Memorandum of Understanding Concerning Small Spark-Ignited Nonroad Engines Employing Clean Technologies The United States Environmental Protection Agency (EPA) and Briggs & Stratton Corporation (Manufacturer) enter into this Memorandum of Understanding (MOU) to explore the marketability and feasibility of applying cleaner technologies to mass production of certain nonhandheld outdoor power equipment in the United States. I. Background and Purpose 1. Manufacturers of small spark-ignited (SI) nonroad engines in the nonhandheld category currently employ a variety of technological approaches in the design of their engines. The choice of technology is based on meeting various important requirements such as cost, consumer demand, and competitive conditions, as well as the emissions requirements established by EPA. 2. Phase 1 emissions standards for these engines were first set by EPA in 1995, and they go into effect with the 1997 model year. EPA is developing a proposal for a Phase 2 program for these engines, based on the Small Nonhandheld Spark-Ignited Nonroad Engine Statement of Principles (SOP) signed by EPA, Briggs & Stratton Corporation, and others. The SOP recognizes that further control of hydrocarbon and oxides of nitrogen emissions from these engines, beyond the Phase 1 levels, is achievable through cost effective technology that will be available in future model years, and that air quality considerations warrant this further control. EPA intends to issue a notice of proposed rulemaking (NPRM) consistent with the provisions of the SOP in the Fall of 1997. 3. The SOP divides small nonhandheld SI engines into two classes based on engine displacement: Class 1 engines, with displacements of less than 225 cc, are typically used in relatively inexpensive applications such as walk-behind lawnmowers, and for the most part use side-valve (SV) technology. Class 2 engines, with displacements greater than or equal to 225 cc, are typically used in more expensive applications such as riding mowers and commercial equipment. Approximately one third of the Class 2 engines sold in the U.S. today use over-head valve (OHV) engine technology. 4. One of the primary goals of the Phase 2 program for non-handheld engines is a shift to cleaner, more emissions-durable control technology, as quickly as is feasible considering cost and lead time. The Phase 2 proposal for Class 2 engines is expected to ensure that manufacturers shift to OHV technology for those engines. In addition, the proposal for Class 1 engines is expected to achieve meaningful emission reductions beyond what is required by the Phase 1 rule, while at the same time allowing the continued use of SV engines for this class. 5. EPA and Manufacturer also recognize the desirability of investigating the potential to reduce the cost and increase the penetration of OHV technology in Class 1, in order to maximize achievable emissions reductions from nonhandheld engines. A Class 1 OHV Demonstration Program that assesses the environmental, marketplace, and other economic factors associated with high-volume OHV technology for Class 1 engines will play an important role in meeting the goals of the Phase 2 program. 6. The purpose of this MOU is to implement a Class 1 OHV Demonstration Program, in order to determine in a meaningful way the potential for increasing the penetration of cleaner more durable technology in Class 1. This is an experiment that will explore the marketability and feasibility of applying OHV technology to mass production Class 1 engines. This MOU describes the actions that each signatory will take to implement the Demonstration Program. II. Manufacturer Actions 1. Manufacturer will undertake the Class 1 OHV Demonstration Program by producing and attempting to sell in the United States a substantial number of engines below 225 cc that use over-head valve technology (small OHV engines) suitable for residential end-use applications. 2. Beginning in the 1998 model year, Manufacturer will have the capacity to produce within a range of 200,000 to 1,000,000 small OHV engines for sale in the United States. This range is intended as a good faith estimate of the number of small OHV engines for Class 1 residential use applications that Manufacturer expects to produce and sell, beginning in model year 1998, under this Demonstration Program. This MOU does not in any way bind the manufacturer to produce or sell any number of these engines in any model year. 3. By October, 1999, and each two years during the Demonstration Program, Manufacturer will submit to EPA a report containing the following information: a) Estimates of the number and type of small OHV engines that were ordered in the previous two model years together with any available estimates of the number and type of small OHV engines that Manufacturer expects to produce in later model years. (These reports will not include information that identifies the purchaser(s) of these engines.) b) Sales trends for all small OHV engine models produced by Manufacturer. c) The percentage increase from prior model years and the relationship of these sales to the overall market for Class 1 engines. d) Cost trends for any small OHV engine models with significant changes in components and/or processes. e) A characterization of the emission control performance and emission levels of small OHV engines, including where changes are made to improve performance or reduce costs, with new engine data based on audit testing and in-use data generated from in-use test programs, as reasonably determined by Manufacturer. III. EPA Actions 1. EPA will cooperate with Manufacturer as it undertakes implementation of the Class 1 OHV Demonstration Project. 2. Upon receipt of reports and other information from Manufacturer under the Demonstration Program that Manufacturer claims to be confidential business information, EPA will treat the information as business confidential to the full extent allowed under the law, including making class determinations of confidentiality, where appropriate, pursuant to 40 C.F.R  2.207. 3. EPA will not use the reports or other information obtained from Manufacturer under this Class 1 OHV Demonstration Program for purposes of determining compliance with emissions standards, unless and to the extent requested by Manufacturer. IV. Miscellaneous 1. This MOU does not bind or obligate either signatory in any way, and each signatory retains the right to terminate the MOU at any time. 2. EPA's participation in the Class 1 OHV Demonstration Program in no way constitutes an endorsement by EPA of Manufacturer's products or a determination that Manufacturer's products comply with applicable laws and regulations. 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