Statements of Principles for Nonroad Phase 2 Small Spark-Ignited Engines

Related Material

Other Related Documents

Note: EPA no longer updates this information, but it may be useful as a reference or resource.

[Federal Register: March 27, 1997 (Volume 62, Number 59)]
[Proposed Rules]
[Page 14739-14754]
From the Federal Register Online via GPO Access [wais.access.gpo.gov]
[DOCID:fr27mr97_dat-20]

[[Page 14739]]

_______________________________________________________________________

Part II

Environmental Protection Agency

_______________________________________________________________________

40 CFR Part 90

Statements of Principles for Nonroad Phase 2 Small Spark-Ignited
Engines; Proposed Rule

[[Page 14740]]

ENVIRONMENTAL PROTECTION AGENCY

40 CFR Part 90

[FRL-5802-5]

Statements of Principles for Nonroad Phase 2 Small Spark-Ignited
Engines

AGENCY: Environmental Protection Agency (EPA).

ACTION: Advance Notice of Proposed Rulemaking (ANPRM).

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SUMMARY: EPA is developing a second phase of national air emission
regulations that affect small spark-ignited (SI) engines used primarily
in lawn and garden equipment. EPA expects the program to reduce
combined emissions of hydrocarbon (HC) and oxides of nitrogen
(NO_X) from these engines by an additional 30 to 40 percent beyond
Phase 1 levels, in excess of 100,000 tons of HC per year with minimal
changes in NO_X. These emission reductions will result in a
decrease in summertime ozone and a corresponding health and welfare
benefit. In 1996 EPA and certain other interested parties signed two
different Statements of Principles (SOPs) that describe various aspects
of the Phase 2 program that EPA will propose. One SOP focuses on
provisions that would affect engines used in handheld equipment such as
leaf blowers, chain saws, and trimmers. The second SOP addresses
provisions that would affect engines used in nonhandheld equipment such
as lawnmowers and generator sets. EPA is issuing this ANPRM to: notify
the public about the availability of the two small SI nonroad engine
SOPs; request comment on the SOPs, and; inform interested parties about
the forthcoming Phase 2 small SI engine Notice of Proposed Rulemaking
(NPRM) which will be based in part on the two SOPs.

DATES: EPA requests comment on this ANPRM no later than April 28, 1997.
Should a commenter miss the requested deadline, EPA will try to
consider any comments that it receives prior to publication of the
NPRM. There will also be an opportunity for oral and written comment
after publication of the NPRM.

ADDRESSES: Materials relevant to this Notice are contained in EPA Air
and Radiation Docket No. A-96-55 and Docket No. A-93-29, located at
room M-1500, Waterside Mall (ground floor), U.S. Environmental
Protection Agency, 401 M Street, SW., Washington, DC 20460. The docket
may be inspected from 8:00 a.m. until 5:30 p.m., Monday through Friday.
The docket may also be reached by telephone at (202) 260-7548.
As provided in 40 CFR part 2, a reasonable fee may be charged by
EPA for copying docket materials.
Comments on this document should be sent to Public Docket A-96-55
at the above address. EPA requests that a copy of comments also be sent
to Betsy McCabe, U.S. EPA, Engine Programs and Compliance Division,
2565 Plymouth Road, Ann Arbor, MI 48105.

FOR FURTHER INFORMATION CONTACT: Betsy McCabe, U.S. EPA, Engine
Programs and Compliance Division, 2565 Plymouth Road, Ann Arbor, MI
48105. Telephone: (313) 668-4344. Electronic mail:
mccabe.betsy@epamail.epa.gov

SUPPLEMENTARY INFORMATION:

I. Background and Purpose for this Advance Notice

With this document EPA announces the signing of two Statements of
Principles (SOPs). One SOP, signed in May, 1996, focuses on provisions
to be proposed in a future Notice of Proposed Rulemaking (NPRM) that
would affect new spark-ignited (SI) engines at or below 19 kilowatts
(25 horsepower) used in handheld applications such as trimmers, edgers,
brush cutters, leaf blowers, leaf vacuums, chain saws, augers, and
tillers. In developing this handheld SOP, EPA, state, and industry
representatives reached agreement on several elements of a Phase 2
program to be proposed for these small handheld SI engines. The second
SOP, signed in December, 1996, describes areas of agreement between EPA
and certain industry representatives for a Phase 2 program to be
proposed for small SI engines used in nonhandheld equipment such as
lawnmowers, generator sets, and riding mowers.
EPA anticipates issuing an NPRM, based in part on these two SOPs,
by the Fall of 1997. The NPRM will be subject to the full public
process required by section 307(d) of the Clean Air Act, as amended, 42
U.S.C. 7607(d). By announcing the availability of the handheld and
nonhandheld SOPs in this Advance Notice, EPA hopes to receive early
comments and suggestions which can inform the development of the
proposal and, ultimately, the final regulations for Phase 2. Today's
Advance Notice includes the text of the handheld and nonhandheld SOPs
as appendices to this preamble.

II. Brief Background on Small SI Engine Rulemakings

In July 1995, EPA issued the first national program to reduce
emissions from small SI engines (60 FR 34582, July 3, 1995, codified at
40 CFR part 90). This program, called ``Phase 1,'' takes effect with
model year 1997 and sets emissions standards for ``new'' small SI
engines. The Phase 1 standards are expected to result in a 32 percent
reduction in HC emissions from small SI engines. The Phase 1 program
was developed through the notice and comment rulemaking process, and
the regulations are similar in many respects to California's Tier I
Regulation for 1995 and Later Utility and Lawn and Garden Equipment
Engines.¹While EPA was developing the Phase 1 regulations, EPA
began working with certain interested parties in a consultative process
to develop a comprehensive Phase 2 program that focusses on ensuring
that emissions reductions from small SI engines are achieved ``in-
use.''
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\1\ The California Regulations for 1995 and Later Utility and
Lawn and Garden Equipment Engines were initially approved in
December 1990, and formally adopted in March 1992.
---------------------------------------------------------------------------

In September 1993, a Negotiated Rulemaking Advisory Committee was
formed to support EPA in developing a practical approach to a
comprehensive regulatory program for Phase 2. This committee,
consisting of representatives from industry, small business, state,
public health and environmental groups, and EPA, met until February
1996, but did not reach consensus on an Agreement in Principle or draft
regulatory language. However, the regulatory negotiation process (Reg
Neg) produced substantial useful information and provided EPA with
input from numerous key stakeholders which will help the Agency develop
the Phase 2 small SI engine regulatory program. Subsequent to the
conclusion of the Reg Neg process, EPA continued working with some of
the parties to reach agreement on how certain aspects of a Phase 2
program would be addressed in a future NPRM. As these discussions
proceeded, the involved parties worked together to develop written
documents, Statements of Principles, which will partly form the basis
of the Phase 2 NPRM. The handheld SOP addresses issues affecting
engines used in handheld equipment, and the nonhandheld SOP addresses
issues affecting engines used in nonhandheld equipment. Key features of
the SOPs are described briefly below. However, the reader is advised to
refer to the actual SOP documents that follow for details (see also
section VII, ``Obtaining Copies of Documents''). Issues not discussed
in the SOPs will be addressed in the Phase 2 NPRM.

[[Page 14741]]

III. Brief Summary of the Handheld SOP for Small SI Engines

Parties to the handheld SOP, signed in May, 1996, include EPA; the
Auger and Power Equipment Manufacturers Association (APEMA); the North
American Equipment Dealers Association (NAEDA); the Portable Power
Equipment Manufacturers Association (PPEMA); the State and Territorial
Air Pollution Program Administrators/Association of Local Air Pollution
Control Officials (STAPPA/ALAPCO); and the Wisconsin Department of
Natural Resources.
This SOP outlines elements for a Phase 2 program to be proposed by
EPA for Class 3, 4, and 5 handheld small SI engines at or below 19
kilowatts. Handheld engines generally use 2-stroke technology due to
its high power to weight ratio and its allowance for multi-positional
use. Because of these characteristics, handheld engines are used in
equipment typically carried by the operator, such as chainsaws,
trimmers, and blowers.
As described in the SOP, EPA plans to propose Phase 2 emission
standards for emissions of HC+NO_X and for carbon monoxide (CO)
from handheld engines that are to be met over the lifetime of the
engine. These standards, if adopted, would represent an estimated 30
percent reduction in HC+NO_X exhaust levels from these engines
below Phase 1 levels.
The involved parties also agreed that EPA would propose a provision
for phased-in effective dates based on a percentage of production from
model year 2002 through model year 2005.
As described in the SOP, the signatories agreed that a particulate
matter and toxics test program will be conducted to collect and
evaluate information on emissions of these pollutants from handheld
sources.
The signatories also agreed that the NPRM would include a voluntary
program that would allow manufacturers to display a label or symbol
identifying handheld engines that have HC+NO_X certification levels
substantially below the Phase 2 standards.
The following elements of a compliance program are reflected in the
SOP and will be described in the NPRM: a certification program; a
production line testing program; and an in-use testing program. The
provisions in the compliance program that EPA will propose will help
ensure that handheld engines continue meeting the standards for the
life of the engine.
In addition, the SOP provides that EPA intends to conduct a
technology review to assess whether any further revisions to the
emissions standards for handheld engines would be appropriate.

IV. Brief Summary of the Nonhandheld SOP for Small SI Engines

Parties to the nonhandheld SOP, signed in December 1996, include
EPA; Briggs & Stratton Corporation; Kawasaki Motors Corporation,
U.S.A.; Kohler Company; Kubota; Mitsubishi Engine North America, Inc.;
Onan Corporation; Suzuki Motor Corporation; Tecumseh Products Company;
The Toro Company; and Wis-Con Total Power Corporation.
This SOP outlines elements of a Phase 2 program to be proposed by
EPA for Class 1 and 2 nonhandheld small SI engines at or below 19
kilowatts. Class 1 engines have displacements of less than 225 cc and
are typically used in relatively inexpensive residential applications
such as walk-behind lawnmowers and tillers. Most Class 1 engines use
side-valve (SV) technology. Class 2 engines have displacements greater
than or equal to 225 cc, and are typically used in more expensive
commercial applications such as lawn tractors, riding mowers and
generator sets.
As described in the nonhandheld SOP, EPA plans to propose in the
Phase 2 NPRM standards for HC +NO_Xand CO emissions from
nonhandheld engines that are to be met over the lifetime of the engine.
These standards, if adopted, would represent a 30 to 40 percent
reduction in HC +NO_Xexhaust emissions from these engines below
Phase 1 levels.
The signatories also agreed that EPA would propose a provision for
an effective date of 2001 for Class 1 engines, and a phase-in between
2001 and 2005 for Class 2 engines. The signatories expect that the
emission standards and effective dates contained in the SOP would cause
manufacturers to shift their Class 2 engines to cleaner, more durable
technology, such as over-head valve (OHV) technology by 2005.
To help determine the consumer acceptance and feasibility of
applying OHV technology to Class 1 engines, EPA and certain
manufacturers have entered into separate Memoranda of Understanding
calling for an OHV Demonstration Program to be implemented by those
manufacturers. Readers who are interested in learning more about the
OHV Demonstration Program should refer directly to the Memoranda of
Understanding (MOUs), available electronically (see Obtaining Copies of
Documents section) and in the public docket for this rulemaking.
As described in detail in the nonhandheld SOP, EPA plans to propose
a comprehensive compliance program for nonhandheld engines in the Phase
2 NPRM. This program will be designed to ensure that emission benefits
are achieved over the lifetime of the engines while minimizing
manufacturers' compliance burdens. The Phase 2 compliance provisions in
the NPRM for nonhandheld engines will include certification and
production line testing programs. In addition, the proposed program
will call for manufacturers to conduct a field durability and in-use
emission performance demonstration program for OHV engines every four
years.
The signatories also agreed to work together to develop a voluntary
Fuel Spillage Reduction Program aimed at educating consumers about the
significant contribution to air pollution from spillage, and
encouraging the development and use of technology that will reduce or
eliminate spills by users.

V. Environmental Benefit Assessment

National Ambient Air Quality Standards (NAAQS) have been set for
criteria pollutants which adversely affect human health, vegetation,
materials, and visibility. The primary criteria pollutant affected by
this rule is ozone. EPA has determined the standards contained in this
NPRM will reduce HC emissions from spark-ignition small engines with
minimal changes inNO_Xlevels and help areas come into compliance
with the ozone NAAQS. The following sections contain a brief
description of some of the health effects associated with ozone, and
the importance of continuing to reduce HC emissions. The NPRM for this
rule will contain a more detailed discussion of the health and welfare
benefits which can be expected from this program.

A. Health Effects of Tropospheric Ozone

Ozone is a highly reactive chemical compound which can affect both
biological tissues and man-made materials. Ozone can affect human
pulmonary and respiratory health--symptoms include chest pain,
coughing, and shortness of breath.² Elevated ozone levels can
cause aggravation of pre-existing respiratory conditions such as
asthma. Ozone can cause a reduction in performance during exercise even
in healthy persons. In addition, ozone can also cause alterations in
pulmonary and extrapulmonary (nervous system, blood, liver, endocrine)
function. The oxidizing effect of ozone can irritate the

[[Page 14742]]

nose, mouth, and throat causing coughing, choking, and eye irritation.
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\2\ Air Quality Criteria Document for Ozone and Related
Photochemical Oxidants (External Review Draft), EPA-600/AP-93/004a-
c, February, 1995 (NTIS #: PB94-17-3127, -3135, -3143).
---------------------------------------------------------------------------

The presence of elevated levels of ozone is of concern in rural
areas as well. Because of its high chemical reactivity, ozone causes
damage to vegetation. Estimates based on experimental studies of the
major commercial crops in the U.S. suggest that ozone may be
responsible for significant agricultural crop yield losses. In
addition, ozone causes noticeable leaf damage in many crops, which
reduces marketability and value. Finally, there is evidence that
exposures to ambient levels of ozone which exist in many parts of the
country are also responsible for forest and ecosystem damage. Such
damage may be exhibited as leaf damage, reduced growth rate, and
increased susceptibility to insects, disease, and other environmental
stresses and has been reported to occur in areas that attain the
current standard. There are complexities associated with evaluating
such effects due to the wide range of species and biological systems
introduce significant uncertainties.

B. Need forNO_Xand VOC Control

Photochemical modeling highlights the fact that ozone pollution is
a regional problem, not simply a local or state problem. Ozone itself
and its precursors are transported long distances by winds and
meteorological events. Thus, achieving ozone attainment for an area and
thereby protecting its citizens from ozone-related health effects often
depends on the ozone and/or precursor emission levels of upwind areas.
Local stationary sourceNO_Xand VOC controls will assist
nonattainment areas toward their ozone reduction goals, but for many
areas with persistent ozone problems, attainment of the ozone NAAQS
will require broader control strategies for bothNO_Xand VOC. As a
result, effective national ozone control requires an integrated
strategy which combines cost-effective approaches in both the mobile
and stationary source arenas at both the local and national levels.
Small spark-ignited engines represent an important portion of the
national HC inventories. The program contained in todays notice will
result in important reductions in HC (in excess of 100,000 tons HC/
year) with little change inNO_Xlevels from small spark-ignited
nonroad engines. These meaningful HC reductions will help to alleviate
the problems associated with ozone formation in many nonattainment
areas throughout the country.

VI. Discussion of Issues

EPA seeks comments on the provisions described in the handheld and
nonhandheld SOPs that are summarized above and published in their
entirety along with this ANPRM. In particular, the Agency requests
comment on some areas for which the SOPs do not contain detailed
provisions, as discussed below.

A. Definitions of Commercial and Residential

As discussed in the handheld SOP, at the time of certification
handheld engine manufacturers would declare an engine family to be
``commercial'' or ``residential'' based on the expected useful life and
intended application of the engine. Comment is solicited on the
appropriate definitions of ``commercial'' and ``residential.''

B. Bench Aging Correlation Program

Both SOPs contain provisions for bench aging programs as part of
the compliance programs that EPA will propose for the Phase 2 NPRM. EPA
solicits suggestions on the ability of bench aging to adequately
demonstrate deterioration of engines in the field. The Agency also
seeks comment on methods for correlating bench-aged and field-aged
results. In addition, EPA requests comment on whether there are certain
engine technologies that are more suitable to bench aging than others.
In particular the Agency seeks information on whether the bench aging
certification program for side valve engines is the appropriate method
for estimating deterioration.

C. Deterioration Factors

The nonhandheld SOP signatories agree to the goal of designing and
building engines that are emissions durable over their actual useful
lives. Consequently, under the program envisioned in the SOP the test
results from any of the new engine compliance programs would be
adjusted by deterioration factors to estimate emissions at the end of
the engine's life. The nonhandheld SOP describes several program
elements that involve establishment of deterioration factors (DFs). As
EPA further develops its Phase 2 program to propose in the NPRM, the
Agency requests comment on various aspects of developing appropriate
deterioration factors. EPA seeks additional data on which to base
assigned DFs in the Phase 2 proposal. In addition, EPA seeks comment on
the types of data required for both assigned and manufacturer-
determined DFs for the 500 and 1000 hour useful life categories for
Class 2 engines. The Agency also seeks suggestions on the
appropriateness of establishing optional assigned DFs for the 250 and
500 hour useful life categories for Class 1. EPA encourages interested
parties to provide comment, regarding Class 2 engines, on the kind of
data required to determine the DFs, the methodology required to
determine the DFs, the amount of in-use testing required to verify the
DFs, and the appropriateness of reserving certification credits pending
verification of the DFs through in-use testing.

D. Averaging, Banking and Trading (ABT)

The Signatories to the nonhandheld SOP agree that an ABT program
would help ensure that the standards and phase-in structure that EPA
will propose in the Phase 2 NPRM will be cost-effective and
technologically feasible. Signatories to the handheld SOP did not reach
agreement on an ABT program. EPA seeks comment on the appropriateness
of the ABT program described in the nonhandheld SOP and also on whether
or not an ABT program would be appropriate for the handheld segment of
the small SI industry. In addition, EPA solicits comment on the
appropriateness of the provision described in the nonhandheld SOP of
unlimited life for credits generated under the Phase 2 program when
used for purposes of compliance with the SOP nonhandheld standards that
EPA will propose in the Phase 2 NPRM.

E. Fuel Spillage Reduction Program

The nonhandheld SOP includes a provision for the signatories to
work collaboratively and with other affected parties to develop a
voluntary fuel spillage reduction program. It is anticipated that this
voluntary partnership program would involve EPA; engine manufacturers
and equipment manufacturers; and potentially regional, state, and local
air pollution agencies; health and environmental organizations; and
other interested parties. The strategies involved in reducing fuel
spillage would include, but not be limited to:
providing information and reminders at public places where
refueling frequently occurs, where equipment or fuel supplies are sold,
and similar places;
providing education and training to commercial operators
of equipment, to those persons who influence individuals doing the
refueling (such as equipment sales staff or small engine course
instructors), and similar target audiences;
providing educational materials for use in environmental
education courses

[[Page 14743]]

or related programs targeting children and youth;
encouraging the development of technology that will assist
equipment users in reducing spills and providing recognition for
implementing technology developments that will assist equipment users
in reducing spills.
EPA will develop this program in greater detail as the proposed
rule is developed and finalized and encourages those parties interested
in participating to contact the Agency.
The Agency believes it is appropriate to develop and implement a
program unique to the small SI industry to encourage public awareness
and act as an incentive for technology investments. Every year,
millions of gallons of gasoline are lost during refueling. It is
estimated that the few ounces spilled during refueling lawn and garden
equipment alone total about 17 million gallons of gasoline, most of
which evaporates into the air to contribute to the air pollution
problem. To reduce and prevent this pollution a variety of measures
will be needed, most involving increased public awareness and
education.
The Agency seeks comment on this possible voluntary partnership
program, appropriate strategies, appropriate target audiences, and
other matters pertinent to establishing this program. EPA also solicits
comment on the feasibility and appropriateness of expanding such a
program to the handheld side of the industry.

F. Environmental Labeling Program

EPA will be developing an incentive and recognition program to
identify for consumers those handheld engines which emit HC+NO_X
levels substantially below the Phase 2 levels. This program would be
voluntary. Manufacturers who meet the program qualifications and choose
to participate would be recognized for their efforts and allowed to
display a symbol (as yet unidentified) on qualifying products
identifying them as cleaner engines.
As part of the public recognition program, EPA will establish
criteria for the standards and the procedure required to qualify for
public recognition. The specific details of the incentive and
recognition program will be determined as the proposed rule is
developed and finalized. Some of the matters which need to be
considered include, but are not limited to:
emission level at which recognition will be granted;
single or multiple levels of recognition provided (that
is, recognizing in a different manner or with a different symbol, those
who comply at the minimum level of the requirement from those products
who go beyond the minimum level);
period of recognition;
type of recognition;
appropriate symbol and identifier for this program;
criteria for use of the symbol on the product, packaging,
or advertisements for the engine;
administrator and/or manager of the program--EPA,
independent third party, combination, or some other option;
process for administration of the program on ongoing
basis.
EPA will propose an initial framework for this program as part of
the NPRM.
The Agency believes it is appropriate to develop and implement a
program unique to this industry as an incentive for advanced technology
investments. EPA solicits comment on this possible incentive and
recognition program, the applicable criteria, the type of recognition
accorded, the period of recognition, and any other matters pertinent to
establishing this program.
While EPA is initially developing this program for handheld engines
which emit below the Phase 2 levels, the Agency solicits comment on the
feasibility and appropriateness of such a program for nonhandheld
engines, including the applicable criteria, the type of recognition
accorded, and the period of recognition. In addition, EPA also solicits
comments on the feasibility and appropriateness of expanding such a
program to include similar equipment not subject to the small SI engine
regulations (such as electric string trimmers and mowers).

G. PM and Toxics Testing Program

The handheld SOP describes a particulate matter (PM) and toxics
test program that EPA will propose as part of the Phase 2 NPRM. The
Agency requests comment on the scope of the program, the number of test
engines, and the types of pollutants to be tested. In addition EPA
seeks suggestions as to who might best administer the test program, how
the program might be administered, and the level of funding needed to
conduct such a program. EPA also seeks comment on the time frame for
such a program, given the consideration that such a program could begin
prior to implementation of the Phase 2 program, since there are
handheld engines now available which meet the standards described in
the handheld SOP which the Agency will propose in the Phase 2 NPRM.

H. Cost Information on Field Ageing

EPA solicits information as to the costs for manufacturers to field
age engines used in handheld and nonhandheld equipment out to the end
of their regulatory useful lives as described in the SOPs.

I. Impact on Equipment Manufacturers

As it works on developing the Phase 2 NPRM, EPA is trying to gain a
better understanding of various aspects of the small SI equipment
industry, and the impacts that the Phase 2 program EPA will propose
would have on the equipment industry. Consequently, the Agency seeks
any detailed information regarding the impact of the program on the
equipment manufacturers. In particular, the Agency seeks specific
information from nonhandheld equipment manufacturers on the number of
production lines per equipment type that will need to be changed in
order to incorporate engines changing to OHV technology.

J. Fuel Consumption Data

In order to fully discuss the effects of the Phase 2 program it
will propose, EPA seeks detailed data regarding fuel consumption for
both handheld and nonhandheld Phase 1 and Phase 2 engines and the
effects of various technological changes and emission reduction
strategies on fuel consumption.

VII. Public Participation

By September 30, 1997, EPA will issue a Notice of Proposed
Rulemaking based in part on the SOPs for Phase 2 nonroad small SI
engines. The Agency is committed to a full and open regulatory process
and looks forward to input from a wide range of interested parties as
the rulemaking process develops. Opportunities for input will include a
formal public comment period and a public hearing. EPA encourages all
interested parties to become involved in this process as it develops.
With publication of this ANPRM, EPA opens a 30 day comment period
regarding the content of this ANPRM and the handheld and nonhandheld
SOPs (see DATES section above for close of comment period). The Agency
strongly encourages comment on all aspects of the SOPs. The most useful
comments are those supported by appropriate and detailed rationales,
data, and analyses. In particular, EPA requests comment on those issues
described in the Discussion of Issues section. All comments, with the
exception of proprietary information, should be submitted to the EPA
Air Docket No. A-96-55 by the date

[[Page 14744]]

specified above. The Agency will consider all comments, and use them in
developing the NPRM.
Commenters who wish to submit proprietary information for
consideration should clearly separate such information from other
comments by (1) labeling proprietary information ``Confidential
Business Information'' and (2) sending proprietary directly to the
contact person listed (see FOR FURTHER INFORMATION CONTACT) and not to
the public docket. This will help ensure that proprietary information
is not inadvertently placed in the docket. If a commenter wants EPA to
use a submission of confidential information as part of the basis for
the NPRM or for the final rule, then a nonconfidential version of the
document that summarizes the key information or data should be sent to
the docket.
Information covered by a claim of confidentiality will be disclosed
by EPA only to the extent allowed and in accordance with the procedures
set forth in 40 CFR part 2. If no claim of confidentiality accompanies
the submission when it is received by EPA, it will be made available to
the public without further notice to the commenter.

VIII. Obtaining Copies of Documents

This Advance Notice, both the handheld and nonhandheld SOPs, and
the MOUs are available in hard copy from the public docket. These
documents are also available electronically from the EPA Internet site
and the Technology Transfer Network (TTN).

A. Hard Copies From the Docket

Hard copies of this ANPRM, the SOPs, and the MOUs may be obtained
from the EPA Air and Radiation public docket as described in the
ADDRESSES section above.

B. Electronic Copies From Internet and TTN

Electronic copies of this ANPRM, the handheld and nonhandheld SOPs,
and the MOUs are available electronically from the EPA internet site
and via dial-up modem on the Technology Transfer Network (TTN), which
is an electronic bulletin board system (BBS) operated by EPA's Office
of Air Quality Planning and Standards. Both services are free of
charge, except for your existing cost of internet connectivity or the
cost of the phone call to TTN. Users are able to access and download
files on their first call using a personal computer and modem per the
following information.
Internet
World Wide Web: http://www.epa.gov/OMSWWW
Gopher: gopher.epa.gov Follow menus for: Offices/Air/OMS FTP:
ftp.epa.gov Change Directory to pub/gopher/OMS
Technology Transfer Network (TTN)
TTN BBS: 919-541-5742 (1200-14400 bps, no parity, 8 data bits, 1
stop bit) Also accessible via Internet: TELNET ttnbbs.rtpnc.epa.gov
Voice Helpline: 919-541-5384.
Off-line: Mondays from 8:00 AM to 12:00 noon EST.
A user who has not called TTN previously will be required to answer
some basic informational questions for registration purposes. After
completing the registration process, proceed through the following menu
choices from the Top Menu to access information on this rulemaking.

T GATEWAY TO TTN TECHNICAL AREAS (Bulletin Boards)
M OMS--Mobile Sources Information
K Rulemaking and Reporting
6 Non-Road
2 Non-road Engines

At this point, the system will list all available files in the
chosen category in reverse chronological order with brief descriptions.
To download a file, select a transfer protocol that is supported by the
terminal software on your own computer, then set your own software to
receive the file using that same protocol.
If unfamiliar with handling compressed (i.e. ZIP'ed) files, go to
the TTN top menu, System Utilities (Command: 1) for information and the
necessary program to download in order to unZIP the files of interest
after downloading to your computer. After getting the files you want
onto your computer, you can quit the TTN BBS with the Goodbye
command.
Please note that due to differences between the software used to
develop the document and the software into which the document may be
downloaded, changes in format, page length, etc. may occur.

IX. Legal Authority

Authority to develop the small SI program is granted to EPA by
sections 213 and 301(a) of the Clean Air Act, as amended (42 U.S.C.
7547, 7601(a)).

X. Unfunded Mandates Reform Act

Under Section 202 of the Unfunded Mandates Reform Act of 1995
(''UMRA''), P.L. 104-4, EPA must prepare a budgetary impact statement
to accompany any general notice of proposed rulemaking or final rule
that includes a Federal mandate which may result in estimated costs to
State, local, or tribal governments in the aggregate, or to the private
sector, of $100 million or more. Under Section 205, for any rule
subject to Section 202 EPA generally must select the least costly, most
cost-effective, or least burdensome alternative that achieves the
objectives of the rule and is consistent with statutory requirements.
Under Section 203, before establishing any regulatory requirements that
may significantly or uniquely affect small governments, EPA must take
steps to inform and advise small governments of the requirements and
enable them to provide input.
EPA has determined that the requirements of UMRA do not extend to
advance notices of proposed rulemaking such as this ANPRM.

XI. Regulatory Flexibility

The Regulatory Flexibility Act (RFA) is intended to assure that
concerns about small entities are adequately considered during the
development of new regulations which affect them. While the Regulatory
Flexibility Act does not require a formal analysis of ANPRMs, pursuant
to section 609(a) of the RFA EPA has begun to consider how small
entities would be affected by the potential new standards discussed in
the SOPs.
The nonroad small SI industry is made up of a large number of
engine manufacturers, and a still larger number of equipment
manufacturers, many of which do business internationally. Some of these
manufacturers may be small businesses as defined by the RFA and
applicable regulations and thus may be impacted by the Phase 2
standards for handheld and nonhandheld engines.
EPA plans to minimize any adverse impact on smaller nonroad small
SI engine and equipment manufacturers to the extent possible consistent
with the law, and will work with representatives of such entities as
the formal proposal is developed. EPA requests comment on the impacts
of the program outlined in the SOPs on small entities. In particular,
EPA solicits advice and recommendations on the following issues:
(a) The number of small entities to which the proposed rule as
based on the SOPs would apply;
(b) Projected reporting, record keeping, and other compliance
requirements of the proposed rule as based on the SOPs, including the
classes of small entities which would be subject to the Phase 2
requirements and the type of professional skills necessary for
preparation of the report or record;

[[Page 14745]]

(c) Other relevant Federal rules which may duplicate, overlap or
conflict with the proposed rule as based on the SOPs; and,
(d) Any significant alternatives to the proposed rule as based on
the SOPs which would accomplish the stated objectives of applicable
statutes and which would minimize any significant economic impact of
Phase 2 rules on small entities.

XII. Administrative Designation and Regulatory Analysis

Under Executive Order 12866 (58 FR 51735 (Oct. 4, 1993)), the
Agency must determine whether this regulatory action is ``significant''
and therefore subject to Office of Management and Budget (OMB) review
and the requirements of the Executive Order. The order defines
``significant regulatory action'' as any regulatory action (including
an advanced notice of proposed rulemaking) that is likely to result in
a rule that may:
(1) 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;
(2) create a serious inconsistency or otherwise interfere with an
action taken or planned by another agency;
(3) Materially alter the budgetary impact of entitlements, grants,
user fees, or loan programs or the rights and obligations of recipients
thereof; or,
(4) Raise novel legal or policy issues arising out of legal
mandates, the President's priorities, or the principles set forth in
the Executive Order.
Although the Agency is uncertain at this time of what the annual
monetary or material effect of a future Phase 2 rulemaking might be,
EPA has reason to estimate that such regulatory action might result in
an annual effect on the economy of $100 million or more, or adversely
affect in a material way a sector of the economy. EPA will further
address the requirements of Executive Order 12886 in developing the
proposed and final Phase 2 rule.
This Advance Notice was submitted to OMB for review as required by
Executive Order 12866. Any written comments from OMB or other federal
agencies and any EPA written response to OMB or other federal agency
comments are in the public docket for this document.

List of Subjects in 40 CFR Part 90

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

Dated: March 19, 1997.
Carol M. Browner,
Administrator.

Appendix A to the Preamble--Handheld Engines Statement of Principles

Statement of Principles for the Regulation of Exhaust Emissions From
Handheld Spark-Ignited Engines at or Below 19 Kilowatts

Preface
The Environmental Protection Agency (EPA) agrees to draft a
preamble and proposed rule that will include, to the maximum extent
possible, consistent with EPAs legal obligations, the agreements
contained in this statement of principles (SOP). This SOP applies to
new spark ignited engines at or below 19 kW for use in handheld
applications. The draft preamble and proposed rule will form the basis
of a notice of proposed rulemaking (NPRM) for Phase 2 emission
standards for all new nonroad spark-ignition engines at or below 19
kilowatts subject to the exclusion and exemption provisions contained
herein. The signatories have reached agreement on many of the basic
issues that will apply to handheld engines in Phase 2, such as the
pollutants to be regulated, the emission standards, phased in effective
dates, and a test program for certain non-regulated pollutants. The
signatories agree to support a program that promotes technological
advancement of durable engine and emission control technology. The
signatories agree that the program should strive to produce verifiable
reductions in engine emissions over the useful lives of the engines and
that the responsibility for verification testing is most appropriately
placed with the manufacturers. Consequently, the signatories have
reached conceptual agreement on issues such as production line and in-
use testing, and the implementation of a technology review designed to
assess the appropriateness of Phase 3 emission standards. However, a
significant number of important, unresolved issues remain. To the
extent possible in the time remaining prior to publication of the NPRM,
the parties will continue their efforts to reach agreement on these
unresolved issues. All outstanding issues will be addressed during the
rulemaking process. Each party to this SOP, other than EPA, agrees not
to file negative comments on the NPRM as to the agreed upon provisions
included in this SOP. If the NPRM includes the agreements contained in
this SOP, each party to the SOP other than EPA agrees to file a
memorandum in the docket to that effect and to acknowledge that it
participated in negotiating the SOP. Each party, other than EPA, agrees
not to take any action to inhibit the adoption in the final rule of the
agreed-upon provisions included in this SOP. Each party, other than
EPA, agrees not to challenge in court the agreements in this SOP which
are included in a final rule. If the final rule is challenged in court,
and if the final rule and preamble include the agreements contained in
this SOP, each party, other than EPA, agrees to file a memorandum
informing the court that it participated in negotiating the agreements
contained in this SOP.
Statement of Principles
The signatories agree to the proposal of a single Notice of
Proposed Rulemaking to regulate the exhaust emissions of small spark
ignited engines at or below 19 kW. The emission standard related
provisions applicable to small handheld engines (Effective Dates,
Engine Classifications, Emission Standards, PM and Toxics Test Program,
Test Procedures, Voluntary Incentive and Recognition Program,
Certification: Averaging, Banking and Trading) will be based upon the
items listed below. The non-emission standard related provisions of the
proposed rule (Definitions, Applicability, Certification Program,
Production Line Testing, In-Use Program, Imports, Dealer
Responsibility, Technology Review/Phase 3, and Tampering) shall be
identical for all engines subject to the rule, to the extent possible
and provided modifications are not necessary due to differences in
emission standard related provisions. Where such provisions are
proposed that will not be identical for all engines, the signatories
will be consulted during development of any such proposal and will have
full opportunity to comment after proposal. Items not addressed in this
SOP will be developed during the rulemaking process.
A. Definitions
The signatories agree that, to the greatest extent possible, terms
defined in the Phase 1 rule shall have the same meanings in the Phase 2
rule. Additionally, the signatories agree to define the following terms
necessary to implement provisions described in this SOP.
In-use credit: An emission credit derived from the difference
between the mean in-use emission results of a

[[Page 14746]]

regulated pollutant, or pair of pollutants in the case of HC+NO_X,
and the applicable emission standard.
Technology subgroup: A group of engine families from one or more
manufacturers having similar size, application, useful life and
emission control equipment; e.g., Class III, residential, non-catalyst,
two stroke, engine used in generator set applications.
B. Applicability
1. This statement of principles is applicable to handheld equipment
and spark ignited engines used in handheld products subject to the
following exclusions. These exclusions, to the extent described in the
Phase 1 rule, apply as described in that rule.
a. Engines used to propel marine vessels.
b. Engines used to propel any motor vehicle as defined in section
216 of the Clean Air Act including motorcycles.
c. Engines used to propel aircraft.
d. Engines used to propel recreational vehicles.
e. Engines used solely for competition.
f. Engines used exclusively in emergency and rescue equipment where
no certified engines are available to power the equipment safely and
practically.
g. Engines used to power stationary sources regulated by a federal
New Source Performance Standard promulgated under section 111 of the
Act.
h. Engines that are both: Used in underground mining or in
underground mining equipment; AND are regulated by the Mining Safety
and Health Administration (MSHA) in 30 CFR parts 7, 31, 32, 36, 56, 57,
70 and 75.
i. Engines produced for export.
2. Exemptions will be provided as in the Phase 1 rule for
uncertified engines used for purposes of research, investigations,
demonstrations or training.
3. Exemptions will also be provided as appropriate for reasons of
national security. An automatic national security exemption will be
proposed, similar to that in the marine SNPRM (61 FR 4618) for nonroad
engines and equipment that exhibit combat features, i.e. armor and or
weaponry.
C. Effective Dates
The standards will be phased in on a percentage of production basis
as shown below. The percentages listed below represent the minimum
percentage of an individual manufacturer s total production of
nonexempt, nonexcluded handheld engines (not percentage of engine
families) destined for U.S. use that must be certified to all
applicable standards and comply with all applicable related emission
requirements; e.g. labeling, warranty, production line and in-use
testing, etc.

Table 1.--Phase in Percentages for all Handheld Standards
------------------------------------------------------------------------
Production
Model year (percent)
------------------------------------------------------------------------
2002....................................................... 20
2003....................................................... 40
2004....................................................... 70
2005....................................................... 100
------------------------------------------------------------------------

D. Engine Classifications
Engine classification will be based upon engine displacement as in
the Phase 1 rule with Classes I and II being reserved for nonhandheld
engines.

Table 2.--Handheld Engine Classifications
------------------------------------------------------------------------
Engine class Application Displacement in cubic CM
------------------------------------------------------------------------
III................ Handheld................ Less than 20.
IV................. Handheld................ Greater than or = 20,
less than 50.
V.................. Handheld................ Greater than 50.
------------------------------------------------------------------------

E. Emission Standards
1. The percentages of engines listed in Table 1 must meet the
standards listed in Table 3 for their useful lives. These standards are
predicated upon a multiplicative deterioration factor (df) of 1.0 and
useful lives of 50 hours for residential handheld engines and 300 hours
for commercial handheld engines. Manufacturers will declare at the time
of certification whether an engine family is ``commercial'' or
``residential''. The definitions of ``commercial'' and ``residential''
will be determined in the rulemaking process.

Table 3.--HC+NO_X and CO Standards for Handheld Engines
------------------------------------------------------------------------
HC +NO_X CO (g/kW/
Engine class (g/kW/hr) hr)
------------------------------------------------------------------------
III............................................... 210 805
IV................................................ 172 805
V................................................. 116 603
------------------------------------------------------------------------

2. Two-stroke engines used to power snowthrowers will be subject to
the handheld standards at the manufacturer's option.
3. Engines used exclusively in wintertime-only applications, such
as snowthrowers or ice augers, need not certify to or comply with the
HC+NO_X standard at the option of the manufacturer.
4. A provision will be included to provide relief to small volume
equipment manufacturers to permit the use of Phase 1 engines for a
certain period of time when they can make a showing that no certified
Phase 2 engine is available with suitable physical or performance
characteristics to power a piece of equipment in production prior to
2002.
F. PM and Toxics Test Program for Class III, IV, and V Engines
The Phase 2 regulations adopted for handheld engines pursuant to
this SOP will not establish small engine emission standards for
particulate matter or toxic air contaminants listed under section
112(b) of the Clean Air Act. To evaluate the levels of these pollutants
from Phase 2 handheld engines, the signatories agree that a particulate
matter and toxics test program will be conducted. Elements of a PM and
Toxics Test Program for Class III, IV, and V engines include:
(1) PPEMA, in cooperation with EPA, commits to a test program to
evaluate and quantify emissions of particulate matter and toxics
including, but not limited to: formaldehyde, acetaldehyde, benzene,
toluene, and 1,3 butadiene.
(2) Testing under this program will be conducted on Phase 2
technology handheld engines.
(3) Testing under this program will be of sufficient magnitude to
represent the range of new basic technologies used to comply with the
Phase 2 small engine standards. CARB test data may be used where
appropriate.
(4) No enforcement will be tied to this testing program.
(5) Test data will be made available promptly to EPA for
distribution to other interested parties.
(6) Testing will be conducted at EPA, industry, and/or independent
facilities.
G. Test Procedures
The 2-mode steady state Cycle C test procedure will apply to all
Class III, IV, and V engines as it did in the Phase 1 rule except that
the modal weighting factors for the Phase 2 rule, will be 0.85 for Mode
1 (100% max. power) and 0.15 for Mode 2 (idle mode).
A large number of unresolved issues regarding the Phase 2 test
procedure still exist. The issues include: testing precision,
calibration requirements, data sampling requirements, long term data
storage, requirements for natural gas and liquefied petroleum gas, and
requirements for ambient test cell conditions. The signatories agree
these

[[Page 14747]]

could be resolved during the rulemaking process.
H. Certification Program
A simplified version of the Phase 1 Certification Program will be
provided to the extent possible and appropriate. The following outlines
the elements of the program:
(1) Streamlined annual certification application.
(2) Coordination with the California Air Resources Board (CARB).
(3) Possible automation of submittal.
I. Production Line Testing
The signatories agree that an efficient, flexible Production Line
Testing (PLT) program, designed to verify production of complying
engines is appropriate. At the same time, the signatories recognize
that when clear compliance is shown for a family, it is reasonable to
reduce or curtail testing. The basic components of a PLT program are
listed below. Additional specific details of the PLT program will be
developed through the rulemaking process.
(1) Self-auditing plan, covering all engine families each model
year in a statistically valid manner.
(2) The Cumulative Sum (CumSum) procedure will be proposed in the
NPRM. Alternate test schemes may be proposed by industry. The
signatories agree it is desirable to avoid a multiplicity of
individual, diverse test schemes, but recognize that there may be
situations where a single test scheme is not appropriate for specific
engine families or companies.
(3) Manufacturers will randomly select engines from each engine
family from the production line without regard to engine configuration.
(4) California audit test data is acceptable to be used as input
into the statistical scheme to determine compliance for 50-state engine
families.
(5) Production line testing will employ the full Federal Test
Procedure (FTP). EPA will seek comments in the NPRM on the
appropriateness of alternative test procedures that preserve the
enforceability of the PLT program.
(6) All exhaust pollutants for which standards are promulgated in
the Phase 2 rule will be tested and resultant test data will be
reported to EPA quarterly.
(7) If an engine family exceeds the test program determinant of
exceedance, the manufacturer will provide appropriate data to EPA
within a certain number of days. EPA will review the data and other
pertinent information and may notify the manufacturer that it intends
to suspend or revoke the manufacturer's certificate of conformity in
whole or in part for that engine family.
(8) The suspension or revocation of a certificate of conformity
shall not occur before thirty (30) days after notification from EPA of
its intent to suspend or revoke. Hearing procedures by which a
manufacturer may contest the suspension or revocation of a certificate
will be provided similar to those in the Phase 1 Selective Enforcement
Auditing (SEA) regulations. The certificate is automatically suspended
with respect to any individual engine that fails to comply with
applicable standards during this testing process.
(9) During this thirty (30) day period described in paragraph I 8
above, EPA will maintain a dialogue and coordinate with the
manufacturer to facilitate the approval of the required production line
change in order to eliminate the need to halt production, if possible.
(10) EPA will approve or disapprove the manufacturer's production
line change within fifteen (15) days of receipt. Disapproval of the
manufacturer's production line change could result in certificate
suspension or revocation, with hearing procedures as described above.
If EPA does not respond to the manufacturer's proposed change within
fifteen (15) days of receipt, the proposed change will be deemed
acceptable to EPA.
(11) The manufacturer, in concert with EPA, will then determine the
number of non-complying engines which have been introduced into
commerce.
(12) EPA may conduct Selective Enforcement Audits as a backstop ;
for example, when it receives evidence of improper testing procedures
or evidence of a non-conformity that was not being addressed in the
normal Production Line Testing process. Routine or random SEAs shall
not be a part of the final program.
J. In-Use Program
1. In-Use Testing
The signatories agree that an efficient, flexible testing program
designed to ensure and verify compliance of in-use engines with
applicable emission standards is appropriate. The signatories agree to
establish an in-use testing program with basic components as follows.
Additional specific details of the program will be developed through
the rulemaking process:
(a) In-use testing will employ the full Federal Test
Procedure(FTP).
(b) All exhaust pollutants for which standards are promulgated in
the Phase 2 rule will be tested.
(c) EPA will select a portion of each manufacturer's engine
families to be in-use tested each year (up to 25% of families).
Manufacturers may elect to conduct testing of additional families, and
to test more frequently. Additional in-use credits may be generated or
required from such testing.
(d) The in-use testing scheme will employ a method to increase the
number of engines to be tested when individual engine failures occur,
up to a maximum of ten engines per family per year. Except for small
volume families, the minimum number(n) of engines tested will be four.
(e) All in-use test results will be reported electronically each
quarter to EPA. Reporting of data which suggests an emission exceedance
(mean standard) will occur within a certain number of days
of the last test.
(f) EPA will have the right to spot check a manufacturer to
evaluate testing practices. EPA will provide reasonable notice of such
checks unless it has evidence of improper test practices.
(g) EPA may conduct its own in-use testing, including testing of
properly maintained consumer owned engines, through the full useful
life of the engines for enforcement purposes.
(h) Bench aging of in-use engines will be permitted only for
technology subgroups where correlation between field aged and bench
aged engines can be shown (see J2).
2. Bench Aging Correlation
The signatories agree that bench aging is an appropriate way to
obtain in-use emission data from small spark ignited gasoline engines,
provided that the bench aging process can be shown initially and
periodically to correlate with field aging. Consequently the
signatories agree to the basics of a bench aging correlation strategy
as follows. Additional specific details will be developed in the
rulemaking.:
(a) An initial bench-aging/field-aging correlation program will be
conducted by manufacturers under EPA guidance. A portion of the field
engines will be aged in individual usage or fleets where the
manufacturer does not carry out or exercise control over the engines
maintenance, or limit their usage such that the engines are no longer
used in a way that is representative of typical in-use engines.
(b) Emission testing will employ the full Federal Test Procedure
(FTP).
(c) All exhaust pollutants for which standards are promulgated in
the phase 2 rule will be measured for correlation purposes.
(d) Engines will be aged to the full regulatory useful life on the
bench and in the field except that commercial engines may be aged to
75% of the full

[[Page 14748]]

regulatory useful life for correlation testing purposes only.
(e) Correlation and sample sizes will be determined as appropriate.
(f) Engine manufacturers will conduct a correlation spot check
program periodically of each technology subgroup to verify that
emissions from bench-aged engines correlate with emissions from field-
aged engines.
3. In-Use Credit Program
The signatories agree that reasonable means must exist to address
emission exceedances of in-use engines, including those exceedances of
in-use engines identified by Production Line Testing, that: (1) provide
an incentive to manufacturers to build emission-durable engines; (2)
can be implemented practically; (3) provide an incentive to perform
additional in-use testing; (4) offset additional emissions that occur
as a result of the exceedance of the standard; and (5) are not unduly
burdensome to the manufacturers. The signatories agree that a mandatory
recall program does not meet these five criteria, although a
manufacturer may conduct a voluntary recall in lieu of remedying
emission exceedances through the in-use credit program or alternative
methods provided in this SOP. The signatories believe that successful
implementation of the in-use credit program and the other alternatives
described herein will provide a comprehensive remedy to address in-use
emission exceedances so that EPA will not, in practice, order mandatory
recall of Phase 2 certified engines. Additional specific details of the
in-use credit program will be developed during the rulemaking process:
(a) In-use credits generated or required will be based on an engine
family's in-use emission level relative to its applicable standard, as
determined from the In-use Testing Program.
(b) A multiplicative factor will be used to adjust credits earned
based on sample size.
(c) In-use credits will be used at a higher rate than the in-use
credits were generated.
(d) In-use credits will have an unlimited life during the Phase 2
program.
(e) For credit computational purposes, U.S. sales figures will be
used.
(f) In-use credit banking and trading is allowed, but trading may
be limited between categories of engines.
(g) All credit calculations indicating surpluses and deficits will
be reported electronically at the conclusion of in-use testing for that
model year.
(h) An appropriate in-use credit formula will be developed in the
rulemaking to account for the different power ratings of engines and
the different regulatory useful lives of residential and commercial
engines.
(i) In the case of in-use testing of carry-over engine families,
and in the absence of other applicable test data, the test results from
one model year will be assumed to apply to four years worth of
production: the model year tested, the next model year and the two
previous model years. In-use credits will be generated or required, as
appropriate.
4. Alternative Methods to Address In-Use Exceedances of Standards
The signatories agree that the primary method for manufacturers to
address in-use exceedances of standards will be applying credits
generated through the in-use credit program. If the manufacturer has
insufficient in-use credits, it should first investigate the
possibility of purchasing credits through available sources. However,
appropriate alternative methods will be considered. Manufacturers will
be allowed to implement all appropriate alternative methods prior to
EPA making a determination of substantial nonconformity. EPA will make
a determination of substantial nonconformity only when use of in-use
credits and/or appropriate alternative methods do not adequately
address the exceedance. Alternatives should meet the following
criteria:
(a) Alternatives must have a nexus to the emission problem caused
by the subject engine family.
(b) The alternative must cost substantially more than foregone
compliance costs and consider the time value of foregone costs.
(c) Alternatives must offset at least 100% of the exceedance of the
standard, subject to the other listed criteria.
(d) Alternatives must consider the degree of environmental harm
caused by the exceedance.
(e) Alternatives must consider the time value of the foregone
environmental benefit resulting from the exceedance.
(f) Alternatives will be subject to a cost cap that will be
established in the rulemaking process.
(g) Alternatives may not include measures the manufacturer planned
to undertake irrespective of the need to address the exceedance.
(h) Alternatives must be able to be implemented expeditiously and
completed in a reasonable time.
(i) Alternatives must not force the manufacturer out of business.
(j) The implementation potential of an alternative must be
considered.
K. Imports
The Imports program will be similar to the program for Phase 1.
Essentially, this program bars the importation of uncertified,
regulated small engines except that a one-time personal use exemption
will permit the importation of three non-conforming small engines (or
pieces of equipment containing such engines) for personal use but not
for purposes of resale.
L. Voluntary Incentive and Recognition Program for Handheld Engines
A voluntary program will be created to identify handheld engines
that have HC+NO_X certification levels substantially below the
Phase 2 standards. Manufacturers who participate in this program will
be allowed to display a symbol (yet to be determined) on their
products, packaging, or advertisements indicating that the engine
qualifies for the program. The signatories recognize that further
specific details of the program need to be formulated, but they agree
on certain basic concepts of the program. To qualify for the program,
certified engine emission levels must be a certain percentage below the
Phase 2 HC+NO_X standard. EPA and industry will agree on the
administration of the program. In addition, manufacturers will receive
a waiver on production line testing if an engine family achieves a
certification level a certain percentage or more below the HC+NO_X
standard. The two percentages referenced in this paragraph may be
different.
M. Certification: Averaging, Banking and Trading (ABT)
No certification ABT program will be created for handheld engines.
In-use credits generated in the in-use ABT program are not applicable
for use in certification.
N. Dealer Responsibility
The signatories agree that, except as noted in this paragraph,
these regulations will not impose any obligation on the dealers or
repair facilities to bring into compliance any products found to have
been tampered, nor will dealers or repair facilities be required to
report defects to EPA. Dealers and repair facilities will be prohibited
from tampering or causing tampering, but, are not prohibited from
working on tampered products. Dealers and repair facilities will not be
required to restore products submitted to them with tampered emission
controls to certified configurations unless the repair

[[Page 14749]]

involves the component or system that has been tampered. In that case,
dealers and repair facilities will be required to restore the system to
a certified and properly functioning configuration but will not be
required to demonstrate that the products comply with applicable
emission standards. In repairing or replacing emission control parts
and systems, dealers and repair facilities may use parts represented by
their manufacturers to be functionally equivalent to original equipment
(OE) parts.
O. Technology Review/Phase 3
The signatories recognize that technological advances and/or cost
reductions may occur after promulgation of the Phase 2 rule that could
make greater, but still cost-effective reductions feasible in handheld
emission levels. At the same time, the signatories agree that industry
requires certainty and stability for its business planning. Without
such certainty, industry would not commit to the investment that these
standards will require, and without such certainty and stability these
investments might never be recouped. EPA will commit to conducting a
technology review and publishing a Notice of Proposed Rulemaking in
2001 announcing any intended amendments to the standard levels or other
program elements or EPAs desire to maintain the existing standards or
program. The final rulemaking will be completed by 2002 and, if Phase 3
standards are adopted, they will be phased in on a percentage basis and
over a period of time similar to Phase 2, beginning no earlier than
model year 2007. This schedule is intended to provide a minimum five
year period between the implementation of Phase 2 standards and the
implementation of any Phase 3 standards to aid manufacturers in
recouping their investments in Phase 2 technology.
P. Tampering
The signatories agree that the tampering prohibitions from Phase 1
shall be adopted in Phase 2 except that a provision will be added to
permit the removal, subject to approval by EPA, of emission control
devices or elements of design that interfere with the safe and/or
practical use of emergency and rescue equipment.

Appendix B to the Preamble--Nonhandheld Engines Statement of
Principles

Small Nonhandheld Spark-Ignited Nonroad Engine Statement of Principles

Members of the small (19 kilowatt and below) nonhandheld spark-
ignited (SI) nonroad engine industry and the U.S. Environmental
Protection Agency (EPA) (collectively, the Signatories) recognize the
significant contribution made by small nonhandheld SI nonroad engines
to the emissions inventory that leads to ozone concentrations in
nonattainment areas. This recognition prompted the Signatories, along
with State and environmental organization representatives, to work
together to quickly put into place a first phase of regulations taking
effect with the 1997 model year. The Phase 1 regulations achieve
significant reductions in ozone-forming pollutants from these engines
by setting emissions standards to control hydrocarbons (HC) and oxides
of nitrogen (NO_X).
Nevertheless, the Signatories recognize that further control of HC
andNO_Xfrom these sources beyond the Phase 1 levels is achievable
through technology that will be cost-effective and feasible in future
model years. They also recognize the need for stability and
predictability to be designed into a regulatory program that achieves
these additional reductions.
The Signatories also recognize that it is important to maintain a
strong and competitive industrial base as EPA implements its
responsibilities to protect public health and welfare and the
environment.
This Statement of Principles (``SOP'') accomplishes both
environmental and business objectives, ensuring cleaner air in a manner
which is both realistic for industry and responds to environmental
needs. The Signatories agree that the aggressive package of emission
standards and implementation schedules contained in this SOP
accomplishes the environmental benefit of further significantly
reducing in-use emissions of ozone forming pollutants from nonhandheld
small SI nonroad engines. The Signatories further agree that the
package of provisions contained in this SOP reflects a clear, stable,
long-term control program for this source which will encourage industry
to more effectively incorporate environmental objectives into their
business planning.
With this SOP, the small nonhandheld SI nonroad engine industry has
stepped forward to work as a partner with EPA to bring about cleaner
air. States will see significant additional reductions in the emission
inventory from these sources beyond those achieved by the Phase 1 rule
that they can rely upon in meeting their responsibilities to attain and
maintain the national ambient air quality standard (NAAQS) for ozone.
Consumers will benefit from improved engine technology, which in
addition to improving air quality will likely also burn less fuel,
require less maintenance, be more reliable, and last longer.
This SOP outlines the joint understanding of all Signatories that
will provide the basis for issuance by EPA of an Advanced Notice of
Proposed Rulemaking (``ANPRM'') and a Notice of Proposed Rulemaking
(``NPRM'') which would be consistent with the points outlined in this
document. EPA intends to issue the ANPRM in early 1997, the NPRM in the
Fall of 1997, and to promulgate a final rule by the Fall of 1998.¹
Based on the currently available information, the Signatories believe
that the standards contained in this SOP represent the most stringent
standards achievable considering cost and other appropriate factors in
the time frame of this Phase 2 program. However, this SOP does not
change the importance of EPA demonstrating the need for the standards
described below and EPA's obligations to meet the criteria of the Clean
Air Act in finalizing any rule, including complying with all applicable
rulemaking procedures.
---------------------------------------------------------------------------

\1\ EPA is currently seeking appropriate changes to a court
order to conform to this SOP.
---------------------------------------------------------------------------

1. Scope
This SOP addresses a Phase 2 program that will apply to Class 1 and
Class 2 nonhandheld SI nonroad engines at or below 19 kilowatts (25
horsepower). These classes are distinguished from each other primarily
in terms of engine size (displacement), cost, and the applications in
which they are used.
Class 1 engines, which have displacements of less than 225 cc, are
typically used in relatively inexpensive applications such as walk-
behind lawnmowers, edgers and trimmers, and other lawn care equipment.
The vast majority of Class 1 engines produced for use in the United
States use side-valve (SV) technology.
Class 2 engines, which have displacements greater than or equal to
225 cc, are typically used in more expensive applications such as
riding mowers, lawn tractors, tillers, generator sets, and many other
applications. Class 2 engines are often used in commercial applications
and, as a result, tend to have much higher hours of use annually than
Class 1 engines. Approximately

[[Page 14750]]

one third of the Class 2 engines sold in the United States today
utilize over-head valve (OHV) engine technology.
2. Technology Forcing and In-Use Goals
The two primary goals for the Phase 2 program for small nonhandheld
SI nonroad engines reflected in this SOP are 1) a shift to cleaner,
more emissions durable technology as quickly as feasible, considering
cost and lead time factors, and 2) assurance that emission reductions
are achieved in-use.
The Signatories acknowledge that the program described here is
intended to meet the clean technology goal and reflect a shift to clean
more durable technology on an aggressive schedule by: 1) ensuring that
manufacturers shift their production of larger (Class 2) nonhandheld
engines completely to over-head valve engine or comparably clean and
durable technology (referred to herein as ``OHV emissions
performance'') by model year 2005, and in the interim attain a 50
percent shift to OHV emissions performance by model year 2001, 2)
establishing standards for Class 1 engines that reflect cost-effective
controls on SV engine technology, and 3) assessing the environmental,
marketplace and other economic factors associated with high-volume OHV
technology for smaller (Class 1) nonhandheld engines through an OHV
demonstration program.
The Signatories further agree on the principle that the emission
benefits of the program must be realized in-use. As a result, this SOP
contains provisions to ensure that the engines produced by
manufacturers are emissions durable over their useful lives while at
the same time using compliance mechanisms that are not unduly
burdensome.
3. Standards and Effective Dates
In order to achieve the goals described in section 2 above, the
Signatories agree to the following provisions.
a. HC+NO_X
The Signatories believe that the standards and effective dates
shown in Table 1 below will achieve the technology forcing goal
described in section 2 above.

Table 1.--HC+NO_X Standards and Model Year Effect Dates
--------------------------------------------------------------------------------------------------------------------------------------------------------
NMHC+NO_X(optional
HC+NO_X standard for natural gas 2001 2002 2003 2004 2005
fueled engines only)
--------------------------------------------------------------------------------------------------------------------------------------------------------

(1)g/kw-hr (g/bhp-hr)
(4)Assumed % of Sales
Class 1....................... 25.0 (18.7)................ 23.0 (17.2)............... 100
Class 2....................... 24.0 (18.0)................ 22.1 (16.5)............... 50 37.5 25 12.5 0
12.1 (9.0)................. 11.3 (8.4)................ 50 62.5 75 87.5 100
--------------------------------------------------------------------------------------------------------------------------------------------------------
Note to table: The actual corporate average emission standards for Class 2 engines, based on the standards applicable at the 250 hour useful life
category are, in g/kw-hr:

------------------------------------------------------------------------
2001 2002 2003 2004 2005
------------------------------------------------------------------------
18.0......... 16.6 15.0 13.6 12.1
------------------------------------------------------------------------
A manufacturer's actual corporate average could be different depending
on its mix of 250, 500, and 1000 hour useful life engines.

The Class 1 level of 25 g/kw-hr is expected to achieve meaningful
emission reductions from these engines beyond what is required for the
Phase 1 rule, while at the same time allowing the continued use of SV
engines in the market for this class. The Signatories agree to the
importance of the OHV Demonstration Program for Class 1 to investigate
the potential for increasing penetration of OHV technology in Class 1
(see section 3(g) below).
For Class 2 engines there is a dual standard: one based on SV
technology (which is expected to be phased-out), and one based on OHV
technology. The OHV technology based standard (12.1 g/kw-hr for 250
hour engines) would be phased-in on a percentage of production basis as
shown in Table 1. The standard is based on the projected capabilities
of emissions-optimized durable OHV engines. The standard assumes an
assigned multiplicative deterioration factor (DF) of 1.3 at 250 hours
for OHV engines. EPA will propose that manufacturers would be allowed
to establish their own DFs for their full product line within a useful
life category for the 500 and 1000 hour useful life categories. The
proposal will address in a reasonable and practical manner the kind of
data required to determine the DFs, the amount of in-use testing
required to verify the DFs, and the appropriateness of reserving
certification credits pending verification of the DFs through in-use
testing. During the rulemaking process EPA will consider the
appropriateness of allowing manufacturers to establish their own DFs
for their full product line within the first useful life category (250
hours).
Recognizing that manufacturers' testing capacities may be
substantially constrained during the transition to fully phased in
standards, manufacturers choosing to establish their own DFs for the
500 and 1000 hour Class 2 useful life categories may base the DF on
good engineering judgment, demonstrated to the satisfaction of the
Administrator, provided that, in a reasonable period after model year
2005, the manufacturer shall verify their good engineering judgement
using appropriate data. The proposal will address in a reasonable and
practical manner the kind of data required to verify the DFs. In the
event that a DF must be adjusted, the manufacturers shall offset any
emission shortfalls resulting from a previous low DF. The use of
credits from either Class 1 or Class 2 engines would be one means to
offset any such shortfalls.
The Signatories agree that one goal of the SOP is to encourage
manufacturers to design and build engines that are emissions durable
over their actual useful lives, and to encourage manufacturers to
voluntarily certify their engines to longer useful life categories when
they are intended for longer hours of operation in-use (See section
3.b.). The Signatories recognize that, depending on the emission
characteristics of an engine, at longer useful life hours the emission
standard may be more difficult to meet. In addition, it is the
Signatories' goal to make sure the emission standards encourage
manufacturers to voluntarily certify to longer useful lives those
engine designed to be operated and durable for longer useful lives.

[[Page 14751]]

EPA will propose, based on available data, optional assigned DFs
for the 500 and 1000 hour useful life categories. The proposed assigned
DFs at the longer useful life categories would not be lower than 1.3.
Furthermore, it is anticipated that longer useful life engines would
not have an assigned DF greater than 1.5 at 1000 hours. Consequently,
the Signatories expect that the proposed assigned DFs for longer useful
life engines would be between 1.3 and 1.5 at 1000 hours.
Finally, the Signatories agree that EPA will propose HC+NO_X
standards associated with longer useful hours to reflect the proposed
assigned DFs discussed above.² However, in no case will the
proposed standard be lower than that associated with an assigned DF of
1.3 or higher than that associated with an assigned DF of 1.5.
---------------------------------------------------------------------------

\2\ The proposed standards will be based on the ratio of the
assigned DFs for these longer useful life engines at the longer time
periods compared to the 1.3 assigned DF at the 250 hour useful life
category (e.g., 1.5/1.3 x 12.1=14.0).
---------------------------------------------------------------------------

If as a result of the field durability demonstration program
described under section 4(d), EPA later determines that the assigned
DFs need to be adjusted, then EPA would initiate a rulemaking to adjust
the DFs and the standards accordingly.³ Any such rulemaking would
only apply prospectively and would be undertaken only if data suggest
that measured DFs are significantly different from the assigned DFs as
set forth in this SOP.
---------------------------------------------------------------------------

\3\ For example, the standard would be 14.0 g/kw-hr if the DF
was adjusted to be 1.5, whereas the standard would be 11.2 g/kw-hr
if the DF was adjusted to be 1.2.
---------------------------------------------------------------------------

The engines for which the manufacturer determines its own DFs would
be included in the field durability demonstration program. However,
data from those engines would not be included in determining whether
the assigned DFs need to be adjusted under the field durability
program.
The Signatories acknowledge that it may be appropriate to create a
separate engine class with different HC+NO_X standards for very
small displacement nonhandheld engines. To that end, EPA will consider
the need for such a class as part of the rulemaking process.
b. Useful Life
The Signatories recognize that small nonhandheld SI nonroad engines
are used in a wide range of applications with annual and seasonal
hourly use varying from low in some residential applications to high in
some commercial applications. The Signatories further recognize that
the greater the use during the ozone season of an engine the greater
its importance in terms of air quality impacts.
The Signatories agree to the desirability of a mechanism that
allows manufacturers to select the useful life category for a given
engine application. Selection of the useful life category would be
solely at the manufacturer's discretion, and the engine's label and
averaging, banking and trading (ABT) credit calculation would reflect
the manufacturer's choice.
For the Phase 2 program, the useful life categories for Class 1 and
Class 2 engines would be as follows:

Table 2.--Useful Life Categories (Hours)
------------------------------------------------------------------------
Category Category Category
C B A
------------------------------------------------------------------------
Class 1................................... 66 250 500
Class 2................................... 250 500 1000
------------------------------------------------------------------------

The useful life category corresponds to the hours of operation to
which the engine is subject to applicable emissions standards. For
purposes of the engine label, the useful life will be referred to as
the emissions compliance period. The engine label will indicate that
the engine is built to conform with EPA emissions regulations for the
emissions compliance period, in hours, selected by the manufacturer
(e.g., 250 hours).
As an option, the engine label will indicate that the engine is
built to conform with EPA emissions regulations for the emissions
compliance period, by category, selected by the manufacturer (e.g.,
Category C). The label will refer to the appropriate owner's manual for
a description of the emissions compliance period. As part of this
option, EPA will propose that engine manufacturers demonstrate during
the certification process that information explaining the meaning of
the category designation will be provided to the ultimate purchaser.
c. CO
The Phase 1 carbon monoxide (CO) standard for Class 1 and Class 2
engines will remain in place for the Phase 2 program, but will be
adjusted to 610 g/kw-hr to reflect engine deterioration. In addition,
EPA will have authority to waive the reporting requirement for CO at
the Administrator's discretion.
d. Wintertime Products
The exemptions from the HC+NO_X standards contained in Phase 1
for engines used only in wintertime products would continue for Phase
2.
e. Certification Test Fuel
The Signatories agree that no changes in the certification test
fuel specifications will be proposed from the current Phase 1
requirements.
f. Averaging, Banking, and Trading (ABT)
Compliance with the HC+NO_X standards above would be based upon
a corporate average with manufacturers also having the ability to bank
and trade emission credits. The Signatories agree that such an ABT
program will help assure that the aggressive schedule set out above
will be cost-effective and technologically feasible.
Credit calculations would be based upon sales weighted corporate
average emissions from a manufacturer's engines on an annual basis,
using family emission limits (FELs) and useful life hours selected by
the manufacturer. While the Signatories believe that the phase-in for
percentage of production shown in Table 1 for Class 2 engines will
occur, the flexibility provided under the ABT program will allow some
variation from the expected percentage of production phase-in.
Regardless of this variation, manufacturers of Class 2 engines
certified to the 250 hour useful life category would be required to
achieve a standard of 18.0 g/kw-hr, 16.6 g/kw-hr, 15.0 g/kw-hr, and
13.6 g/kw-hr in model years 2001, 2002, 2003, and 2004, respectively,
on a sales weighted average across their Class 2 production,⁴
recognizing that through the ABT program credits may be used to meet
the standard. EPA will propose rules addressing the procedures and
requirements for determining the number of engines that correspond to
an engine family and model year for purposes of credit calculations.
The procedures and requirements will take into account the unique
characteristics of the small nonhandheld SI nonroad engine industry,
and will be designed to limit the burden of tracking engine production
and sales to no more than the minimum needed to establish fair and
accurate credit accounting. In addition, EPA will consider during the
rulemaking process the appropriateness of using production-based
instead of sales-based accounting for credit accounting purposes.
---------------------------------------------------------------------------

\4\ A manufacturer's actual corporate average could be different
depending on its mix of 250, 500, and 1000 hour useful life engines.
---------------------------------------------------------------------------

In order to assure that the ABT program adequately encourages the
transition to cleaner, more durable technology and that the ABT program
fulfills its intended function, cross class averaging, banking, and
trading will

[[Page 14752]]

only be allowed under two scenarios; provided that the affected
manufacturer's Class 2 engine production is either all OHV technology
or it meets or exceeds the assumed OHV emissions performance production
phase-in schedule for Class 2 engines in Table 1. One scenario where
cross class ABT would be allowed is for credit exchanges from credit
generating Class 2 engines to credit using Class 1 engines. The other
allowable scenario is credit exchanges between Class 1 and Class 2
engines to offset emission shortfalls identified in to the programs
outlined in Section 4(c) below or as a result of an adjustment to
manufacturer determined DFs as discussed in section 3(a).
In order to provide an incentive to accelerate the introduction of
cleaner technologies, the Signatories agree that the proposal will
contain provisions for generation of credits prior to the 2001 model
year (i.e., early banking). Manufacturers may begin to generate such
early credits two model years before the standards set forth in this
SOP take effect. Early banking credits may only be generated for
engines certified below the 12.1 g/kw-hr HC+NO_X emission level at
the 250 hour useful life category for Class 2 engines (or the
applicable standard for the 500 and 1000 hour useful life categories),
and below 16.0 g/kw-hr HC+NO_X for Class 1 engines. In addition,
such early credits could only be banked where a manufacturer certifies
and complies with the 2001 standard for it's entire product line in a
given class. Early banking credits cannot be used to defer the assumed
OHV emissions performance production phase-in schedule for Class 2
engines in Table 1.
The Signatories further agree that credits generated under the
Phase 2 program will have an unlimited life when used for purposes of
compliance with the standards specified in this SOP. EPA will consider
the appropriate life of Phase 2 program credits in connection with
other regulatory programs in which those credits could be used.
g. Class 1 OHV Demonstration Program
The Signatories recognize the important role SV engines currently
play in the Class 1 market and the significant economic impediments to
the widespread introduction of higher cost, cleaner technologies such
as OHV in this class. Nevertheless, the Signatories also recognize the
desirability of investigating the potential to reduce the cost and
increase the penetration of such technology in this class in order to
maximize achievable emissions reductions from this industry.
As a result, in order to determine in a meaningful way the
potential for increasing the penetration of cleaner, more durable
technology in Class 1, EPA and certain manufacturers have entered into
Memoranda of Understanding (MOUs) calling for an OHV demonstration
program. The Class 1 OHV demonstration program is designed as an
experiment to explore the consumer acceptance and feasibility of
applying OHV technology to mass production Class 1 engines. The program
would include a series of reports to EPA on the level of success,
impediments encountered, market response, costs, emission rates, etc.
4. Compliance Assurance
The Signatories agree on the principle that the emission benefits
of the Phase 2 program must be achieved over the lifetime of the
engines. However, the Signatories also recognize the importance of
minimizing to the extent possible the compliance burden associated with
this program.
The Signatories agree that reasonable means must exist to address
emission exceedences identified in selective enforcement audits (SEA)
or production line testing (PLT). These means should: (1) provide an
incentive to manufacturers to build emission-durable engines; (2) be
practical to implement; (3) provide an incentive to perform accurate
testing; (4) offset additional emissions that occur as a result of the
exceedence of the standards; and (5) not be unduly burdensome to
manufacturers. The Signatories agree that a mandatory recall program
for Class 1 and 2 engines, modeled on traditional on-highway recall
procedures, does not meet these five criteria, given the non-integrated
nature of the nonhandheld outdoor power equipment industry and the
consumer markets in which most of that equipment is sold. The
Signatories agree that there are other, better means to encourage
compliance with emission standards for these engines than mandatory
product recalls (as discussed in section 4(c) below), and that the
efforts of the industry and EPA should be devoted to assuring that
engines will comply with applicable standards in-use before they leave
the production facility and to taking any necessary actions as quickly
as possible to assure good emission performance. Consequently, the
proposal will not contain provisions for making compliance
determinations on the basis of in-use testing or emission performance.
The Signatories agree that the combined package of provisions
contained in this SOP strikes the appropriate balance between providing
assurance of in-use emission performance and minimizing the burden to
industry.
a. Class 1 Certification
Certification for Class 1 engines with SV technology or
aftertreatment would continue as under Phase 1, except that
certification engines would first be bench-aged to the number of hours
selected as useful life (66, 250, or 500) to determine compliance with
the FEL.
A manufacturer could propose a bench-aging schedule up to 48 months
prior to the start of a model year for the engine family as projected
by the manufacturer. EPA would accept or reject the proposed schedule
within 90 days of submission. If EPA did not reject the schedule within
90 days, the manufacturer's proposed schedule would automatically be
accepted.
Periodic correlation of bench-to-field testing would be
demonstrated by the manufacturer. Such correlation would be established
by a simple method such as determining the ratio of the calculated mean
emission levels of bench-aged engines and field-aged engines. During
the first five years the program correlation would be demonstrated
every two model years, and every five model years thereafter (e.g.,
2001, 2003, 2005, 2010, etc.). Any changes to the correlation ratio
would apply prospectively only with appropriate lead time for the
manufacturers.
As an option, instead of testing engines on the bench and
demonstrating correlation, manufacturers could choose to test engines
from the field with accumulated hours corresponding to the useful life
category selected by the manufacturer (``field-aged certification'').
Certification for Class 1 OHV engines would continue as under Phase
1, except that a multiplicative assigned DF would be applied to new
engine levels to determine compliance with the FEL for the 66 hour
useful life category shown in Table 2. The Signatories agree that the
assigned DF for Class 1 OHV engines will be 1.3 at 66 hours.
Manufacturers would be allowed to establish their own DFs for their
full product line within a useful life category for the 250 and 500
hour useful life categories. The proposal will address in a reasonable
and practical manner the kind of data required to determine the DF, the
amount of in-use testing required to verify the DF, and the
appropriateness of reserving

[[Page 14753]]

certification credits pending verification of the DF through in-use
testing. During the rulemaking process EPA will consider the
appropriateness of allowing manufacturers to establish their own DF for
their full product line within the first useful life category (66
hours). EPA will also consider the appropriateness of establishing
optional assigned DFs for the 250 and 500 hour useful life categories.
Any adjustment to the assigned DF would be made as set forth in Section
3(a) above, however, in the case of Class 1 engines the standard would
not be adjusted.
b. Class 2 Certification
Certification for Class 2 engines with SV technology or
aftertreatment would continue as under Phase 1, except that
certification engines would first be bench-aged to the number of hours
selected as the useful life (250, 500, or 1000) to determine compliance
for certification purposes. During the transition to OHV emissions
performance engines, some flexibilities to relieve testing burden would
apply (see section 5).
A manufacturer could propose a bench-aging schedule up to 48 months
prior to the start of a model year for the engine family as projected
by the manufacturer. EPA would accept or reject the proposed schedule
within 90 days of submission. If EPA did not reject the schedule within
90 days, the manufacturer's proposed schedule would automatically be
accepted.
Periodic correlation of bench-to-field testing would be
demonstrated by the manufacturer. Such correlation would be established
by a simple method such as determining the ratio of the calculated mean
emission levels of bench-aged engines and field-aged engines. During
the first five years the program correlation would be demonstrated
every two model years, and every five model years thereafter (e.g.,
2001, 2003, 2005, 2010, etc.). Any changes to the correlation ratio
would apply prospectively only with appropriate lead time for the
manufacturers.
As an option, instead of testing engines on the bench and
demonstrating correlation, manufacturers could choose to test engines
from the field with accumulated hours corresponding to the useful life
category selected by the manufacturer (``field-aged certification'').
Certification for Class 2 OHV engines would continue as under Phase
1, except that a multiplicative assigned DF would be applied to new
engine levels to determine compliance with the FEL for the 250 hour
useful life category shown in Table 2. The Signatories agree that the
assigned DF for Class 2 OHV engines will be 1.3 at 250 hours.
Manufacturers would be allowed to establish their own DFs for their
full product line within a useful life category for the 500 and 1000
hour useful life categories. The proposal will address in a reasonable
and practical manner the kind of data required to determine the DFs,
the amount of in-use testing required to verify the DFs, and the
appropriateness of reserving certification credits pending verification
of the DFs through in-use testing. During the rulemaking process EPA
will consider the appropriateness of allowing manufacturers to
establish their own DFs for their full product line within the first
useful life category (250 hours). EPA will propose based on available
data optional assigned DFs for the 500 and 1000 hour useful life
categories, as discussed in Section 3(a) above. Any adjustment to the
DF and standard would be made as set forth in Section 3(a) above.
c. Production Line Compliance
The Signatories agree that reasonable testing to assure that
production engines meet standards is appropriate and that two different
approaches would be used to monitor production line compliance.
Under the first approach, a manufacturer would opt to conduct a
manufacturer run Production Line Testing (PLT) program (including but
not necessarily limited to CumSum) for all of their engine families. In
this case, the Signatories agree that the SEA program would exist only
for backstop purposes where evidence of improper testing or
nonconformities not being addressed by the manufacturer's testing
program was obtained by EPA. The Signatories agree that for
manufacturers who conduct a PLT program under this approach, if an
engine family fails its production audit by exceeding its FEL, the FEL
for that family would be adjusted to the new FEL indicated by the
production audit results for both past and future production where
applicable. Similarly, if an engine family passes its production audit
by achieving emissions below its FEL, the FEL for that family can be
adjusted to the new FEL indicated by the production audit results for
future production where applicable. Any deficit in corporate-wide
emissions performance resulting from the FEL change would need to be
retired by the end of the model year following the model year in which
the production audit failure occurred on a one-for-one basis. Any
deficit in corporate-wide emissions performance resulting from the FEL
change that is not retired by that time can be retired in the following
two model years on a 1.2 to one basis.
This PLT program will permit the manufacturer to perform additional
testing beyond the minimum required by regulation. Any such additional
test data can be used to limit the number of engines for which a
manufacturer is liable if there is a failure in the PLT program.
A manufacturer must implement the PLT approach for a minimum of
three consecutive model years and must notify EPA a minimum of one
complete model year prior to the model year for which they are
requesting to opt out. This timing restriction would not preclude a
manufacturer from implementing appropriate changes to the design or
scope of the PLT program from model year to model year. Furthermore,
they cannot be carrying a negative credit balance at the time of opting
out. Where a manufacturer fails the PLT audit for more than one engine
family in a model year and the number of engines that are recertified
to a new FEL as a result of the failed PLT audit exceeds 10 percent of
the manufacturer's annual production, then the remedies for
noncompliance under this option are no longer valid. Instead, the
provisions under the SEA approach described below would apply.
Under the second approach, engines in the Phase 2 program would be
subject to SEA as under the Phase 1 program. This approach would apply
to manufacturers who do not conduct a PLT program under the first
approach. The Signatories agree that appropriate remedies need to be
implemented for failures of SEA resulting from testing new (e.g. zero-
hour) engines. Such appropriate remedies must meet the criteria set
forth in the second paragraph of Section 4 above. EPA is committed to
designing remedies that will both preserve the environmental benefits
of this program and minimize the burden on the industry. The proposal
will therefore preserve for EPA adequate flexibility to address such
failures on a case-by-case basis, so that EPA and the manufacturer may
develop a response that achieves the goals noted above. Such a response
might include, for example, a combination of measures such as mandatory
PLT for appropriate time periods and portions of production,
recertification of all or part of an engine family, and generation of
credits to remedy the exceedences over an appropriate period of time.
As discussed above in section 4, the Signatories agree that a mandatory
recall program for Class 1 and 2 engines, modeled on traditional on-
highway

[[Page 14754]]

recall procedures, does not meet the criteria for reasonable means to
address emission exceedences identified in SEA or PLT programs, given
the non-integrated nature of the nonhandheld outdoor power equipment
industry and the consumer markets in which most of that equipment is
sold. EPA will not revoke or suspend a certificate where a response
that meets the goals noted above is designed and implemented in a
timely manner (except in cases where a manufacturer desires to obtain a
new certificate in which case the old certificate would be suspended to
avoid the existence of two certificates for the same family).
d. Field Durability and In-use Emission Performance Demonstration
Program for OHV Engines
The Signatories agree to the necessity of a Field Durability and
In-use Emission Performance Demonstration Program to produce reliable
data that verifies that the conclusions in this program with respect to
the durability of OHV engines are accurate. The data collected under
this program would be designed to provide a representative picture of
actual in-use emissions, including representative age (hours),
maintenance, and sales mix of engines in the field. Manufacturers would
test a sufficient number of engines to be statistically meaningful.
Individual manufacturers would supply test data to EPA. However, the
test program could be jointly run on an industry-wide basis.
To the extent practical, engines will be selected from residential
customers or professional users; however, the Signatories recognize
that engines also will be selected from manufacturers fleets, as long
as the engines represent typical in-use engines.
The Field Durability and In-use Emission Performance Demonstration
Program would be conducted every four years. The data from this program
are neither designed nor intended to be used for compliance purposes.
The Signatories recognize that the test programs covered under
sections 4(a), 4(b) and 4(d) should be designed in a way to minimize
the overall burden on the manufacturer while meeting the goals of these
provisions including a reasonable cap where appropriate on the overall
level of testing required. The Signatories further recognize that while
the maximum testing may be required in the initial years of testing,
EPA will reduce the testing burden as appropriate in subsequent years
as the overall database grows. To that end, the total field engine test
burden for the largest manufacturers by sales volume for tests required
for these programs will not exceed 96 field-aged engines in a four year
period or 24 field-aged engines in a one year period. EPA will propose
an appropriate scaling of the field engine test burden for smaller
volume manufacturers. It is intended that only a representative sample
of engine families will be tested in the program set forth in Section
4(d). EPA will have the discretion to proportion the test engines among
the test programs covered under Sections 4(a), 4(b) and 4(d). The
Signatories also agree to permit the Field Durability test program to
run over multiple years and to provide for appropriate delays or
waivers from the requirements of the bench correlation program in years
when a manufacturer also runs the field durability program.
5. Manufacturer Flexibilities During the Transition to OHV Emissions
Performance Engines
Recognizing that old technology will be phased-out during the
transition period to clean durable OHV emissions performance technology
for Class 2, the Signatories agree to certain flexibilities to
accommodate an orderly transition. Manufacturers would be allowed to
bench-age Class 2 SV or aftertreatment engines and to demonstrate
compliance with the FEL based on 120 hours of testing during the
transition period. However, manufacturers would certify to and use 250
hours for credit calculation purposes.
6. Small Volume Provisions
The Signatories agree that for SV Class 2 engine families with less
than 1000 units produced for sale in the U.S. can continue to meet the
24.0 g/kw-hr standard in 2005 and subsequent model years. With the 2005
model year, however, this standard will become a cap and these engines
will be excluded from the ABT credit calculations.
7. Fuel Spillage Reduction Program
The Signatories recognize the contribution to air pollution from
fuel spillage and agree to work collaboratively and with other affected
parties to develop a voluntary Fuel Spillage Reduction Program which
provides information and education to a variety of audiences and
encourages the development and use of technology that will reduce
spills by users.
8. Test Procedures and Other Requirements
The signatories agree that the model year definition will be the
same as for the Phase 1 rule, and the interpretation of the model year
definition for the start-up of the Phase 1 program will also exist for
the start-up of the Phase 2 program in order to provide maximum
flexibility in the transition to Phase 2 standards.
The Signatories acknowledge that this SOP does not address such
issues as test procedure or certain other issues included in the
existing Phase 1 Rule. The Signatories acknowledge that any changes not
specifically set forth above could adversely affect the manufacturers
ability to meet the standards and effective dates in this SOP. EPA will
continue to review all aspects of the Phase 1 regulatory program to
determine what areas, if any, need to be updated to reflect experience
gained during Phase 1 or to implement the provisions contained in this
SOP. EPA does not plan on proposing any changes in the areas not
addressed herein, or any additional programs not consistent with this
SOP, such as evaporative emissions standards, that would materially
change the stringency or cost of the Phase 2 regulatory program.
9. Stability
One of the key principles of this SOP is to design a regulatory
program that provides industry with stability and predictability,
allowing it to make and recoup the investments that will be needed to
achieve the emissions reductions called for under this SOP. EPA
recognizes this level of investment, and acknowledges the need for a
corresponding period of stability and certainty.
10. Harmonization
The Signatories recognize the value that harmonizing standards
within the United States would have on the cost of producing engines
and equipment and support the goal of harmonization as long as it does
not undercut achieving the air quality needs the standards are designed
to achieve, and the Signatories will work with the California Air
Resources Board (ARB) to this end. The Signatories will also coordinate
and consult with ARB in order to achieve the maximum appropriate
harmonization of the elements of their respective small SI engine
regulatory programs, including, for example, test procedures,
certification, and compliance assurance, recognizing the value for EPA,
manufacturers and users associated with harmonizing these programs.

[FR Doc. 97-7626 Filed 3-26-97; 8:45 am]
BILLING CODE 6560-50-P

Notices For
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Statements of Principles for Nonroad Phase 2 Small Spark-Ignited Engines

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