manufacturer
offers for the engine.
These minimum useful life values are lower than the minimum values
for Category 2 engines due to the effect of using residual fuel, which
generally has much higher sulfur levels than distillate fuels. The high
sulfur levels create a more corrosive environment within the combustion
chamber, which decreases durability. The period of years (three years)
is also affected by the higher usage rate in terms of hours per year.
6. What Are the Manufacturer's Responsibilities for the Emission
Warranty and Defect Reporting?
Tied to the useful life is the minimum period for the emission
warranty required under section 207(a) of the Clean Air Act. We believe
it is important to ensure that the engine manufacturer has designed and
built the engine to ensure that it will comply with the emission
standards throughout its useful life, as long as it is properly
maintained. We therefore specify that the period for the emission
warranty is equal to the useful life period (e.g., 10,000 hours or 3
years). The engine manufacturer is responsible for any emission-related
repairs to any properly maintained and properly used engine that fails
to meets the standard in use during the warranty period. Engine
operators are responsible to repair any engines that fail to meet the
standards because of improper maintenance during the service life of
the engine.
We are also adopting defect-reporting requirements. These
provisions require Category 3 engine manufacturers to report to us
whenever a specific emission-related defect occurs in two or more
engines (or two or more cylinders within the same engine). We generally
expect manufacturers to identify defects as part of their normal
warranty process. The manufacturer must, however, report all defects,
without regard to how they were identified. Note that the defect
reporting requirements do not expressly require the manufacturer to
collect new information. However if their practice for safety and
production defects is to collect new information or conduct
investigations, then they must do so with respect to emission-related
defects under this regulation. Manufacturers must also track and report
information they obtain through normal business practice.
7. What Are Deterioration Factors?
To further ensure that the emission standards are met in use, we
require manufacturers to apply a deterioration factor (DF) to engines
to evaluate emission-control performance throughout the useful life.
The emissions from new engines are mathematically adjusted using the DF
to account for potential deterioration in emissions due to aging of
emission-control technologies or devices. The resulting emission level
is intended to represent the expected emissions at the end of the
useful life period for a properly maintained engine. We believe the
effectiveness of some emission-control technologies, such as
aftertreatment, sophisticated fuel-

[[Page 9772]]

delivery controls, and some cooling systems, can decline as these
systems age. The DF is applied to the certification emission test data
to represent emissions at the end of the useful life of the engine. We
are proposing that marine diesel engine DFs be determined by engine
manufacturers in accordance with good engineering practices. This is
more flexible than some more prescriptive approaches that are required
for other program. The DFs, however, are subject to EPA approval and
must be consistent with in-use test data. Manufacturers must calculate
DF values based on the worst-case engine configuration offered within
the engine family.
It is not our intent to require a great deal of data gathering on
engines that use established technology for which the manufacturers
have the experience to develop appropriate DFs. New DF testing may not
be needed where sufficient data already exists. However, we are
applying the DF requirement to all engines so we can be sure that
reasonable methods are being used to determine the capability of
engines to meet standards throughout their useful lives. Consistent
with other programs, we allow manufacturers the flexibility of using
durability emission data from a single engine for other engine families
that are being certified to the same standards.
DFs are calculated as an additive value (i.e., the arithmetic
difference between the emission level at full useful life and the
emission level at the test point) for engines without exhaust
aftertreatment devices. In contrast, DFs are calculated as a
multiplicative value (i.e., the ratio of the emission level at full
useful life to the emission level at the test point) for engines using
exhaust aftertreatment devices. This is consistent with the DF
requirements applicable to other diesel engines, based on observed
patterns of emission deterioration. Given the type of emission controls
projected to be used to meet the near-term standards (calibration
changes and combustion chamber redesign, but not aftertreatment), it is
possible that NO_X emissions may actually decrease with time
as the piston rings and cylinder liners wear (thereby reducing peak
pressures). In such cases, manufacturers would not be allowed to use a
negative DF, and would instead be required to use a DF of zero.
One of the reasons we are adopting a very flexible DF program for
this rulemaking is that we do not expect deterioration to be a major
problem for these engines. Our history with in-cylinder NO_X
control suggests that engine-out NO_X emissions are
relatively stable over time. If we eventually adopt an aftertreatment-
forcing standard or a standard for PM, we would likely consider more
specific requirements for calculating DFs. For example, it might be
appropriate to apply to these engines the more specific DF provisions
that have been developed for heavy-duty highway engines (40 CFR 86.004-
26).
8. What Requirements Apply to In-Use Maintenance?
In previous rules, we have required manufacturers to furnish the
ultimate purchaser of each new nonroad engine with written instructions
for the maintenance needed to ensure proper functioning of the
emission-control system. (Generally, manufacturers require the owners
to perform this maintenance as a condition of their emission
warranties.) If such required maintenance is not performed by the
engine operator, then in-use emission deterioration can result. We
therefore require operators of vessels with Category 3 to perform the
emission-related maintenance specified by the manufacturer, which we
approve as part of the application for certification. This provision is
comparable to our requirement for railroads to perform emission-related
maintenance for locomotives (40 CFR 92.1004). In that approach,
locomotive owners who fail to properly maintain a locomotive are
subject to civil penalties for tampering. For marine engines, we
consider rebuilding engines and power assemblies to be a part of
emission-related maintenance. We believe these requirements are
generally consistent in practice with the provisions specified for ship
operators in Technical File required by the NO_X Technical
Code.
Unlike our regulation for smaller marine engines, we are not
adopting minimum allowable maintenance intervals for Category 3 marine
diesel engines. This is also consistent with our approach for
locomotives. In both cases, we believe the engine manufacturers,
allowing for input from the engine owner, can assess what should be the
specific maintenance schedules before completing the sale of the
engine. The engine manufacturer will then provide those specific
maintenance instructions to the ship operator or owner as part of the
required maintenance information.
9. What Requirements Apply to Rebuilding Engines?
We are adopting in-use maintenance provisions that require
operators to properly perform emission-related maintenance throughout
the service life of the engine. This also applies whenever an engine or
engine subsystem is rebuilt. In general, we require that all rebuilds
return the engine to its original certified condition. We consider
failure to rebuild an engine to its original certified condition to be
tampering with the emission controls. We believe these maintenance and
rebuild provisions address the vast majority of in-use servicing of
these engines.
10. What Are the Prohibited Acts and Related Requirements?
We are regulating Category 3 engines under 40 CFR part 94. This
means that we are extending the general compliance provisions for
smaller marine engines to Category 3 marine engines. These include the
general prohibition against introducing an uncertified engine into
commerce, as well as the tampering and defeat-device prohibitions.
These prohibitions are listed in 40 CFR 94.1103. As discussed above,
certain prohibitions applying to ship owners and ship operators are
also described in this section.
11. What General Exemptions Apply?
We are applying the exemptions for smaller marine engines to
Category 3 marine engines. These include, for example, exemptions for
the purpose of national security and exemptions for engines built in
the United States for export to other countries. These exemptions,
described in 40 CFR part 94, subpart J, typically exempt the engines
from emission standards and other requirements, but require the
manufacturer to keep records and label exempted engines.
12. What Regulations Apply for Imported Engines?
We are extending the current importation provisions found in 40 CFR
part 94 for smaller marine engines to Category 3 marine engines.
Imported engines are generally subject to the same requirements, based
on their date of original manufacture. The existing provisions for
smaller engines include permanent and temporary exemptions from this
requirement.
13. What Are a Manufacturer's Recall Responsibilities?
Section 207(c)(1) of the Act specifies that manufacturers must
recall and repair in-use engines if we determine that a substantial
number of them do not comply with the regulations in use. We are
proposing to apply the existing provisions for smaller marine engines
to Category 3 marine engines. These provisions are described in 40 CFR
part 94, subpart H.

[[Page 9773]]

14. What Responsibilities Apply to Ship Owners and Operators?
In this final rule we are requiring ship owners and operators to
maintain all records of maintenance, repair, and adjustment of the
ship's engines as it relates to emission-control performance. We
believe these records currently are kept by most ship operators as part
of normal recordkeeping associated with engines of this magnitude,
initial investment, and cost of operation. These records would be
essential for both the ship operator and the Administration to
determine compliance with the applicable requirements. This is
especially important for Category 3 marine engines, because operators
need to be able to make adjustments that significantly affect the
engine's ability to control emissions. These records must be maintained
on-board the vessel and be provided to EPA upon request. It is a
separate violation of the record keeping and submission requirements to
fail to meet the requirements with respect to each required submission
or record. Penalties are assessed for each day of each such violation.
In order to maintain the proper emission-control performance of the
engine, the ship owner and operator are responsible for maintaining all
adjustable parameters within the certified ranges specified by the
engine manufacturer, and for ensuring that the engine is rebuilt
pursuant to the regulatory requirements. The regulations establish that
any adjustment outside the range specified by the manufacturer for
proper emission-control performance constitutes a violation of the
regulations and the Clean Air Act. Additionally, the regulations
require the ship owner and operator to correct any noncompliance within
a two-hour period. Failure to correct the noncompliance within a two-
hour period is a violation of the regulations, with each two-hour
period considered a separate violation. These provisions, like the
other maintenance-related provisions, are intended to ensure that
owners and operators perform adjustments properly to avoid the
significant increase in emissions associated with improper adjustments.
In effect, the timely correction of the improperly adjusted parameter
is considered a required maintenance event, and failure to properly
perform this required maintenance is considered tampering. Given the
significant emission increases that can occur with improper
adjustments, the reasonable time needed to correct an improper
adjustment, and the need for an effective deterrent, the regulations
establish a recurring two-hour period as the appropriate requirement.
As a minimum measure of compliance, the ship owner is required to
comply with certain basic recordkeeping, as described above, and to
review those records periodically to ensure compliance. Specifically,
owners must perform an end-of-year review of the applicable maintenance
and repair records and send us an annual statement confirming that they
have met the emission-related requirements of the regulations for the
previous year, or acknowledging any noncompliance, as appropriate. If
the ship is operated by a company not controlled by the ship owner,
then both companies are responsible to meet this reporting requirement.
If EPA receives a valid compliance statement regarding a particular
vessel from either the owner or the operator of the vessel, EPA will
consider both the owner and the operator to have complied with the
reporting requirement.
As described in Section I.E, the NO_X Technical Code
Section 2.1 will require each engine covered by the Annex VI
NO_X requirements to be surveyed to ensure that it complies
with the NO_X limits (this requirement will apply once Annex
VI goes into force). Two of the surveys, the pre-certification survey
and initial certification survey, are required as part of a ship's
initial survey and the issuance of an International Air Pollution
Prevention certificate for the vessel. Section 2.1 also contains a
requirement for periodic and intermediate surveys ``to ensure the
engine continues to fully comply with the provisions of the Code.'' The
periodic and interim surveys are to occur every five and every 2\1/2\
years, respectively. Annex VI also requires additional unscheduled
surveys unless the scheduled surveys are carried out on an annual
basis. These surveys are required for engines installed on vessels of
400 gross tonnage or above, as specified in Regulation 5 of the Annex.
For smaller vessels, it is up to each country to establish appropriate
programs.
The periodic and interim surveys are somewhat similar to the annual
compliance statement we are finalizing today. However, while the Annex
VI surveys will be carried out by government surveyors, the annual
compliance statement described in this section must be completed by the
owner of the vessel and therefore creates a liability requirement for
the vessel owner. In addition, it is not clear at this time whether the
Annex VI survey will be designed only to inspect the engine to make
sure it is in compliance at the time of the survey or if it will be
designed to ascertain whether the engine has been taken out of
compliance (i.e., if there has been tampering) during the interim
period. This is because the U.S. Senate has not yet ratified Annex VI,
so the implementing legislation and corresponding regulations for
adopting the Annex VI and NO_X Technical Code requirements
into U.S. law have not yet been adopted. For both of these reasons, we
believe it is necessary to include this annual compliance statement
requirement in this rule. However, it is possible that the additional
documentation required by Annex VI and the associated surveys may be
sufficient to ensure compliance. Therefore, in light of this
possibility, EPA will reconsider the need for this annual compliance
statement in the context of the development of the implementing
legislation and supporting regulations for U.S. implementation of
MARPOL Annex VI. If such reconsideration leads EPA to rely in the
future on the Annex survey in lieu of the annual statement of the
compliance, the owner and operator of the vessel would remain liable
for all other compliance provisions of the regulations adopted today.
This would include maintaining all records of maintenance, repair and
adjustment of the ship's engines as it relates to emission-control
performance, and maintaining the proper emission-control performance of
the engine. The annual compliance certification requirement will remain
in effect unless it is specifically rescinded.

C. Test Procedures for Category 3 Marine Engines

Engine manufacturers are currently testing according to the test
procedures outlined in The Technical Code on Control of Emission of
Nitrogen Oxides from Marine Diesel Engines (hereafter referred to as
``NO_X Technical Code'').\35\ The new EPA standards are based
on these Annex VI test procedures, with some modifications described
below. These modifications are necessary to ensure that the test data
used for certification are consistent with the requirements of the
Clean Air Act.
------------------------------------------------------------------------

\35\ A copy of the conference version of the NO_X
Technical Code can be found in Docket A-97-50, Document II-B-01.
Copies of updated versions can be obtained from the International
Maritime Organization (http://www.imo.org).

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

1. What Duty Cycle Do I Use To Test My Engines?
The duty cycle used to measure emissions is intended to simulate
operation in the field. Testing an engine for emissions consists of
exercising it

[[Page 9774]]

over a prescribed duty cycle of speeds and loads, typically using an
engine dynamometer. The nature of the duty cycle used for determining
compliance with emission standards during the certification process is
critical in evaluating the likely emission-control performance of
engines designed to those standards.
To address operational differences between engines, we are adopting
two different duty cycles for different types of Category 3 marine
engines. Engines that operate on a fixed-pitch propeller curve must be
certified using the E3 duty cycle adopted by the International
Organization for Standardization (ISO). This is a four-mode steady-
state cycle developed to represent in-use operation of marine diesel
engines. The four modes lie on an average propeller curve based on the
vessels surveyed in the development of this duty cycle. We are adopting
the ISO E2 duty cycle for propulsion engines that operate at a constant
speed. These are the same cycles specified by Annex VI.
2. How Do I Account for Variable Test Conditions?
We are not limiting certification testing based on barometric
pressure or ambient humidity. We limit the allowable ambient air
temperature for laboratory testing to a range between 13[deg]C and
30[deg]C and charge air cooling water between 17[deg]C and 27[deg]C.
This is somewhat broader than is specified by the NTC. We are adopting
the NTC correction factors for temperature and humidity for
certification testing in this temperature range. These corrections
adjust emission measurements to be equivalent to measurements taken at
25[deg]C and a humidity of 10.71 g/kg. We will allow the use of the
corrections for a broader range of test conditions, as long as the
manufacturer verifies the accuracy of the correction factors outside of
the range of test conditions for certification.
3. How Does Laboratory Testing Relate to Actual In-Use Operation?
If done properly, laboratory testing can provide emission
measurements that are the same as measurements taken from in-use
operation. However, improper measurements may be unrepresentative of
in-use operation. We are therefore adopting regulatory provisions to
ensure that laboratory measurements accurately reflect in-use
operation. The regulations include a general requirement that
manufacturers must use good engineering judgment in applying the
NO_X Technical Code test procedures to ensure that the
emission measurements accurately represent emission-control performance
from in-use engines. We are adding specific requirements for
manufacturers to ensure that intake air and exhaust restrictions and
coolant and oil temperatures are consistent with in-use operation. Most
importantly, we require that manufacturers' simulation of charge-air
cooling replicate the performance of in-use coolers within +/-3[deg]C.
The definition of maximum test speed, (the maximum engine speed in
revolutions per minute, or rpm) is an important aspect of the test
cycles. Under the NO_X Technical Code, engine manufacturers
are allowed to declare the rated speeds for their engines, and to use
those speeds as the maximum test speeds for emission testing. However,
we are concerned that a manufacturer might declare a rated speed that
is not representative of the in-use operating characteristics of its
engine in order to influence the parameters under which their engines
may be certified. We are therefore applying the current definition of
``maximum test speed'', which is already specified for Category and
Category 2 engines 40 CFR 94.107, to Category 3 engines. We will also
allow manufacturers to ask us to use the maximum in-use engine speed as
the maximum test speed.

D. Comparison to NO_X Technical Code Compliance Requirements

1. How Are EPA's Compliance Requirements Different From the
NO_X Technical Code Requirements?
We have attempted to define compliance requirements that are
sufficiently consistent with the NO_X Technical Code (NTC) to
allow manufacturers to use a single harmonized compliance strategy to
certify under both systems. This has involved making several changes to
proposal to align the certification and compliance program with that
specified by NTC. For example, (1) the final rule specifies a test fuel
based on engine operation with cleaner-burning distillate fuel; (2) we
are not requiring engine manufacturers to test engine emissions to
verify compliance after engines are installed in vessels; and (3)
operators do not need to conduct onboard emission measurements after
adjusting the engines (or before they enter U.S. territorial waters) to
demonstrate that the engine continues to meet the standards after such
adjustments. We intend to revisit these issues in our future
rulemaking.
We are adopting several provisions in our compliance program that
are different from the NTC requirements. The differences are based on
certain Clean Air Act-specific compliance provisions and the related
need to adopt test procedures designed to achieve the emission
reductions called for under Clean Air Act section 213. These
differences are discussed in detail in Section V.A.2 above and are
summarized as follows:
? Liability for in-use compliance--We require that the engine
manufacturer be responsible for designing and producing an engine that
will comply with the emission standards for the full useful life of the
engine, while the NTC program makes the ship operators solely
responsible for ensuring in-use compliance. Both the EPA regulations
and the NTC provisions require ship operators to properly maintain
their engines and to keep records of the maintenance and engine
adjustment throughout the service life of the engine. Under NTC, these
records are referred to as the Record Book of Engine Parameters.
? Durability demonstration--We require that the engine
manufacturer demonstrate prior to production that a properly maintained
and used engine will comply with the emission standards for the full
useful life of the engine (see Section V.B.5). The NTC program only
requires manufacturers to demonstrate that the engine meets the
standards when it is installed in the vessel; there is no durability
demonstration under NTC.
? Witness testing--We allow, but do not require, witness
testing for U.S. compliance. Some other countries require witness
testing for marine engines. Manufacturers must take this into
consideration if they plan to sell the same engines in the United
States and those other countries.
? Test conditions--We certify Category 3 marine engines using
the NTC test procedures with certain modifications. Annex VI specifies
narrow ranges for air and water temperature. This can make it easier
for manufacturers to certify, because they might not design for the
wide ranges of conditions that actually occur. We believe it is
necessary to specify wider temperatures to achieve the level of
emission reductions called for under the Act. Test procedures based on
real operating parameters provide a robust method of measuring
emissions. To address the concern for varying emission levels under
extreme conditions, we correct emissions back to standard conditions
using Annex VI correction factors.
? Test parameters--NTC allows manufacturers full discretion
to adjust certain engine parameters to appropriate

[[Page 9775]]

settings. For engine parameters such as aftercooler and backpressure
simulation, these parameters may significantly affect emission levels.
As with the test conditions for air and water temperatures, to avoid
unrealistic parameter settings, we simply require good engineering
judgment to select representative values for such engine parameters.
Also, under NTC, manufacturers may specify a maximum test speed for
engine testing that selectively includes lower-emission operation, even
if those speeds do not represent an engine's actual operation when
installed on a vessel. We instead define an objective way of
identifying an engine's maximum test speed, based on the way the engine
will operate in use.
? Compliance date for standards--As described in Section III,
we apply the new emission standards based on the date the engine is
fully assembled for the first time, while Annex VI applies the
standards based on the date that the vessel is manufactured. Note that
this difference would not matter for the near-term standards, since the
effective date of the Annex VI limits has already passed (January 1,
2000).
? Parameter adjustment--We are allowing manufacturers to
specify in their applications for certification the range of adjustment
across which the engine is certified to comply with the applicable
emission standards. This would allow a manufacturer to specify
different fuel injection timing calibrations for different conditions.
These different calibrations would be designed to account for
differences in fuel quality. Operators would then be prohibited by the
anti-tampering provisions from adjusting engines to a calibration
different from the calibration specified by the manufacturer. The NTC
would also prohibit operators from adjusting engines to a calibration
different from the calibration specified by the manufacturer.
The durability requirements of the Clean Air Act represent the most
fundamental differences between the NTC certification program and the
program required by the Clean Air Act. The Act requires that a
certificate of conformity be based on a demonstration of compliance
with the engine standards, and the engine standards require that the
engine manufacturer produces an engine that will comply with the
emission standards for the specified useful life of the engine. The NTC
certification provisions do not include this kind of requirement,
instead making the ship operators solely responsible for ensuring in-
use compliance through periodic survey requirements. Nevertheless,
since requiring compliance with both would be at least partially
duplicative, this rule harmonizes the Act and NTC requirements as
closely as possible.
The requirements related to representative engine testing are
important to ensure that engines are not designed with emission-control
systems that operate well in the laboratory, with less effective
control during in-use operation. However, based on our expectation that
manufacturers are designing their engines properly today, we will allow
manufacturers to rely on test data generated under NTC on an interim
basis, as described in Section V.A.2,
2. Can a Manufacturer Comply With EPA Requirements and Annex VI
Requirements at the Same Time?
Manufacturers complying with EPA requirements will need to do very
little additional work to meet the Annex VI requirements. Engine
manufacturers must give the operator a Technical File that has more
information than we require. The manufacturer may also need to ensure
that the relevant emission testing is witnessed appropriately.
For manufacturers already complying with the NTC, the amount of
additional work necessary to satisfy the new EPA requirements depends
on how they conducted emission testing. The NTC allows more discretion
in testing engines than we allow under our regulations, and does not
necessarily require that the engine be tested fully consistent with in-
use operation. Under the EPA regulations tests of engines that are not
consistent with in-use operation would not be allowed, unless the
manufacturer could demonstrate that the test results were equivalent to
test results that would result from testing conducted in accordance
with the proposed regulations. In these cases, manufacturers would need
to repeat the tests according to the proposed test procedures. However,
we recognize that some additional lead time is needed for manufacturers
that will be repeating tests. Therefore, we have included in 40 CFR
94.12(f) of the final regulations an interim provision which will allow
manufacturers to use their Annex VI test data to show compliance with
Tier 1 standards. Manufacturers would not need prior approval to do
this. We are limiting this allowance to the first three model years of
the Tier 1 standards. Beginning with model year 2007, manufacturers
would need to make a showing of equivalence before they could deviate
from the EPA test procedures.
On the other hand, manufacturers that used good engineering
judgment to test their engines consistent with their in-use operation
may generally use the same test data for EPA certification. For future
testing, manufacturers may test their engines in a way that allows them
to simultaneously meet the NTC and EPA requirements.
With respect to other EPA compliance requirements not related to
certification testing, manufacturers must do the following things in
addition to the Annex VI requirements:
? Demonstrate prior to production that the engines will
comply with the emission standards for the useful life of the engine.
? Warrant to the purchasers that the engines will comply with
the EPA requirements for the useful life of the engine.
? Specify how the operator should adjust the engine in use
and how proper adjustment should be verified through testing.

E. Technical Amendment to 40 CFR Part 94

The regulations in 40 CFR 94.7(d) require that a marine engine be
equipped with a connection in the exhaust system for the temporary
attachment of gaseous and/or particulate emission-sampling equipment.
This provision is intended to facilitate in-use emission testing. Where
the engine manufacturer does not add a sample port, for example when an
inadequate amount of the exhaust system is supplied to make such an
installation practical, the engine manufacturer would have to provide
installation instructions for the sample port. If the engine
manufacturer properly supplies such instructions, the engine would be
covered by the applicable engine certificate when the engine
manufacturer provides the engine to the vessel manufacturer for the
purposes of installation. The vessel manufacturer would then have to
follow these installation instructions or the vessel manufacturer's
sale or placement of the vessel into service could be a violation of
the prohibited acts. Manufacturers expressed concern that the wording
of this requirement could be taken to mean that a failure to install
the sample port by the vessel manufacturer could affect their engine
certificate. This was clearly not the intent of this provision. To
further clarify this issue, we are amending 40 CFR 94.7(d) by deleting
the words ``invalidate a certificate and'' from the last sentence of
that regulatory provision.

[[Page 9776]]

F. Compliance Issues To Be Considered for Future Rulemaking

The compliance program being finalized in this final rule is
appropriate to implement the Tier 1 standards. However, we continue to
believe that additional compliance provisions will be necessary for
later standards that require more advanced technology and more
challenging calibrations. These include provisions related to (1)
parameter adjustment, (2) off-cycle emissions, (3) test fuels, and (4)
post-certification testing. These issues were discussed in detail in
the proposal for this rule, along with potential compliance provisions
that could address our concerns. We intend to assess the need for such
compliance provisions in our future rulemaking.
1. What Are EPA's Concerns About Parameter Adjustment?
Given the broad range of ignition properties for in-use residual
fuels, we expect that our in-use adjustment allowance for Category 3
engines would result in a broader range of adjustment than is expected
for Category 2 engines. Because of this broader allowance, we proposed
that operators be required to perform a simple field measurement test
to confirm emissions after a parameter adjustment or maintenance
operation, using onboard emission measurement systems with electronic-
logging equipment. We expect that this issue will be equally important
for more advanced engines that rely on water injection or after
treatment for emission reductions. In addition, in most cases, these
advanced technologies can be turned on and off by the operator. Thus,
we expect there to be a need for an onboard verification system for
these engines as well.
We envision a simpler measurement system than the type specified in
Chapter 6 of NO_X Technical Code. As is described in the
Final Regulatory Support Document, we believe that onboard emission
equipment that is relatively inexpensive and easy to use could be used
to verify that an engine is properly adjusted and is operating to the
specifications of the engine manufacturer. Note that Annex VI includes
specifications allowing operators to choose to verify emissions through
onboard testing, which suggests that Annex VI also envisioned that
onboard measurement systems could be of value to operators.
We proposed to allow vessel operators to adjust an engine's
operating parameters different from the manufacturer's specification
when the vessel is sufficiently far from the U.S. coastline. This
flexibility is not included in the NTC provisions. Under the proposed
approach, engine adjustments different from engine manufacturer's
specifications would have been conditional on readjusting the engine's
parameters within its certified range and confirming that emissions are
within the range of emissions to which the engine is certified to
comply before a vessel approaches the U.S. coastline. Failure to take
these actions would have constituted tampering with the engine in
violation of Clean Air Act section 203(a)(3)(A) and 40 CFR
94.1103(a)(3)(i). While we are finalizing our Tier 1 program without
this flexibility, we will continue to evaluate whether it is
appropriate for more advanced standards.
While we may revisit some of these issues in our future rulemaking,
under this final rule ship operators may not adjust the parameters
outside of the ranges specified by engine manufacturers in their
application for certification. Any adjustment outside of the
certification range would be considered tampering (see Sections V.B.3
and V.B.14).
2. What Are EPA's Concerns About Off-Cycle Emissions?
We are concerned about emission-control performance when the engine
is not operating on the ISO E3 test cycle points. For Category 1 and
Category 2 engines, we adopted ``not-to-exceed'' provisions to define
an objective measure to ensure that engines would be reasonably
controlling emissions under the whole range of expected normal
operation, as well as the defeat-device prohibition. Since these
smaller engines are mass produced for a wide range of vessels used in
many different applications, we expected ``normal operation'' for these
engines to vary considerably around the ideal propeller curve.
Generally, Category 3 engines are intended to operate on a propeller
curve matched with a propeller for custom installation on a specific
vessel. However, we remain concerned that Category 3 engines may have
higher emissions between test modes. While the defeat device provisions
prohibit manufacturers from producing their engines to control
emissions more effectively at established test points than at other
points not included in the test, it can be a difficult prohibition to
enforce. We expect to revisit this issue in our future rulemaking. For
example we may require manufacturers to develop emission targets to
allow the operator to ensure that the engine has been readjusted to
have performance equivalent to the certified configuration. These
emission targets would vary with operating conditions and would include
targets for engine speeds other than the test points speeds. In the
proposal we defined equivalent control to be either the use of the same
injection timing map for the tested and nontested engine speeds, or
following a linear interpolation between test points for NO_X
emissions at nontest speeds.
In addition, we remain concerned that Category 3 engines operate at
relatively low power levels when they are operating within range of a
port. Ship pilots generally operate engines at reduced power for
several miles to approach a port, with even lower power levels very
close to shore. Because of the relatively low weighting of the low-
power test modes in the ISO E3 test cycle, it is very possible that
manufacturers could meet emission standards without significantly
reducing emissions at the low-power modes that are more prevalent for
these engines as they operate close to commercial ports. This issue
would generally not apply to vessels that rely on multiple engines
providing electric-drive propulsion, since these engines can be shut
down as needed to maintain the desired engine loading. We will consider
several options in our future rulemaking to address this concern. We
could re-weight the modes of the duty cycle to emphasize low-power
operation. This has several disadvantages. For example, we have no
information to provide a basis for applying different weighting
factors. Also, changing the duty cycle would depart from the historic
norm for marine engine testing. This would make it more difficult to
make use of past emission data, which is all based on the established
modal weighting. An alternative approach would be to cap emission rates
at the two low-power modes. We could set the cap at the same level as
the emission standard, or allow for a small variation above the
emission standard. For mechanically controlled engines, such an
approach could dictate the overall design of the engine. On the other
hand, it is likely that Tier 2 engines will have electronic controls,
which would enable the manufacturer to target emission controls
specifically for low-power operation without affecting the
effectiveness of emission controls at higher power.
3. What Are EPA's Concerns About the Fuel Used for Emission Testing?
Appropriate test procedures need to represent in-use operating
conditions as much as possible, including specification of test fuels
consistent with the fuels that compliant engines

[[Page 9777]]

will use over their lifetimes. For the standards we are adopting in
this rule, we are allowing engine testing using distillate fuel, even
though vessels with Category 3 marine engines primarily use the
significantly less expensive residual fuel. This allowance is
consistent with the specifications of the NTC. We proposed to base the
standards on testing using residual fuel, but are not finalizing this
requirement at this time due to concerns about the lead time needed by
manufacturers to develop the necessary testing capabilities for
residual fuels. Most manufacturers have test facilities designed to
test engines using distillate fuel because it is easier to work with
than residual fuel. Nevertheless, we believe that long-term standards
should be based on actual in-use fuels. Thus, we will reconsider the
issue of test fuel in a future rulemaking.
In our proposal, we also included a correction factor to account
for the emission-related effects of fuel quality, specifically fuel-
bound nitrogen. We are not finalizing the correction here. This
correction would have been needed for residual fuel testing because of
the high levels of nitrogen contained in those fuels. For all testing
with Category 3 engines, we proposed to require measuring fuel-bound
nitrogen and correcting measured values to what would occur with a
nitrogen concentration of 0.4 weight percent. This corrected value
would be used to determine whether the engine meets emission standards
or not. This correction methodology would have applied equally to
testing with distillate or residual fuels. While we are not adopting
any correction for fuel effects in this rule, we will reconsider the
need for such corrections in a future rulemaking.
4. What Are EPA's Concerns About Production Variability?
To ensure compliance of production engines, we proposed a simple
testing program that is modeled loosely on our production line testing
(PLT) requirements for other marine engines. The general object of any
PLT program is to enable manufacturers and EPA to determine, with
reasonable certainty, whether certification designs have been
translated into production engines that meet applicable standards. We
proposed that each engine a manufacturer produces be tested. We are not
including new production testing requirements in this final rule
because of concerns about the amount of lead time needed to start such
program. However, we will revisit the need to include this type of
post-certification testing in our future rulemaking.

VI. Projected Impacts

Our analysis of the projected impacts of new emission standards
typically consists of estimating the costs, emission benefits, and cost
per ton of pollutant reduced.
We expect the costs of compliance to be negligible. We do not
anticipate any engineering or design costs associated with the near-
term standards because manufacturers should already be certifying
engines to the Annex VI standards to comply with the internationally
negotiated program and new Category 3 marine diesel engines installed
on ships since January 1, 2000 are widely understood to already comply
with the standards set forth in both Annex VI and this rule. While
there will be certification and compliance costs, these costs will be
negligible, because manufacturers will be able to use the same test
data for both programs. As detailed in the information collection
request associated with this final rule (OMB #2060-0460), total
annual reporting and recordkeeping costs for all affected entities is
estimated to be $144,000.\36\ Consequently, this program does not
impose significant additional costs.
------------------------------------------------------------------------

\36\ Note that manufacturers have already incurred most of these
estimated compliance costs for meeting Annex VI standards. New costs
related to the final rule will be much smaller.
------------------------------------------------------------------------

The emission reductions will reflect only reductions from engines
that are currently in noncompliance with the Annex VI NO_X
limits. For these reasons, the projected impacts of this rule are
expected to be negligible (see Table VI-1). Accordingly, we have not
calculated values to quantify the cost-effectiveness of the final rule.

Table VI-1.--Category 3 Marine Vessel NO_X National Emission Inventories
----------------------------------------------------------------------------------------------------------------
1996 2010 2020 2030
----------------------------------------------------------------------------------------------------------------
No control baseline (thousand short tons)................... 190 303 439 659
EPA/MARPOL Annex VI:
(Thousand short tons)................................... 190 274 367 531
Percent reduction (relative to no control).............. ........... 9.6 16.2 19.5
----------------------------------------------------------------------------------------------------------------

VII. The Blue Cruise Program

As described in Section VIII of the proposal, we are interested in
developing a voluntary program to encourage ship owners and operators
to reduce their air and waste emissions to minimize adverse
environmental impacts. Under the envisioned program, a participant ship
owner would be awarded a certain designation based on the combination
of air and waste emission-control programs adopted. These technologies
and systems could be different for new or existing vessels, but would
be in addition to any equipment or systems they are already required to
have. Qualifying ship owners could use the EPA designation on
advertising materials (including the ship itself) to educate consumers
and encourage them to choose their vessels.
We will continue the development of the Blue Cruise program
separate from the emission-control programs for marine diesel engines.
We intend to interact extensively with interested parties through
public workshops and a proposal that we intend to publish in mid-2003.
After consideration of the public comments we receive on that proposal,
we will publish a final program.

VIII. Public Participation

A wide variety of interested parties participated in the rulemaking
process that culminates with this final rule. This process provided
opportunity for public comment following the proposal that we published
May 29, 2002 (67 FR 37548). We considered these comments in developing
the final rule.
We have prepared a detailed Summary and Analysis of Comments
document, which describes the comments we received on the proposal and
our response to each of these comments. The Summary and Analysis of
Comments is available in the docket for this rule and on the Office of
Transportation and Air Quality Internet home page at
http://www.epa.gov/otaq/marine.htm.

[[Page 9778]]

IX. Statutory and Executive Order Reviews

A. Executive Order 12866: Regulatory Planning and Review

Under Executive Order 12866 (58 FR 51735, October 4, 1993), the
Agency must determine whether the regulatory action is ``significant''
and therefore subject to review by the Office of Management and Budget
(OMB) and the requirements of this Executive Order. The Executive Order
defines a ``significant regulatory action'' as one that is likely to
result in a rule that may:
? Have an annual effect on the economy of $100 million or
more or adversely affect in a material way the economy, a sector of the
economy, productivity, competition, jobs, the environment, public
health or safety, or State, local, or tribal governments or
communities;
? Create a serious inconsistency or otherwise interfere with
an action taken or planned by another agency;
? Materially alter the budgetary impact of entitlements,
grants, user fees, or loan programs, or the rights and obligations of
recipients thereof; or
? Raise novel legal or policy issues arising out of legal
mandates, the President's priorities, or the principles set forth in
the Executive Order.
EPA has determined that this rule is a ``significant regulatory
action'' under the terms of Executive Order 12866 because it raises
novel legal or policy issues due to the international nature of the use
of Category 3 marine diesel engines and is therefore subject to OMB
review. The Agency believes this regulation will result in none of the
economic effects set forth in Section 1 of the Order. A Final
Regulatory Support Document has been prepared and is available in the
docket for this rulemaking and at the Internet address listed under
ADDRESSES above. Written comments from OMB and responses from EPA to
OMB are in the public docket for this rulemaking.

B. Paperwork Reduction Act

The Paperwork Reduction Act, 44 U.S.C. 3501 et seq., requires
agencies to submit for OMB review and approval any federal requirements
and activities that result in the collection of information from ten or
more persons. Information-collection requirements may include
reporting, labeling, and recordkeeping requirements. Federal agencies
may not impose penalties on persons who fail to comply with collections
of information that do not display a currently valid OMB control
number.
The information collection requirements in this final rule have
been approved by OMB under the Paperwork Reduction Act. The OMB control
number for this information collection is 2060-0460, which we sent to
OMB under the EPA ICR number 1897.04. The information being collected
will be used by EPA to ensure that new marine vessels and fuel systems
comply with emission standards through certification requirements and
various subsequent compliance provisions.
In addition, this notice announces OMB's approval of the
information collection requirements for commercial marine diesel engine
for which we adopted emission standards on December 29, 1999 (64 FR
73300) and for recreational marine diesel engines for which we adopted
emission standards on November 8, 2002 (67 FR 68242). The estimated
annual public reporting and recordkeeping burden for collecting
information from these engines is shown in Table IX.B-1.

Table IX.B-1.--Burden Collecting Information for Marine Diesel Emission-Control Programs
----------------------------------------------------------------------------------------------------------------
Capital Operating and
Hours per Hours for costs for maintenance Total costs
Engine type Respondents respondent all all costs for all for all
respondents respondents respondents respondents
----------------------------------------------------------------------------------------------------------------
Category 3..................... 6 302 1,812 $0 $67,104 $144,022
Commercial--Category 1 and 2... 232 93 21,520 0 40,000 2,494,272
Recreational................... 12 606 7,273 0 870,238 1,178,061
----------------------------------------------------------------------------------------------------------------

The Information Collection Requests (ICR) were subject to public
notice and comment prior to OMB approval and, as a result, EPA finds
that there is ``good cause'' under section 553(b) of the Administrative
Procedures Act (5 U.S.C. 553(b)) to include these information-
collection requirements in 40 CFR part 9 without additional notice and
comment. EPA received various comments on the rulemaking provisions
covered by the ICRs, but no comments on the paperwork burden or other
information in the ICRs. All comments that were submitted to EPA are
considered in the relevant Summary and Analysis of Comments, which can
be found in the docket. A copy of any of the submitted ICR documents
may be obtained from Susan Auby, Collection Strategies Division, U.S.
Environmental Protection Agency (2822-T), 1200 Pennsylvania Ave., NW.,
Washington, DC 20460 or by e-mail at auby.susan@epamail.epa.gov.

C. Regulatory Flexibility Act

EPA has determined that it is not necessary to prepare a regulatory
flexibility analysis in connection with this final rule. EPA has also
determined that this rule will not have a significant economic impact
on a substantial number of small entities. For purposes of assessing
the impacts of this rulemaking, ``small entity'' is defined as any one
of the following: (1) A small business that meets the definition for
businesses based on size standards adopted by the Small Business
Administration; (2) a small governmental jurisdiction that is a
government of a city, county, town, school district or special district
with a population of less than 50,000; or (3) a small organization that
is any not-for-profit enterprise that is independently owned and
operated and is not dominant in its field. The following Table X.B-1
provides an overview of the primary SBA small business categories that
may be affected by this regulation.

Table X.B-1.--Primary SBA Small Business Categories Potentially Affected
by This Regulation
------------------------------------------------------------------------
Defined by SBA as a small
Industry NAICS a business if: b
------------------------------------------------------------------------
Internal Combustion Engines. 333618 < 1000 employees
Ship Building............... 336611 < 1000 employees

[[Page 9779]]

Water transportation, 483 < 500 employees
freight and passenger.
------------------------------------------------------------------------
a North American Industry Classification System.
b According to SBA's regulations (13 CFR part 121), businesses with no
more than the listed number of employees or dollars in annual receipts
are considered ``small entities'' for purposes of a regulatory
flexibility analysis.

After considering the economic impacts of this rule on small
entities, EPA has concluded that this action will not have a
significant economic impact on a substantial number of small entities.
This final rule will not impose any requirements on small entities. Our
review of the list of manufacturers of Category 3 marine diesel engines
indicates that there are no U.S. manufacturers of these engines that
qualify as small businesses. We are unaware of any foreign
manufacturers of such engines with a U.S.-based facility that qualify
as a small business. In addition, this rule will not impose significant
economic impacts on engine manufacturers. Engine manufacturers are
already achieving the Tier 1 standards and our program will impose only
negligible compliance costs. Our review of the U.S. shipyards that
build ships that use Category 3 marine diesel engines indicates that
there are no U.S. manufacturers of these ships that qualify as small
businesses.
Ship operators must take minimal steps to comply with this final
rule. This includes an obligation to do emission-related maintenance
specified by the engine manufacturer. These costs are not expected to
be greater than the costs of maintaining unregulated engines except to
the extent that ship operators do not currently maintain engines as
specified by the engine manufacturer. Maintenance costs are expected to
be minimal, given the overall costs of maintaining all of the vessel's
systems and structures. In addition, operators must record certain
information related to operating and servicing their engines. For
example, maintaining the ``record book of engine parameters'' and
detailing the ship's location when servicing engines is generally
already required under MARPOL Annex VI or is readily available as a
matter of routine recordkeeping. Finally, we require owners of marine
vessels with Category 3 engines to send minimal annual notification to
EPA to state whether engine maintenance and adjustments have caused
engines to be noncompliant.

D. Unfunded Mandates Reform Act

Title II of the Unfunded Mandates Reform Act of 1995 (UMRA), Pub.
L. 104-4, establishes requirements for Federal agencies to assess the
effects of their regulatory actions on State, local, and tribal
governments and the private sector. Under section 202 of the UMRA, EPA
generally must prepare a written statement, including a cost-benefit
analysis for proposed and final rules with ``Federal mandates'' that
may result in expenditures to State, local, and tribal governments, in
the aggregate, or to the private sector, of $100 million or more in any
one year. Before promulgating an EPA rule for which a written statement
is needed, section 205 of the UMRA generally requires EPA to identify
and consider a reasonable number of regulatory alternatives and adopt
the least costly, most cost-effective, or least burdensome alternative
that achieves the objectives of the rule. The provisions of section 205
do not apply when they are inconsistent with applicable law. Moreover,
section 205 allows EPA to adopt an alternative other than the least
costly, most cost-effective, or least burdensome alternative if the
Administrator publishes with the final rule an explanation why that
alternative was not adopted.
Before EPA establishes any regulatory requirements that may
significantly or uniquely affect small governments, including tribal
governments, it must have developed under section 203 of the UMRA a
small government agency plan. The plan must provide for notifying
potentially affected small governments, enabling officials of affected
small governments to have meaningful and timely input in the
development of EPA regulatory proposals with significant Federal
intergovernmental mandates, and informing, educating, and advising
small governments on compliance with the regulatory requirements.
EPA has determined that this rule does not contain a Federal
mandate that may result in expenditures of $100 million or more for
State, local, and tribal governments in the aggregate, or the private
sector in any one year. According to our cost estimates, we estimate
the aggregate costs (annualized over 20 years) of this rule to be
negligible. This final rule is therefore not subject to the
requirements of sections 202 and 205 of the UMRA.

E. Executive Order 13132: Federalism

Executive Order 13132, entitled ``Federalism'' (64 FR 43255, August
10, 1999), requires EPA to develop an accountable process to ensure
``meaningful and timely input by State and local officials in the
development of regulatory policies that have federalism implications.''
``Policies that have federalism implications'' is defined in the
Executive Order to include regulations that have ``substantial direct
effects on the States, on the relationship between the national
government and the States, or on the distribution of power and
responsibilities among the various levels of government.''
This rule does not have federalism implications. It will not have
substantial direct effects on the States, on the relationship between
the national government and the States, or on the distribution of power
and responsibilities among the various levels of government, as
specified in Executive Order 13132. This rule creates no mandates on
State, local, or tribal governments. The rule imposes no enforceable
duties on these entities, because they do not manufacture any engines
that are subject to this rule. This rule will be implemented at the
Federal level and impose compliance obligations only on private
industry. Executive Order 13132 therefore does not apply to this rule.
Although Section 6 of Executive Order 13132 does not apply to this
rule, EPA did consult with representatives of various State and local
governments in developing this rule. EPA has also consulted
representatives from STAPPA/ALAPCO, which represents state and local
air pollution officials.

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

Executive Order 13175, entitled ``Consultation and Coordination
with Indian Tribal Governments'' (59 FR 22951, November 6, 2000),
requires EPA to develop an accountable process to

[[Page 9780]]

ensure ``meaningful and timely input by tribal officials in the
development of regulatory policies that have tribal implications.''
This rule does not have tribal implications as specified in
Executive Order 13175. This rule will be implemented at the Federal
level and impose compliance costs only on engine manufacturers and
shipbuilders. Tribal governments will be affected only to the extent
they purchase and use vessels having regulated engines. Executive Order
13175 therefore does not apply to this rule.

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

Executive Order 13045, ``Protection of Children from Environmental
Health Risks and Safety Risks'' (62 FR 19885, April 23, 1997) applies
to any rule that (1) is determined to be ``economically significant''
as defined under Executive Order 12866, and (2) concerns an
environmental health or safety risk that EPA has reason to believe may
have a disproportionate effect on children. If the regulatory action
meets both criteria, Section 5-501 of the Order directs the Agency to
evaluate the environmental health or safety effects of the planned rule
on children, and explain why the planned regulation is preferable to
other potentially effective and reasonably feasible alternatives
considered by the Agency.
This rule is not subject to Executive Order 13045 because it is not
economically significant under the terms of Executive Order 12866.

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

This rule is not a ``significant energy action'' as defined in
Executive Order 13211, ``Actions Concerning Regulations That
Significantly Affect Energy Supply, Distribution, or Use'' (66 FR 28355
(May 22, 2001)) because it is not likely to have a significant adverse
effect on the supply, distribution or use of energy. The aim to reduce
emissions from certain nonroad engines and have no effect on fuel
formulation, distribution, or use.

I. National Technology Transfer and Advancement Act

Section 12(d) of the National Technology Transfer and Advancement
Act of 1995 (``NTTAA''), Pub. L. 104-113, section 12(d) (15 U.S.C. 272
note) directs EPA to use voluntary consensus standards in its
regulatory activities unless doing so would be inconsistent with
applicable law or otherwise impractical. Voluntary consensus standards
are technical standards (e.g., materials specifications, test methods,
sampling procedures, and business practices) that are developed or
adopted by voluntary consensus standards bodies. NTTAA directs EPA to
provide Congress, through OMB, explanations when the Agency decides not
to use available and applicable voluntary consensus standards.
This rule involves technical standards for testing emissions from
marine diesel engines. EPA is adopting test procedures contained in the
MARPOL NO_X Technical Code, with the certain modifications as
described in this document. The MARPOL NO_X Technical Code
includes the International Standards Organization (ISO) duty cycle for
marine diesel engines (E2, E3, D2, C1) and the American Society for
Testing and Materials (ASTM) fuel standards.\37\ These procedures are
currently used by virtually all Category 3 engine manufacturers to
demonstrate compliance with the Annex VI NO_X limits and to
obtain Statements of Voluntary Compliance to those standards.
---------------------------------------------------------------------------

\37\ The Technical Code on Control of Emission of Nitrogen
Oxides from Marine Diesel Engines in the Annex VI of MARPOL 73/78
Regulations for the Prevention of Air Pollution from Ships and
NO_X Technical Code, International Maritime Organization.
See footnote 1 regarding how to obtain copies of these documents.
---------------------------------------------------------------------------

J. Congressional Review Act

The Congressional Review Act, 5 U.S.C. 801 et seq., as added by the
Small Business Regulatory Enforcement Fairness Act of 1996, generally
provides that before a rule may take effect, the agency promulgating
the rule must submit a rule report, which includes a copy of the rule,
to each House of the Congress and to the Comptroller General of the
United States. EPA will submit a report containing this rule and other
required information to the U.S. Senate, the U.S. House of
Representatives, and the Comptroller General of the United States
before the rule is published in the Federal Register. This rule is not
a ``major rule'' as defined by 5 U.S.C. 804(2).

List of Subjects

40 CFR Part 9

Reporting and recordkeeping requirements.

40 CFR Part 94

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

Dated: January 31, 2003.
Christine Todd Whitman,
Administrator.

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

PART 9--[AMENDED]

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

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

2. Section 9.1 is amended in the table by adding the center heading
and the entries under that center heading in numerical order to read as
follows:

Sec. 9.1 OMB approvals under the Paperwork Reduction Act.

* * * * *

------------------------------------------------------------------------
OMB control
40 CFR citation No.
------------------------------------------------------------------------

* * * * *
Control of Emissions From New and In-Use Marine Compression-Ignition
Engines
------------------------------------------------------------------------
94.7-94.12................................................. 2060-0460.
94.101-94.109.............................................. 2060-0460
94.203-94.222.............................................. 2060-0460
94.303-94.310.............................................. 2060-0460
94.403-94.408.............................................. 2060-0460
94.508-94.509.............................................. 2060-0460
94.804..................................................... 2060-0460
94.904-94.911.............................................. 2060-0460

* * * * *
------------------------------------------------------------------------

PART 94--CONTROL OF AIR POLLUTION FROM MARINE COMPRESSION-IGNITION
ENGINES

1. The authority for part 94 continues to read as follows:

Authority: 42 U.S.C. 7522, 7523, 7524, 7525, 7541, 7542, 7543,
7545, 7547, 7549, 7550, and 7601(a).

Subpart A--[Amended]

2. Section 94.1 is amended by revising paragraph (b) to read as
follows:

Sec. 94.1 Applicability.

* * * * *

[[Page 9781]]

(b) Notwithstanding the provision of paragraph (c) of this section,
the requirements and prohibitions of this part do not apply with
respect to the engines identified in paragraphs (a)(1) and (2) of this
section where such engines are:
(1) Marine engines with rated power below 37 kW; or
(2) Marine engines on foreign vessels.
* * * * *

3. Section 94.2 is amended by adding, in alphabetical order,
definitions to paragraph (b) for ``Annex VI Technical Code'', ``Brake-
specific fuel consumption'', ``Hydrocarbon standard'', ``Maximum test
speed'', ``Residual fuel'', ``Round'', ``Tier 1'', ``Vessel operator'',
and ``Vessel owner'', and revising the definitions for ``Designated
Officer'', ``Diesel fuel'', and ``New vessel'' to read as follows:

Sec. 94.2 Definitions.

* * * * *
(b) As used in this part, all terms not defined in this section
shall have the meaning given them in the Act:
Annex VI Technical Code means the ``Technical Code on Control of
Emission of Nitrogen Oxides from Marine Diesel Engines,'' adopted by
the International Maritime Organization (incorporated by reference in
Sec. 94.5).
* * * * *
Brake-specific fuel consumption means the mass of fuel consumed by
an engine during a test segment divided by the brake-power output of
the engine during that same test segment.
* * * * *
Designated Officer means the Manager of the Engine Programs Group
(6405-J), U.S. Environmental Protection Agency, 1200 Pennsylvania Ave.,
Washington, DC 20460.
* * * * *
Diesel fuel means any fuel suitable for use in diesel engines which
is commonly or commercially known or sold as diesel fuel or marine
distillate fuel.
* * * * *
Hydrocarbon standard means an emission standard for total
hydrocarbons, nonmethane hydrocarbons, or total hydrocarbon equivalent;
or a combined emission standard for NO_X and total
hydrocarbons, nonmethane hydrocarbons, or total hydrocarbon equivalent.
* * * * *
Maximum test speed means the engine speed defined by Sec. 94.107
to be the maximum engine speed to use during testing.
* * * * *
New vessel means:
(1)(i) A vessel, the equitable or legal title to which has never
been transferred to an ultimate purchaser; or
(ii) For vessels with no Category 3 engines, a vessel that has been
modified such that the value of the modifications exceeds 50 percent of
the value of the modified vessel. The value of the modification is the
difference in the assessed value of the vessel before the modification
and the assessed value of the vessel after the modification. Use the
following equation to determine if the fractional value of the
modification exceeds 50 percent:

Percent of value = [(Value after modification)-(Value before
modification)]
x 100% (Value after modification)

(iii) For vessels with Category 3 engines, a vessel that has
undergone a modification, which:
(A) Substantially alters the dimensions or carrying capacity of the
vessel; or
(2) Changes the type of vessel; or
(3) Substantially prolongs the vessel's life.
(2) Where the equitable or legal title to a vessel is not
transferred to an ultimate purchaser prior to its being placed into
service, the vessel ceases to be new when it is placed into service.
* * * * *
Residual fuel means a petroleum product containing the heavier
compounds that remain after the distillate fuel oils (e.g., diesel fuel
and marine distillate fuel) and lighter hydrocarbons are distilled away
in refinery operations.
Round means to round numbers according to ASTM E29-02 (incorporated
by reference in Sec. 94.5), unless otherwise specified.
* * * * *
Tier 1 means relating to an engine subject to the Tier 1 emission
standards listed in Sec. 94.8.
* * * * *
Vessel operator means any individual that physically operates or
maintains a vessel, or exercises managerial control over the operation
of the vessel.
Vessel owner means the individual or company that holds legal title
to a vessel.
* * * * *

4. Section 94.5 is revised to read as follows:

Sec. 94.5 Reference materials.

We have incorporated by reference the documents listed in this
section. The Director of the Federal Register approved the
incorporation by reference as prescribed in 5 U.S.C. 552(a) and 1 CFR
part 51. Anyone may inspect copies at the U.S. EPA, Air and Radiation
Docket and Information Center, 1301 Constitution Ave., NW., Room B102,
EPA West Building, Washington, DC 20460 or the Office of the Federal
Register, 800 N. Capitol St., NW., 7th Floor, Suite 700, Washington,
DC.
(a) ASTM material. Table 1 of Sec. 94.5 lists material from the
American Society for Testing and Materials that we have incorporated by
reference. The first column lists the number and name of the material.
The second column lists the sections of this part where we reference
it. Anyone may purchase copies of these materials from the American
Society for Testing and Materials, 100 Barr Harbor Dr., PO Box C700,
West Conshohocken, PA 19428. Table 1 follows:

Table 1 of Sec. 94.5.--ASTM Materials
------------------------------------------------------------------------
Document No. and name Part 94 reference
------------------------------------------------------------------------
ASTM D 86-01, Standard Test Method for 94.108
Distillation of Petroleum Products at
Atmospheric Pressure.
ASTM D 93-02, Standard Test Methods for 94.108
Flash-Point by Pensky-Martens Closed Cup
Tester.
ASTM D 129-00, Standard Test Method for 94.108
Sulfur in Petroleum Products (General Bomb
Method).
ASTM D 287-92 (Reapproved 2000), Standard 94.108
Test Method for API Gravity of Crude
Petroleum and Petroleum Products
(Hydrometer Method).
ASTM D 445-01, Standard Test Method for 94.108
Kinematic Viscosity of Transparent and
Opaque Liquids (the Calculation of Dynamic
Viscosity).
ASTM D 613-01, Standard Test Method for 94.108
Cetane Number of Diesel Fuel Oil.
ASTM D 1319-02a, Standard Test Method for 94.108
Hydrocarbon Types in Liquid Petroleum
Products by Fluorescent Indicator
Adsorption.

[[Page 9782]]

ASTM D 2622-98, Standard Test Method for 94.108
Sulfur in Petroleum Products by Wavelength
Dispersive X-ray Fluorescence Spectrometry.
ASTM D 5186-99, Standard Test Method for 94.108
Determination of the Aromatic Content and
Polynuclear Aromatic Content of Diesel
Fuels and Aviation Turbine Fuels by
Supercritical Fluid Chromatography.
ASTM E 29-02, Standard Practice for Using 94.2
Significant Digits in Test Data to
Determine Conformance with Specifications.
------------------------------------------------------------------------

(b) ISO material. Table 2 of Sec. 94.5 lists material from the
International Organization for Standardization that we have
incorporated by reference. The first column lists the number and name
of the material. The second column lists the section of this part where
we reference it. Anyone may purchase copies of these materials from the
International Organization for Standardization, Case Postale 56, CH-
1211 Geneva 20, Switzerland.
Table 2 follows:

Table 2 of Sec. 94.5.--ISO Materials
------------------------------------------------------------------------
Document No. and name 40 CFR part 94 reference
------------------------------------------------------------------------
ISO 8178-1, Reciprocating internal 94.109
combustion engines--Exhaust emission
measurement--Part 1: Test-bed measurement
of gaseous and particulate exhaust
emissions, 1996.
------------------------------------------------------------------------

(c) IMO material. Table 3 of Sec. 94.5 lists material from the
International Maritime Organization that we have incorporated by
reference. The first column lists the number and name of the material.
The second column lists the section of this part where we reference it.
Anyone may purchase copies of these materials from the International
Maritime Organization, 4 Albert Embankment, London SE1 7SR, United
Kingdom.
Table 3 follows:

Table 3 of Sec. 94.5.--IMO Materials
------------------------------------------------------------------------
Document No. and name 40 CFR part 94 reference
------------------------------------------------------------------------
Resolution 2--Technical Code on Control of 94.2, 94.11, 94.108,
Emission of Nitrogen Oxides from Marine 94.109, 94.204, 94.211,
Diesel Engines, 1997. 94.1004.
------------------------------------------------------------------------

5. Section 94.7 is amended by revising paragraph (d) to read as
follows:

Sec. 94.7 General standards and requirements.

* * * * *
(d) Manufacturers shall ensure that all engines subject to the
emission standards of this part are equipped with a connection in the
engine exhaust system that is located downstream of the engine and
before any point at which the exhaust contacts water (or any other
cooling/scrubbing medium) for the temporary attachment of gaseous and/
or particulate emission sampling equipment. Use good engineering
judgment to locate the connection. This connection shall be internally
threaded with standard pipe threads of a size not larger than one-half
inch, and shall be closed by a pipe-plug when not in use. Equivalent
connections are allowed. Engine manufacturers may comply with this
requirement by providing vessel manufacturers with clear instructions
explaining how to meet this requirement, and noting in the instructions
that failure to comply may subject the vessel manufacturer to federal
penalties. Vessel manufacturers are required to comply with the engine
manufacturer's instructions.
* * * * *

6. Section 94.8 is amended by revising paragraphs (a), (c), (d),
(e), (f), and (g) to read as follows:

Sec. 94.8 Exhaust emission standards.

(a) The Tier 1 standards of paragraph (a)(1) of this section apply
until replaced by the standards of paragraph (a)(2) of this section.
(1) Tier 1 standards. NO_X emissions from model year 2004
and later engines with displacement of 2.5 or more liters per cylinder
may not exceed the following values:
(i) 17.0 g/kW-hr when maximum test speed is less than 130 rpm.
(ii) 45.0 x N-0.20 when maximum test speed is at least
130 but less than 2000 rpm, where N is the maximum test speed of the
engine in revolutions per minute.

(Note: Round speed-dependent standards to the nearest 0.1 g/kW-hr.)

(iii) 9.8 g/kW-hr when maximum test speed is 2000 rpm or more.
(2) Tier 2 standards. (i) Exhaust emissions from marine
compression-ignition engines shall not exceed the applicable Tier 2
exhaust emission standards contained in Table A-1 as follows:

Table A-1.--Primary Tier 2 Exhaust Emission Standards (G/kW-hr)
--------------------------------------------------------------------------------------------------------------------------------------------------------
THC+NO_X g/kW-
Engine size liters/cylinder, rated power Category Model year \1\ hr CO g/kW-hr PM g/kW-hr
--------------------------------------------------------------------------------------------------------------------------------------------------------
disp. < 0.9 and power £= 37 kW...... Category 1.............................. 2005 7.5 5.0 0.40
0.9 <= disp. < 1.2, all power levels.......... Category 1.............................. 2004 7.2 5.0 0.30
1.2 <= disp. < 2.5, all power levels.......... Category 1.............................. 2004 7.2 5.0 0.20
2.5 <= disp. < 5.0, all power levels.......... Category 1.............................. 2007 7.2 5.0 0.20

[[Page 9783]]

5.0 <= disp. < 15.0, all power levels......... Category 2.............................. 2007 7.8 5.0 0.27
15.0 <= disp. < 20.0 power, < 3300 kW......... Category 2.............................. 2007 8.7 5.0 0.50
15.0 <= disp. < 20.0, power £= 3300 Category 2.............................. 2007 9.8 5.0 0.50
kW.
20.0 <= disp. < 25.0, all power levels........ Category 2.............................. 2007 9.8 5.0 0.50
25.0 <= disp. < 30.0, all power levels........ Category 2.............................. 2007 11.0 5.0 0.50
disp. £= 30.0, all power levels..... Category 3.............................. 2007 See paragraph (a)(2)(ii) of this section.
--------------------------------------------------------------------------------------------------------------------------------------------------------
\1\ The model years listed indicate the model years for which the specified standards start.

(ii) EPA has not finalized Tier 2 standards for Category 3 engines.
EPA will promulgate final Tier 2 standards for Category 3 engines on or
before April 27, 2007.
* * * * *
(c) In lieu of the THC+NO_X standards, and PM standards
specified in paragraph (a) of this section, manufacturers may elect to
include engine families in the averaging, banking, and trading program,
the provisions of which are specified in subpart D of this part. The
manufacturer shall then set a family emission limit (FEL) which will
serve as the standard for that engine family. The ABT provisions of
subpart D of this part do not apply for Category 3 engines.
(d)(1) Naturally aspirated engines subject to the standards of this
section shall not discharge crankcase emissions into the ambient
atmosphere.
(2) For engines using turbochargers, pumps, blowers, or
superchargers for air induction, if the engine discharges crankcase
emissions into the ambient atmosphere in use, these crankcase emissions
shall be included in all exhaust emission measurements. This
requirement applies only for engines subject to hydrocarbon standards
(e.g., THC standards, NMHC standards, or THC+NO_X standards).
(3) The crankcase requirements of this paragraph (d) do not apply
for Tier 1 engines.
(e)(1) For Category 1 and Category 2 engines, exhaust emissions
from propulsion engines subject to the standards (or FELs) in paragraph
(a), (c), or (f) of this section shall not exceed:
(i) 1.20 times the applicable standards (or FELs) when tested in
accordance with the supplemental test procedures specified in Sec.
94.106 at loads greater than or equal to 45 percent of the maximum
power at rated speed or 1.50 times the applicable standards (or FELs)
at loads less than 45 percent of the maximum power at rated speed; or
(ii) 1.25 times the applicable standards (or FELs) when tested over
the whole power range in accordance with the supplemental test
procedures specified in Sec. 94.106.
(2) [Reserved]
(f) The following define the requirements for low-emitting Blue Sky
Series engines:
(1) Voluntary standards. (i) Category 1 and Category 2 engines may
be designated ``Blue Sky Series'' engines by meeting the voluntary
standards listed in Table A-2, which apply to all certification and in-
use testing:

Table A-2.--Voluntary Emission Standards [g/kW-hr]
------------------------------------------------------------------------
Rated brake power (kW) THC+NO_X PM
------------------------------------------------------------------------
Power £= 37 kW, and displ. < 4.0 0.24
0.9....................................
0.9 <= displ. < 1.2..................... 4.0 0.18
1.2 <= displ. < 2.5..................... 4.0 0.12
2.5 <= displ. < 5....................... 5.0 0.12
5 <= displ. < 15........................ 5.0 0.16
15 <= disp. < 20, and power < 3300 kW... 5.2 0.30
15 <= disp. < 20, and power £= 5.9 0.30
3300 kW................................
20 <= disp. < 25........................ 5.9 0.30
25 <= disp. < 30........................ 6.6 0.30
------------------------------------------------------------------------

(ii) Category 3 engines may be designated ``Blue Sky Series''
engines by meeting these voluntary standards that would apply to all
certification and in-use testing:
(A) A NO_X standard of 9.0 x N-\0.20\ where N
= the maximum test speed of the engine in revolutions per minute (or
4.8 g/kW-hr for engines with maximum test speeds less than 130 rpm).
(Note: Round speed-dependent standards to the nearest 0.1 g/kW-hr.)
(B) An HC standard of 0.4 g/kW-hr.
(C) A CO standard of 3.0 g/kW-hr.
(2) Additional standards. Blue Sky Series engines are subject to
all provisions that would otherwise apply under this part.
(3) Test procedures. Manufacturers may use an alternate procedure
to demonstrate the desired level of emission control if approved in
advance by the Administrator.
(g) Standards for alternative fuels. The standards described in
this section apply to compression-ignition engines, irrespective of
fuel, with the following two exceptions for Category 1 and Category 2
engines:
(1) Engines fueled with natural gas shall comply with
NMHC+NO_X standards that are numerically equivalent to the
THC+NO_X described in paragraph (a) of this section; and
(2) Engines fueled with alcohol fuel shall comply with
THCE+NO_X standards that are numerically equivalent to the
THC+NO_X described in paragraph (a) of this section.

7. Section 94.9 is amended by revising paragraphs (a)(1), (b)(1)
and (b)(2) to read as follows:

Sec. 94.9 Compliance with emission standards.

(a) * * *
(1) The minimum useful life is 10 years or 10,000 hours of
operation for Category 1, 10 years or 20,000 hours of operation for
Category 2, and 3 years or

[[Page 9784]]

10,000 hours of operation for Category 3.
* * * * *
(b) * * *
(1) Compliance with the applicable emission standards by an engine
family shall be demonstrated by the certifying manufacturer before a
certificate of conformity may be issued under Sec. 94.208.
Manufacturers shall demonstrate compliance using emission data,
measured using the procedures specified in Subpart B of this part, from
a low hour engine. A development engine that is equivalent in design to
the marine engines being certified may be used for Category 2 or
Category 3 certification.
(2) The emission values to compare with the standards shall be the
emission values of a low hour engine, or a development engine, adjusted
by the deterioration factors developed in accordance with the
provisions of Sec. 94.219. Before comparing any emission value with
the standard, round it to the same number of significant figures
contained in the applicable standard.
* * * * *

8. Section 94.10 is amended by revising paragraph (a) to read as
follows:

Sec. 94.10 Warranty period.

(a)(1) Warranties imposed by Sec. 94.1107 for Category 1 or
Category 2 engines shall apply for a period of operating hours equal to
at least 50 percent of the useful life in operating hours or a period
of years equal to at least 50 percent of the useful life in years,
whichever comes first.
(2) Warranties imposed by Sec. 94.1107 for Category 3 engines
shall apply for a period of operating hours equal to at least the full
useful life in operating hours or a period of years equal to at least
the full useful life in years, whichever comes first.
* * * * *

9. Section 94.11 is amended by adding paragraph (g) to read as
follows:

Sec. 94.11 Requirements for rebuilding certified engines.

* * * * *
(g) For Category 3 engines, the owner and operator shall also
comply with the recordkeeping requirements in the Annex VI Technical
Code (incorporated by reference at Sec. 94.5) regarding the Engine
Book of Record Parameters.

10. Section 94.12 is amended by revising the introductory text and
adding paragraph (f) to read as follows:

Sec. 94.12 Interim provisions.

This section contains provisions that apply for a limited number of
calendar years or model years. These provisions supercede the other
provisions of this part. The provisions of this section do not apply
for Category 3 engines.
* * * * *
(f) Manufacturers may submit test data collected using the Annex VI
test procedures to show compliance with Tier 1 standards for model
years before 2007. Note: Starting in 2007, EPA may approve a
manufacturer's request to continue using alternate procedures under
Sec. 94.102(c), as long as the manufacturer satisfies EPA that the
differences in testing will not affect NO_X emission rates.

Subpart B--[Amended]

11. Section 94.106 is amended by revising the section heading and
introductory text to read as follows:

Sec. 94.106 Supplemental test procedures for Category 1 and Category
2 marine engines.

This section describes the test procedures for supplemental testing
conducted to determine compliance with the exhaust emission
requirements of Sec. 94.8(e)(1). In general, the supplemental test
procedures are the same as those otherwise specified by this subpart,
except that they cover any speeds, loads, ambient conditions, and
operating parameters that may be experienced in use. The test
procedures specified by other sections in this subpart also apply to
these tests, except as specified in this section.
* * * * *

12. Section 94.107 is amended by revising paragraph (a) and adding
paragraph (f) to read as follows:

Sec. 94.107 Determination of maximum test speed.

(a) Overview. This section specifies how to determine maximum test
speed from a lug curve. This maximum test speed is used in Sec. Sec.
94.105, 94.106, and Sec. 94.109 (including the tolerances for engine
speed specified in Sec. 94.105).
* * * * *
(f) For Category 3 engines, manufacturers may choose to set the
maximum test speed at the maximum in-use engine speed instead of the
speed specified in Sec. 94.107(d).

13. Section 94.108 is amended by revising paragraphs (a)(1), (b),
and (d)(1) and adding paragraph (e) to read as follows:

Sec. 94.108 Test fuels.

(a) Distillate diesel test fuel. (1) The diesel fuels for testing
Category 1 and Category 2 marine engines designed to operate on
distillate diesel fuel shall be clean and bright, with pour and cloud
points adequate for operability. The diesel fuel may contain
nonmetallic additives as follows: cetane improver, metal deactivator,
antioxidant, dehazer, antirust, pour depressant, dye, dispersant, and
biocide. The diesel fuel shall also meet the specifications (as
determined using methods incorporated by reference at Sec. 94.5) in
Table B-5 of this section, or substantially equivalent specifications
approved by the Administrator, as follows:

Table B-5.--Federal Test Fuel Specifications
------------------------------------------------------------------------
Item Procedure \1\ Value
------------------------------------------------------------------------
Cetane......................... ASTM D 613-01.... 40-48
Distillation Range:
Initial boiling point, ASTM D 86-01..... 171-204
[deg]C.
10% point, [deg]C.......... ASTM D 86-01..... 204-238
50% point, [deg]C.......... ASTM D 86-01..... 243-282
90% point, [deg]C.......... ASTM D 86-01..... 293-332
End point, [deg]C.......... ASTM D 86-01..... 321-366
Flashpoint, [deg]C............. ASTM D 93-02..... 54 minimum
Gravity, API................... ASTM D 287-92.... 32-37
Hydrocarbon composition:
Aromatics, volume percent.. ASTM D 1319-02a 10 minimum
or D 5186-99.
Olefins and Saturates ASTM D 1319-02a.. Remainder
(paraffins and
napththenes).
Total Sulfur, weight percent... ASTM D 129-00 or 0.03--0.80
D 2622-98.

[[Page 9785]]

Viscosity at 38 [deg]C, ASTM D 445-01.... 2.0-3.2
centistokes.
------------------------------------------------------------------------
\1\ All ASTM standards are incorporated by reference in Sec. 94.5.

* * * * *
(b) Other fuel types. For Category 1 and Category 2 engines that
are designed to be capable of using a type of fuel (or mixed fuel)
instead of or in addition to distillate diesel fuel (e.g., natural gas,
methanol, or nondistillate diesel), and that are expected to use that
type of fuel (or mixed fuel) in service:
(1) A commercially available fuel of that type shall be used for
exhaust emission testing. The manufacturer shall propose for the
Administrator's approval a set of test fuel specifications that take
into account the engine design and the properties of commercially
available fuels. The Administrator may require testing on each fuel if
it is designed to operate on more than one fuel. These test fuel
specifications shall be reported in the application for certification.
(2) [Reserved]
* * * * *
(d) Correction for sulfur. (1) Particulate emission measurements
from Category 1 or Category 2 engines without exhaust aftertreatment
obtained using a diesel fuel containing more than 0.40 weight percent
sulfur may be adjusted to a sulfur content of 0.40 weight percent.
* * * * *
(e) Test fuel for Category 3 engines. For testing Tier 1 engines,
use test fuels meeting the specifications listed in the Annex VI
Technical Code (incorporated by reference in Sec. 94.5).

14. A new Sec. 94.109 is added to read as follows:

Sec. 94.109 Test procedures for Category 3 marine engines.

(a) Gaseous emissions shall be measured using the test cycles and
procedures specified by Section 5 of the Annex VI Technical Code
(incorporated by reference in Sec. 94.5), except as otherwise
specified in this paragraph (a).
(1) The inlet air and exhaust restrictions shall be set at the
average in-use levels.
(2) Measurements are valid only for sampling periods in which the
temperature of the charge air entering the engine is within 3[deg]C of
the temperature that would occur in-use under ambient conditions
(temperature, pressure, and humidity) identical to the test conditions.
You may measure emissions within larger discrepancies, but you may not
use those measurements to demonstrate compliance.
(3) Engine coolant and engine oil temperatures shall be equivalent
to the temperatures that would occur in-use under ambient conditions
identical to the test conditions.
(4) Exhaust flow rates shall be calculated using measured fuel flow
rates.
(5) Standards used for calibration shall be traceable to NIST
standards. (Other national standards may be used if they have been
shown to be equivalent to NIST standards.)
(6) Certification tests may be performed at any representative
pressure and humidity levels. Certification tests may be performed at
any ambient air temperature from 13[deg]C to 30[deg]C and any charge
air cooling water temperature from 17[deg]C to 27[deg]C. These limits
apply instead of the limits specified in section 5.2.1 of the Annex VI
Technical Code. Correct emissions for test conditions using the
corrections specified in section 5.12.3 of the Annex VI Technical Code.
(7) Test cycles shall be denormalized based on the maximum test
speed described in Sec. 94.107.
(b) Analyzers meeting the specifications of either 40 CFR part 86,
subpart N, or ISO 8178-1 (incorporated by reference in Sec. 94.5)
shall be used to measure THC and CO.
(c) The Administrator may specify changes to the provisions of
paragraph (a) of this section that are necessary to comply with the
general provisions of Sec. 94.102.

Subpart C--[Amended]

15. Section 94.203 is amended by revising paragraph (d)(14) to read
as follows:

Sec. 94.203 Application for certification.

* * * * *
(d) * * *
(14) (i) For Category 1 and Category 2 engines, a statement that
the all the engines included in the engine family comply with the Not
To Exceed standards specified in Sec. 94.8(e) when operated under all
conditions which may reasonably be expected to be encountered in normal
operation and use; the manufacturer also must provide a detailed
description of all testing, engineering analyses, and other information
which provides the basis for this statement.
(ii) [Reserved]
* * * * *

16. Section 94.204 is amended by adding paragraph (f) to read as
follows:

Sec. 94.204 Designation of engine families.

* * * * *
(f) Category 3 engines shall be grouped into engine families based
on the criteria specified in Section 4.3 of the Annex VI Technical Code
(incorporated by reference in Sec. 94.5), except as allowed in
paragraphs (d) and (e) of this section.

17. Section 94.205 is amended by revising paragraph (b) and adding
paragraphs (e) and (f) to read as follows:

Sec. 94.205 Prohibited controls, adjustable parameters.

* * * * *
(b)(1) Category 1 marine engines equipped with adjustable
parameters must comply with all requirements of this subpart for any
adjustment in the physically adjustable range.
(2) Category 2 and Category 3 marine engines equipped with
adjustable parameters must comply with all requirements of this subpart
for any adjustment in the approved adjustable range.
* * * * *
(e) Tier 1 Category 3 marine engines shall be adjusted according to
the manufacturer's specifications for testing.
(f) For Category 3 marine engines, manufacturers must specify in
the maintenance instructions how to adjust the engines to achieve
emission performance equivalent to the performance demonstrated under
the certification test conditions. This must address all necessary
adjustments, including those required to address differences in fuel
quality or ambient temperatures. For example, equivalent emissions
performance can be measured relative to optimal engine performance that
could be achieved in the absence of emission standards (i.e., the
calibration that result in the lowest fuel consumption and/or maximum
firing pressure). In this example, adjustments

[[Page 9786]]

that achieved the same percent reduction in NO_X emissions
from the optimal calibration would be considered to be equivalent.
Alternatively, if the engine uses injection timing retard and EGR to
reduce emissions, then retarding timing the same number of degrees
(relative to optimal engine performance) and using the same rate of EGR
at the different conditions would be considered to be equivalent.

18. Section 94.209 is amended by adding introductory text to the
section to read as follows:

Sec. 94.209 Special provisions for post-manufacture marinizers.

The provisions of this section apply for Category 1 and Category 2
engines, but not for Category 3 engines.
* * * * *

19. Section 94.211 is amended by adding paragraphs (a)(3),
(e)(2)(iii), (k) and (l) and revising paragraphs (h) introductory text,
and (j)(2) introductory text to read as follows:

Sec. 94.211 Emission-related maintenance instructions for purchasers.

(a) * * *
(3) For Category 3 engines, the manufacturer must provide in
boldface type on the first page of the written maintenance instructions
notice that Sec. 94.1004 requires that the emissions-related
maintenance be performed as specified in the instructions (or
equivalent).
* * * * *
(e) * * *
(2) * * *
(iii) The maintenance intervals listed in paragraphs (e)(3) and
(e)(4) of this section do not apply for Category 3.
* * * * *
(h) For Category 1 and Category 2 engines, equipment, instruments,
or tools may not be used to identify malfunctioning, maladjusted, or
defective engine components unless the same or equivalent equipment,
instruments, or tools will be available to dealerships and other
service outlets and are:
* * * * *
(j) * * *
(2) All critical emission-related scheduled maintenance must have a
reasonable likelihood of being performed in use. For Category 1 and
Category 2 engines, the manufacturer must show the reasonable
likelihood of such maintenance being performed in-use. Critical
emission-related scheduled maintenance items which satisfy one of the
conditions defined in paragraphs (j)(2)(i) through (j)(2)(vi) of this
section will be accepted as having a reasonable likelihood of being
performed in use.
(k) For engines with rated power greater than 130 kW, the
manufacturer must provide the ultimate purchaser with a Technical File
meeting the specifications of section 2.4 of the AnnexVI Technical Code
(incorporated by reference in Sec. 94.5). The maintenance instructions
required by this part to be provided by manufacturer may be included in
this Technical File. The manufacturer must provide a copy of this
Technical File to EPA upon request.
(l) Owners and operators of Category 3 engines shall transfer the
maintenance instructions to subsequent owners and operators of the
engine upon sale or transfer of the engine or vessel.

20. Section 94.214 is revised to read as follows:

Sec. 94.214 Production engines.

Any manufacturer obtaining certification under this part shall
supply to the Administrator, upon his/her request, a reasonable number
of production engines, as specified by the Administrator. The engines
shall be representative of the engines, emission control systems, and
fuel systems offered and typical of production engines available for
sale or use under the certificate. These engines shall be supplied for
testing at such time and place and for such reasonable periods as the
Administrator may require. This requirement does not apply for Category
3 engines. Manufacturers of Category 3 engines, however, must allow EPA
access to test engines and development engines to the extent necessary
to determine that the engine family is in full compliance with the
applicable requirements of this part.

21. Section 94.217 is amended by adding paragraph (f) to read as
follows:

Sec. 94.217 Emission data engine selection.

* * * * *
(f) A single cylinder test engine may be used for certification of
Tier 1 Category 3 engine families. If you use test data from a single
cylinder test engine for certification, explain in your application how
you have determined that such data show that the multiple cylinder
production engines will comply with the applicable emission standards.

22. Section 94.218 is amended by revising paragraphs (c) and (d)(1)
to read as follows:

Sec. 94.218 Deterioration factor determination.

* * * * *
(c) Rounding. (1) In the case of a multiplicative exhaust emission
deterioration factor, round the factor to three places to the right of
the decimal point.
(2) In the case of an additive exhaust emission deterioration
factor, round the factor shall to at least two places to the right of
the decimal point.
(d)(1) Except as allowed by paragraph (d)(2) of this section, the
manufacturer shall determine the deterioration factors for Category 1
and Category 2 engines based on service accumulation and related
testing, according to the manufacturer's procedures, and the provisions
of Sec. Sec. 94.219 and 94.220. The manufacturer shall determine the
form and extent of this service accumulation, consistent with good
engineering practice, and shall describe this process in the
application for certification.
* * * * *

23. Section 94.219 is amended by revising paragraph (a) to read as
follows:

Sec. 94.219 Durability data engine selection.

(a) For Category 1 and Category 2 engines, the manufacturer shall
select for durability testing, from each engine family, the engine
configuration which is expected to generate the highest level of
exhaust emission deterioration on engines in use, considering all
exhaust emission constituents and the range of installation options
available to vessel builders. The manufacturer shall use good
engineering judgment in making this selection.
* * * * *

Subpart D--[Amended]

24. Section 94.305 is amended by revising paragraph (a) to read as
follows:

Sec. 94.305 Credit generation and use calculation.

(a) For each participating engine family, calculate
THC+NO_X and PM emission credits (positive or negative)
according to the equation in paragraph (b) of this section and round
emissions to the nearest one-hundredth of a megagram (Mg). Use
consistent units throughout the calculation.
* * * * *

Subpart E--[Amended]

24. Section 94.403 is amended by revising paragraph (a) to read as
follows:

Sec. 94.403 Emission defect information report.

(a) A manufacturer must file a defect information report whenever
it determines, in accordance with procedures it established to identify
either safety-related or performance defects (or based on other
information), that a specific emission-related defect

[[Page 9787]]

exists in 25 or more Category 1 marine engines, or 10 or more Category
2 marine engines, or 2 or more Category 3 engines or cylinders. No
report must be filed under this paragraph for any emission-related
defect corrected prior to the sale of the affected engines to an
ultimate purchaser. (Note: These limits apply to the occurrence of the
same defect, and are not constrained by engine family or model year.)
* * * * *

Subpart F--[Amended]

25. Section 94.503 is amended by revising paragraphs (a) and (b) to
read as follows:

Sec. 94.503 General requirements.

(a) For Tier 2 and later Category 1 and Category 2 engines,
manufacturers shall test production line engines in accordance with
sampling procedures specified in Sec. 94.505 and the test procedures
specified in Sec. 94.506. The production-line testing requirements of
this part do not apply for other engines.
(b) Upon request, the Administrator may also allow manufacturers to
conduct alternate production line testing programs for Category 1 and
Category 2 engines, provided the Administrator determines that the
alternate production line testing program provides equivalent assurance
that the engines that are being produced conform to the provisions of
this part. As part of this allowance or for other reasons, the
Administrator may waive some or all of the requirements of this
subpart.
* * * * *

26. Section 94.505 is amended by revising paragraph (a)
introductory text to read as follows:

Sec. 94.505 Sample selection for testing.

(a) At the start of each model year, the manufacturer will begin to
select engines from each Category 1 and Category 2 engine family for
production line testing. Each engine will be selected from the end of
the production line. Testing shall be performed throughout the entire
model year to the extent possible. Engines selected shall cover the
broadest range of production possible.
* * * * *

27. Section 94.507 is amended by revising paragraph (a) to read as
follows:

Sec. 94.507 Sequence of testing.

(a) If one or more Category 1 or Category 2 engines fail a
production line test, then the manufacturer must test two additional
engines for each engine that fails.
* * * * *

28. Section 94.508 is amended by revising paragraphs (a), (b), (c),
(d), and (e) introductory text to read as follows:

Sec. 94.508 Calculation and reporting of test results.

* * * * *
(a) Manufacturers shall calculate initial test results using the
applicable test procedure specified in Sec. 94.506(a). These results
must also include the Green Engine Factor, if applicable. Round these
results to the number of decimal places contained in the applicable
emission standard expressed to one additional significant figure.
(b) To calculate test results, sum the initial test results derived
in paragraph (a) of this section for each test engine, divide by the
number of tests conducted on the engine, and round to the same number
of decimal places contained in the applicable standard expressed to one
additional decimal place. (For example, if the applicable standard is
7.8, then round the test results to two places to the right of the
decimal.)
(c) To calculate the final test results for each test engine, apply
the appropriate deterioration factors, derived in the certification
process for the engine family, to the test results described in
paragraph (b) of this section; round to the same number of decimal
places contained in the applicable standard expressed to one additional
decimal place. (For example, if the applicable standard is 7.8, then
round the test results to two places to the right of the decimal.)
(d) (1) If, subsequent to an initial failure of a Category 1 or
Category 2 production line test, the average of the test results for
the failed engine and the two additional engines tested, is greater
than any applicable emission standard or FEL, the engine family is
deemed to be in non-compliance with applicable emission standards, and
the manufacturer must notify the Administrator within 2 working days of
such noncompliance.
(2) [Reserved]
(e) Within 30 calendar days of the end of each quarter in which
production line testing occurs, each manufacturer must submit to the
Administrator a report which includes the following information:
* * * * *

29. Section 94.510 is amended by revising paragraph (b) to read as
follows:

Sec. 94.510 Compliance with criteria for production line testing.

* * * * *
(b) A Category 1 or Category 2 engine family is deemed to be in
noncompliance, for purposes of this subpart, if at any time throughout
the model year, the average of an initial failed engine and the two
additional engines tested, is greater than any applicable emission
standard or FEL.

Subpart I--[Amended]

30. Section 94.801 is amended by revising paragraph (b) to read as
follows:

Sec. 94.801 Applicability.

* * * * *
(b) Regulations prescribing further procedures for the importation
of engines into the Customs territory of the United States are set
forth in U.S. Customs Service regulations (19 CFR chapter I).

Subpart J--[Amended]

Sec. 94.904 [Amended]

31. Section 94.904 is amended by removing paragraph (b)(7).

32. Section 94.906 is amended by revising the section heading and
removing paragraph (d) to read as follows:

Sec. 94.906 Manufacturer-owned exemption, display exemption, and
competition exemption.

* * * * *

33. Section 94.907 is amended by revising paragraph (d),
introductory text, to read as follows:

Sec. 94.907 Engine dressing exemption.

* * * * *
(d) New Category 1 and Category 2 marine engines that meet all the
following criteria are exempt under this section:
* * * * *

34. Subpart K, consisting of Sec. Sec. 94.1001, 94.1002, 94.1003,
and 94.1004, is added to read as follows:
Subpart K--Requirements Applicable to Vessel Manufacturers, Owners, and
Operators
Sec.
94.1001 Applicability.
94.1002 Definitions.
94.1003 Production testing, in-use testing, and inspections.
94.1004 Maintenance, repair adjustment, and recordkeeping.

Subpart K--Requirements Applicable to Vessel Manufacturers, Owners,
and Operators

Sec. 94.1001 Applicability.

The requirements of this subpart are applicable to manufacturers,
owners, and operators of marine vessels that

[[Page 9788]]

contain Category 3 engines subject to the provisions of subpart A of
this part, except as otherwise specified.

Sec. 94.1002 Definitions.

The definitions of subpart A of this part apply to this subpart.

Sec. 94.1003 Production testing, in-use testing, and inspections.

(a) [Reserved]
(b) [Reserved]
(c) Manufacturers, owners and operators must allow emission tests
and inspections to be conducted and must provide reasonable assistance
to perform such tests or inspections.

Sec. 94.1004 Maintenance, repair, adjustment, and recordkeeping.

(a) Unless otherwise approved by the Administrator, all owners and
operators of Category 3 engines subject to the provisions of this part
shall ensure that all emission-related maintenance is performed, as
specified in the maintenance instructions provided by the certifying
manufacturer in compliance with Sec. 94.211.
(b) Unless otherwise approved by the Administrator, all
maintenance, repair, adjustment, and alteration of engines subject to
the provisions of this part performed by any owner, operator or other
maintenance provider that is not covered by paragraph (a) of this
section shall be performed, using good engineering judgment, in such a
manner that the engine continues (after the maintenance, repair,
adjustment or alteration) to meet the emission standards it was
certified as meeting prior to the need for service. Adjustments are
limited to the range specified by the engine manufacturer in the
approved application for certification.
(c) An engine may not be adjusted or altered contrary to the
requirements of Sec. 94.11 or Sec. 94.1004(b), except as allowed by
Sec. 94.1103(b)(2). If such an adjustment or alteration occurs, the
engine must be returned to a configuration allowed by this part within
two hours of operation. Each two-hour period during which there is
noncompliance is a separate violation. The following provisions apply
to adjustments or alterations made under Sec. 94.1103(b)(2):
(1) In the case of an engine that is adjusted or altered under
Sec. 94.1103(b)(2)(i), there is no violation under this paragraph (c)
for engine operation before completion of the repair or replacement
procedure. The provisions of paragraph (c) introductory text apply to
all operation following completion of the repair or replacement
procedure.
(2) In the case of an engine that is adjusted or altered under
Sec. 94.1103(b)(2)(ii), there is no violation under this paragraph (c)
if the engine operates for less than two hours following the conclusion
of the emergency that prompted the adjustment or alteration before the
emission-control system is restored to proper functioning. The
provisions of paragraph (c) introductory text apply to all operation
that occurs after this two-hour period.
(d) The owner and operator of the engine shall maintain on board
the vessel records of all maintenance, repair, and adjustment that
could reasonably affect the emission performance of any Category 3
engine subject to the provision of this part. Owners and operators
shall also maintain, on board the vessel, records regarding
certification, parameter adjustment, and fuels used. For engines that
are automatically adjusted electronically, all adjustments must be
logged automatically. Owners and operators shall make these records
available to EPA upon request. These records must include the
following:
(1) [Reserved]
(2) The Technical File, Record Book of Engine Parameters, and
bunker delivery notes that are required by the Annex VI Technical Code
(incorporated by reference in Sec. 94.5).
(3) Specific descriptions of engine maintenance, repair,
adjustment, and alteration (including rebuilding). The descriptions
must include at least the date, time, and nature of the maintenance,
repair, adjustment, or alteration and the position of the vessel when
the maintenance, repair, adjustment, or alteration was made.
(4) Emission-related maintenance instructions provided by the
manufacturer.
(e) For each marine vessel containing a Category 3 engine, the
owner shall annually review the vessel's records and submit to EPA a
signed statement certifying compliance during the preceding year with
the requirements of this part that are applicable to owners and
operators of such vessels. Alternately, if review of the vessel's
records indicates that there has been one or more violations of the
requirements of this part, the owner shall submit to EPA a signed
statement specifying the noncompliance, including the nature of the
noncompliance, the time of the noncompliance, and any efforts made to
remedy the noncompliance. The statement of compliance (or
noncompliance) required by this paragraph shall be signed by the
executive with responsibility for marine activities of the owner. If
the vessel is operated by a different business entity than the vessel
owner, the reporting requirements of this paragraph (e) apply to both
the owner and the operator. Compliance with these review and
certification requirements by either the vessel owner or the vessel
operator with respect to a compliance statement will be considered
compliance with these requirements by both of these parties for that
compliance statement. The executive(s) may authorize a captain or other
primary operator to conduct this review and submit the certification,
provided that the certification statement is accompanied by written
authorization for that individual to submit such statements. The
Administrator may waive the requirements of this paragraph when
equivalent assurance of compliance is otherwise available.

Subpart L--[Amended]

35. Section 94.1103 is amended by adding paragraphs (a)(2)(v),
(a)(2)(vi), and (a)(7) and by revising paragraph (a)(3)(i) to read as
follows:

Sec. 94.1103 Prohibited acts.

(a) * * *
(2) * * *
(v) For an owner or operator of a vessel using a Category 3 engine
to refuse to allow the in-use testing described in Sec. 94.1003 to be
performed.
(vi) For a manufacturer, owner or operator of a Category 3 engine
to fail to provide maintenance instructions as required by Sec.
94.211.
(3)(i) For a person to remove or render inoperative a device or
element of design installed on or in a engine in compliance with
regulations under this part, or to set any adjustable parameter to a
setting outside of the range specified by the manufacturer, as approved
in the application for certification by the Administrator (except as
allowed by Sec. Sec. 94.1003 and 94.1004).
* * * * *
(7)(i) For an owner or operator of a vessel using a Category 3
engine to fail or refuse to ensure that an engine is properly adjusted
as set forth in Sec. 94.1004.
(ii) For an owner or operator of a vessel using a Category 3 to
fail to maintain or repair an engine as set forth in Sec. 94.1004.
(iii) For an owner or operator of a vessel using a Category 3
engine to operate an engine in violation of the requirements of Sec.
94.1004(c).
(iv) For an owner or operator of a vessel using a Category 3 engine
to fail

[[Page 9789]]

to comply with any applicable provision in this part for recordkeeping,
reporting, or submission of information to EPA, including the annual
certification requirements of Sec. 94.1004.
* * * * *

36. Section 94.1106 is amended by adding introductory text,
revising paragraphs (a) and (c)(1), and adding paragraph (d) to read as
follows:

Sec. 94.1106 Penalties.

This section specifies actions that are prohibited and the maximum
civil penalties that we can assess for each violation. The maximum
penalty values listed in paragraphs (a) and (c) of this section are
shown for calendar year 2002. As described in paragraph (d) of this
section, maximum penalty limits for later years are set forth in 40 CFR
part 19.
(a) Violations. A violation of the requirements of this subpart is
a violation of the applicable provisions of the Act, including sections
213(d) and 203, and is subject to the penalty provisions thereunder.
(1) A person who violates Sec. 94.1103(a)(1), (a)(4), (a)(5),
(a)(6), or (a)(7)(iv) or a manufacturer or dealer who violates Sec.
94.1103(a)(3) (i) or (iii) or Sec. 94.1103(a)(7) is subject to a civil
penalty of not more than $31,500 for each violation.
(2) A person other than a manufacturer or dealer who violates Sec.
94.1103(a)(3) (i) or (iii) or Sec. 94.1103(a)(7) (i), (ii), or (iii)
or any person who violates Sec. 94.1103(a)(3)(ii) is subject to a
civil penalty of not more than $3,150 for each violation.
(3) A violation with respect to Sec. 94.1103(a)(1), (a)(3)(i),
(a)(3)(iii), (a)(4), or (a)(5), (a)(7) constitutes a separate offense
with respect to each engine.
(4) A violation with respect to Sec. 94.1103(a)(3)(ii) constitutes
a separate offense with respect to each part or component. Each day of
a violation with respect to Sec. 94.1103(a)(5) or (a)(7)(iv)
constitutes a separate offense.
(5) Each two hour period of a violation with respect to Sec.
94.1103(a)(7)(iii) constitutes a separate offense. A violation of Sec.
94.1103(a)(7)(iii) lasting less than two hours constitutes a single
offense.
* * * * *
(c) Administrative assessment of certain penalties. (1)
Administrative penalty authority. Subject to 42 U.S.C. 7524(c), in lieu
of commencing a civil action under paragraph (b) of this section, the
Administrator may assess any civil penalty prescribed in paragraph (a)
of this section, except that the maximum amount of penalty sought
against each violator in a penalty assessment proceeding shall not
exceed $250,000, unless the Administrator and the Attorney General
jointly determine that a matter involving a larger penalty amount is
appropriate for administrative penalty assessment. Any such
determination by the Administrator and the Attorney General is not
subject to judicial review. Assessment of a civil penalty shall be by
an order made on the record after opportunity for a hearing held in
accordance with the procedures found at part 22 of this chapter. The
Administrator may compromise, or remit, with or without conditions, any
administrative penalty which may be imposed under this section.
* * * * *
(d) The maximum penalty values listed in paragraphs (a) and (c) of
this section are shown for calendar year 2002. Maximum penalty limits
for later years may be adjusted based on the Consumer Price Index. The
specific regulatory provisions for changing the maximum penalties,
published in 40 CFR part 19, reference the applicable U.S. Code
citation on which the prohibited action is based.

[FR Doc. 03-3065 Filed 2-27-03; 8:45 am]
BILLING CODE 6560-50-P

Notices For
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