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Control of Emissions From Nonroad Spark-Ignition Engines and Equipment
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PDF Version (50 pp, 787K, About PDF) [Federal Register: October 8, 2008 (Volume 73, Number 196)] [Rules and Regulations] [Page 59033-59082] From the Federal Register Online via GPO Access [wais.access.gpo.gov] [DOCID:fr08oc08-17] [[Page 59034]] ----------------------------------------------------------------------- ENVIRONMENTAL PROTECTION AGENCY 40 CFR Parts 9, 60, 80, 85, 86, 89, 90, 91, 92, 94, 1027, 1033, 1039, 1042, 1045, 1048, 1051, 1054, 1060, 1065, 1068, and 1074 [EPA-HQ-OAR-2004-0008; FRL-8712-8] RIN 2060-AM34 Control of Emissions From Nonroad Spark-Ignition Engines and Equipment AGENCY: Environmental Protection Agency (EPA). ACTION: Final rule. ----------------------------------------------------------------------- SUMMARY: We are setting emission standards for new nonroad spark- ignition engines that will substantially reduce emissions from these engines. The exhaust emission standards apply starting in 2010 for new marine spark-ignition engines, including first-time EPA standards for sterndrive and inboard engines. The exhaust emission standards apply starting in 2011 and 2012 for different sizes of new land-based, spark- ignition engines at or below 19 kilowatts (kW). These small engines are used primarily in lawn and garden applications. We are also adopting evaporative emission standards for vessels and equipment using any of these engines. In addition, we are making other minor amendments to our regulations. We estimate that by 2030, this rule will result in significantly reduced pollutant emissions from regulated engine and equipment sources, including estimated annual nationwide reductions of 604,000 tons of volatile organic hydrocarbon emissions, 132,200 tons of NOX emissions, and 5,500 tons of directly-emitted particulate matter (PM2.5) emissions. These reductions correspond to significant reductions in the formation of ground-level ozone. We also expect to see annual reductions of 1,461,000 tons of carbon monoxide emissions, with the greatest reductions in areas where there have been problems with individual exposures. The requirements in this rule will substantially benefit public health and welfare and the environment. We estimate that by 2030, on an annual basis, these emission reductions will prevent 230 PM-related premature deaths, between 77 and 350 ozone-related premature deaths, approximately 1,700 hospitalizations and emergency room visits, 23,000 work days lost, 180,000 lost school days, 590,000 acute respiratory symptoms, and other quantifiable benefits every year. The total annual benefits of this rule in 2030 are estimated to be between $1.8 billion and $4.4 billion, assuming a 3% discount rate. The total annual benefits of this rule in 2030 are estimated to be between $1.6 billion and $4.3 billion, assuming a 7% discount rate. Estimated costs in 2030 are many times less at approximately $190 million. DATES: This rule is effective on December 8, 2008. The incorporation by reference of certain publications listed in this regulation is approved by the Director of the Federal Register as of December 8, 2008. ADDRESSES: Docket: All documents in the docket are listed in the www.regulations.gov index. Although listed in the index, some information is not publicly available, such as CBI or other information whose disclosure is restricted by statute. Certain other material, such as copyrighted material, will be publicly available only in hard copy. Publicly available docket materials are available either electronically in www.regulations.gov or in hard copy at the ``Control of Emissions from Nonroad Spark-Ignition Engines, Vessels and Equipment'' Docket. The docket is located in the EPA Headquarters Library, Room Number 3334 in the EPA West Building, located at 1301 Constitution Ave., NW., Washington, DC. The EPA/DC Public Reading Room hours of operation will be 8:30 a.m. to 4:30 p.m. Eastern Standard Time (EST), Monday through Friday, excluding holidays. The telephone number for the Public Reading Room is (202) 566-1744 and the telephone number for the Docket is (202) 566-1742. FOR FURTHER INFORMATION CONTACT: Carol Connell, Environmental Protection Agency, Office of Transportation and Air Quality, Assessment and Standards Division, 2000 Traverwood Drive, Ann Arbor, Michigan 48105; telephone number: 734-214-4349; fax number: 734-214-4050; e-mail address: connell.carol@epa.gov. SUPPLEMENTARY INFORMATION: Does This Action Apply to Me? This action will affect you if you produce or import new spark- ignition engines intended for use in marine vessels or in new vessels using such engines. This action will also affect you if you produce or import new spark-ignition engines below 19 kilowatts used in nonroad equipment, including agricultural and construction equipment, or produce or import such nonroad vehicles. The following table gives some examples of entities that may have to follow the regulations; however, since these are only examples, you should carefully examine the regulations. Note that we are adopting minor changes in the regulations that apply to a wide range of products that may not be reflected in the following table (see Section VIII). If you have questions, call the person listed in the FOR FURTHER INFORMATION CONTACT section above: ---------------------------------------------------------------------------------------------------------------- NAICS codes SIC codes Examples of potentially regulated Category \a\ \b\ entities ---------------------------------------------------------------------------------------------------------------- Industry...................................... 333618 3519 Manufacturers of new engines. Industry...................................... 333111 3523 Manufacturers of farm machinery and equipment. Industry...................................... 333112 3524 Manufacturers of lawn and garden tractors (home). Industry...................................... 336612 3731 Manufacturers of marine vessels. 3732 Industry...................................... 811112 7533 Commercial importers of vehicles and 811198 7549 vehicle components. ---------------------------------------------------------------------------------------------------------------- \a\ North American Industry Classification System (NAICS). \b\ Standard Industrial Classification (SIC) system code. Table of Contents I. Introduction A. Overview B. Why Is EPA Taking This Action? C. What Regulations Currently Apply to Nonroad Engines or Vehicles? D. Putting This Rule into Perspective E. What Requirements Are We Adopting? F. How Is This Document Organized? G. Judicial Review II. Public Health and Welfare Effects A. Public Health Impacts B. Air Toxics C. Carbon Monoxide [[Page 59035]] III. Sterndrive and Inboard Marine Engines A. Overview B. Engines Covered by This Rule C. Exhaust Emission Standards D. Test Procedures for Certification E. Additional Certification and Compliance Provisions F. Small-Business Provisions G. Technological Feasibility IV. Outboard and Personal Watercraft Engines A. Overview B. Engines Covered by This Rule C. Final Exhaust Emission Standards D. Changes to OB/PWC Test Procedures E. Additional Certification and Compliance Provisions F. Other Adjustments to Regulatory Provisions G. Small-Business Provisions H. Technological Feasibility V. Small SI Engines A. Overview B. Engines Covered by This Rule C. Final Requirements D. Testing Provisions E. Certification and Compliance Provisions for Small SI Engines and Equipment F. Small-Business Provisions G. Technological Feasibility VI. Evaporative Emissions A. Overview B. Fuel Systems Covered by This Rule C. Final Evaporative Emission Standards D. Emission Credit Programs E. Testing Requirements F. Certification and Compliance Provisions G. Small-Business Provisions H. Technological Feasibility VII. Energy, Noise, and Safety A. Safety B. Noise C. Energy VIII. Requirements Affecting Other Engine and Vehicle Categories A. State Preemption B. Certification Fees C. Amendments to General Compliance Provisions in 40 CFR Part 1068 D. Amendments Related to Large SI Engines (40 CFR Part 1048) E. Amendments Related to Recreational Vehicles (40 CFR Part 1051) F. Amendments Related to Heavy-Duty Highway Engines (40 CFR Part 85) G. Amendments Related to Stationary Spark-Ignition Engines (40 CFR Part 60) H. Amendments Related to Locomotive, Marine, and Other Nonroad Compression-Ignition Engines (40 CFR Parts 89, 92, 94, 1033, 1039, and 1042) IX. Projected Impacts A. Emissions from Small Nonroad and Marine Spark-Ignition Engines B. Estimated Costs C. Cost per Ton D. Air Quality Impact E. Benefits F. Economic Impact Analysis X. Public Participation XI. Statutory and Executive Order Reviews A. Executive Order 12866: Regulatory Planning and Review B. Paperwork Reduction Act C. Regulatory Flexibility Act D. Unfunded Mandates Reform Act E. Executive Order 13132: Federalism F. Executive Order 13175: Consultation and Coordination With Indian Tribal Governments G. Executive Order 13045: Protection of Children from Environmental Health and Safety Risks H. Executive Order 12898: Federal Actions to Address Environmental Justice in Minority Populations and Low-Income Populations. I. Executive Order 13211: Actions that Significantly Affect Energy Supply, Distribution, or Use J. National Technology Transfer Advancement Act K. Congressional Review Act I. Introduction A. Overview This rule will reduce the mobile-source contribution to air pollution in the United States. In particular, we are adopting standards that will require manufacturers to substantially reduce emissions from marine spark-ignition engines and from nonroad spark- ignition engines below 19 kW that are generally used in lawn and garden applications.\1\ We refer to these as Marine SI engines and Small SI engines, respectively. The new emission standards are a continuation of the process of establishing standards for nonroad engines and vehicles as required by Clean Air Act section 213. All the nonroad engines subject to this rule are already regulated under existing emission standards, except sterndrive and inboard marine engines, which are subject to EPA emission standards for the first time. --------------------------------------------------------------------------- \1\ Otto-cycle engines (referred to here as spark-ignition or SI engines) typically operate on gasoline, liquefied petroleum gas, or natural gas. Diesel-cycle engines, referred to simply as ``diesel engines'' in this document, may also be referred to as compression- ignition or CI engines. These engines typically operate on diesel fuel, but other fuels may also be used. --------------------------------------------------------------------------- Nationwide, emissions from Marine SI engines and Small SI engines contribute significantly to mobile source air pollution. By 2030 without this final rule these engines would account for about 33 percent (1,287,000 tons) of mobile source volatile organic hydrocarbon compounds (VOC) emissions, 31 percent (15,605,000 tons) of mobile source carbon monoxide (CO) emissions, 6 percent (311,300 tons) of mobile source oxides of nitrogen (NOX) emissions, and 12 percent (44,000 tons) of mobile source particulate matter (PM2.5) emissions. The new standards will reduce exposure to these emissions and help avoid a range of adverse health effects associated with ambient ozone, CO, and PM levels. In addition, the new standards will help reduce acute exposure to CO, air toxics, and PM for persons who operate or who work with or are otherwise active in close proximity to these engines. They will also help address environmental problems associated with Marine SI engines and Small SI engines, such as injury to vegetation and ecosystems and visibility impairment. These effects are described in more detail later in this document. B. Why Is EPA Taking This Action? Clean Air Act section 213(a)(1) directs us to study emissions from nonroad engines and vehicles to determine, among other things, whether these emissions ``cause, or significantly contribute to, air pollution which may reasonably be anticipated to endanger public health or welfare.'' Section 213(a)(2) further requires us to determine whether emissions of CO, VOC, and NOX from all nonroad engines significantly contribute to ozone or CO concentrations in more than one nonattainment area. If we determine that emissions from all nonroad engines do contribute significantly to these nonattainment areas, section 213(a)(3) then requires us to establish emission standards for classes or categories of new nonroad engines and vehicles that cause or contribute to such pollution. We may also set emission standards under section 213(a)(4) regulating any other emissions from nonroad engines that we find contribute significantly to air pollution which may reasonably be anticipated to endanger public health or welfare. Specific statutory direction to set standards for nonroad spark- ignition engines comes from section 428(b) of the 2004 Consolidated Appropriations Act, which requires EPA to adopt regulations under the Clean Air Act ``that shall contain standards to reduce emissions from new nonroad spark-ignition engines smaller than 50 horsepower.'' \2\ As highlighted above and more fully described in Section II, these engines emit pollutants that contribute to ground-level ozone and ambient CO levels. Human exposure to ozone and CO can cause serious respiratory and cardiovascular problems. Additionally, these emissions contribute to other serious environmental degradation. This rule implements Congress' mandate by adopting new requirements for particular nonroad engines and equipment that are regulated as part of [[Page 59036]] EPA's overall nonroad emission control program. --------------------------------------------------------------------------- \2\ Public Law 108-199, Div G, Title IV, Sec. 428(b), 118 Stat. 418 (January 23, 2004). --------------------------------------------------------------------------- We are adopting this rule under the procedural authority of section 307(d) of the Clean Air Act. C. What Regulations Currently Apply to Nonroad Engines or Vehicles? EPA has been setting emission standards for nonroad engines and/or vehicles since Congress amended the Clean Air Act in 1990 and included section 213. These amendments have led to a series of rulemakings to reduce the air pollution from this widely varying set of products. In these rulemakings, we divided the broad group of nonroad engines and vehicles into several different categories for setting application- specific requirements. Each category involves many unique characteristics related to the participating manufacturers, technology, operating characteristics, sales volumes, and market dynamics. Requirements for each category therefore take on many unique features regarding the stringency of standards, the underlying expectations regarding emission control technologies, the nature and extent of testing, and the myriad details that comprise the implementation of a compliance program. At the same time, the requirements and other regulatory provisions for each engine category share many characteristics. Each rulemaking under section 213 sets technology-based standards consistent with the Clean Air Act and requires annual certification based on measured emission levels from test engines or vehicles. As a result, the broader context of EPA's nonroad emission control programs demonstrates both strong similarities between this rulemaking and the requirements adopted for other types of engines or vehicles and distinct differences as we take into account the unique nature of these engines and the companies that produce them. We completed the Nonroad Engine and Vehicle Emission Study to satisfy Clean Air Act section 213(a)(1) in November 1991.\3\ On June 17, 1994, we made an affirmative determination under section 213(a)(2) that nonroad emissions are significant contributors to ozone or CO in more than one nonattainment area (56 FR 31306). Since then we have undertaken several rulemakings to set emission standards for the various categories of nonroad engines. Table I-1 highlights the different engine or vehicle categories we have established and the corresponding cites for emission standards and other regulatory requirements. Table I-2 summarizes the series of EPA rulemakings that have set new or revised emission standards for any of these nonroad engines or vehicles. These actions are described in the following sections, with additional discussion to explain why we are not adopting more stringent standards for certain types of nonroad spark-ignition engines below 50 horsepower. --------------------------------------------------------------------------- \3\ This study is available on EPA's Web site at www.epa.gov/otaq/equip-ld. Table I-1: Nonroad Engine Categories for EPA Emission Standards ------------------------------------------------------------------------ CFR Cite for regulations Cross reference Engine categories establishing emission to table I-2 standards ------------------------------------------------------------------------ 1. Locomotives engines........ 40 CFR Part 92 and d, l. 1033. 2. Marine diesel engines...... 40 CFR Part 94 and g, i, j, l. 1042. 3. Other nonroad diesel 40 CFR Parts 89 and a, e, k. engines. 1039. 4. Marine SI engines \a\...... 40 CFR Part 91....... c. 5. Recreational vehicles...... 40 CFR Part 1051..... i. 6. Small SI engines \b\....... 40 CFR Part 90....... b, f, h. 7. Large SI engines \b\....... 40 CFR Part 1048..... i. ------------------------------------------------------------------------ \a\ The term ``Marine SI,'' used throughout this document, refers to all spark-ignition engines used to propel marine vessels. This includes outboard engines, personal watercraft engines, and sterndrive/inboard engines. See Section III for additional information. \b\ The terms ``Small SI'' and ``Large SI'' are used throughout this document. All nonroad spark-ignition engines not covered by our programs for Marine SI engines or recreational vehicles are either Small SI engines or Large SI engines. Small SI engines include those engines with maximum power at or below 19 kW, and Large SI engines include engines with maximum power above 19 kW. Table I-2: EPA's Rulemakings for Nonroad Engines ---------------------------------------------------------------------------------------------------------------- Nonroad engines (categories and sub-categories) Final rulemaking Date ---------------------------------------------------------------------------------------------------------------- a. Land-based diesel engines >= 37 kW--Tier 1..... 56 FR 31306............. June 17, 1994. b. Small SI engines--Phase 1...................... 60 FR 34581............. July 3, 1995. c. Marine SI engines--outboard and personal 61 FR 52088............. October 4, 1996. watercraft. d. Locomotives.................................... 63 FR 18978............. April 16, 1998. e. Land-based diesel engines--Tier 1 and Tier 2 63 FR 56968............. October 23, 1998. for engines < 37 kW--Tier 2 and Tier 3 for engines >= 37 kW. f. Small SI engines (Nonhandheld)--Phase 2........ 64 FR 15208............. March 30, 1999. g. Commercial marine diesel < 30 liters per 64 FR 73300............. December 29, 1999. cylinder. h. Small SI engines (Handheld)--Phase 2........... 65 FR 24268............. April 25, 2000. i. Recreational vehicles, Industrial spark- 67 FR 68242............. November 8, 2002. ignition engines > 19 kW, and Recreational marine diesel. j. Marine diesel engines >= 2.5 liters/cylinder... 68 FR 9746.............. February 28, 2003. k. Land-based diesel engines--Tier 4.............. 69 FR 38958............. June 29, 2004. l. Locomotives and commercial marine diesel < 30 73 FR 37096............. June 30, 2008. liters per cylinder. ---------------------------------------------------------------------------------------------------------------- [[Page 59037]] Small SI Engines We have previously adopted emission standards for nonroad spark- ignition engines at or below 19 kW in two phases. The first phase of these standards introduced certification and an initial level of emission standards for both handheld and nonhandheld engines. On March 30, 1999 we adopted a second phase of standards for nonhandheld engines, including both Class I and Class II engines (64 FR 15208).\4\ The Phase 2 regulations included a phase-in period that has recently been completed. These standards involved emission reductions based on improving engine calibrations to reduce exhaust emissions and added a requirement that emission standards must be met over the engines' entire useful life as defined in the regulations. We believe catalyst technology has now developed to the point that it can be applied to all nonhandheld Small SI engines to reduce exhaust emissions. Various emission control technologies are similarly available to address the different types of fuel evaporative emissions we have identified. --------------------------------------------------------------------------- \4\ Handheld engines generally include those engines for which the operator holds or supports the equipment during operation; nonhandheld engines are Small SI engines that are not handheld engines (see Sec. 1054.801). Class I refers to nonhandheld engines with displacement below 225 cc; Class II refers to larger nonhandheld engines. --------------------------------------------------------------------------- For handheld engines, we adopted Phase 2 exhaust emission standards in April 25, 2000 (65 FR 24268). These standards were based on the application of catalyst technology, with the expectation that manufacturers would have to make considerable investments to modify their engine designs and production processes. A technology review we completed in 2003 indicated that manufacturers were making progress toward compliance, but that additional implementation flexibility was needed if manufacturers were to fully comply with the regulations by 2010. This finding and a change in the rule were published in the Federal Register on January 12, 2004 (69 FR 1824). At this point, we have no information to suggest that manufacturers can uniformly apply new technology or make design improvements to reduce exhaust emissions below the Phase 2 levels. We therefore believe the Phase 2 standards continue to represent the greatest degree of emission reduction achievable for these engines.\5\ However, we believe it is appropriate to apply evaporative emission standards to handheld engines similar to the standards we are adopting for the nonhandheld engines. Manufacturers can control evaporative emissions from handheld engines in a way that has little or no impact on exhaust emissions. --------------------------------------------------------------------------- \5\ Note that we refer to the handheld exhaust emission standards in 40 CFR part 1054 as Phase 3 standards. This is intended to maintain consistent terminology with the comparable standards in California rather than indicating an increase in stringency. --------------------------------------------------------------------------- Marine SI Engines On October 4, 1996 we adopted emission standards for spark-ignition outboard and personal watercraft engines that have recently been fully phased in (61 FR 52088). We decided not to finalize emission standards for sterndrive or inboard marine engines at that time. Uncontrolled emission levels from sterndrive and inboard marine engines were already significantly lower than the outboard and personal watercraft engines. We did, however, leave open the possibility of revisiting the need for emission standards for sterndrive and inboard engines in the future. See Section III for further discussion of the scope and background of past and current rulemakings for these engines. We believe existing technology can be applied to all Marine SI engines to reduce emissions of harmful pollutants, including both exhaust and evaporative emissions. Manufacturers of outboard and personal watercraft engines can continue the trend of producing four- stroke engines and advanced-technology two-stroke engines to further reduce emissions. For sterndrive/inboard engines, manufacturers can add technologies, such as fuel injection and aftertreatment, that can safely and substantially improve the engines' emission control capabilities. Large SI Engines We adopted emission standards for Large SI engines on November 8, 2002 (67 FR 68242). This includes Tier 1 standards for 2004 through 2006 model years and Tier 2 standards starting with 2007 model year engines. Manufacturers are today facing a considerable challenge to comply with the Tier 2 standards, which are already substantially more stringent than any of the standards for the other engine categories subject to this final rule. The Tier 2 standards also include evaporative emission standards, new transient test procedures, additional exhaust emission standards to address off-cycle emissions, and diagnostic requirements. Stringent standards for this category of engines, and in particular engines between 25 and 50 horsepower (19 to 37 kW), have been completed in the recent past, and are currently being implemented. We do not have information at this time on possible advances in technology beyond Tier 2. We therefore believe the evidence provided in the recently promulgated rulemaking continues to represent the best available information regarding the appropriate level of standards for these engines under section 213 at this time. The California Air Resources Board has adopted an additional level of emission control for Large SI engines starting with the 2010 model year. However, as described in Section I.D.1, their new standards do not increase overall stringency beyond that reflected in the federal standards. As a result, we believe it is inappropriate to adopt more stringent emission standards for these engines in this rulemaking. Note that the Large SI standards apply to nonroad spark-ignition engines above 19 kW. However, we adopted a special provision for engine families where production engines have total displacement at or below 1000 cc and maximum power at or below 30 kW, allowing these engine families to instead certify to the applicable standards for Small SI engines. This rule preserves this approach. Recreational Vehicles We adopted exhaust and evaporative emission standards for recreational vehicles in our November 8, 2002 final rule (67 FR 68242). These standards apply to all-terrain vehicles, off-highway motorcycles, and snowmobiles.\6\ These exhaust emission standards were fully phased in starting with the 2007 model year. The evaporative emission standards apply starting with the 2008 model year. --------------------------------------------------------------------------- \6\ Note that we treat certain high-speed off-road utility vehicles as all-terrain vehicles (see 40 CFR part 1051). --------------------------------------------------------------------------- Recreational vehicles will soon be subject to permeation requirements that are very similar to the requirements included in this rulemaking. We have also learned more about controlling running losses and diffusion emissions that may eventually lead us to propose comparable standards for recreational vehicles. Considering these new requirements for recreational vehicles in a later rulemaking would give us additional time to collect information to better understand the feasibility, costs, and benefits of applying these requirements to recreational vehicles. The following sections describe the state of technology and regulatory requirements for the different types of recreational vehicles. [[Page 59038]] All-Terrain Vehicles EPA's initial round of exhaust emission standards was fully implemented starting with the 2007 model year. The regulations for all- terrain vehicles (ATV) specify testing based on a chassis-based transient procedure. However, we permit manufacturers on an interim basis to optionally use a steady-state engine-based procedure. We recently completed a change in the regulations to extend this allowance from 2009 through 2014, after which manufacturers must certify all their ATVs based on the chassis-based transient test procedure that applies for off-highway motorcycles (72 FR 20730, April 26, 2007). This change does not represent an increase in stringency, but manufacturers will be taking time to make the transition to the different test procedure. We expect that there will be a good potential to apply further emission controls on these engines. However, we do not have information at this time on possible advances in technology beyond what is required for the current standards. Off-Highway Motorcycles For off-highway motorcycles, manufacturers are in many cases making a substantial transition to move away from two-stroke engines in favor of four-stroke engines. This transition is now underway. While it may eventually be appropriate to apply aftertreatment or other additional emission control technologies to off-highway motorcycles, we need more time for this transition to be completed and to assess the success of aftertreatment technologies such as catalysts on similar applications such as highway motorcycles. As EPA and manufacturers learn more in implementing emission standards, we expect to be able to better judge the potential for broadly applying new technology to achieve further emission reductions from off-highway motorcycles. Snowmobiles In our November 8, 2002 final rule we set three phases of exhaust emission standards for snowmobiles (67 FR 68242). Environmental and industry groups challenged the third phase of these standards. The court decision upheld much of EPA's reasoning for the standards, but vacated the NOX standard and remanded the CO and HC standards to clarify the analysis and evidence upon which the standards are based. See Bluewater Network, et al. v. EPA, 370 F 3d 1 (D.C. Cir. 2004). A large majority of snowmobile engines are rated above 50 hp and there is still a fundamental need for time to pass to allow us to assess the success of four-stroke engine technology in the marketplace.\7\ This is an important aspect of the assessment we need to conduct with regard to the Phase 3 emission standards. We believe it is best to address this in a separate rulemaking and we have initiated that effort to evaluate the appropriate long-term emission standards for snowmobiles. --------------------------------------------------------------------------- \7\ Only about 3 percent of snowmobiles are rated below 50 horsepower. --------------------------------------------------------------------------- Nonroad Diesel Engines The 2004 Consolidated Appropriations Act providing the specific statutory direction for this rulemaking focuses on nonroad spark- ignition engines. Nonroad diesel engines are therefore not included within the scope of that Congressional mandate. However, we have gone through several rulemakings to set standards for these engines under the broader authority of Clean Air Act section 213. In particular, we have divided nonroad diesel engines into three groups for setting emission standards. We adopted a series of standards for locomotives on April 16, 1998, including requirements to certify engines to emission standards when they are rebuilt (63 FR 18978). We also adopted emission standards for marine diesel engines over several different rulemakings, as described in Table I-2. These included separate actions for engines below 37 kW, engines installed in oceangoing vessels, engines installed in commercial vessels involved in inland and coastal waterways, and engines installed in recreational vessels. We recently adopted a new round of more stringent emission standards for both locomotives and marine diesel engines that will require widespread use of aftertreatment technology (73 FR 37096, June 30, 2008). Finally, all other nonroad diesel engines are grouped together for EPA's emission standards. We have adopted multiple tiers of increasingly stringent standards in three separate rulemakings, as described in Table I-2. We most recently adopted Tier 4 standards based on the use of ultra low-sulfur diesel fuel and the application of exhaust aftertreatment technology (69 FR 38958, June 29, 2004). D. Putting This Rule into Perspective Most manufacturers that will be subject to this rulemaking are also affected by regulatory developments in California and in other countries. Each of these is described in more detail below. State Initiatives Clean Air Act section 209 prohibits California and other states from setting emission standards for new motor vehicles and new motor vehicle engines, but authorizes EPA to waive this prohibition for California, in which case other states may adopt California's standards. Similar preemption and waiver provisions apply for emission standards for nonroad engines and vehicles, whether new or in-use. However for new locomotives, new engines used in locomotives, and new engines used in farm or construction equipment with maximum power below 130 kW, California and other states are preempted and there is no provision for a waiver of preemption. In addition, in section 428 of the 2004 Consolidated Appropriations Act, Congress further precluded other states from adopting new California standards for nonroad spark- ignition engines below 50 horsepower. In addition, the amendment required that we specifically address the safety implications of any California standards for these engines before approving a waiver of federal preemption. We are codifying these preemption changes in this rule. The California Air Resources Board (California ARB) has adopted requirements for five groups of nonroad engines: (1) Diesel- and Otto- cycle small off-road engines rated under 19 kW; (2) spark-ignition engines used for marine propulsion; (3) land-based nonroad recreational engines, including those used in all-terrain vehicles, off-highway motorcycles, go-carts, and other similar vehicles; (4) new nonroad spark-ignition engines rated over 19 kW not used in recreational applications; and (5) new land-based nonroad diesel engines rated over 130 kW. They have also approved a voluntary registration and control program for existing portable equipment. In the 1990s California ARB adopted Tier 1 and Tier 2 standards for Small SI engines consistent with the federal requirements. In 2003, they moved beyond the federal program by adopting exhaust HC+NOX emission standards of 10 g/kW-hr for Class I engines starting in the 2007 model year and 8 g/kW-hr for Class II engines starting in the 2008 model year. In the same rule they adopted evaporative emission standards for nonhandheld equipment, requiring control of fuel tank permeation, fuel line permeation, diurnal emissions, and running losses. [[Page 59039]] California ARB has adopted two tiers of exhaust emission standards for outboard and personal watercraft engines beyond EPA's original standards. The most recent standards, which apply starting in 2008, require HC+NOX emission levels as low as 16 g/kW-hr. For sterndrive and inboard engines, California ARB has adopted a 5 g/kW-hr HC+NOX emission standard for 2008 and later model year engines, with testing underway to confirm the feasibility of standards. California ARB's marine programs include no standards for exhaust CO emissions or evaporative emissions. The California ARB emission standards for recreational vehicles have a different form than the comparable EPA standards but are roughly equivalent in stringency. The California standards include no standards for controlling evaporative emissions. Another important difference between the two programs is California ARB's reliance on a provision allowing noncompliant vehicles to be used in certain areas that are less environmentally sensitive as long as they have a specified red sticker for identifying their lack of emission controls to prevent them from operating in other areas. California ARB in 1998 adopted requirements that apply to new nonroad engines rated over 25 hp produced for California, with standards phasing in from 2001 through 2004. Texas has adopted these initial California ARB emission standards statewide starting in 2004. More recently, California ARB adopted exhaust emission standards and new evaporative emission standards for these engines, consistent with EPA's 2007 model year standards. Their new requirements also included an additional level of emission control for Large SI engines starting with the 2010 model year. However, their 2010 standards do not increase overall stringency beyond that reflected in the federal standards. Rather, they aim to achieve reductions in HC+NOX emissions by removing the flexibility incorporated into the federal standards allowing manufacturers to have higher HC+NOX emissions by certifying to a more stringent CO standard. Actions in Other Countries While the new emission standards will apply only to engines sold in the United States, we are aware that manufacturers in many cases are selling the same products into other countries. To the extent that we have the same emission standards as other countries, manufacturers can contribute to reducing air emissions without being burdened by the costs associated with meeting differing or inconsistent regulatory requirements. The following discussion describes our understanding of the status of emission standards in countries outside the United States. Regulations for spark ignition engines in handheld and nonhandheld equipment are included in the ``Directive 97/68/EC of the European Parliament and of the Council of 16 December 1997 on the approximation of the laws of the Member States relating to measures against the emission of gaseous and particulate pollutants from internal combustion engines to be installed in non-road mobile machinery (OJ L 59, 27.2.1998, p. 1)'', as amended by ``Directive 2002/88/EC of the European Parliament and of the Council of 9 December 2002.'' The Stage I emission standards are to be met by all handheld and nonhandheld engines by 24 months after entry into force of the Directive (as noted in a December 9, 2002 amendment to Directive 97/68/EC). The Stage I emission standards are similar to the U.S. EPA's Phase 1 emission standards for handheld and nonhandheld engines. The Stage II emission standards are implemented over time for the various handheld and nonhandheld engine classes from 2005 to 2009 with handheld engines at or above 50 cc on August 1, 2008. The Stage II emission standards are similar to EPA's Phase 2 emission standards for handheld and nonhandheld engines. Six months after these dates Member States must require that engines placed on the market meet the requirements of the Directive, whether or not they are already installed in machinery. The European Commission has adopted emission standards for recreational marine engines, including both diesel and gasoline engines. These requirements apply to all new engines sold in member countries and began in 2006 for four-stroke engines and in 2007 for two-stroke engines. Table I-3 presents the European standards for diesel and gasoline recreational marine engines. The numerical emission standards for NOX are based on the applicable standard from MARPOL Annex VI for marine diesel engines (See Table I-3). The European standards are roughly equivalent to the nonroad diesel Tier 1 emission standards for HC and CO. Emission measurements under the European standards rely on the ISO D2 duty cycle for constant-speed engines and the ISO E5 duty cycle for other engines. Table I-3: European Emission Standards for Recreational Marine Engines (g/kW-hr) ---------------------------------------------------------------------------------------------------------------- Engine type HC NOX CO PM ---------------------------------------------------------------------------------------------------------------- Two-Stroke Spark-Ignition............. 30 + 100/P \0.75\....... 10.0 150 + 600/P............. -- Four-Stroke Spark-Ignition............ 6 + 50/P \0.75\......... 15.0 150 + 600/P............. -- Compression-Ignition.................. 1.5 + 2/P \0.5\......... 9.8 5.0..................... 1.0 ---------------------------------------------------------------------------------------------------------------- Note: P = rated power in kilowatts (kW). E. What Requirements Are We Adopting? EPA's emission control provisions require engine, vessel and equipment manufacturers to design and produce their products to meet the emission standards we adopt. To ensure that engines and fuel systems meet the expected level of emission control, we also require compliance with a variety of additional requirements, such as certification, labeling engines, and meeting warranty requirements. The following sections provide a brief summary of the new requirements in this rulemaking. See the later sections for a full discussion of the rule. Marine SI Engines and Vessels We are adopting a more stringent level of emission standards for outboard and personal watercraft engines starting with the 2010 model year. The HC+NOX emission standards are the same as those adopted by California ARB for 2008 and later model year engines. The CO emission standard is 300 g/kW-hr for engines with maximum engine power above 40 kW; the standard increases as a function of maximum engine power for smaller engines. We expect manufacturers to meet these standards with improved fueling systems and other in-cylinder controls. We are not pursuing catalyst-based emission standards for outboard and personal watercraft engines. As discussed below, the application of [[Page 59040]] catalyst-based standards to the marine environment creates special technology challenges that must be addressed. Unlike the sterndrive/ inboard engines discussed in the next paragraph, outboard and personal watercraft engines are not built from automotive engine blocks and it is not straightforward to apply the fundamental engine modifications, fuel system upgrades, and other engine control modifications needed to get acceptable catalyst performance. This rule is an appropriate next step in the evolution of technology-based standards for outboard and personal watercraft engines as they are likely to lead to the elimination of carbureted two-stroke engines in favor of four-stroke engines or direct-injection two-stroke engines and to encourage the fuel system upgrades and related engine modifications needed to achieve the required reductions and to potentially set the stage for more stringent controls in the future. We are adopting new exhaust emission standards for sterndrive and inboard marine engines. The standards are 5.0 g/kW-hr for HC+NOX and 75.0 g/kW-hr for CO starting with the 2010 model year. We expect manufacturers to meet these standards with three-way catalysts and closed-loop fuel injection. To ensure proper functioning of these emission control systems in use, we will require engines to have a diagnostic system for detecting a failure in the emission control system. For sterndrive and inboard marine engines above 373 kW with high-performance characteristics (generally referred to as ``SD/I high-performance engines''), we are adopting less stringent emission standards that reflect their limited ability to control emissions with catalysts. The HC+NOX standard is 16 g/kW-hr in for engines at or below 485 kW and 22 g/kW-hr for bigger engines. The CO standard for all SD/I high-performance engines is 350 g/kW-hr. Manufacturers of these engines must meet emission standards without generating or using emission credits. We also include a variety of other special provisions for these engines to reflect unique operating characteristics. The emission standards described above relate to engine operation over a prescribed duty cycle for testing in the laboratory. We are also adopting not-to-exceed (NTE) standards that establish emission limits when engines operate under normal speed-load combinations that are not included in the duty cycles for the other engine standards (the NTE standards do not apply to SD/I high-performance engines). We are adopting new standards to control evaporative emissions for all Marine SI vessels. The new standards include requirements to control fuel tank permeation, fuel line permeation, and diurnal emissions, including provisions to ensure that refueling emissions do not increase. We are including these new regulations for Marine SI engines in 40 CFR part 1045 rather than in the current regulations in 40 CFR part 91. This new part allows us to improve the clarity of regulatory requirements and update our regulatory compliance program to be consistent with the provisions we have recently adopted for other nonroad programs. We are also making a variety of changes to 40 CFR part 91 to make minor adjustments to the current regulations and to prepare for the transition to 40 CFR part 1045. Small SI Engines and Equipment We are adopting HC+NOX exhaust emission standards of 10.0 g/kW-hr for Class I engines starting in the 2012 model year and 8.0 g/kW-hr for Class II engines starting in the 2011 model year. For both classes of nonhandheld engines, we are maintaining the existing CO standard of 610 g/kW-hr. We expect manufacturers to meet these standards by improving engine combustion and adding catalysts. These standards are consistent with the requirements recently adopted by California ARB. For spark-ignition engines used in marine generators, we are adopting a more stringent Phase 3 CO emission standard of 5.0 g/kW-hr. This applies equally to all sizes of engines subject to the Small SI standards. We are adopting new evaporative emission standards for both handheld and nonhandheld engines. The new standards include requirements to control permeation from fuel tanks and fuel lines. For nonhandheld engines we will also require control of running loss emissions. We are drafting the new regulations for Small SI engines from 40 CFR part 90 rather than changing the current regulations in 40 CFR part 90. This new part will allow us to improve the clarity of regulatory requirements and update our regulatory compliance program to be consistent with the provisions we have recently adopted for other nonroad programs. F. How Is This Document Organized? Many readers may be interested only in certain aspects of the rule since it covers a broad range of engines and equipment that vary in design and use. We have therefore attempted to organize this information in a way that allows each reader to focus on the material of particular interest. The Air Quality discussion in Section II, however, is general in nature and applies to all the categories subject to the rule. The next several sections describe the provisions that apply for Small SI engines and equipment and Marine SI engines and vessels. Sections III through V describe the new requirements related to exhaust emission standards for each of the affected engine categories, including standards, effective dates, testing information, and other specific requirements. Section VI details the new requirements related to evaporative emissions for all categories. Section VII discusses how we took energy, noise, and safety factors into consideration for the new standards. Section VIII describes a variety of provisions that affect other categories of engines besides those that are the primary subject of this rule. This includes the following changes: • We are reorganizing the regulatory language related to preemption of state standards and to clarify certain provisions. • We are incorporating new provisions related to certification fees for newly regulated products covered by this rule. This involves some restructuring of the regulatory language. We are also adopting various technical amendments, such as identifying an additional payment method, that apply broadly to our certification programs. • We are modifying 40 CFR part 1068 to clarify when engines are subject to standards. This includes several new provisions to address special cases for partially complete engines. • We are also modifying part 1068 to clarify how the provisions apply with respect to evaporative emission standards and we are adopting various technical amendments. These changes apply to all types of nonroad engines that are subject to the provisions of part 1068. • We are adopting several technical amendments for other categories of nonroad engines and vehicles, largely to maintain consistency across programs for different categories of engines and vehicles. • We are amending provisions related to delegated assembly. The new approach is to adopt a universal set of requirements in Sec. 1068.261 that applies uniformly to heavy-duty highway engines and nonroad engines. • We are clarifying that the new exhaust and evaporative emission standards for Small SI engines also apply to the comparable stationary engines. [[Page 59041]] Section IX summarizes the projected impacts and benefits of this rule. Finally, Sections X and XI summarize the primary public comments received and describe how we satisfy our various administrative requirements. G. Judicial Review Under section 307(b)(1) of the Clean Air Act (CAA), judicial review of these final rules is available only by filing a petition for review in the U.S. Court of Appeals for the District of Columbia Circuit by December 8, 2008. Under section 307(b)(2) of the CAA, the requirements established by these final rules may not be challenged separately in any civil or criminal proceedings brought by EPA to enforce these requirements. Section 307(d)(7)(B) of the CAA further provides that ``[o]nly an objection to a rule or procedure which was raised with reasonable specificity during the period for public comment (including any public hearing) may be raised during judicial review.'' This section also provides a mechanism for us to convene a proceeding for reconsideration, ``[i]f the person raising an objection can demonstrate to the EPA that it was impracticable to raise such objection within [the period for public comment] or if the grounds for such objection arose after the period for public comment (but within the time specified for judicial review) and if such objection is of central relevance to the outcome of the rule.'' Any person seeking to make such a demonstration to us should submit a Petition for Reconsideration to the Office of the Administrator, U.S. EPA, Room 3000, Ariel Rios Building, 1200 Pennsylvania Ave., NW., Washington, DC 20460, with a copy to both the person(s) listed in the preceding FOR FURTHER INFORMATION CONTACT section and the Associate General Counsel for the Air and Radiation Law Office, Office of General Counsel (Mail Code 2344A), U.S. EPA, 1200 Pennsylvania Ave., NW., Washington, DC 20460. II. Public Health and Welfare Effects The engines and fuel systems subject to this rule generate emissions of hydrocarbons (HC), nitrogen oxides (NOX), particulate matter (PM) and carbon monoxide (CO) that contribute to nonattainment of the National Ambient Air Quality Standards (NAAQS) for ozone, PM and CO. These engines and fuel systems also emit hazardous air pollutants (air toxics) that are associated with a host of adverse health effects. Emissions from these engines and fuel systems also contribute to visibility impairment and other welfare and environmental effects. This section summarizes the general health and welfare effects of these emissions. Interested readers are encouraged to refer to the Final RIA for more in-depth discussions. A. Public Health Impacts Ozone The Small SI engine and Marine SI engine standards finalized in this action will result in reductions of volatile organic compounds (VOC), of which HC are a subset, and NOX emissions. VOC and NOX contribute to the formation of ground-level ozone pollution or smog. People in many areas across the U.S. continue to be exposed to unhealthy levels of ambient ozone. Background Ground-level ozone pollution is typically formed by the reaction of VOC and NOX in the lower atmosphere in the presence of heat and sunlight. These pollutants, often referred to as ozone precursors, are emitted by many types of pollution sources, such as highway and nonroad motor vehicles and engines, power plants, chemical plants, refineries, makers of consumer and commercial products, industrial facilities, and smaller area sources. The science of ozone formation, transport, and accumulation is complex.\8\ Ground-level ozone is produced and destroyed in a cyclical set of chemical reactions, many of which are sensitive to temperature and sunlight. When ambient temperatures and sunlight levels remain high for several days and the air is relatively stagnant, ozone and its precursors can build up and result in more ozone than typically occurs on a single high-temperature day. Ozone can be transported hundreds of miles downwind of precursor emissions, resulting in elevated ozone levels even in areas with low local VOC or NOX emissions. --------------------------------------------------------------------------- \8\ U.S. EPA Air Quality Criteria for Ozone and Related Photochemical Oxidants (Final). U.S. Environmental Protection Agency, Washington, D.C., EPA 600/R-05/004aF-cF, 2006. This document is available in Docket EPA-HQ-OAR-2003-0190. This document may be accessed electronically at: http://www.epa.gov/ttn/naaqs/standards/ ozone/s_o3_cr_cd.html. --------------------------------------------------------------------------- EPA has recently amended the ozone NAAQS (73 FR 16436, March 27, 2008). The final ozone NAAQS rule addresses revisions to the primary and secondary NAAQS for ozone to provide increased protection of public health and welfare, respectively. With regard to the primary standard for ozone, EPA has revised the level of the 8-hour standard to 0.075 parts per million (ppm), expressed to three decimal places. With regard to the secondary standard for ozone, EPA has revised the current 8-hour standard by making it identical to the revised primary standard. Health Effects of Ozone The health and welfare effects of ozone are well documented and are assessed in EPA's 2006 ozone Air Quality Criteria Document (ozone AQCD) and EPA Staff Paper.9, 10 Ozone can irritate the respiratory system, causing coughing, throat irritation, and/or uncomfortable sensation in the chest. Ozone can reduce lung function and make it more difficult to breathe deeply; breathing may also become more rapid and shallow than normal, thereby limiting a person's activity. Ozone can also aggravate asthma, leading to more asthma attacks that require medical attention and/or the use of additional medication. In addition, there is suggestive evidence of a contribution of ozone to cardiovascular-related morbidity and highly suggestive evidence that short-term ozone exposure directly or indirectly contributes to non- accidental and cardiopulmonary-related mortality, but additional research is needed to clarify the underlying mechanisms causing these effects. In a recent report on the estimation of ozone-related premature mortality published by the National Research Council (NRC), a panel of experts and reviewers concluded that short-term exposure to ambient ozone is likely to contribute to premature deaths and that ozone-related mortality should be included in estimates of the health benefits of reducing ozone exposure.\11\ Animal toxicological evidence indicates that with repeated exposure, ozone can inflame and damage the lining of the lungs, which may lead to permanent changes in lung tissue and irreversible reductions in lung function. People who are more susceptible to effects [[Page 59042]] associated with exposure to ozone can include children, the elderly, and individuals with respiratory disease such as asthma. Those with greater exposures to ozone, for instance due to time spent outdoors (e.g., children and outdoor workers), are also of particular concern. --------------------------------------------------------------------------- \9\ U.S. EPA Air Quality Criteria for Ozone and Related Photochemical Oxidants (Final). U.S. Environmental Protection Agency, Washington, DC., EPA 600/R-05/004aF-cF, 2006. This document is available in Docket EPA-HQ-OAR-2003-0190. This document may be accessed electronically at: http://www.epa.gov/ttn/naaqs/standards/ ozone/s_o3_cr_cd.html. \10\ U.S. EPA (2007) Review of the National Ambient Air Quality Standards for Ozone, Policy Assessment of Scientific and Technical Information. OAQPS Staff Paper.EPA-452/R-07-003. This document is available in Docket EPA-HQ-OAR-2003-0190. This document is available electronically at: http:www.epa.gov/ttn/naaqs/standards/ozone/s_ o3_cr_sp.html. \11\ National Research Council (NRC), 2008. Estimating Mortality Risk Reduction and Economic Benefits from Controlling Ozone Air Pollution. The National Academies Press: Washington, DC. --------------------------------------------------------------------------- The recent ozone AQCD also examined relevant new scientific information that has emerged in the past decade, including the impact of ozone exposure on such health effects as changes in lung structure and biochemistry, inflammation of the lungs, exacerbation and causation of asthma, respiratory illness-related school absence, hospital admissions and premature mortality. Animal toxicological studies have suggested potential interactions between ozone and PM with increased responses observed to mixtures of the two pollutants compared to either ozone or PM alone. The respiratory morbidity observed in animal studies along with the evidence from epidemiologic studies supports a causal relationship between acute ambient ozone exposures and increased respiratory-related emergency room visits and hospitalizations in the warm season. In addition, there is suggestive evidence of a contribution of ozone to cardiovascular-related morbidity and non- accidental and cardiopulmonary mortality. Plant and Ecosystem Effects of Ozone Elevated ozone levels contribute to environmental effects, with impacts to plants and ecosystems being of most concern. Ozone can produce both acute and chronic injury in sensitive species depending on the concentration level and the duration of the exposure. Ozone effects also tend to accumulate over the growing season of the plant, so that even low concentrations experienced for a longer duration have the potential to create chronic stress on vegetation. Ozone damage to plants includes visible injury to leaves and a reduction in food production through impaired photosynthesis, both of which can lead to reduced crop yields, forestry production, and use of sensitive ornamentals in landscaping. In addition, the reduced food production in plants and subsequent reduced root growth and storage below ground, can result in other, more subtle plant and ecosystems impacts. These include increased susceptibility of plants to insect attack, disease, harsh weather, interspecies competition and overall decreased plant vigor. The adverse effects of ozone on forest and other natural vegetation can potentially lead to species shifts and loss from the affected ecosystems, resulting in a loss or reduction in associated ecosystem goods and services. Lastly, visible ozone injury to leaves can result in a loss of aesthetic value in areas of special scenic significance like national parks and wilderness areas. The final 2006 Criteria Document presents more detailed information on ozone effects on vegetation and ecosystems. Current and Projected Ozone Levels Ozone concentrations exceeding the level of the 1997 8-hour ozone NAAQS occur over wide geographic areas, including most of the nation's major population centers.\12\ As of March 12, 2008, there were approximately 140 million people living in 72 areas (which include all or part of 337 counties) designated as not in attainment with the 1997 8-hour ozone NAAQS.\13\ These numbers do not include the people living in areas where there is a future risk of failing to maintain or attain the 8-hour ozone NAAQS. The 1997 ozone NAAQS was recently revised and the 2008 ozone NAAQS was final on March 12, 2008. Table II-1 presents the number of counties in areas currently designated as nonattainment for the 1997 ozone NAAQS as well as the number of additional counties that have design values greater than the 2008 ozone NAAQS. --------------------------------------------------------------------------- \12\ A listing of the 8-hour ozone nonattainment areas is included in the RIA for this rule. \13\ Population numbers are from 2000 census data. Table II-1--Counties With Design Values Greater Than the 2008 Ozone NAAQS Based on 2004-2006 Air Quality Data ------------------------------------------------------------------------ Number of Counties Population \a\ ------------------------------------------------------------------------ 1997 Ozone Standard: Counties 337 139,633,458 within the 72 areas currently designated as nonattainment........ 2008 Ozone Standard: Additional 74 15,984,135 counties that would not meet the 2008 NAAQS \b\..................... ----------------------------------- Total........................... 411 155,617,593 ------------------------------------------------------------------------ Notes: \a\ Population numbers are from 2000 census data. \b\ Attainment designations for 2008 ozone NAAQS have not yet been made. Nonattainment for the 2008 Ozone NAAQS will be based on three years of air quality data from later years. Also, the county numbers in the table include only the counties with monitors violating the 2008 Ozone NAAQS. The numbers in this table may be an underestimate of the number of counties and populations that will eventually be included in areas with multiple counties designated nonattainment. States with 8-hour ozone nonattainment areas are required to take action to bring those areas into compliance in the future. Based on the final rule designating and classifying 8-hour ozone nonattainment areas (69 FR 23951, April 30, 2004), most 8-hour ozone nonattainment areas will be required to attain the 1997 ozone NAAQS in the 2007 to 2013 time frame and then maintain the NAAQS thereafter.\14\ Many of these nonattainment areas will need to adopt additional emission reduction programs and the VOC and NOX reductions from this final action are particularly important for these states. The attainment dates associated with the potential new 2008 ozone nonattainment areas are likely to be in the 2013 to 2021 timeframe, depending on the severity of the problem. --------------------------------------------------------------------------- \14\ The Los Angeles South Coast Air Basin 8-hour ozone nonattainment area will have to attain before June 15, 2021. --------------------------------------------------------------------------- EPA has already adopted many emission control programs that are expected to reduce ambient ozone levels. Some of these control programs are described in Section I.C.1. As a result of existing programs, the number of areas that fail to meet the ozone NAAQS in the future is expected to decrease. Based on the air quality modeling performed for this rule, which does not include any additional local controls, we estimate eight counties (where 22 million people are projected to live) will exceed the 1997 8-hour [[Page 59043]] ozone NAAQS in 2020.\15\ An additional 37 counties (where 27 million people are projected to live) are expected to be within 10 percent of violating the 1997 8-hour ozone NAAQS in 2020. --------------------------------------------------------------------------- \15\ We expect many of the 8-hour ozone nonattainment areas to adopt additional emission reduction programs but we are unable to quantify or rely upon future reductions from additional state and local programs that have not yet been adopted. --------------------------------------------------------------------------- Results from the air quality modeling conducted for this final rule indicate that the Small SI and Marine SI engine emission reductions in 2020 and 2030 will improve both the average and population-weighted average ozone concentrations for the U.S. In addition, the air quality modeling shows that on average this final rule will help bring counties closer to ozone attainment as well as assist counties whose ozone concentrations are within ten percent below the standard. For example, on a population-weighted basis, the average modeled future-year 8-hour ozone design values will decrease by 0.57 ppb in 2020 and 0.76 ppb in 2030.\16\ The air quality modeling methodology and the projected reductions are discussed in more detail in Chapter 2 of the RIA. --------------------------------------------------------------------------- \16\ Ozone design values are reported in parts per million (ppm) as specified in 40 CFR Part 50. Due to the scale of the design value changes in this action, results have been presented in parts per billion (ppb) format. --------------------------------------------------------------------------- Particulate Matter The Small SI engine and Marine SI engine standards detailed in this action will result in reductions in emissions of VOCs and NOX which contribute to the formation of secondary PM2.5. In addition, the standards finalized today will reduce primary (directly emitted) PM2.5 emissions. Background PM represents a broad class of chemically and physically diverse substances. It can be principally characterized as discrete particles that exist in the condensed (liquid or solid) phase spanning several orders of magnitude in size. PM is further described by breaking it down into size fractions. PM10 refers to particles generally less than or equal to 10 micrometers (m) in aerodynamic diameter. PM2.5 refers to fine particles, generally less than or equal to 2.5 in aerodynamic diameter. Inhalable (or ``thoracic'') coarse particles refer to those particles generally greater than 2.5 μm but less than or equal to 10 μm in aerodynamic diameter. Ultrafine PM refers to particles less than 100 nanometers (0.1 μm) in aerodynamic diameter. Larger particles tend to be removed by the respiratory clearance mechanisms (e.g. coughing), whereas smaller particles are deposited deeper in the lungs. Fine particles are produced primarily by combustion processes and by transformations of gaseous emissions (e.g., SOX, NOX and VOC) in the atmosphere. The chemical and physical properties of PM2.5 may vary greatly with time, region, meteorology, and source category. Thus, PM2.5 may include a complex mixture of different pollutants including sulfates, nitrates, organic compounds, elemental carbon and metal compounds. These particles can remain in the atmosphere for days to weeks and travel hundreds to thousands of kilometers. The primary PM2.5 NAAQS includes a short-term (24-hour) and a long- term (annual) standard. The 1997 PM2.5 NAAQS established by EPA set the 24-hour standard at a level of 65μg/m\3\ based on the 98th percentile concentration averaged over three years. The annual standard specifies an expected annual arithmetic mean not to exceed 15μg/m\3\ averaged over three years. In 2006, EPA amended the NAAQS for PM2.5 (71 FR 61144, October 17, 2006). The final rule addressed revisions to the primary and secondary NAAQS for PM to provide increased protection of public health and welfare, respectively. The level of the 24-hour PM2.5 NAAQS was revised from 65μg/m\3\ to 35 μg/m\3\ and the level of the annual PM2.5 NAAQS was retained at 15μg/m\3\. With regard to the secondary standards for PM2.5, EPA has revised these standards to be identical in all respects to the revised primary standards. Health Effects of PM2.5 Scientific studies show ambient PM is associated with a series of adverse health effects. These health effects are discussed in detail in the 2004 EPA Particulate Matter Air Quality Criteria Document (PM AQCD), and the 2005 PM Staff Paper.17 18 Further discussion of health effects associated with PM can also be found in the RIA for this rule. --------------------------------------------------------------------------- \17\ U.S. EPA (2004) Air Quality Criteria for Particulate Matter (Oct 2004), Volume I Document No. EPA600/P-99/002aF and Volume II Document No. EPA600/P-99/002bF. This document is available in Docket EPA-HQ-OAR-2003-0190. \18\ U.S. EPA (2005) Review of the National Ambient Air Quality Standard for Particulate Matter: Policy Assessment of Scientific and Technical Information, OAQPS Staff Paper. EPA-452/R-05-005. This document is available in Docket EPA-HQ-OAR-2003-0190. --------------------------------------------------------------------------- Health effects associated with short-term exposures (hours to days) to ambient PM include premature mortality, increased hospital admissions, heart and lung diseases, increased cough, adverse lower- respiratory symptoms, decrements in lung function and changes in heart rate rhythm and other cardiac effects. Studies examining populations exposed to different levels of air pollution over a number of years, including the Harvard Six Cities Study and the American Cancer Society Study, show associations between long-term exposure to ambient PM2.5 and both total and cardiovascular and respiratory mortality.\19\ In addition, a reanalysis of the American Cancer Society Study shows an association between fine particle and sulfate concentrations and lung cancer mortality.\20\ --------------------------------------------------------------------------- \19\ Dockery, DW; Pope, CA III: Xu, X; et al. 1993. An association between air pollution and mortality in six U.S. cities. N Engl J Med 329:1753-1759. \20\ Pope, C. A., III; Burnett, R. T.; Thun, M. J.; Calle, E. E.; Krewski, D.; Ito, K.; Thurston, G. D. (2002) Lung cancer, cardiopulmonary mortality, and long-term exposure to fine particulate air pollution. J. Am. Med. Assoc. 287:1132-1141. --------------------------------------------------------------------------- Recently, several studies have highlighted the adverse effects of PM specifically from mobile sources.21 22 Studies have also focused on health effects due to PM exposures on or near roadways.\23\ Although these studies include all air pollution sources, including both spark-ignition (gasoline) and diesel powered vehicles, they indicate that exposure to PM emissions near roadways, thus dominated by mobile sources, are associated with health effects. The controls finalized in this action may help to reduce exposures, and specifically exposures near the source, to mobile source related PM2.5. --------------------------------------------------------------------------- \21\ Laden, F.; Neas, L.M.; Dockery, D.W.; Schwartz, J. (2000) Association of Fine Particulate Matter from Different Sources with Daily Mortality in Six U.S. Cities. Environmental Health Perspectives 108: 941-947. \22\ Janssen, N.A.H.; Schwartz, J.; Zanobetti, A.; Suh, H.H. (2002) Air Conditioning and Source-Specific Particles as Modifiers of the Effect of PM10 on Hospital Admissions for Heart and Lung Disease. Environmental Health Perspectives 110: 43-49. \23\ Riediker, M.; Cascio, W.E.; Griggs, T.R..; Herbst, M.C.; Bromberg, P.A.; Neas, L.; Williams, R.W.; Devlin, R.B. (2003) Particulate Matter Exposures in Cars is Associated with Cardiovascular Effects in Healthy Young Men. Am. J. Respir. Crit. Care Med. 169: 934-940. --------------------------------------------------------------------------- Visibility Visibility can be defined as the degree to which the atmosphere is transparent to visible light. Airborne particles degrade visibility by scattering and absorbing light. Visibility is important because it has direct significance to people's enjoyment of daily activities in all parts of the country. Individuals value good visibility for the well- being it provides them directly, where they live and work and in places where they enjoy recreational opportunities. [[Page 59044]] Visibility is also highly valued in significant natural areas such as national parks and wilderness areas and special emphasis is given to protecting visibility in these areas. For more information on visibility, see the final 2004 PM AQCD as well as the 2005 PM Staff Paper.24 25 --------------------------------------------------------------------------- \24\ U.S. EPA (2004) Air Quality Criteria for Particulate Matter (Oct 2004), Volume I Document No. EPA600/P-99/002aF and Volume II Document No. EPA600/P-99/002bF. This document is available in Docket EPA-HQ-OAR-2003-0190. \25\ U.S. EPA (2005) Review of the National Ambient Air Quality Standard for Particulate Matter: Policy Assessment of Scientific and Technical Information, OAQPS Staff Paper. EPA-452/R-05-005. This document is available in Docket EPA-HQ-OAR-2003-0190. --------------------------------------------------------------------------- EPA is pursuing a two-part strategy to address visibility. First, to address the welfare effects of PM on visibility, EPA has set secondary PM2.5 standards which act in conjunction with the establishment of a regional haze program. In setting this secondary standard, EPA has concluded that PM2.5 causes adverse effects on visibility in various locations, depending on PM concentrations and factors such as chemical composition and average relative humidity. Second, section 169 of the Clean Air Act provides additional authority to address existing visibility impairment and prevent future visibility impairment in the 156 national parks, forests and wilderness areas categorized as mandatory class I federal areas (62 FR 38680-81, July 18, 1997).\26\ In July 1999, the regional haze rule (64 FR 35714) was put in place to protect the visibility in mandatory class I federal areas. Visibility can be said to be impaired in both PM2.5 nonattainment areas and mandatory class I federal areas. --------------------------------------------------------------------------- \26\ These areas are defined in section 162 of the Act as those national parks exceeding 6,000 acres, wilderness areas and memorial parks exceeding 5,000 acres, and all international parks which were in existence on August 7, 1977. --------------------------------------------------------------------------- Current Visibility Impairment As of March 12, 2008, over 88 million people live in nonattainment areas for the 1997 PM2.5 NAAQS.\27\ These populations, as well as large numbers of individuals who travel to these areas, are likely to experience visibility impairment. In addition, while visibility trends have improved in mandatory class I federal areas the most recent data show that these areas continue to suffer from visibility impairment.\28\ In summary, visibility impairment is experienced throughout the U.S., in multi-state regions, urban areas, and remote mandatory class I federal areas.29 30 --------------------------------------------------------------------------- \27\ Population numbers are from 2000 census data. \28\ U.S. EPA (2002) Latest Findings on National Air Quality-- 2002 Status and Trends. EPA 454/K-03-001. \29\ U.S. EPA, Air Quality Designations and Classifications for the Fine Particles (PM2.5) National Ambient Air Quality Standards, December 17, 2004. (70 FR 943, Jan 5. 2005) This document is also available on the web at: http://www.epa.gov/pmdesignations/ \30\ U.S. EPA. Regional Haze Regulations, July 1, 1999. (64 FR 35714, July 1, 1999). --------------------------------------------------------------------------- Future Visibility Impairment Air quality modeling conducted for this final rule was used to project visibility conditions in 133 mandatory class I federal areas across the U.S. in 2020 and 2030. The results indicate that improvements in visibility will occur in the future, although all areas will continue to have annual average deciview levels above background in 2020 and 2030. Chapter 2 of the RIA contains more detail on the visibility portion of the air quality modeling. Atmospheric Deposition Wet and dry deposition of ambient particulate matter delivers a complex mixture of metals (e.g., mercury, zinc, lead, nickel, aluminum, cadmium), organic compounds (e.g., POM, dioxins, furans) and inorganic compounds (e.g., nitrate, sulfate) to terrestrial and aquatic ecosystems. The chemical form of the compounds deposited is impacted by a variety of factors including ambient conditions (e.g., temperature, humidity, oxidant levels) and the sources of the material. Chemical and physical transformations of the particulate compounds occur in the atmosphere as well as the media onto which they deposit. These transformations in turn influence the fate, bioavailability and potential toxicity of these compounds. Atmospheric deposition has been identified as a key component of the environmental and human health hazard posed by several pollutants including mercury, dioxin and PCBs.\31\ --------------------------------------------------------------------------- \31\ U.S. EPA (2000) Deposition of Air Pollutants to the Great Waters: Third Report to Congress. Office of Air Quality Planning and Standards. EPA-453/R-00-0005. This document is available in Docket EPA-HQ-OAR-2003-0190. --------------------------------------------------------------------------- Adverse impacts on water quality can occur when atmospheric contaminants deposit to the water surface or when material deposited on the land enters a water body through runoff. Potential impacts of atmospheric deposition to water bodies include those related to both nutrient and toxic inputs. Adverse effects to human health and welfare can occur from the addition of excess particulate nitrate nutrient enrichment, which contributes to toxic algae blooms and zones of depleted oxygen, which can lead to fish kills, frequently in coastal waters. Particles contaminated with heavy metals or other toxins may lead to the ingestion of contaminated fish, ingestion of contaminated water, damage to the marine ecology, and limited recreational uses. Several studies have been conducted in U.S. coastal waters and in the Great Lakes Region in which the role of ambient PM deposition and runoff is investigated.32 33 34 35 36 --------------------------------------------------------------------------- \32\ U.S. EPA (2004) National Coastal Condition Report II. Office of Research and Development/ Office of Water. EPA-620/R-03/ 002. This document is available in Docket EPA-HQ-OAR-2003-0190. \33\ Gao, Y., E.D. Nelson, M.P. Field, et al. 2002. Characterization of atmospheric trace elements on PM2.5 particulate matter over the New York-New Jersey harbor estuary. Atmos. Environ. 36: 1077-1086. \34\ Kim, G., N. Hussain, J.R. Scudlark, and T.M. Church. 2000. Factors influencing the atmospheric depositional fluxes of stable Pb, 210Pb, and 7Be into Chesapeake Bay. J. Atmos. Chem. 36: 65-79. \35\ Lu, R., R.P. Turco, K. Stolzenbach, et al. 2003. Dry deposition of airborne trace metals on the Los Angeles Basin and adjacent coastal waters. J. Geophys. Res. 108(D2, 4074): AAC 11-1 to 11-24. \36\ Marvin, C.H., M.N. Charlton, E.J. Reiner, et al. 2002. Surficial sediment contamination in Lakes Erie and Ontario: A comparative analysis. J. Great Lakes Res. 28(3): 437-450. --------------------------------------------------------------------------- Adverse impacts on soil chemistry and plant life have been observed for areas heavily impacted by atmospheric deposition of nutrients, metals and acid species, resulting in species shifts, loss of biodiversity, forest decline and damage to forest productivity. Potential impacts also include adverse effects to human health through ingestion of contaminated vegetation or livestock (as in the case for dioxin deposition), reduction in crop yield, and limited use of land due to contamination. Materials Damage and Soiling The deposition of airborne particles can reduce the aesthetic appeal of buildings and culturally important articles through soiling, and can contribute directly (or in conjunction with other pollutants) to structural damage by means of corrosion or erosion.\37\ Particles affect materials principally by promoting and accelerating the corrosion of metals, by degrading paints, and by deteriorating building materials such as concrete and limestone. Particles contribute to these effects because of their electrolytic, hygroscopic, and acidic properties, and their ability to adsorb corrosive gases (principally sulfur dioxide). The rate of metal corrosion depends on a number of factors, including the deposition rate and nature of the pollutant; the influence of the metal protective [[Page 59045]] corrosion film; the amount of moisture present; variability in the electrochemical reactions; the presence and concentration of other surface electrolytes; and the orientation of the metal surface. --------------------------------------------------------------------------- \37\ U.S EPA (2005) Review of the National Ambient Air Quality Standards for Particulate Matter: Policy Assessment of Scientific and Technical Information, OAQPS Staff Paper. This document is available in Docket EPA-HQ-OAR-2003-0190. --------------------------------------------------------------------------- Current and Projected PM2.5 Levels PM2.5 concentrations exceeding the level of the PM2.5 NAAQS occur in many parts of the country.\38\ In 2005 EPA designated 39 nonattainment areas for the 1997 PM2.5 NAAQS (70 FR 943, January 5, 2005). These areas are comprised of 208 full or partial counties with a total population exceeding 88 million. The 1997 PM2.5 NAAQS was revised and the 2006 PM2.5 NAAQS became effective on December 18, 2006. Table II- 2 presents the number of counties in areas currently designated as nonattainment for the 1997 PM2.5 NAAQS as well as the number of additional counties that have design values greater than the 2006 PM2.5 NAAQS. --------------------------------------------------------------------------- \38\ A listing of the PM2.5 nonattainment areas is included in the RIA for this rule. Table II-2--Counties With Design Values Greater Than the 2006 PM2.5 NAAQS Based on 2003-2005 Air Quality Data ------------------------------------------------------------------------ Nonattainment areas/other violating Number of counties counties Population a ------------------------------------------------------------------------ 1997 PM2.5 Standards: Counties 208 88,394,000 within the 39 areas currently designated as nonattainment........ 2006 PM2.5 Standards: Additional 49 18,198,676 counties that would not meet the 2006 NAAQS b....................... ----------------------------------- Total........................... 257 106,595,676 ------------------------------------------------------------------------ Notes: a Population numbers are from 2000 census data. b Attainment designations for 2006 PM2.5 NAAQS have not yet been made. Nonattainment for the 2006 PM2.5 NAAQS will be based on 3 years of air quality data from later years. Also, the county numbers in the table includes only the counties with monitors violating the 2006 PM2.5 NAAQS. The numbers in this table may be an underestimate of the number of counties and populations that will eventually be included in areas with multiple counties designated nonattainment. Areas designated as not attaining the 1997 PM2.5 NAAQS will need to attain the 1997 standards in the 2010 to 2015 time frame, and then maintain them thereafter. The attainment dates associated with the potential new 2006 PM2.5 nonattainment areas are likely to be in the 2014 to 2019 timeframe. The emission standards finalized in this action become effective as early as 2009 making the inventory reductions from this rulemaking useful to states in attaining or maintaining the PM2.5 NAAQS. EPA has already adopted many emission control programs that are expected to reduce ambient PM2.5 levels and which will assist in reducing the number of areas that fail to achieve the PM2.5 NAAQS. Even so, our air quality modeling for this final rule projects that in 2020, with all current controls but excluding the reductions achieved through this rule, up to 11 counties with a population of over 24 million may not attain the current annual PM2.5 standard of 15 μg/m3. These numbers do not account for additional areas that have air quality measurements within 10 percent of the annual PM2.5 standard. These areas, although not violating the standards, will also benefit from the additional reductions from this rule ensuring long term maintenance of the PM2.5 NAAQS. Air quality modeling performed for this final rule shows the emissions reductions will improve both the average and population- weighted average PM2.5 concentrations for the U.S. On a population-weighted basis, the average modeled future-year annual PM2.5 design value (DV) for all counties is expected to decrease by 0.02 μg/m3 in 2020 and 2030. There are areas with larger decreases in their future-year annual PM2.5 DV, for instance the Chicago region will experience a 0.08 μ g/m\3\ reduction by 2030. The air quality modeling methodology and the projected reductions are discussed in more detail in Chapter 2 of the RIA. B. Air Toxics Small SI and Marine SI emissions also contribute to ambient levels of air toxics known or suspected as human or animal carcinogens, or that have noncancer health effects. These air toxics include benzene, 1, 3-butadiene, formaldehyde, acetaldehyde, acrolein, polycyclic organic matter (POM), and naphthalene. All of these compounds, except acetaldehyde, were identified as national or regional cancer risk or noncancer hazard drivers in the 1999 National-Scale Air Toxics Assessment (NATA) and have significant inventory contributions from mobile sources. That is, for a significant portion of the population, these compounds pose a significant portion of the total cancer and noncancer risk from breathing outdoor air toxics. In addition, human exposure to toxics from spark-ignition engines also occurs as a result of operating these engines and from intrusion of emissions in residential garages into attached indoor spaces.39 40 The emission reductions from Small SI and Marine SI engines that are finalized in this rulemaking will help reduce exposure to these harmful substances. --------------------------------------------------------------------------- \39\ Baldauf, R.; Fortune, C.; Weinstein, J.; Wheeler, M.; Blanchard, B. (2006) Air contaminant exposures during the operation of lawn and garden equipment. J Expos Sci Environ Epidmeiol 16: 362-370. \40\ Isbell, M.; Ricker, J.; Gordian, M.E.; Duff, L.K. (1999) Use of biomarkers in an indoor air study: lack of correlation between aromatic VOCs with respective urinary biomarkers. Sci Total Environ 241: 151-159. --------------------------------------------------------------------------- Benzene: The EPA's IRIS database lists benzene as a known human carcinogen (causing leukemia) by all routes of exposure, and concludes that exposure is associated with additional health effects, including genetic changes in both humans and animals and increased proliferation of bone marrow cells in mice.41 42 43 EPA states in its IRIS database that data indicate a causal relationship between benzene exposure and acute lymphocytic leukemia and suggest a relationship between benzene exposure and chronic non-lymphocytic [[Page 59046]] leukemia and chronic lymphocytic leukemia. The International Agency for Research on Carcinogens (IARC) has determined that benzene is a human carcinogen and the U.S. Department of Health and Human Services (DHHS) has characterized benzene as a known human carcinogen.44 45 --------------------------------------------------------------------------- \41\ U.S. EPA. 2000. Integrated Risk Information System File for Benzene. This material is available electronically at http://www.epa.gov/iris/subst/0276.htm. \42\ International Agency for Research on Cancer (IARC). 1982. Monographs on the evaluation of carcinogenic risk of chemicals to humans, Volume 29, Some industrial chemicals and dyestuffs, World Health Organization, Lyon, France, p. 345-389. \43\ Irons, R.D.; Stillman, W.S.; Colagiovanni, D.B.; Henry, V.A. 1992. Synergistic action of the benzene metabolite hydroquinone on myelopoietic stimulating activity of granulocyte/macrophage colony-stimulating factor in vitro, Proc. Natl. Acad. Sci. 89:3691-3695. \44\ International Agency for Research on Cancer (IARC). 1987. Monographs on the evaluation of carcinogenic risk of chemicals to humans, Volume 29, Supplement 7, Some industrial chemicals and dyestuffs, World Health Organization, Lyon, France. \45\ U.S. Department of Health and Human Services National Toxicology Program 11th Report on Carcinogens available at: http://ntp.niehs.nih.gov/go/16183. --------------------------------------------------------------------------- A number of adverse noncancer health effects including blood disorders, such as preleukemia and aplastic anemia, have also been associated with long-term exposure to benzene.46 47 The most sensitive noncancer effect observed in humans, based on current data, is the depression of the absolute lymphocyte count in blood.48 49 In addition, recent work, including studies sponsored by the Health Effects Institute (HEI), provides evidence that biochemical responses are occurring at lower levels of benzene exposure than previously known.50 51 52 53 EPA's IRIS program has not yet evaluated these new data. --------------------------------------------------------------------------- \46\ Aksoy, M. (1989). Hematotoxicity and carcinogenicity of benzene. Environ. Health Perspect. 82: 193-197. \47\ Goldstein, B.D. (1988). Benzene toxicity. Occupational medicine. State of the Art Reviews. 3: 541-554. \48\ Rothman, N., G.L. Li, M. Dosemeci, W.E. Bechtold, G.E. Marti, Y.Z. Wang, M. Linet, L.Q. Xi, W. Lu, M.T. Smith, N. Titenko- Holland, L.P. Zhang, W. Blot, S.N. Yin, and R.B. Hayes (1996) Hematotoxicity among Chinese workers heavily exposed to benzene. Am. J. Ind. Med. 29: 236-246. \49\ U.S. EPA (2002) Toxicological Review of Benzene (Noncancer Effects). Environmental Protection Agency, Integrated Risk Information System (IRIS), Research and Development, National Center for Environmental Assessment, Washington DC. This material is available electronically at http://www.epa.gov/iris/subst/0276.htm. \50\ Qu, O.; Shore, R.; Li, G.; Jin, X.; Chen, C.L.; Cohen, B.; Melikian, A.; Eastmond, D.; Rappaport, S.; Li, H.; Rupa, D.; Suramaya, R.; Songnian, W.; Huifant, Y.; Meng, M.; Winnik, M.; Kwok, E.; Li, Y.; Mu, R.; Xu, B.; Zhang, X.; Li, K. (2003) HEI Report 115, Validation & Evaluation of Biomarkers in Workers Exposed to Benzene in China. \51\ Qu, Q., R. Shore, G. Li, X. Jin, L.C. Chen, B. Cohen, et al. (2002) Hematological changes among Chinese workers with a broad range of benzene exposures. Am. J. Industr. Med. 42: 275-285. \52\ Lan, Qing, Zhang, L., Li, G., Vermeulen, R., et al. (2004) Hematotoxically in Workers Exposed to Low Levels of Benzene. Science 306: 1774-1776. \53\ Turtletaub, K.W. and Mani, C. (2003) Benzene metabolism in rodents at doses relevant to human exposure from Urban Air. Research Reports Health Effect Inst. Report No.113. --------------------------------------------------------------------------- 1,3-Butadiene: EPA has characterized 1,3-butadiene as carcinogenic to humans by inhalation.54 55 The IARC has determined that 1,3-butadiene is a human carcinogen and the U.S. DHHS has characterized 1,3-butadiene as a known human carcinogen.56 57 There are numerous studies consistently demonstrating that 1,3-butadiene is metabolized into genotoxic metabolites by experimental animals and humans. The specific mechanisms of 1,3-butadiene-induced carcinogenesis are unknown; however, the scientific evidence strongly suggests that the carcinogenic effects are mediated by genotoxic metabolites. Animal data suggest that females may be more sensitive than males for cancer effects associated with 1,3-butadiene exposure; there are insufficient data in humans from which to draw conclusions about sensitive subpopulations. 1,3-butadiene also causes a variety of reproductive and developmental effects in mice; no human data on these effects are available. The most sensitive effect was ovarian atrophy observed in a lifetime bioassay of female mice.\58\ --------------------------------------------------------------------------- \54\ U.S. EPA (2002) Health Assessment of 1,3-Butadiene. Office of Research and Development, National Center for Environmental Assessment, Washington Office, Washington, DC. Report No. EPA600-P- 98-001F. This document is available electronically at http://www.epa.gov/iris/supdocs/buta-sup.pdf. \55\ U.S. EPA (2002) Full IRIS Summary for 1,3-butadiene (CASRN 106-99-0). Environmental Protection Agency, Integrated Risk Information System (IRIS), Research and Development, National Center for Environmental Assessment, Washington, DC http://www.epa.gov/iris/subst/0139.htm. \56\ International Agency for Research on Cancer (IARC) (1999) Monographs on the evaluation of carcinogenic risk of chemicals to humans, Volume 71, Re-evaluation of some organic chemicals, hydrazine and hydrogen peroxide and Volume 97 (in preparation), World Health Organization, Lyon, France. \57\ U.S. Department of Health and Human Services (2005) National Toxicology Program 11th Report on Carcinogens available at: ntp.niehs.nih.gov/index.cfm?objectid=32BA9724-F1F6-975E-7FCE50709CB4C932. \58\ Bevan, C.; Stadler, J.C.; Elliot, G.S.; et al. (1996) Subchronic toxicity of 4-vinylcyclohexene in rats and mice by inhalation. Fundam. Appl. Toxicol. 32:1-10. --------------------------------------------------------------------------- Formaldehyde: Since 1987, EPA has classified formaldehyde as a probable human carcinogen based on evidence in humans and in rats, mice, hamsters, and monkeys.\59\ EPA is currently reviewing recently published epidemiological data. For instance, research conducted by the National Cancer Institute (NCI) found an increased risk of nasopharyngeal cancer and lymphohematopoietic malignancies such as leukemia among workers exposed to formaldehyde.60 61 NCI is currently performing an update of these studies. A recent National Institute of Occupational Safety and Health (NIOSH) study of garment workers also found increased risk of death due to leukemia among workers exposed to formaldehyde.\62\ Extended follow-up of a cohort of British chemical workers did not find evidence of an increase in nasopharyngeal or lymphohematopoietic cancers, but a continuing statistically significant excess in lung cancers was reported.\63\ Recently, the IARC re-classified formaldehyde as a human carcinogen (Group 1).\64\ --------------------------------------------------------------------------- \59\ U.S. EPA (1987) Assessment of Health Risks to Garment Workers and Certain Home Residents from Exposure to Formaldehyde, Office of Pesticides and Toxic Substances, April 1987. \60\ Hauptmann, M.; Lubin, J. H.; Stewart, P. A.; Hayes, R. B.; Blair, A. 2003. Mortality from lymphohematopoetic malignancies among workers in formaldehyde industries. Journal of the National Cancer Institute 95: 1615-1623. \61\ Hauptmann, M.; Lubin, J. H.; Stewart, P. A.; Hayes, R. B.; Blair, A. 2004. Mortality from solid cancers among workers in formaldehyde industries. American Journal of Epidemiology 159: 1117-1130. \62\ Pinkerton, L. E. 2004. Mortality among a cohort of garment workers exposed to formaldehyde: an update. Occup. Environ. Med. 61: 193-200. \63\ Coggon, D, EC Harris, J Poole, KT Palmer. 2003. Extended follow-up of a cohort of British chemical workers exposed to formaldehyde. J National Cancer Inst. 95:1608-1615. \64\ International Agency for Research on Cancer (IARC). 2006. Formaldehyde, 2-Butoxyethanol and 1-tert-Butoxypropan-2-ol. Volume 88. (in preparation), World Health Organization, Lyon, France. --------------------------------------------------------------------------- Formaldehyde exposure also causes a range of noncancer health effects, including irritation of the eyes (burning and watering of the eyes), nose and throat. Effects from repeated exposure in humans include respiratory tract irritation, chronic bronchitis and nasal epithelial lesions such as metaplasia and loss of cilia. Animal studies suggest that formaldehyde may also cause airway inflammation--including eosinophil infiltration into the airways. There are several studies that suggest that formaldehyde may increase the risk of asthma-- particularly in the young.65 66 --------------------------------------------------------------------------- \65\ Agency for Toxic Substances and Disease Registry (ATSDR). 1999. Toxicological profile for Formaldehyde. Atlanta, GA: U.S. Department of Health and Human Services, Public Health Service. http://www.atsdr.cdc.gov/toxprofiles/tp111.html \66\ WHO (2002) Concise International Chemical Assessment Document 40: Formaldehyde. Published under the joint sponsorship of the United Nations Environment Programme, the International Labour Organization, and the World Health Organization, and produced within the framework of the Inter-Organization Programme for the Sound Management of Chemicals. Geneva. --------------------------------------------------------------------------- Acetaldehyde: Acetaldehyde is classified in EPA's IRIS database as a probable human carcinogen, based on nasal tumors in rats, and is considered toxic by the inhalation, oral, and intravenous routes.67 Acetaldehyde is [[Page 59047]] reasonably anticipated to be a human carcinogen by the U.S. DHHS in the 11th Report on Carcinogens and is classified as possibly carcinogenic to humans (Group 2B) by the IARC.68 69 EPA is currently conducting a reassessment of cancer risk from inhalation exposure to acetaldehyde. --------------------------------------------------------------------------- \67\ U.S. EPA. 191. Integrated Risk Information System File of Acetaldehyde. Research and Development, National Center for Environmental Assessment, Washington, DC. This material is available electronically at http://www.epa.gov/iris/subst/0290.htm. \68\ U.S. Department of Health and Human Services National Toxicology Program 11th Report on Carcinogens available at: ntp.niehs.nih.gov/index.cfm?objectid=32BA9724-F1F6-975E- 7FCE50709CB4C932. \69\ International Agency for Research on Cancer (IARC). 1999. Re-evaluation of some organic chemicals, hydrazine, and hydrogen peroxide. IARC Monographs on the Evaluation of Carcinogenic Risk of Chemical to Humans, Vol 71. Lyon, France. --------------------------------------------------------------------------- The primary noncancer effects of exposure to acetaldehyde vapors include irritation of the eyes, skin, and respiratory tract.\70\ In short-term (4 week) rat studies, degeneration of olfactory epithelium was observed at various concentration levels of acetaldehyde exposure.71 72 Data from these studies were used by EPA to develop an inhalation reference concentration. Some asthmatics have been shown to be a sensitive subpopulation to decrements in functional expiratory volume (FEV1 test) and bronchoconstriction upon acetaldehyde inhalation.\73\ The agency is currently conducting a reassessment of the health hazards from inhalation exposure to acetaldehyde. --------------------------------------------------------------------------- \70\ U.S. EPA. 1991. Integrated Risk Information System File of Acetaldehyde. This material is available electronically at http://www.epa.gov/iris/subst/0290.htm. \71\ Appleman, L. M., R. A. Woutersen, V. J. Feron, R. N. Hooftman, and W. R. F. Notten. 1986. Effects of the variable versus fixed exposure levels on the toxicity of acetaldehyde in rats. J. Appl. Toxicol. 6: 331-336. \72\ Appleman, L.M., R.A. Woutersen, and V.J. Feron. 1982. Inhalation toxicity of acetaldehyde in rats. I. Acute and subacute studies. Toxicology. 23: 293-297. \73\ Myou, S.; Fujimura, M.; Nishi K.; Ohka, T.; and Matsuda, T. 1993. Aerosolized acetaldehyde induces histamine-mediated bronchoconstriction in asthmatics. Am. Rev. Respir.Dis.148(4 Pt 1): 940-3. --------------------------------------------------------------------------- Acrolein: EPA determined in 2003 that the human carcinogenic potential of acrolein could not be determined because the available data were inadequate. No information was available on the carcinogenic effects of acrolein in humans and the animal data provided inadequate evidence of carcinogenicity.\74\ The IARC determined in 1995 that acrolein was not classifiable as to its carcinogenicity in humans.\75\ --------------------------------------------------------------------------- \74\ U.S. EPA. 2003. Integrated Risk Information System File of Acrolein. Research and Development, National Center for Environmental Assessment, Washington, DC. This material is available at http://www.epa.gov/iris/subst/0364.htm. \75\ International Agency for Research on Cancer (IARC). 1995. Monographs on the evaluation of carcinogenic risk of chemicals to humans, Volume 63, Dry cleaning, some chlorinated solvents and other industrial chemicals, World Health Organization, Lyon, France. --------------------------------------------------------------------------- Acrolein is extremely acrid and irritating to humans when inhaled, with acute exposure resulting in upper respiratory tract irritation, mucus hypersecretion and congestion. Levels considerably lower than 1 ppm (2.3 mg/m3) elicit subjective complaints of eye and nasal irritation and a decrease in the respiratory rate.76 77 Lesions to the lungs and upper respiratory tract of rats, rabbits, and hamsters have been observed after subchronic exposure to acrolein. Based on animal data, individuals with compromised respiratory function (e.g., emphysema, asthma) are expected to be at increased risk of developing adverse responses to strong respiratory irritants such as acrolein. This was demonstrated in mice with allergic airway-disease by comparison to non-diseased mice in a study of the acute respiratory irritant effects of acrolein.\78\ --------------------------------------------------------------------------- \76\ Weber-Tschopp, A; Fischer, T; Gierer, R; et al. (1977) Experimentelle reizwirkungen von Acrolein auf den Menschen. Int Arch Occup Environ Hlth 40(2):117-130. In German. \77\ Sim, VM; Pattle, RE. (1957) Effect of possible smog irritants on human subjects. J Am Med Assoc 165(15):1908-1913. \78\ Morris JB, Symanowicz PT, Olsen JE, et al. 2003. Immediate sensory nerve-mediated respiratory responses to irritants in healthy and allergic airway-diseased mice. J Appl Physiol 94(4):1563-1571. --------------------------------------------------------------------------- EPA is currently in the process of conducting an assessment of acute exposure effects for acrolein. The intense irritancy of this carbonyl has been demonstrated during controlled tests in human subjects, who suffer intolerable eye and nasal mucosal sensory reactions within minutes of exposure.\79\ --------------------------------------------------------------------------- \79\ Sim VM, Pattle RE. Effect of possible smog irritants on human subjects JAMA165: 1980-2010, 1957. --------------------------------------------------------------------------- Polycyclic Organic Matter (POM): POM is generally defined as a large class of organic compounds which have multiple benzene rings and a boiling point greater than 100 degrees Celsius. Many of the compounds included in the class of compounds known as POM are classified by EPA as probable human carcinogens based on animal data. One of these compounds, naphthalene, is discussed separately below. Polycyclic aromatic hydrocarbons (PAHs) are a subset of POM that contain only hydrogen and carbon atoms. A number of PAHs are known or suspected carcinogens. Recent studies have found that maternal exposures to PAHs (a subclass of POM) in a population of pregnant women were associated with several adverse birth outcomes, including low birth weight and reduced length at birth, as well as impaired cognitive development at age three.80 81 EPA has not yet evaluated these recent studies. --------------------------------------------------------------------------- \80\ Perera, F.P.; Rauh, V.; Tsai, W-Y.; et al. (2002) Effect of transplacental exposure to environmental pollutants on birth outcomes in a multiethnic population. Environ Health Perspect. 111: 201-205. \81\ Perera, F.P.; Rauh, V.; Whyatt, R.M.; Tsai, W.Y.; Tang, D.; Diaz, D.; Hoepner, L.; Barr, D.; Tu, Y.H.; Camann, D.; Kinney, P. (2006) Effect of prenatal exposure to airborne polycyclic aromatic hydrocarbons on neurodevelopment in the first 3 years of life among inner-city children. Environ Health Perspect 114: 1287-1292. --------------------------------------------------------------------------- Naphthalene: Naphthalene is found in small quantities in gasoline and diesel fuels. Naphthalene emissions have been measured in larger quantities in both gasoline and diesel exhaust compared with evaporative emissions from mobile sources, indicating it is primarily a product of combustion. EPA recently released an external review draft of a reassessment of the inhalation carcinogenicity of naphthalene based on a number of recent animal carcinogenicity studies.\82\ The draft reassessment recently completed external peer review.\83\ Based on external peer review comments received to date, additional analyses are being undertaken. This external review draft does not represent official agency opinion and was released solely for the purposes of external peer review and public comment. Once EPA evaluates public and peer reviewer comments, the document will be revised. The National Toxicology Program listed naphthalene as ``reasonably anticipated to be a human carcinogen'' in 2004 on the basis of bioassays reporting clear evidence of carcinogenicity in rats and some evidence of carcinogenicity in mice.\84\ California EPA has released a new risk assessment for naphthalene, and the IARC has reevaluated naphthalene and re-classified it as Group 2B: possibly carcinogenic to humans.\85\ Naphthalene [[Page 59048]] also causes a number of chronic non-cancer effects in animals, including abnormal cell changes and growth in respiratory and nasal tissues.\86\ --------------------------------------------------------------------------- \82\ U.S. EPA (2004) Toxicological Review of Naphthalene (Reassessment of the Inhalation Cancer Risk), Environmental Protection Agency, Integrated Risk Information System, Research and Development, National Center for Environmental Assessment, Washington, DC. This material is available electronically at http://www.epa.gov/iris/subst/0436.htm. \83\ Oak Ridge Institute for Science and Education (2004) External Peer Review for the IRIS Reassessment of the Inhalation Carcinogenicity of Naphthalene. August 2004. http://cfpub.epa.gov/ncea/cfm/recordisplay.cfm?deid=84403. \84\ National Toxicology Program (NTP). (2004). 11th Report on Carcinogens. Public Health Service, U.S. Department of Health and Human Services, Research Triangle Park, NC. Available from: http://ntp-server.niehs.nih.gov. \85\ International Agency for Research on Cancer (IARC) (2002) Monographs on the Evaluation of the Carcinogenic Risk of Chemicals for Humans. Vol. 82. Lyon, France. \86\ U.S. EPA (1998) Toxicological Review of Naphthalene, Environmental Protection Agency, Integrated Risk Information System, Research and Development, National Center for Environmental Assessment, Washington, DC. This material is available electronically at http://www.epa.gov/iris/subst/0436.htm. --------------------------------------------------------------------------- The standards finalized in this action will reduce air toxics emitted from these engines, vessels and equipment. These emissions reductions will help to mitigate some of the adverse health effects associated with their operation. C. Carbon Monoxide CO is a colorless, odorless gas produced through the incomplete combustion of carbon-based fuels. The current primary NAAQS for CO are 35 ppm for the 1-hour average and nine ppm for the 8-hour average. These values are not to be exceeded more than once per year. We previously found that emissions from nonroad engines contribute significantly to CO concentrations in more than one nonattainment area (59 FR 31306, June 17, 1994). We have also previously found that emissions from Small SI engines contribute to CO concentrations in more than one nonattainment area. We are adopting a finding, based on the information in this section and in Chapters 2 and 3 of the Final RIA, that emissions from Marine SI engines and vessels likewise contribute to CO concentrations in more than one CO nonattainment area. Carbon monoxide enters the bloodstream through the lungs, forming carboxyhemoglobin and reducing the delivery of oxygen to the body's organs and tissues. The health threat from CO is most serious for those who suffer from cardiovascular disease, particularly those with angina or peripheral vascular disease. Healthy individuals also are affected, but only at higher CO levels. Exposure to elevated CO levels is associated with impairment of visual perception, work capacity, manual dexterity, learning ability and performance of complex tasks. Carbon monoxide also contributes to ozone nonattainment since carbon monoxide reacts photochemically in the atmosphere to form ozone.\87\ Additional information on CO related health effects can be found in the Carbon Monoxide Air Quality Criteria Document (CO AQCD).\88\ --------------------------------------------------------------------------- \87\ U.S. EPA (2000). Air Quality Criteria for Carbon Monoxide, EPA/600/P-99/001F. This document is available in Docket EPA-HQ-OAR- 2004-0008. \88\ U.S. EPA (2000). Air Quality Criteria for Carbon Monoxide, EPA/600/P-99/001F. This document is available in Docket EPA-HQ-OAR- 2004-0008. --------------------------------------------------------------------------- In addition to health effects from chronic exposure to ambient CO levels, acute exposures to higher levels are also a problem, see the Final RIA for additional information. In recent years a substantial number of CO poisonings and deaths have occurred on and around recreational boats across the nation.\89\ The actual number of deaths attributable to CO poisoning while boating is difficult to estimate because CO-related deaths in the water may be labeled as drowning. An interagency team consisting of the National Park Service, the U.S. Department of the Interior, and the National Institute for Occupational Safety and Health maintains a record of published CO-related fatal and nonfatal poisonings.\90\ Between 1984 and 2004, 113 CO-related deaths and 458 non-fatal CO poisonings have been identified based on hospital records, press accounts and other information. Deaths have been attributed to exhaust from both onboard generators and propulsion engines. Houseboats, cabin cruisers, and ski boats are the most common types of boats associated with CO poisoning cases. These incidents have prompted other federal agencies, including the United States Coast Guard and National Park Service, to issue advisory statements and other interventions to boaters to avoid excessive CO exposure.\91\ --------------------------------------------------------------------------- \89\ Mott, J.S.; Wolfe, M.I.; Alverson, C.J.; Macdonald, S.C.; Bailey, C.R.; Ball, L.B.; Moorman, J.E.; Somers, J.H.; Mannino, D.M.; Redd, S.C. (2002) National Vehicle Emissions Policies and Practices and Declining US Carbon Monoxide-Related Mortality. JAMA 288:988-995. \90\ National Park Service; Department of the Interior; National Institute for Occupational Safety and Health. (2004) Boat-related carbon monoxide poisonings. This document is available electronically at http://safetynet.smis.doi.gov/thelistbystate10-19-04.pdf and in docket EPA-HQ-OAR-2004-0008. \91\ U.S Department of the Interior. (2004) Carbon monoxide dangers from generators and propulsion engines. On-board boats-- compilation of materials. This document is available online at http://safetynet.smis.doi.gov/COhouseboats.htm and in docket EPA-HQ- OAR-2004-0008. --------------------------------------------------------------------------- As of March 12, 2008, there were approximately 850,000 people living in 4 areas (which include 5 counties) designated as nonattainment for CO.\92\ The CO nonattainment areas are presented in the Final RIA. --------------------------------------------------------------------------- \92\ Population numbers are from 2000 census data. --------------------------------------------------------------------------- EPA's NONROAD model indicates that Marine SI emissions are present in each of the CO nonattainment areas and thus contribute to CO concentrations in those nonattainment areas. The CO contribution from Marine SI engines in classified CO nonattainment areas is presented in Table II-3. Table II-3--CO Emissions From Marine SI Engines and Vessels in Classified CO Nonattainment Areas a ---------------------------------------------------------------------------------------------------------------- CO (short tons Area County Category in 2005) ---------------------------------------------------------------------------------------------------------------- Las Vegas, NV........................... Clark..................... Marine SI................. 3,016 Reno, NV................................ Washoe.................... Marine SI................. 3,494 El Paso, TX............................. El Paso................... Marine SI................. 37 ---------------------------------------------------------------------------------------------------------------- Source: U.S. EPA, NONROAD 2005 model. \a\ This table does not include Salem, OR which is an unclassified CO nonattainment area. Based on the national inventory numbers in Chapter 3 of the Final RIA and the local inventory numbers described in this section, we find that emissions of CO from Marine SI engines and vessels contribute to CO concentrations in more than one CO nonattainment area. III. Sterndrive and Inboard Marine Engines A. Overview This section applies to sterndrive and inboard marine (SD/I) engines. Sterndrive and inboard engines are spark-ignition engines typically derived from automotive engine blocks for which a manufacturer will take steps to ``marinize'' the engine for use in marine applications. This marinization process includes choosing and optimizing the fuel management system, configuring a marine cooling system, adding intake and exhaust manifolds, and adding accessory drives and units. These engines typically have water-jacketed [[Page 59049]] exhaust systems to keep surface temperatures low. Ambient surface water (seawater or freshwater) is generally added to the exhaust gases before the mixture is expelled under water. As described in Section I, the initial rulemaking to set standards for Marine SI engines did not include final emission standards for SD/I engines. In that rulemaking, we finalized the finding under Clean Air Act section 213(a)(3) that all Marine SI engines cause or contribute to ozone concentrations in two or more ozone nonattainment areas in the United States. However, because uncontrolled SD/I engines appeared to be a low-emission alternative to outboard and personal watercraft engines in the marketplace, even after the emission standards for these engines were fully phased in, we decided to set emission standards only for outboard and personal watercraft engines. At that time, outboard and personal watercraft engines were almost all two-stroke engines with much higher emission rates compared to the SD/I engines, which were all four-stroke engines. We pointed out in that initial rulemaking that we wanted to avoid imposing costs on SD/I engines that could cause a market shift to increased use of the higher-emitting outboard engines, which will undermine the broader goal of achieving the greatest degree of emission control from the full set of Marine SI engines. We believe this is an appropriate time to set standards for SD/I engines, for several reasons. First, the available technology for SD/I engines has developed significantly, so we are now able to anticipate substantial emission reductions. With the simultaneous developments in technology for outboard and personal watercraft engines, we can set standards that achieve substantial emission reductions from all Marine SI engines. Second, now that California has adopted standards for SD/I engines, the cost impact of setting new standards for manufacturers serving the California market is generally limited to the hardware costs of adding emission control technology; these manufacturers will be undergoing a complete redesign effort for these engines to meet the California standards. Third, while an emission control program for SD/I engines will increase the price of these engines, we no longer think this will result in a market shift to higher-emitting outboard engines. The economic impact analysis performed for this final rule, summarized in Section XII, suggests that the prices will increase less than 1 percent and sales will be impacted by less than 2 percent. It is also possible that SD/I engine manufacturers may promote higher fuel efficiency and other performance advantages of compliant engines which would allow them to promote these engines as having a greater value and justifying these small expected price increases. As a result, we believe we can achieve the maximum emission reductions from Marine SI engines by setting standards for SD/I engines based on the use of catalyst technology at the same time that we adopt more stringent standards for outboard and personal watercraft engines. As described in Section II, we are adopting the finding under Clean Air Act section 213(a)(3) that Marine SI engines cause or contribute to CO concentrations in two or more nonattainment areas of the United States. We believe the new CO standards will also reduce the exposure of individual boaters and bystanders to potentially dangerous CO levels. We believe catalyst technology is available for achieving the new standards. Catalysts have been used for decades in automotive applications to reduce emissions, and catalyst manufacturers have continued to develop and improve this technology. Design issues for using catalysts in marine applications are primarily centered on packaging catalysts in the water-jacketed, wet exhaust systems seen on most SD/I engines. Section III.G discusses recent development work that has shown success in packaging catalysts in SD/I applications. In addition, there are ongoing efforts in evaluating catalyst technology in SD/I engines being sponsored by the marine industry, U.S. Coast Guard, and California ARB. We are adopting the regulatory requirements for marine spark- ignition engines in 40 CFR part 1045. These requirements are similar to the regulations that have been in place for outboard and personal watercraft engines for several years, but include updated certification procedures, as described in Section IV.A. Engines and vessels subject to part 1045 are also subject to the general compliance provisions in 40 CFR part 1068. These include prohibited acts and penalties, exemptions and importation provisions, selective enforcement audits, defect reporting and recall, and hearing procedures. See Section VIII of the preamble to the proposed rule for further discussion of these general compliance provisions. B. Engines Covered by This Rule (1) Definition of Sterndrive and Inboard Engines For the purpose of this regulation, SD/I engines encompass all spark-ignition marine propulsion engines that are not outboard or personal watercraft engines. A discussion of the revised definitions for outboard and personal watercraft engines is in Section IV.B. We consider all the following to be SD/I engines: inboard, sterndrive (also known as inboard/outboard), airboat engines, and jet boat engines. The definitions for sterndrive and inboard engines at 40 CFR part 91 are presented below: • Sterndrive engine means a four stroke Marine SI engine that is designed such that the drive unit is external to the hull of the marine vessel, while the engine is internal to the hull of the marine vessel. • Inboard engine means a four stroke Marine SI engine that is designed such that the propeller shaft penetrates the hull of the marine vessel while the engine and the remainder of the drive unit is internal to the hull of the marine vessel. We are amending the above definitions for determining which exhaust emission standards apply to spark-ignition marine engines in 2010. The new definition establishes a single term to include sterndrive and inboard engines together as a single engine category. The new definition for sterndrive/inboard also is drafted to include all engines not otherwise classified as outboard or personal watercraft engines. The new definition has several noteworthy impacts. First, it removes a requirement that only four-stroke engines can qualify as sterndrive/inboard engines. We believe limiting the definition to include only four-stroke engines is unnecessarily restrictive and could create an incentive to use two-stroke (or rotary) engines to avoid catalyst-based standards. Second, it removes limitations caused by reference to propellers. The definition should not refer specifically to propellers, because there are other propulsion drives on marine vessels, such as jet drives, that could be used with SD/I engines. Third, as explained in the section on the OB/PWC definitions, the new definitions treat engines installed in open-bay vessels (e.g. jet boats) and in vessels over 4 meters long as SD/I engines. Finally, the definition in part 91 does not clearly specify how to treat specialty vessels such as airboats or hovercraft that use engines similar to those in conventional SD/I applications. The [[Page 59050]] definition of personal watercraft grants EPA the discretion to classify engines as SD/I engines if the engine is comparable in technology and emissions to an inboard or sterndrive engine. EPA has used this discretion to classify airboats as SD/I engines. See 40 CFR 91.3 for the existing definitions of the marine engine classes. We continue to believe these engines share fundamental characteristics with traditional SD/I engines and should therefore be treated the same way. However, we believe the definitions should address these applications expressly to make clear which standards apply. We are adopting the following definition: • Sterndrive/inboard engine means a spark-ignition engine that is used to propel a vessel, but is not an outboard engine or a personal watercraft engine. A sterndrive/inboard engine may be either a conventional sterndrive/inboard engine or a high-performance engine. Engines on propeller-driven vessels, jet boats, air boats, and hovercraft are all sterndrive/inboard engines. SD/I high-performance engines are generally characterized by high- speed operation, supercharged air intake, customized parts, very high power densities, and a short time until rebuild (50 to 200 hours). Based on current SD/I product offerings, we are defining a high- performance engine as an SD/I engine with maximum power above 373 kW (500 hp) that has design features to enhance power output such that the expected operating time until rebuild is substantially shorter than 480 hours. (2) Exclusions and Exemptions We are extending our basic nonroad exemptions to the SD/I engines and vessels covered by this rule. These include the testing exemption, the manufacturer-owned exemption, the display exemption, and the national-security exemption. If the conditions for an exemption are met, then the engine is not subject to the exhaust emission standards. In the rulemaking for recreational vehicles, we chose not to apply standards to hobby products by exempting all reduced-scale models of vehicles that are not capable of transporting a person (67 FR 68242, November 8, 2002). We are extending that same provision to SD/I marine engines (see Sec. 1045.5). The Clean Air Act provides for different treatment of engines used solely for competition. Rather than relying on engine design features that serve as inherent indicators of dedicated competitive use, as specified in the current regulations, we have taken the approach in more recent programs of more carefully differentiating competition and noncompetition models in ways that reflect the nature of the particular products. In the case of Marine SI engines, we do not believe there are engine design features that allow us to differentiate between engines that are used in high-performance recreational applications and those that are used solely for competition. Starting January 1, 2009, Marine SI engines meeting all the following criteria will therefore be considered to be used solely for competition: • The engine (or a vessel in which the engine is installed) may not be displayed for sale in any public dealership or otherwise offered for sale to the general public. • Sale of the vessel in which the engine is installed must be limited to professional racers or other qualified racers. • The engine must have performance characteristics that are substantially superior to noncompetitive models (e.g. higher power-to- weight ratio). • The engines must be intended for use only in racing events sanctioned (with applicable permits) by the Coast Guard or other public organization, with operation limited to racing events, speed record attempts, and official time trials. We are also including a provision allowing us to approve an exemption for cases in which an engine manufacturer can provide clear and convincing evidence that an engine will be used solely for competition even though not all the above criteria apply for a given situation. This may occur, for example, if a racing association specifies a particular engine model in their competition rules, where that engine has design features that prevent it from being certified or from being used for purposes other than competition. Engine manufacturers will make their request for each new model year. We will deny a request for future production if there are indications that some engines covered by previous requests are not being used solely for competition. Competition engines are generally produced and sold in very small quantities, so manufacturers should be able to identify which engines qualify for this exemption. We are applying the same criteria to outboard and personal watercraft engines and vessels. See Sec. 1045.620. We are adopting a new exemption to address individuals who manufacture recreational marine vessels for personal use (see Sec. 1045.630). Under this exemption, someone may install a used engine in a new vessel where that engine is exempt from standards, subject to certain limitations. For example, an individual may produce one such vessel over a five-year period, the vessel may not be used for commercial purposes, and any exempt engines may not be sold for at least five years. The vessel must generally be built from unassembled components, rather than simply completing assembly of a vessel that is otherwise similar to one that will be certified to meet emission standards. This exemption does not apply for freshly manufactured engines. This exemption addresses the concern that hobbyists who make their own vessels could otherwise be a manufacturer subject to the full set of emission standards by introducing these vessels into commerce. We expect this exemption to involve a very small number of vessels. We revised the provisions of the personal-use exemption since the proposal to allow people to build a vessel with an exempted engine once every five years instead of ten years. We believe this is more reflective of a hobbyists interest in building a boat and using it before moving on to the next building project. C. Exhaust Emission Standards We are adopting technology-based exhaust emission standards for new SD/I engines. These standards are similar to the exhaust emission standards that California ARB recently adopted (see Section I). This section describes the provisions related to controlling exhaust emissions from SD/I engines. See Section VI for a description of the new requirements related to evaporative emissions. (1) Standards and Dates We are adopting exhaust emission standards of 5.0 g/kW-hr HC+NOX and 75 g/kW-hr CO for SD/I engines, starting with the 2010 model year (see Sec. 1045.105). On average, this represents about a 70 percent reduction in HC+NOX and a 50 percent reduction in CO from baseline engine configurations. Due to the challenges of controlling CO emissions at high load, the expected reduction in CO emissions from low-to mid-power operation is expected to be more than 80 percent. We are providing additional lead time for small businesses as discussed in Section III.F.2. The new standards are based on the same duty cycle that currently is in place for outboard and personal watercraft engines, as described in Section III.D. Section III.G discusses the technological feasibility of these standards in more detail. The new standards are largely based on the use of small catalytic converters [[Page 59051]] that can be packaged in the water-cooled exhaust systems typical for these applications. California ARB also adopted an HC+NOX standard of 5 g/kW-hr, starting with 2008 model year engines, but they did not adopt a standard for CO emissions. We believe the type of catalyst used to achieve the HC+NOX standard will also be effective in reducing CO emissions enough to meet the new standard with the proper calibrations, so no additional hardware will be needed to control CO emissions. Manufacturers have expressed concern that the implementation dates may be difficult to meet, for certain engines, due to anticipated changes in engine block designs produced by General Motors. As described in the Final RIA and in the docket, the vast majority of SD/I engines are based on automotive engine blocks sold by General Motors.\93\ There are five basic engine blocks used, and recently GM announced that it plans to discontinue production of the 4.3L and 8.1L engine blocks. GM anticipates that it will offer a 4.1L engine block and a 6.0L supercharged engine block to the marine industry as replacements. Full-run production of these new blocks is anticipated around the time that manufacturers will be making the transition to meeting new EPA emission standards. SD/I engine manufacturers have expressed concern that they will not be able to begin the engineering processes related to marinizing these engines, including the development of catalyst-equipped exhaust manifolds, until they see the first prototypes of the two replacement engine models. In addition, they are concerned that they do not have enough remaining years of sales of the 4.3L and 8.1L engines to justify the cost of developing catalyst-equipped exhaust manifolds for these engines and amortizing the costs of the required tooling while also developing the two new engine models. --------------------------------------------------------------------------- \93\ ``GM Product Changes Affecting SD/I Engine Marinizers,'' memo from Mike Samulski, EPA, to Docket EPA-HQ-OAR-2004-0008-0528. --------------------------------------------------------------------------- These are unique circumstances because the SD/I engine manufacturers' plans and products depend on the manufacture of the base engine by a company not directly involved in marine engine manufacturing. The SD/I sales represent only a small fraction of GM's total engine sales and thus did not weigh heavily in their decision to replace the existing engine blocks with two comparable versions during the timeframe when the SD/I manufacturers are facing new emission standards. SD/I manufacturers have stated that alternative engine blocks that meet their needs are not available in the interim, and that it will be cost-prohibitive for them to produce their own engine blocks. EPA's SD/I standards start to take effect with the 2010 model year, two years after the same standards apply in California. We believe a requirement to extend the California standards nationwide after a two- year delay allows manufacturers adequate time to incorporate catalysts across their product lines as they are doing in California. Once the technology is developed for use in California, it will be available for use nationwide soon thereafter. In fact, one company currently certified to the California standards is already offering catalyst- equipped SD/I engines nationwide. To address the challenge related to the transition away from the current 4.3 and 8.1 liter GM engines, we are including in the final rule a direct approval for a hardship exemption allowing manufacturers to produce these engines for one additional year without certifying them (see Sec. 1045.145). Starting in the 2011 model year, we would expect manufacturers to have worked things out such that they could certify their full product lineup to the applicable standards. Engines used on jet boats may have been classified under the original definitions as personal watercraft engines. As described in Section IV, engines used in jet boats or personal watercraft-like vessels that are four meters or longer will be classified as SD/I engines under the new definitions. Such engines subject to part 91 today will therefore need to continue meeting EPA emission standards as personal watercraft engines through the 2009 model year under part 91, after which they will need to meet the new SD/I standards under part 1045. This is another situation where the transition period discussed above may be helpful. In contrast, as discussed above, air boats have been classified as SD/I engines under EPA's discretionary authority and are not required to comply with part 91, but must meet the new emission standards for SD/I engines under part 1045. As described above, engines used solely for competition are not subject to emission standards, but many SD/I high-performance engines are sold for recreational use. SD/I high-performance engines have very high power outputs, large exhaust gas flow rates, and relatively high concentrations of hydrocarbons and carbon monoxide in the exhaust gases. As described in the Final Regulatory Impact Analysis, applying catalyst technology to these engines is not practical. California ARB initially adopted the same HC+NOX standards that apply for other SD/I engines with the expectation that manufacturers would simply rely on emission credits from other SD/I engines. We believe a credit- based solution is not viable for small business manufacturers that do not have other products with which to exchange emission credits and California ARB has modified their rule to also address this concern. We are adopting standards for SD/I high-performance engines based on the level of control that can be expected from recalibration with electronically controlled fuel injection. These standards are phased in over a two-year transition period. In the 2010 model year, the HC+NOX emission standards are 20.0 g/kW-hr for engines at or below 485 kW and 25.0 g/kW-hr for bigger engines. In 2011 and later model years, the HC+NOX emission standards drop to 16.0 g/ kW-hr for engines at or below 485 kW and 22.0 g/kW-hr for bigger engines. The CO standard is 350 g/kW-hr for all SD/I high-performance engines. We believe this is achievable with more careful control of fueling rates, especially under idle conditions. Control of air-fuel ratios should result in improved emission control even after multiple rebuilds. Note that small-volume manufacturers may delay complying with the high-performance standards until 2013. In that year, the standard will be the same as the 2011 standards for larger manufacturers. We are adopting a variety of provisions to simplify the requirements for exhaust emission certification and compliance for SD/I high-performance engines, as described in Section IV.F. We have also chosen not to apply the Not-to-Exceed emission standards to these engines because we have very limited information on their detailed emission characteristics and we are concerned about extent of testing that would be required by the large number of affected engine manufacturers that are small businesses. We are also aware that there are some very small sterndrive or inboard engines. In particular, sailboats may have small propulsion engines for backup power. These engines will fall under the new definition of sterndrive/inboard engines, even though they are much smaller and may experience very different in-use operation. These engines generally have more in common with marine auxiliary engines or lawn and garden engines that are subject to land-based standards. We are therefore allowing manufacturers to use engines that have been certified to current land- [[Page 59052]] based emission standards for sterndrive and inboard installation, much like we are adopting for outboard and personal watercraft engines (see Sec. 1045.610). The emission standards apply at the range of atmospheric pressures represented by the test conditions specified in part 1065. This includes operation at elevated altitudes. Since we expect most or all SD/I engines to have three-way catalysts with closed-loop fuel control, these engines should be able to include the ability to automatically compensate for varying altitude. Manufacturers may choose to use an altitude kit for demonstrating compliance with emission standards at high altitudes as described for OB/PWC engines in Section IV.C.1. Manufacturers using altitude kits would need to take a variety of steps to describe their approach and ensure that such altitude kits are in fact being used with in-use engines operating at high altitudes, as described in Section IV.E.8. (2) Not-to-Exceed Standards We are adopting emission standards that apply over an NTE zone. The NTE standards are in the form of a multiplier times the duty-cycle standard for HC+NOX and for CO (see Sec. 1045.105. Section III.D.2 gives an overview of the NTE standards and compliance provisions and describes the NTE test procedures. Manufacturers commented that certification to the NTE standards requires additional testing for engine models that are already certified to the new emission standards for California. In addition, they expressed concern that they may need to recalibrate existing engine models to meet the NTE standards. Manufacturers commented that this would not be possible by the date of the duty cycle standard. For engines already certified in California, manufacturers carry over preexisting certification test data from year to year. Manufacturers commented that additional time would be necessary to retest, and potentially recalibrate, these engines for certification to the NTE standards. To address these issues regarding lead time needed to retest these engines, we are not applying the NTE standards for 2010-2012 model year engines that are certified using preexisting data (i.e., carryover engine families). For new engine models, manufacturers indicated that they will be able to perform the NTE testing and duty- cycle testing as part of their efforts to certify to the new standards. Therefore the primary implementation date of 2010 applies to these engines. Beginning in the 2013 model year, all conventional SD/I engines must be certified to meet the NTE standards. This NTE approach complements the weighted modal emission tests included in this rule. These steady-state duty cycles and standards are intended to establish average emission levels over several discrete modes of engine operation. Because it is an average, manufacturers design their engines with emission levels at individual points varying as needed to maintain maximum engine performance and still meet the engine standard. The NTE limit will be an additional requirement. It is intended to ensure that emission controls function with relative consistency across the full range of expected operating conditions. (3) Emission Credit Programs (a) Averaging, Banking, and Trading We are adopting provisions for averaging, banking, and trading of emission credits for conventional SD/I engines to meet the new HC+NOX and CO standards (see Sec. 1045.105 and part 1045, subpart H). See Section VII.C.5 of the preamble to the proposed rule for a description of general provisions related to averaging, banking, and trading programs. A description of the ABT provisions for the new SD/I standards is provided in this section. EPA proposed that manufacturers would not be able to earn credits for one pollutant while using credits to comply with the emissions standard for another pollutant. The proposed restriction was modeled on similar requirements in other ABT programs where there was concern that a manufacturer could use technologies to reduce one pollutant while increasing another pollutant. Manufacturers are expected to comply with the new SD/I standards by using a combination of improved engine designs and catalysts. This should result in reductions in both HC+NOX emissions and CO emissions compared to current designs. While the technology is expected to reduce both HC+NOX emissions and CO emissions, there could be situations where the engines are capable of meeting one of the emission standards but not the other. EPA does not want to preclude such engines from being able to certify using the provisions of the ABT program and is therefore dropping the proposed restriction from the final rule. Credit generation and use is calculated based on the FEL of the engine family and the standard. We are adopting FEL caps to prevent the sale of very high-emitting engines. The HC+NOX FEL cap for conventional SD/I engines is 16 g/kW-hr while the CO FEL cap is 150 g/ kW-hr and applies starting in 2010, except as noted below. These FEL caps represent the average baseline emission levels of SD/I engines, based on data described in the Final RIA. However, through the 2013 model year we are separately allowing small-volume engine manufacturers to certify their four-stroke conventional SD/I engines without testing by assuming an HC+NOX FEL of 22.0 g/kW-hr and a CO FEL of 150 g/kW-hr. Manufacturers using this provision would not be subject to the FEL cap for those engine families. We are specifying that SD/I engines are in a separate averaging set from OB/PWC engines, with a limited exception for certain jet boat engines as described below. This means that credits earned by SD/I engines may be used only to offset higher emissions from other SD/I engines. Likewise, credits earned by OB/PWC engines may be used only to offset higher emissions from other OB/PWC engines (except where we allow those credits to be used for certain jet boat engines). Emission credits earned for SD/I engines will have an indefinite credit life with no discounting. We consider these emission credits to be part of the overall program for complying with the new standards. Given that we may consider further reductions beyond these standards in the future, we believe it will be important to assess the ABT credit situation that exists at the time any further standards are considered. Emission credit balances will be part of the analysis for determining the appropriate level and timing of new standards, consistent with the statutory requirement to establish standards that represent the greatest degree of emission reduction achievable, considering cost, safety, lead time, and other factors. If we were to allow the use of credits generated under the standards adopted in this rule to meet more stringent standards adopted in a future rulemaking, we may need to adopt emission standards at more stringent levels or with an earlier start date than we would absent the continued use of existing emission credits, depending on the level of emission credit banks. Alternatively, we may adopt future standards without allowing the use of existing emission credits. Finally, manufacturers may include as part of their federal credit calculation the sales of engines in California as long as they don't separately account for those emission credits under the California regulations. We originally proposed to exclude engines sold in California that are subject to the California ABR standards. However, we [[Page 59053]] consider California's current HC+NOX standards to be equivalent to those we are adopting in this rulemaking, so we would expect a widespread practice of producing and marketing 50-state products. Therefore, as long as a manufacturer is not generating credits under California's regulations for SD/I engines, we would allow manufacturers to count those engines when calculating credits under EPA's program. This is consistent with how EPA allows credits to be calculated in other nonroad sectors, such as recreational vehicles. (b) Early-Credit Approaches We are adopting an early-credit program in which a manufacturer could earn emission credits before 2010 with early introduction of emission controls designed to meet the new standards (see Sec. 1045.145). For engines produced by small-volume SD/I manufacturers that are eligible for the one-year delay described in Section III.F.2, early credits could be earned before 2011. As proposed, use of these early credits would be limited to the first three years that the new standards apply. While we believe adequate lead time is provided to meet the new standards, we recognize that flexibility in timing could help some manufacturers--particularly small manufacturers--to meet the new standards. Other manufacturers that are able to comply early on certain models will be better able to transition their full product line to the new standards by spreading out the transition over two years or more. Under this approach, we anticipate that manufacturers will generate credits through the use of catalysts. Manufacturers will generate these early credits based on the difference between the measured emission level of the clean engines and an assigned baseline level (16 g/kW-hr HC+NOX and 150 g/kW- hr CO). These assigned baseline levels are based on data presented in Chapter 4 of the Final RIA representing the average level observed for uncontrolled engines. We also provide bonus credits for any small- volume SD/I engine manufacturer that certifies early to the new standards to provide a further incentive for introducing catalysts in SD/I engines. The bonus credits will take the form of a multiplier times the earned credits. The multipliers are 1.25 for being one year early, 1.5 for being two years early, and 2.0 for being three years early. For example, a small-volume manufacturer certifying an engine to 5.0 g/kW-hr HC+NOX in 2009 (two years early) will get a bonus multiplier of 1.5. Early HC+NOX credits will therefore be calculated using the following equation: credits [grams] = (16-5) mu Power [kW] x Useful Life [hours] x Load Factor x 1.5. The specified load factor is 0.207, which is currently used in the OB/PWC calculations. To earn these early credits, the engine must meet both the new HC+NOX standard and the new CO standard. These early credits will be treated the same as emission credits generated after the emission standards start to apply. This approach provides an incentive for manufacturers to pull ahead significantly cleaner technologies. We believe such an incentive will lead to early introduction of catalysts on SD/I engines and help promote earlier market acceptance of this technology. We believe this early credit program will allow manufactures to comply with the new standards in an earlier time frame because it allows them to spread out their development resources over multiple years. To ensure that manufacturers do not generate credits for meeting standards that already apply, no EPA credits will be generated for engines that are produced for sale in California. (c) Jet Boats Sterndrive and inboard vessels are typically propelled by traditional SD/I engines based on automotive engine blocks. As explained in Section IV, we are changing the definition of personal watercraft to ensure that engines used on jet boats will no longer be classified as personal watercraft engines but instead as SD/I engines because jet boats are more like SD/I vessels. However, manufacturers in many cases make these jet boats by installing an engine also used in outboard or personal watercraft applications (less than 4 meters in length) and coupling the engine to a jet drive for propelling the jet boat. Thus, manufacturers of outboard or personal watercraft engines may also manufacture the same or a similar engine for use on what we consider to be a jet boat. Engines used in jet boats will be subject to SD/I emission standards. However, we are providing some flexibility in meeting the new emission standards for jet boat engines because they are currently designed to use engines derived from OB/PWC applications and because of their relatively low sales volumes. We will allow manufacturers to use emission credits generated from OB/PWC engines to demonstrate that their jet boat engines meet the new HC+NOX and CO standards for SD/I engines if the same or similar engine is certified as an outboard or personal watercraft engine, and if the majority of units sold in the United States from those related engine families are sold for use as outboard or personal watercraft engines (see Sec. 1045.660 and Sec. 1045.701). Manufacturers will need to group SD/I engines used for jet boats in a separate engine family from the outboard or personal watercraft engines to ensure proper labeling and calculation of emission credits, but manufacturers could rely on emission data from the same prototype engine for certifying both engine families. Finally, manufacturers of jet boat engines subject to SD/I standards and using credits from outboard or personal watercraft engines must certify these jet boat engines to an FEL that meets or exceeds the newly adopted standards for outboard and personal watercraft engines. This limits the degree to which manufacturers may take advantage of emission credits to produce engines that are emitting at higher levels than competitive engines. (d) SD/I High-Performance Engines For the reasons described in Section III.C.1, the standards being adopted for SD/I high-performance engines are less stringent than originally proposed. As a result, we are not including the SD/I high- performance engines in the ABT program. Manufacturers are required to meet the emission standards for SD/I high-performance engines without using emission credits. (4) Crankcase Emissions Due to blowby of combustion gases and the reciprocating action of the piston, exhaust emissions can accumulate in the crankcase. Uncontrolled engine designs route these vapors directly to the atmosphere. Closed crankcases have become standard technology for automotive engines and for outboard and personal watercraft engines. Manufacturers generally do this by routing crankcase vapors through a valve into the engine's air intake system. We are requiring manufacturers to prevent crankcase emissions from SD/I marine engines (see Sec. 1045.115). Because automotive engine blocks are already tooled for closed crankcases, the cost of adding a valve for positive crankcase ventilation is small for SD/I engines. Even with non- automotive blocks, the tooling changes necessary for closing the crankcase are straightforward. (5) Durability Provisions We rely on pre-production certification, and other programs, to ensure that engines control emissions throughout their intended lifetime of operation. Section VII of the preamble to [[Page 59054]] the proposed rule describes how we require manufacturers to incorporate laboratory aging in the certification process, how we limit the extent of maintenance that manufacturers may specify to keep engines operating as designed, and other general provisions related to certification. The following sections describe additional provisions that are specific to SD/I engines. (a) Useful Life We are specifying a useful life period of ten years or 480 hours of engine operation, whichever comes first (see Sec. 1045.105). Manufacturers are responsible for meeting emission standards during this useful life period. This is consistent with the requirements adopted by California ARB. We are further requiring that the 480-hour useful life period is a baseline value, which may be extended if data show that the average service life for engines in the family is longer. For example, we may require that the manufacturer certify the engine over a longer useful life period that more accurately represents the engines' expected operating life if we find that in-use engines are typically operating substantially more than 480 hours. This approach is similar to what we adopted for recreational vehicles. For SD/I high-performance engines, we are specifying a useful life of 150 hours or 3 years for engines at or below 485 kW and a useful life of 50 hours or 1 year for engines above 485 kW. Due to the high power and high speed of these engines, mechanical parts are often expected to wear out quickly. For instance, one manufacturer indicated that some engines above 485 kW have scheduled head rebuilds between 50 and 75 hours of operation. These useful life values are consistent with the California ARB regulations for SD/I high-performance engines. Some SD/I engines below 373 kW may be designed for high power output even though they do not reach the power threshold to qualify as SD/I high-performance engines. Because they do not qualify for the shorter useful life that applies to SD/I high-performance engines, they will be subject to the default value of 480 hours for other SD/I engines. However, to address the limited operating life for engines that are designed for especially high power output, we are allowing manufacturers to request a shorter useful life for such an engine family based on information showing that engines in the family rarely operate beyond the requested shorter period. For example, if engines designed for extremely high-performance are typically rebuilt after 250 hours of operation, this will form the basis for establishing a shorter useful life period for those engines. See Sec. 1045.105 for additional detail in establishing a shorter useful life. Jet boat engines that are certified in conjunction with outboard or personal watercraft engine families are subject to the shorter useful life period that applies for outboard or personal watercraft engines. This is necessary to prevent a situation where the original certification data is insufficient for certifying the jet boat engines without some further testing or analysis to show that the engines meet emission standards over a longer period. (b) Warranty Periods We are requiring that manufacturers provide an emission-related warranty during the first three years or 480 hours of engine operation, whichever comes first (see Sec. 1045.120). This warranty period applies equally to emission-related electronic components on SD/I high- performance engines. However, we are allowing shorter warranty periods (in hours) for emission-related mechanical components on SD/I high- performance engines because these parts are expected to wear out more rapidly than comparable parts on traditional SD/I engines. Specifically, we are specifying a warranty period for emission-related mechanical components of 3 years or 150 hours for high-performance engines between 373 and 485 kW, and 1 year or 50 hours for high- performance engines above 485 kW. These warranty periods are the same as those adopted by the California ARB. If the manufacturer offers a longer warranty for the engine or any of its components at no additional charge, we require that the emission-related warranty for the respective engine or component must be extended by the same amount. The emission-related warranty includes components related to controlling exhaust, evaporative, and crankcase emissions from the engine. These warranty requirements are consistent with provisions that apply in most other programs for nonroad engines. (6) Engine Diagnostics We are requiring that manufacturers design their catalyst-equipped SD/I engines to diagnose malfunctioning emission control systems starting with the introduction of the final standards (see Sec. 1045.110). As discussed in the Final RIA, three-way catalyst systems with closed-loop fueling control work well only when the air-fuel ratios are controlled to stay within a narrow range around stoichiometry. Worn or broken components or drifting calibrations over time can prevent an engine from operating within the specified range. This increases emissions and can lead to significantly increased fuel consumption and engine wear. The operator may or may not notice the change in the way the engine operates. We are not requiring similar diagnostic controls for OB/PWC engines because the anticipated emission control technologies for these other applications are generally less susceptible to drift and gradual deterioration. We have adopted similar diagnostic requirements for Large SI engines operating in forklifts and other industrial equipment that also use three-way catalysts to meet emission standards. This diagnostic requirement focuses solely on maintaining stoichiometric control of air-fuel ratios. This kind of design detects problems such as broken oxygen sensors, leaking exhaust pipes (upstream of sensors and catalysts), fuel deposits, and other things that require maintenance to keep the engine at the proper air-fuel ratio. Diagnostic monitoring provides a mechanism to help keep engines tuned to operate properly, with benefits for both controlling emissions and maintaining optimal performance. There are currently no inspection and maintenance programs for marine engines, so the most important variable in making the emission control and diagnostic systems effective is getting operators to repair the engine when the diagnostic light comes on. This calls for a relatively simple design to avoid signaling false failures as much as possible. The diagnostic requirements in this final rule, therefore, focus on detecting inappropriate air-fuel ratios, which is the most likely failure mode for three-way catalyst systems. The malfunction indicator must go on when an engine runs for a full minute under closed-loop operation without reaching a stoichiometric air-fuel ratio. California ARB has adopted diagnostic requirements for SD/I engines that involve a more extensive system for monitoring catalyst performance and other parameters. We will accept a California-approved system as meeting EPA requirements. The final regulations direct manufacturers to follow standard practices defined in documents adopted recently by the Society of Automotive Engineers in SAE J1939-5. See Sec. 1045.110 for detailed information. [[Page 59055]] D. Test Procedures for Certification (1) General Provisions The marine engine test procedures are generally the same for both SD/I and OB/PWC engines. This involves laboratory measurement of emissions while the engine operates over the ISO E4 duty cycle. This is a five-mode steady-state duty cycle including an idle mode and four modes lying on a propeller curve with an exponent of 2.5, as shown in Appendix II to part 1045. The International Organization for Standardization (ISO) intended for this cycle to be used for recreational spark-ignition marine engines installed in vessels up to 24 m in length. Because most or all vessels over 24 m have diesel engines, we believe the E4 duty cycle is most appropriate for SD/I engines covered by this rule. There may be some spark-ignition engines installed in vessels somewhat longer than 24 m, but we believe the E4 duty cycle is no less appropriate in these cases. See Section IV.D for a discussion of adjustments to the test procedures related to the migration to 40 CFR part 1065, testing with a ramped-modal cycle, determining maximum test speed for denormalizing the duty cycle, and testing at high altitude. The E4 duty cycle includes a weighting of 40 percent for idle. For SD/I high-performance engines, commenters suggested that these engines typically have substantial auxiliary loads and parasitic losses even when the vessel does not need propulsion power. While the specified duty cycle for SD/I high-performance engines is identical to that for other Marine SI engines, we would expect manufacturers to use the provisions of Sec. 1065.510(b)(3) to target a reference torque of 15 percent instead of zero at idle. (2) Not-to-Exceed Test Procedures and Standards We are adopting not-to-exceed (NTE) requirements similar to those established for marine diesel engines. Engines will be required to meet the NTE standards during normal in-use operation. (a) Concept Our goal is to achieve control of emissions over a wide range of ambient conditions and over the broad range of in-use speed and load combinations that can occur on a marine engine. This will ensure real- world emission control, rather than just controlling emissions under certain laboratory conditions. This allows us to evaluate an engine's compliance during in-use testing without removing the engine from the vessel because the NTE requirements establish an objective standard and an easily implemented test procedure. Our traditional approach has been to set a numerical standard on a specified test procedure and rely on the additional prohibition of defeat devices to ensure in-use control over a broad range of operation not included in the test procedure. We are establishing the same prohibition on defeat devices for OB/PWC and SD/I engines (see Sec. 1045.115). No single test procedure or test cycle can cover all real-world applications, operations, or conditions. Yet to ensure that emission standards are providing the intended benefits in use, we must have a reasonable expectation that emissions under real-world conditions reflect those measured on the test procedure. The defeat device prohibition is designed to ensure that emission controls are employed during real-world operation, not just under laboratory testing conditions. However, the defeat device prohibition is not a quantified standard and does not have an associated test procedure, so it does not have the clear objectivity and ready enforceability of a numerical standard and test procedure. We believe using the traditional approach, i.e., using only a standardized laboratory test procedure and test cycle, makes it difficult to ensure that engines will operate with the same level of emission control in use as in the laboratory. Because the duty cycle we have adopted uses only five modes on an average propeller curve to characterize marine engine operation, we are concerned that an engine designed to that duty cycle will not necessarily perform the same way over the range of speed and load combinations seen on a boat. This duty cycle is based on an average propeller curve, but a marine propulsion engine may never be fitted with an ``average propeller.'' For instance, an engine installed in a specific boat with a particular propeller may operate differently based on the design of the boat and how heavily the boat is loaded, among other factors. To ensure that engines control emissions over a wide range of speed and load combinations normally seen on boats, we are including a zone under the engine's power curve where the engine may not exceed a specified emission limit (see Sec. 1045.105 and Sec. 1045.515). This limit will apply to all regulated pollutants during steady-state operation. In addition, we are requiring that a wide range of real ambient conditions be included in testing with this NTE zone. The NTE zone, limit, and ambient conditions are described below. We believe there are significant advantages to establishing NTE standards. The final NTE test procedure is flexible, so it can represent the majority of in-use engine operation and ambient conditions. The NTE approach thus takes all the benefits of a numerical standard and test procedure and expands it to cover a broad range of conditions. Also, laboratory testing makes it harder to perform in-use testing because either the engines will have to be removed from the vessel or care will have to be taken to achieve laboratory-type conditions on the vessel. With the NTE approach, in-use testing and compliance become much easier since emissions may be sampled during normal boating. By establishing an objective measurement, this approach makes enforcement of defeat device provisions easier and provides more certainty to the industry. Even with the NTE requirements, we believe it is still appropriate to retain standards based on the steady-state duty cycle. This is the standard that we expect the certified marine engines to meet on average in use. The NTE testing is focused more on maximum emissions for segments of operation and, in most cases, will not require additional technology beyond what is used to meet the final standards. In some cases, the calibration of the engine may need to be adjusted. We believe that basing the emission standards on a distinct cycle and using the NTE zone to ensure in-use control creates a comprehensive program. We believe the technology used to meet the standards over the five- mode duty cycle, when properly calibrated, will meet the caps that apply across the NTE zone. We therefore do not expect the final NTE standards to cause manufacturers to need additional hardware. We believe the NTE standard will not result in a large amount of additional testing, because these engines should be designed to perform as well in use as they do over the five-mode test. However, our cost analysis in the Final RIA accounts for some additional testing, especially in the early years, to provide manufacturers with assurance that their engines will meet the NTE requirements. (b) Shape of NTE Zone We developed the NTE zone based on the range of conditions that these engines typically see in use. Manufacturers collected data on several engines installed on vessels and operated under light and heavy load. Chapter 4 of the Final RIA presents this data and describes the development of the boundaries and conditions [[Page 59056]] associated with the NTE zone. Although significant in-use engine operation occurs at low speeds, we are excluding operation below 40 percent of maximum test speed because brake-specific emissions increase dramatically as power approaches zero. An NTE limit for low-speed or low-power operation will be very hard for manufacturers and EPA to implement in a meaningful way. We anticipate that most, if not all SD/I engines subject to the NTE standards will use three-way catalytic controls to meet the exhaust emission standards. For that reason, this discussion focuses on the NTE zone and subzones for catalyst-equipped engines. Catalysts are most effective when the fuel-air ratio in the exhaust is near stoichiometry, and engine manufacturers use closed-loop electronic control to monitor and maintain the proper fuel-air ratio in the exhaust for optimum catalyst efficiency. However, at high power, engine manufacturers must increase the fueling rate to reduce the exhaust temperatures. Otherwise, if the exhaust temperature becomes too high, exhaust valves and catalysts may be damaged. During rich, open-loop operation at high power, the catalyst is oxygen-limited and less effective at oxidizing HC and CO. To address the issue of open-loop catalyst efficiency, we created a high power subzone for catalyst-equipped engines. The shape of this subzone is based on data presented in the RIA on engine protection strategies. Figure III-1 illustrates the final NTE zone for engines equipped with catalysts. Section IV.D.5 discusses the NTE test procedures and limits for non-catalyzed engines. The NTE zones and standards apply depending on whether the engine has a catalyst or not, so outboard or personal watercraft engines may be subject to the NTE approach described in this section and sterndrive/inboard engines may be subject to the NTE provisions described in Section IV.D.5. However, we expect these situations to be rather uncommon. [GRAPHIC] [TIFF OMITTED] TR08OC08.061 The final regulations allow manufacturers to request approval for adjustments to the size and shape of the NTE zone for certain engines if they can show that the engine will not normally operate outside the revised NTE zone in use (see Sec. 1045.515). We do not want manufacturers to go to extra lengths to design and test their engines to control emissions for operation that will not occur in use. However, manufacturers will still be responsible for all operation of an engine on a vessel that will reasonably be expected to be seen in use, and they will be responsible for ensuring that their specified operation is indicative of real-world operation. EPA testing may include any normal operation observed on in-use vessels, consistent with the applicable regulatory provisions. In addition, if a manufacturer designs an engine for operation at speeds and loads outside of the NTE zone, the manufacturer is required to notify us so the NTE zone used to comply with the applicable standards can be modified appropriately to include this operation for that engine family. (c) NTE Emission Limits We are establishing NTE limits for the individual subzones shown in Figure III-1 above based on data collected from several SD/I engines equipped with catalysts. These data and our analysis are presented in Chapter 4 of the Final RIA. See Section IV.D.5 for a discussion [[Page 59057]] of NTE limits for engines not equipped with catalysts. For catalyst-equipped engines, the largest contribution of emissions over the 5-mode duty cycle comes from open-loop operation at Mode 1. In addition, the idle point (Mode 5) is weighted 40 percent in the 5-mode duty cycle, but not included in the NTE zone. For this reason, brake-specific emissions throughout most of the NTE zone are less than the weighted average from the steady-state testing. For most of the NTE zone, we are therefore establishing a limit equal to the duty-cycle standard (i.e., NTE multiplier = 1.0). This means that these engines may not have steady-state emissions at any point inside the NTE zone, except in the subzone around full-load operation, that exceed the HC+NOX or CO emission standards. Emission data on catalyst-equipped engines also show higher emissions near full-power operation. As discussed above, this is due to the need for richer fuel-air ratios under high-power operation to protect the engines from overheating. Under rich conditions, a three- way catalyst does not effectively oxidize CO emissions. Therefore, we are not setting an NTE limit in Subzone 1 for CO. Some HC+NOX control is expected in Subzone 1 because a three-way catalyst will efficiently reduce NOX emissions under rich conditions. Similar to CO, HC emissions are not effectively oxidized in a catalyst during rich operation. We are therefore establishing a higher NTE limit of 1.5 for HC+NOX in Subzone 1. This limit is based on emission control performance during open-loop operation. (d) Excluded Operation As with marine diesel engines, only steady-state operation is included for NTE testing (see Sec. 1045.515). Steady-state operation will generally mean setting the throttle (or speed control) in a fixed position. We believe most operation with Marine SI engines involves nominally steady-state operator demand. It is true that boats often experience rapid accelerations, such as with water skiing. However, boats are typically designed for planing operation at relatively high speeds. This limits the degree to which we would expect engines to experience frequent accelerations during extended operation. Also, because most of the transient events involve acceleration from idle to reach a planing condition, most transient engine operation is outside the NTE zone and will therefore not be covered by NTE testing anyway. Moreover, we believe OB/PWC and SD/I engines designed to comply with steady-state NTE requirements will be using technologies that also work effectively under the changing speed and load conditions that may occur. If we find there is substantial transient operation within the NTE zone that causes significantly increased emissions from installed engines, we will revisit this provision in the future. We are aware that engines may not be able to meet emission standards under all conditions, such as times when emission control must be compromised for startability or safety. As with outboard and personal watercraft engines, NTE testing excludes engine starting and warm-up. We are allowing manufacturers to design their engines to utilize engine protection strategies that will not be covered by defeat device provisions or NTE standards. This is analogous to the tampering exemptions incorporated into 40 CFR 1068.101(b)(1) to address emergencies. We believe it is appropriate to allow manufacturers to design their engines with ``limp-home'' capabilities to prevent a scenario where an engine fails to function, leaving an operator on the water without any means of propulsion. (e) Ambient Conditions Variations in ambient conditions can affect emissions. Such conditions include air temperature, water temperature, barometric pressure, and humidity. We are applying the comparable ranges for these variables as for marine diesel engines (see Sec. 1045.515). Within the specified ranges, there is no provision to correct emission levels to standard conditions. Outside of the specified ranges, emissions may be corrected back to the nearest end of the range using good engineering practice. The specified ranges are 13 to 35 [deg]C (55 to 95 [deg]F) for ambient air temperature, 5 to 27 [deg]C (41 to 80 [deg]F) for ambient water temperature, and 94.0 to 103.325 kPa for atmospheric pressure. NTE testing may take place at any humidity level, but manufacturers may correct for humidity effects as described in Sec. 1065.670. (f) Measurement Methods While it may be easier to test outboard engines in the laboratory, there is a strong advantage to using portable measurement equipment to test SD/I engines and personal watercraft without removing the engine from the vessel. Field testing will also provide a much better means of measuring emissions to establish compliance with the NTE standards, because it is intended to ensure control of emissions during normal in- use operation that may not occur during laboratory testing over the specified duty cycle. We are adopting field-testing provisions for all SD/I engines. These field-testing procedures are described further in Section IV.E.2. A parameter to consider is the minimum sampling time for field testing. A longer period allows for greater accuracy, due mainly to the smoothing effect of measuring over several transient events. On the other hand, an overly long sampling period can mask areas of engine operation with poor emission control characteristics. To balance these concerns, we are applying a minimum sampling period of 30 seconds. This is consistent with the requirement for marine diesel engines. Spark- ignition engines generally don't have turbochargers and they control emissions largely by maintaining air-fuel ratio. Spark-ignition engines are therefore much less prone to consistent emission spikes from off- cycle or unusual engine operation. We believe the minimum 30 second sampling time will ensure sufficient measurement accuracy and will allow for meaningful measurements. We do not specify a maximum sampling time. We expect manufacturers testing in-use engines to select an approximate sampling time before measuring emissions. However, for any sampling period, each 30-second period of operation would be subject to the NTE standards. For example, manufacturers may measure emissions for ten minutes. The engine's emissions over the ten-minute period would need to meet the applicable NTE standards, but each 30-second period of operation during the ten- minute period should also be evaluated to determine that the engine complies. (g) Certification We are requiring that manufacturers state in their application for certification that their engines will comply with the NTE standards under any nominally steady-state combination of speeds and loads within the new NTE zone (see Sec. 1045.205). The manufacturer must also provide a detailed description of all testing, engineering analysis, and other information that forms the basis for the statement. This statement will be based on testing and, if applicable, other research that supports such a statement, consistent with good engineering judgment. We will review the basis for this statement during the certification process. For marine diesel engines, we have provided guidance that manufacturers may demonstrate compliance with NTE standards by testing their engines at a number of standard points throughout the NTE zone. In addition, manufacturers must test at a few random points chosen by EPA prior to the testing. [[Page 59058]] E. Additional Certification and Compliance Provisions (1) Production-Line Testing There are several factors that have led us to conclude that we should not finalize production-line testing requirements for SD/I engines in this rulemaking. First, California ARB has not yet adopted production-line testing requirements for these engines. Second, the companies producing these engines are predominantly small businesses. Third, the relatively short useful life and small sales volumes limit the overall emissions effect from these engines. Fourth, we are aware that marine engines may need additional setup time for testing to simulate the marine configuration. We do not consider any of these issues to be fundamental, but we believe it is best to defer further consideration of a requirement for production-line testing until a later rulemaking. This would allow us to better understand the degree of compliance with emission standards, the effectiveness of diagnostic controls, and California ARB's interest in requiring production-line testing. However, we may require the manufacturer to conduct a reasonable degree of testing under Clean Air Act section 208 if we have reason to believe that an engine family does not conform to the regulations. This testing may take the form of a Selective Enforcement Audit. (2) In-Use Testing Manufacturers of OB/PWC engines have been required to test in-use engines to show that they continue to meet emission standards. We contemplated a similar requirement for SD/I engines, but have decided not to adopt a requirement for a manufacturer-run in-use testing program at this time. Manufacturers have pointed out that it would be very difficult to identify a commercial fleet of boats that could be set up to operate for hundreds of hours because it is very uncommon for commercial operators to have significant numbers of SD/I vessels. Where there are commercial fleets of vessels that may be conducive to accelerated in-use service accumulation, these vessels generally use outboard engines. Manufacturers could instead hire drivers to operate the boats, but this may be cost-prohibitive. There is also a question about access to the engines for testing. If engines need to be removed from vessels for testing in the laboratory for some reason, it is unlikely that owners will cooperate. While we are not establishing a program to require manufacturers to routinely test in-use engines, the Clean Air Act allows us to perform our own testing at any time with in-use engines to evaluate whether they continue to meet emission standards throughout the useful life. This may involve either laboratory testing or in-field testing with portable measurement equipment. For laboratory tests, we could evaluate compliance with either the duty-cycle standards or the not-to-exceed standards. For testing with engines that remain installed on marine vessels, we will evaluate compliance with the not-to-exceed standards. In addition, as described above for production-line testing, we may require manufacturers to perform a reasonable degree of testing. This may include testing in-use engines. (3) Certification Fees Under our current certification program, manufacturers pay a fee to cover the costs for various certification and other compliance activities associated with implementing the emission standards. As explained below, we are assessing EPA's compliance costs associated with SD/I engines based on EPA's existing fees regulation. Section VI describes a new fees category we are adopting, based on the cost study methodology used in establishing EPA's original fees regulation, for costs related to the final evaporative emission standards for both vessels and equipment that are subject to this final rule. EPA established a fee structure by grouping together various manufacturers and industries into fee categories, with an explanation that separation of industries into groups was appropriate to tailor the applicable fee to the level of effort expected for EPA to oversee the range of certification and compliance responsibilities (69 FR 26222, May 11, 2004). As part of this process, EPA conducted a cost analysis to determine the various compliance activities associated with each fee category and EPA's associated annual cost burden. Once the total EPA costs were determined for each fee category, the total number of certificates involved within a fee category was added together and divided into the total costs to determine the appropriate assessment for each anticipated certificate.\94\ One of the fee categories created was for ``Other Engines and Vehicles,'' which includes marine engines (both compression-ignition and spark-ignition), nonroad spark-ignition engines (above and below 19 kW), locomotive engines, recreational vehicles, heavy-duty evaporative systems, and heavy-duty engines certified only for sale in California. These engine and vehicle types were grouped together because EPA planned a more basic certification review than, for example, for light-duty motor vehicles. --------------------------------------------------------------------------- \94\ See Cost Analysis Document at p. 21 associated with the proposed fees rule (http://www.epa.gov/otaq/fees.htm). --------------------------------------------------------------------------- EPA determined in the final fees rulemaking that it was premature to assess fees for SD/I engines since they were not yet subject to emission standards. The fee calculation nevertheless includes a projection that there will eventually be 25 certificates of conformity annually for SD/I engines. We are now formally including SD/I engines in the ``Other Engines and Vehicles'' category such that the baseline fee is $839 for each certificate of conformity. Note that we will continue to update assessed fees each year, so the actual fee in 2010 and later model years will depend on these annual calculations (see Sec. 1027.105). (4) Special Provisions Related to Partially Complete Engines It is common practice for one company to produce engine blocks that a second company modifies for use as a marine engine. Since our regulations prohibit the sale of uncertified engines, we are establishing provisions to clarify the status of these engines and defining a path by which these engines can be handled without violating the regulations. See Section VIII.C.1 for more information. (5) Use of Engines Already Certified to Other Programs In some cases, manufacturers may want to use engines already certified under our other programs. Engines certified to the emission standards for highway applications in part 86 or Large SI applications in part 1048 are meeting more stringent standards. We are therefore allowing the pre-existing certification to be valid for engines used in marine applications, on the condition that the engine is not changed from its certified configuration in any way (see Sec. 1045.605). Manufacturers will need to demonstrate that fewer than five percent of the total sales of the engine model are for marine applications. There are also a few minor notification and labeling requirements to allow for EPA oversight of this provision. We are adopting similar provisions for engines below 19 kW that are certified to Small SI standards as described in Section III.C.1. [[Page 59059]] (6) Import-specific Information at Certification We are requiring additional information to improve our ability to oversee compliance related to imported engines (see Sec. 1045.205). In the application for certification, we require the following additional information: (1) The port or ports at which the manufacturer has imported engines over the previous 12 months, (2) the names and addresses of the agents the manufacturer has authorized to import the engines, and (3) the location of the test facilities in the United States where the manufacturer will test the engines if we select them for testing under a selective enforcement audit. See Section 1.3 of the Summary and Analysis of Comments for further discussion related to naming test facilities in the United States. (7) Alternate Fuels See Section IV.E.7 for a discussion of requirements that apply to spark-ignition SD/I engines that operate on fuels other than gasoline. F. Small-Business Provisions (1) Small Business Advocacy Review Panel On June 7, 1999, we convened a Small Business Advocacy Review Panel under section 609(b) of the Regulatory Flexibility Act as amended by the Small Business Regulatory Enforcement Fairness Act of 1996 (RFA). The purpose of the Panel was to collect the advice and recommendations of representatives of small entities that could be affected by the proposal and to report on those comments and the Panel's findings and recommendations as to issues related to the key elements of the Initial Regulatory Flexibility Analysis under section 603 of the Regulatory Flexibility Act. We re-convened the Panel on August 17, 2006 to update our review for the proposal. The Panel reports have been placed in the rulemaking record for this final rule. Section 609(b) of the Regulatory Flexibility Act directs the review Panel to report on the comments of small entity representatives and make findings as to issues related to certain elements of an initial regulatory flexibility analysis (IRFA) under RFA section 603. Those elements of an IRFA are: • A description of, and where feasible, an estimate of the number of small entities to which the rule will apply; • A description of projected reporting, recordkeeping, and other compliance requirements of the rule, including an estimate of the classes of small entities that will be subject to the requirements and the type of professional skills necessary for preparation of the report or record; • An identification, to the extent practicable, of all relevant Federal rules that may duplicate, overlap, or conflict with the rule; and • A description of any significant alternative to the rule that accomplishes the stated objectives of applicable statutes and that minimizes any significant economic impact of the rule on small entities. In addition to the EPA's Small Business Advocacy Chairperson, the Panel consisted of the Director of the Assessment and Standards Division of the Office of Transportation and Air Quality, the Administrator of the Office of Information and Regulatory Affairs within the Office of Management and Budget, and the Chief Counsel for Advocacy of the Small Business Administration. EPA used the size standards provided by the Small Business Administration (SBA) at 13 CFR part 121 to identify small entities for the purposes of its regulatory flexibility analysis. Companies that manufacture internal-combustion engines and that employ fewer than 1000 employees are considered small businesses for the purpose of the RFA analysis for this rule. Equipment manufacturers, boat builders, and fuel system component manufacturers that employ fewer than 500 people are considered small businesses for the purpose of the RFA analysis for this rule. Based on this information, we asked 25 companies that met the SBA small business thresholds to serve as small entity representatives for the duration of the Panel process. Of these 25 companies, 13 were involved in the marine industry. These companies represented a cross-section of SD/I engine manufacturers, boat builders, and fuel system component manufacturers. With input from small entity representatives, the Panel reports provide findings and recommendations on how to reduce potential burden on small businesses that may occur as a result of the proposed rule. The Panel reports are included in the rulemaking record for this action. In light of the Panel report, and where appropriate, we proposed a number of provisions for small business SD/I engine manufacturers. With this final rule we are adopting many of the flexibility options proposed with some changes due to the different standards we are adopting for SD/I high-performance engines. In addition, we are making a change to the criteria for determining which companies are eligible for the flexibility options. The following section describes the flexibility options being adopted as part of this final rule and the criteria for determining which manufacturers are eligible. (2) Final Burden Reduction Approaches for Small-Volume SD/I Engine Manufacturers We are establishing several options for small-volume SD/I engine manufacturers. For purposes of determining which engine manufacturers are eligible for the small business provisions described below for SD/I engine manufacturers, we are adopting a 250 employee limit. EPA believes this limit will cover all the existing small business SD/I engine manufacturers (as defined by SBA), but places a reasonable limit on how large a company could grow before they are no longer eligible for EPA's flexibilities for small volume engine manufacturers. (a) Additional Lead Time As recommended in the SBAR Panel report and as proposed, EPA is establishing an implementation date of 2011 for conventional SD/I engines produced by small volume engine manufacturers. In addition, EPA is establishing an implementation date of 2013 for SD/I high- performance engines produced by small volume engine manufacturers (see Sec. 1045.145). (b) Exhaust Emission ABT In the proposal, EPA cited concerns raised by small businesses that ABT could give a competitive advantage to large businesses and requested comment on the desirability of credit trading between high- performance and conventional SD/I marine engines. As described earlier in Section III.C.1, EPA is adopting different standards for SD/I high- performance engines than originally proposed. While we are adopting an averaging, banking, and trading (ABT) credit program for conventional SD/I marine engines (see part 1045, subpart H), SD/I high-performance engines are required to meet the new standards without an ABT program. (c) Early Credit Generation for ABT As recommended in the SBAR Panel report and as proposed, we are adopting an early banking program in which small volume engine manufacturers can earn bonus credits for certifying earlier than required (see Sec. 1045.145). This program, combined with the additional lead time for small businesses, will give small-volume SD/I engine manufacturers ample opportunity to [[Page 59060]] bank emission credits prior to the implementation date of the standards and will provide greater incentive for more small business engine manufacturers to introduce advanced technology earlier across the nation than will otherwise occur. The ABT program applies only to conventional SD/I engines so the early credit provisions will not apply to SD/I high-performance engines. (d) Assigned Emission Rates for SD/I High-Performance Engines In the proposal, EPA noted that engine manufacturers using emission credits to comply with the standard will still need to test engines to calculate how many emission credits are needed. To minimize this testing burden, we proposed to allow manufacturers to use assigned baseline emission rates for certification based on previously generated emission data. As discussed above, we are adopting less stringent standards for SD/I high-performance engines that do not allow for the use of the ABT program for demonstrating compliance with the standards. We are not adopting baseline HC+NOX and CO emission rates for SD/I high-performance engines since the proposed levels were higher than the standards being adopted and therefore are of no use without an ABT program. (e) Alternative Standards for SD/I High-Performance Engines In the proposal, EPA cited concerns raised by small businesses that catalysts had not been demonstrated on high-performance engines and that they may not be practicable for this application and therefore requested comment on the need for and level of alternative standards for SD/I high-performance engines. As described in Section III.C.1, we are adopting a less stringent set of exhaust emission standards for SD/ I high-performance engines than originally proposed. In addition, as described in Section III.C.2, we are not adopting NTE standards for SD/I high-performance engines (See Sec. 1045.105). This is consistent with the SBAR Panel recommendation that NTE standards not apply to SD/I high-performance engines. (f) Broad Engine Families for SD/I High-Performance Engines In the proposal, EPA noted that the testing burden could be reduced by using broader definitions of engine families. As proposed, we are adopting provisions to allow small businesses to group all their SD/I high-performance engines into a single engine family for certification (see Sec. 1045.230). A manufacturer will need to perform emission tests only on the engine in that family that is most likely to exceed an emission standard. (g) Simplified Test Procedures for SD/I High-Performance Engines Existing testing requirements include detailed specifications for the calibration and maintenance of testing equipment and tolerances for performing the actual tests. For laboratory equipment and testing, these specifications and tolerances are intended to achieve the most repeatable results feasible given testing hardware capabilities. For SD/I high-performance engines, EPA is adopting a provision that allows for different equipment than is specified for the laboratory and with less restrictive specifications and tolerances more typical of in-use testing (see Sec. 1045.501(h)). These less restrictive specifications will facilitate less expensive testing for businesses, with little or no negative effect on the environment. The relaxation on these specifications is especially helpful for testing high-performance engines due to their high exhaust flow rates, temperatures, and emission concentrations. This provision is available to all SD/I high- performance engine manufacturers, regardless of business size. (h) Reduced Testing Requirements for SD/I Engines We are adopting provisions to allow small-volume engine manufacturers to use an assigned deterioration factor to demonstrate compliance with the standards for certification rather than doing service accumulation and additional testing to measure deteriorated emission levels at the end of the regulatory useful life (see Sec. 1045.240). EPA is not specifying actual levels for the assigned deterioration factors in this final rule. EPA intends to analyze available emission deterioration information to determine appropriate deterioration factors for SD/I engines. The data will likely include durability information from engines certified to California ARB's standards and may also include engines certified early to EPA's standards. Prior to the implementation date for the SD/I standards, EPA will provide guidance to engine manufacturers specifying the levels of the assigned deterioration factors for small-volume engine manufacturers. We proposed to exempt small-volume manufacturers of SD/I engines from the production-line testing requirements. However, we are dropping the production-line testing requirements for all SD/I engine manufacturers. Therefore, no production-line testing will be required of any SD/I engine manufacturer, whether large or small (see Sec. 1045.301). (i) Hardship Provisions We are adopting two types of hardship provisions for SD/I engine manufacturers, consistent with the Panel recommendations. EPA used the SBA size standards for purposes of defining ``small businesses'' for its regulatory flexibility analysis. The eligibility criteria for the hardship provisions described below reflect EPA's consideration of the Panel's recommendations and a reasonable application of existing hardship provisions. As has been our experience with similar provisions already adopted, we anticipate that hardship mechanisms will be used sparingly. First, under the unusual circumstances hardship provision, any manufacturer subject to the new standards may apply for hardship relief if circumstances outside their control cause the failure to comply and if failure to sell the subject engines or equipment or fuel system component would have a major impact on the company's solvency (see Sec. 1068.245). An example of an unusual circumstance outside a manufacturer's control may be an ``Act of God,'' a fire at the manufacturing plant, or the unforeseen shutdown of a supplier with no alternative available. The terms and time frame of the relief will depend on the specific circumstances of the company and the situation involved. As part of its application for hardship, a company will be required to provide a compliance plan detailing when and how it will achieve compliance with the standards. This hardship provision will be available to all manufacturers of engines, equipment, boats, and fuel system components subject to the new standards, regardless of business size. Second, an economic hardship provision allows small businesses subject to the new standards to petition EPA for limited additional lead time to comply with the standards (see Sec. 1068.250). A small business must make the case that it has taken all possible business, technical, and economic steps to comply, but the burden of compliance costs would jeopardize the company's solvency. Hardship relief could include requirements for interim emission reductions and/or the purchase and use of emission credits. The length of the hardship relief decided during review of the hardship application will be up to one year, with the potential to extend the relief as needed. We anticipate that [[Page 59061]] one to two years will normally be sufficient. As part of its application for hardship, a company will be required to provide a compliance plan detailing when and how it will achieve compliance with the standards. This hardship provision will be available only to qualifying small businesses. Because boat builders in many cases will depend on engine manufacturers to supply certified engines in time to produce complying boats, we are also providing a hardship provision for all boat builders, regardless of size, that will allow the builder to request more time if they are unable to obtain a certified engine and they are not at fault and will face serious economic hardship without an extension (see Sec. 1068.255). G. Technological Feasibility (1) Level of Standards Over the past few years, developmental programs have demonstrated the capabilities of achieving significant reductions in exhaust emissions from SD/I engines. California ARB has acted on this information to set an HC+NOX emission standard of 5 g/kW-hr for SD/I engines, starting in 2008. At this time, three engine manufacturers have certified SD/I engines to these standards. Chapter 4 of the Final RIA presents data from these engines as well as detailed data on several developmental SD/I engines with catalysts packaged within water-cooled exhaust manifolds. Four of these developmental engines were operated with catalysts in vessels for 480 hours. The remaining developmental engines were tested with catalysts that had been subjected to a rapid-aging cycle in the laboratory. Data from these catalyst-equipped engines support the level of the standards. SD/I high-performance engines have very high power outputs, large exhaust gas flow rates, and relatively high concentrations of hydrocarbons and carbon monoxide in the exhaust gases. As a result, we believe it is not practical to apply catalyst technology to these engines. We are therefore adopting standards for SD/I high-performance engines based on the level of control that can be expected from recalibration with electronically controlled fuel injection. (2) Implementation Dates We anticipate that manufacturers will use the same catalyst designs to meet the final standards that they will use to meet the California ARB standards for SD/I engines in 2008. We believe a requirement to extend the California standards nationwide after a two-year delay allows manufacturers adequate time to incorporate catalysts across their product lines. Once the technology is developed for use in California, it will be available for use nationwide. In fact, several engine models currently certified to the California standards are already available with catalysts nationwide. As discussed above, we are accommodating the transition to new base engines by agreeing to one year of hardship relief for companies that would otherwise need to design and certify an engine for that one year before it becomes obsolete. (3) Technological Approaches Engine manufacturers can adapt readily available technologies to control emissions from SD/I engines. Electronically controlled fuel injection gives manufacturers more precise control of the air/fuel ratio in each cylinder, thereby giving them greater flexibility in how they calibrate their engines. With the addition of an oxygen sensor, electronic controls give manufacturers the ability to use closed-loop control, which is especially valuable when using a catalyst. In addition, manufacturers can achieve HC+NOX reductions through the use of exhaust gas recirculation. However, the most effective technology for controlling emissions is a three-way catalyst in the exhaust stream. In SD/I engines, the exhaust manifolds are water-jacketed and the water mixes with the exhaust stream before exiting the vessel. Manufacturers add a water jacket to the exhaust manifold to meet temperature-safety protocol. They route this cooling water into the exhaust to protect the exhaust couplings and to reduce engine noise. Catalysts must therefore be placed upstream of the point where the exhaust and water mix-this ensures the effectiveness and durability of the catalyst. Because the catalyst must be small enough to fit in the exhaust manifold, potential emission reductions are not likely to exceed 90 percent, as is common in land-based applications. However, as discussed in Chapter 4 of the Final RIA, data on catalyst-equipped SD/I engines show that emissions may be reduced by 70 to 80 percent for HC+NOX and 30 to 50 percent for CO over the test cycle. Larger reductions, especially for CO, have been achieved at lower-speed operation. There have been concerns that aspects of the marine environment could result in unique durability problems for catalysts. The primary aspects that could affect catalyst durability are sustained operation at high load, saltwater effects on catalyst efficiency, and thermal shock from cold water coming into contact with a hot catalyst. Modern catalysts perform well at temperatures up to 1100 [deg]C, which is much higher than expected in a marine exhaust manifold. These catalysts have also been shown to withstand the thermal shock of being immersed in water. More detail on catalyst durability is presented in the Final RIA. In addition, use of catalysts in automotive, motorcycle, and handheld equipment has shown that catalysts can be packaged to withstand vibration in the exhaust manifold. Manufacturers already strive to design their exhaust systems to prevent water from reaching the exhaust ports. If too much water reaches the exhaust ports, significant durability problems will result from corrosion or hydraulic lock. As discussed in the Final RIA, industry and government worked on a number of cooperative test programs in which several SD/I engines were equipped with catalysts and installed in vessels to prove out the technology. Early in the development work, a study was performed on an SD/I engine operating in a boat to see if water was entering the part of the manifold where catalysts will be installed. Although some water was collected in the exhaust manifold, it was found that this water came from water vapor that condensed out of the combustion products. This was easily corrected using a thermostat to prevent overcooling from the water jacket. Four SD/I engines equipped with catalysts were operated in vessels for 480 hours in fresh water. This time period was intended to represent the full expected operating life of a typical SD/I engine. No significant deterioration was observed on any of these catalysts, nor was there any evidence of water reaching the catalysts. In addition, the catalysts were packaged such that the exhaust system met industry standards for maximum surface temperatures. Testing has been performed on one engine in a vessel on both fresh water and saltwater over a test protocol designed by industry to simulate the worst-case operation for water reversion. No evidence was found of water reaching the catalysts. After the testing, the engine had emission rates below the HC+NOX standard. We later engaged in a test program to evaluate three additional engines with catalysts in vessels operating on saltwater for extended periods. Early in the program, two of the three manifolds experienced corrosion in the salt-water environment resulting in water leaks and damage to the catalyst. These manifolds were rebuilt with guidance from experts in the marine industry and additional [[Page 59062]] hours were accumulated on the boats. Although the accumulated hours are well below the 480 hours performed on fresh water, the operation completed showed no visible evidence of water reversion or damage to the catalysts. Three SD/I engine manufacturers have certified SD/I engines to the California ARB standards, and some catalyst-equipped engines are available for purchase nationwide. Manufacturers have indicated that they have successfully completed durability testing, including extended in-use testing on saltwater. (4) Regulatory Alternatives In developing the final emission standards, we considered both what was achievable without catalysts and what could be achieved with larger, more efficient catalysts than those used in our test programs. Chapter 4 of the Final RIA presents data on SD/I engines equipped with exhaust gas recirculation (EGR). HC+NOX emission levels below 10 g/kW-hr were achieved for each of the engines. CO emissions ranged from 25 to 185 g/kW-hr. We believe EGR will be a technologically feasible and cost-effective approach to reducing emissions from SD/I marine engines. However, we believe greater reductions could be achieved through the use of catalysts. We considered basing an interim standard on EGR, but were concerned that this will divert manufacturers' resources away from catalyst development and could have the effect of delaying emission reductions from this sector. Several of the marine engines with catalysts that were tested as part of the development of the standards had HC+NOX emission rates appreciably lower that 5 g/kW-hr, even with consideration of expected in-use emissions deterioration associated with catalyst aging. However, we believe a standard of 5 g/kW-hr is still appropriate given the potential variability in in-use performance and in test data. The test programs described in Chapter 4 of the Final RIA did not investigate larger catalysts for SD/I applications. The goal of the testing was to demonstrate catalysts that will work within the packaging constraints associated with water jacketing the exhaust and fitting the engines into engine compartments on boats. However, we did perform testing on engines equipped with both catalysts and EGR. These engines showed emission results in the 2-3 g/kW-hr range. We expect that these same reductions could be achieved more simply through the use of larger catalysts or catalysts with higher precious metal loading. Past experience indicates that most manufacturers will strive to achieve emission reductions well below the final standards to give them certainty that they will pass the standards in-use, especially as catalysts on SD/I engines are a new technology. Therefore, we do not believe it is necessary at this time to set a lower standard for these engines. For SD/I high-performance engines, we originally proposed a standard based on the use of catalysts and then considered a less stringent alternative based on engine fuel system upgrades, calibration, or other minor changes such as an air injection pump rather than catalytic control. However, manufacturers commented that catalysts are not practical for these engines due to the high exhaust flow rates, high emission rates, and short time between rebuilds. In the final rule, we are establishing standards that can be met through the use of engine controls, similar to the alternative standard that was analyzed in the proposal. Because we do not consider catalyst-based standards to be feasible for high-performance engines at this time, we did not model a more stringent alternative for these engines. (5) Our Conclusions We believe the final 2010 exhaust emission standards for SD/I engines represent the greatest degree of emission reduction achievable in this time frame. Manufacturers of conventional SD/I engines can meet the standards through the use of three-way catalysts packaged in the exhaust systems upstream of where the water and exhaust mix. Manufacturers are already selling engines with this technology. By 2010 there will be widespread experience in applying emission controls to a large number of engine models. As discussed in Section VII, we do not believe the final standards will have negative effects on energy, noise, or safety and may lead to some positive effects. IV. Outboard and Personal Watercraft Engines A. Overview This section applies to spark-ignition outboard and personal watercraft (OB/PWC) marine engines and vessels. OB/PWC engines are currently required to meet the HC+NOX exhaust emissions and other related requirements under 40 CFR part 91. As a result of these standards, manufacturers have spent the last several years developing new technologies to replace traditional carbureted two-stroke engine designs. Many of these technologies are capable of emission levels well below the current standards. We are adopting new HC+NOX and CO exhaust emission standards for OB/PWC marine engines reflecting the capabilities of these new technologies. For outboard and personal watercraft engines, the current emission standards regulate only HC+NOX emissions. As described in Section II, we are making the finding under Clean Air Act section 213(a)(3) that Marine SI engines cause or contribute to CO nonattainment in two or more areas of the United States. We believe manufacturers can use readily available technological approaches to design their engines to meet the new standards. In fact, as discussed in Chapter 4 of the Final RIA, manufacturers are already producing several models of four-stroke engines and direction-injection two-stroke engines that meet the new standards. The most important compliance step for the standards will be to retire high-emitting designs that are still available and replace them with these cleaner engines. We are not establishing standards based on the use of catalytic converters in OB/PWC engines. While this may be an attractive technology in the future, we do not believe there has been sufficient development work on the application of catalysts to OB/PWC engines to use as a basis for standards at this time. Note that we are migrating the regulatory requirements for marine spark-ignition engines from 40 CFR part 91 to 40 CFR part 1045. Manufacturers must comply with the provisions in part 1045 for an engine once the exhaust emission standards begin to apply in 2010. This gives us the opportunity to update the details of our certification and compliance program to be consistent with the comparable provisions that apply to other engine categories and describe regulatory requirements in plain language. Most of the change in regulatory text provides improved clarity without substantially changing procedures or compliance obligations. Where there is a change that warrants further attention, we describe the need for the change below. Engines and vessels subject to part 1045 are also subject to the general compliance provisions in 40 CFR part 1068. These include prohibited acts and penalties, exemptions and importation provisions, selective enforcement audits, defect reporting and recall, and hearing procedures. See Section VIII of the preamble to the proposed rule for further discussion of these general compliance provisions. [[Page 59063]] B. Engines Covered by This Rule (1) Definition of Outboard and Personal Watercraft Engines and Vessels The final standards are intended to apply to outboard marine engines and engines used to propel personal watercraft. We are changing the definitions of outboard and personal watercraft to reflect this intent. The original definitions of outboard engine and personal watercraft marine engine adopted in 40 CFR part 91 are presented below: • Outboard engine is a Marine SI engine that, when properly mounted on a marine vessel in the position to operate, houses the engine and drive unit external to the hull of the marine vessel. • Personal watercraft engine (PWC) is a Marine SI engine that does not meet the definition of outboard engine, inboard engine, or sterndrive engine, except that the Administrator in his or her discretion may classify a PWC as an inboard or sterndrive engine if it is comparable in technology and emissions to an inboard or sterndrive engine. With the implementation of catalyst-based standards for sterndrive and inboard marine engines, we believe the above definitions could be problematic. Certain applications using SD/I engines and able to apply catalyst control will not be categorized as SD/I under the original definitions in at least two cases. First, an airboat engine, which is often mounted well above the hull of the engine and used to drive an aircraft-like propeller could be misconstrued as an outboard engine. However, like traditional sterndrive and inboard engines, airboat engines are typically derived from automotive-based engines without substantial modifications for marine application. Airboat engines can use the same technologies that are available to sterndrive and inboard engines, so we believe they should be subject to the same standards. To address the concerns about classifying airboats, we are changing the outboard definition to specify that the engine and drive unit be a single, self-contained unit that is designed to be lifted out of the water. This clarifies that air boats are not outboard engines; air boats do not have engines and drive units that are designed to be lifted out of the water. We are adopting the following definition: • Outboard engine means an assembly of a spark-ignition engine and drive unit used to propel a marine vessel from a properly mounted position external to the hull of the marine vessel. An outboard drive unit is partially submerged during operation and can be tilted out of the water when not in use. Second, engines used on jet boats (with an open bay for passengers) have size, power, and usage characteristics that are very similar to sterndrive and inboard applications, but these engines may be the same as OB/PWC engines, rather than the marinized automotive engines traditionally used on sterndrive vessels. Because jet boat engines may be the same as OB/PWC engines, the regulations classified them as OB/ PWC engines unless the Agency classified them as SD/I due to comparable technology and emissions as SD/I engines. However, as explained in the proposed rule, we believe classifying such engines as personal watercraft engines is inappropriate because it will subject the jet boats to less stringent emission standards than other boats with similar size, power, and usage characteristics, and thus potentially lead to increased use of high-emitting engines in these vessels. Because the current regulations authorize engines powering jet boats to be treated as SD/I engines at the discretion of the Agency, but do not compel such classification, we are finalizing amendments to the definition to explicitly exclude jet boats and their engines from being treated as personal watercraft engines or vessels. Instead, we are classifying jet boat engines as SD/I engines. The new definition conforms to the definition of personal watercraft established by the International Organization for Standardization (ISO 13590). This ISO standard excludes open-bay vessels and specifies a maximum vessel length of 4 meters. The ISO standard for personal watercraft therefore excludes personal watercraft-like vessels 4 meters or greater and jet boats. Thus, engines powering such vessels will be classified as sterndrive/inboard engines. We believe this definition effectively serves to differentiate vessels in a way that groups propulsion engines into categories that are appropriate for meeting different emission standards. This approach is shown below with the corresponding definition of personal watercraft engine. We are making one change to the ISO definition for domestic regulatory purposes; we are removing the word ``inboard'' to prevent confusion between PWC and inboard engines and state specifically that a vessel powered by an outboard marine engine is not a PWC. We are revising the definitions as follows: • Personal watercraft means a vessel less than 4.0 meters (13 feet) in length that uses an installed spark-ignition engine powering a water jet pump as its primary source of propulsion and is designed with no open load carrying area that would retain water. The vessel is designed to be operated by a person or persons positioned on, rather than within the confines of the hull. A vessel using an outboard engine as its primary source of propulsion is not a personal watercraft. • Personal watercraft engine means a spark-ignition engine used to propel a personal watercraft. Section III.C.3 describes special provisions that will allow manufacturers extra flexibility with emission credits if they want to continue using outboard or personal watercraft engines in jet boats. These engines will need to meet the standards for sterndrive/inboard engines, but we believe it is appropriate for them to make this demonstration using emission credits generated by other outboard and personal watercraft engines because these vessels are currently using these engine types. (2) Exclusions and Exemptions We are maintaining the current exemptions for OB/PWC engines. These include the testing exemption, the manufacturer-owned exemption, the display exemption, and the national-security exemption. If the conditions for an exemption are met, the engine is not subject to the exhaust emission standards. These exemptions are described in more detail in Section VIII of the preamble to the proposed rule. The Clean Air Act provides for different treatment of engines used solely for competition. In the initial rulemaking to set standards for OB/PWC engines, we adopted the conventional definitions that excluded engines from the regulations if they had features that were difficult to remove and that made it unsafe, impractical, or unlikely to be used for noncompetitive purposes. We have more recently taken the approach in other programs of more carefully differentiating competition and noncompetition models, and are adopting these kinds of changes in this rule. The changes to the provisions relating to competition engines apply equally to all types of Marine SI engines. See Section III.B and Sec. 1045.620 of the regulations for a full discussion of the new approach. We are incorporating a new exemption to address individuals who manufacture recreational marine vessels for personal use as described in Section III.B.2. In the rulemaking for recreational vehicles, we chose not to apply standards to hobby products by [[Page 59064]] exempting all reduced-scale models of vehicles that are not capable of transporting a person (67 FR 68242, November 8, 2002). We are extending that same provision to OB/PWC marine engines (see Sec. 1045.5). C. Final Exhaust Emission Standards We are requiring more stringent exhaust emission standards for new OB/PWC marine engines. These standards can be met through expanded reliance on four-stroke engines and two-stroke direct-injection engines. This section describes the new requirements for OB/PWC engines for controlling exhaust emissions. See Section VI for a description of the final requirements related to evaporative emissions. (1) Standards and Dates We are requiring new HC+NOX standards for OB/PWC engines starting in model year 2010 that will achieve more than a 60 percent reduction from the 2006 standards (see Sec. 1045.103). We are also establishing new CO emission standards. These standards will result in meaningful CO reductions from many engines and prevent CO from increasing for engines that already use technologies with lower CO emissions. The new emission standards are largely based on certification data from cleaner-burning four-stroke engines and two- stroke direct-injection engines that are certified under part 91. Section IV.H discusses the technological feasibility of these standards in more detail. Table IV-1 presents the exhaust emission standards for OB/PWC. The HC+NOX emission standards are the same as those adopted by California ARB for 2008 and later model years. We are also applying not-to-exceed emission standards over a range of engine operating conditions, as described in Section IV.C.2. Table IV-1: OB/PWC Exhaust Emission Standards [g/kW-hr] ---------------------------------------------------------------------------------------------------------------- Pollutant Power Emission standard ---------------------------------------------------------------------------------------------------------------- HC+NOX............................. P <= 4.3 kW 30.0 P > 4.3 kW 2.1 + 0.09 x (151 + 557/P\0.9\)) CO................................. P <= 40 kW 500--5.0 x P P> 40 kW 300 ---------------------------------------------------------------------------------------------------------------- Note: P = maximum engine power in kilowatts (kW). Our implementation date allows two additional years beyond the implementation date of the same standards in California. Manufacturers generally sell their lower-emission engines, which are already meeting the 2008 California standards, nationwide. However, the additional time will give manufacturers time to address any models that may not meet the upcoming California standards or are not sold in California. This also accommodates the lead time concerns with the timing of this final rule as expressed by the commenters. The emission standards apply at the range of atmospheric pressures represented by the test conditions specified in part 1065. This includes operation at elevated altitudes. Since not all engines have electronic engines with feedback controls to incorporate altitude compensation, we are taking the same approach here as for Small SI engines where a similar dynamic is in place. Specifically, we are requiring that all engines must comply with emission standards in the standard configuration (i.e., without an altitude kit) at barometric pressures above 94.0 kPa, which corresponds to altitudes up to about 2,000 feet above sea level (see Sec. 1045.115). This will ensure that all areas east of the Rocky Mountains and most of the populated areas in Pacific Coast states will have compliant engines without depending on engine adjustments. This becomes more important as we anticipate manufacturers increasingly relying on technologies that are sensitive to controlling air-fuel ratio for reducing emissions. For operation at higher altitudes, manufacturers may rely on an altitude kit that allows their engines to meet emission standards at higher elevations. In this case, engine manufacturers must describe the kit specifications in their application for certification and identify in the owner's manual the altitude ranges for proper engine performance and emission control that are expected with and without the altitude kit. The owner's manual must also state that operating the engine with the wrong engine configuration at a given altitude may increase its emissions and decrease fuel efficiency and performance. The regulations specify that owners may follow the manufacturer's instructions to modify their engines with altitude kits without violating the tampering prohibition. See Section IV.E.8 for further discussion related to the deployment of altitude kits where the manufacturers rely on them for operation at higher altitudes. The new standards include the same general provisions that apply today. For example, engines must control crankcase emissions. The regulations also require compliance over the full range of adjustable parameters and prohibit the use of defeat devices. (See Sec. 1045.115.) (2) Not-to-Exceed Standards We are adopting emission standards that apply over an NTE zone. The NTE standards are in the form of a multiplier times the duty-cycle standard for HC+NOX and for CO (see Sec. 1045.105). Section IV.D.5 gives an overview of the NTE standards and compliance provisions and describes the NTE test procedures. Manufacturers commented that certification to the NTE standards requires additional testing even for engine models that are currently certified to emission levels below the new duty-cycle based standards. In addition, they expressed concern that they may need to recalibrate existing engine models to meet the NTE standards. Manufacturers commented that this would not be possible by 2010 because of the large number of engine models. For most engines, manufacturers carry over preexisting certification test data from year to year. Manufacturers commented that additional time would be necessary to retest, and potentially recalibrate, all these engines for certification to the NTE standards. To address these issues regarding lead time needed to retest these engines, we are not applying the NTE standards for 2010-2012 model year engines that are certified using preexisting data (i.e., carryover engine families). For new engine models, manufacturers indicated that they will be able to perform the NTE testing and duty- cycle testing as part of their efforts to certify to the new standards. Therefore the primary implementation date of 2010 applies to these engines. Beginning in the 2013 model year, all conventional OB/PWC engines must be certified to meet the NTE standards. [[Page 59065]] This NTE approach complements the weighted modal emission tests included in this rule. These steady-state duty cycles and standards are intended to establish average emission levels over several discrete modes of engine operation. Because it is an average, manufacturers design their engines with emission levels at individual points varying as needed to maintain maximum engine performance and still meet the engine standard. The NTE limit will be an additional requirement. It is intended to ensure that emission controls function with relative consistency across the full range of expected operating conditions. (3) Emission Credit Programs Engine manufacturers may use emission credits to meet OB/PWC standards under part 91. We are adopting an ABT program for the new HC+NOX emission standards that is similar to the previous program (see part 1045, subpart H). A description of the ABT provisions for the new OB/PWC standards is described below. OB/PWC engine manufacturers that have generated HC+NOX credits under the 2006 standards will be able to use those credits to demonstrate compliance with the new HC+NOX standards being adopted in this final rule. The credits generated under the 2006 standards are subject to a three-year credit life. Therefore, a manufacturer will be able to use those credits for demonstrating compliance with the new standards as long as the credits have not expired. We are allowing an indefinite life for emission credits earned under the new standards for OB/PWC engines. We consider these emission credits to be part of the overall program for complying with standards. Given that we may consider further reductions beyond these standards in the future, we believe it will be important to assess the ABT credit situation that exists at the time any further standards are considered. Emission credit balances will be part of the analysis for determining the appropriate level and timing of new standards, consistent with the statutory requirement to establish standards that represent the greatest degree of emission reduction achievable, considering cost, safety, lead time, and other factors. If we were to allow the use of credits generated under the standards adopted in this rule to meet more stringent standards adopt in a future rulemaking, we may need to adopt emission standards at more stringent levels or with an earlier start date than we would absent the continued use of existing emission credits, depending on the level of emission credit banks. Alternatively, we may adopt future standards without allowing the use of existing emission credits. We are adopting the equation for calculating emission credits for OB/PWC engines as proposed. This equation represents a simpler calculation than is currently used for OB/PWC engines and is based on the equation that is common in many of our other ABT programs. The primary difference is that the regulatory useful life will be used in the credit calculation rather than a discounted useful life function based on engine type and power rating. In addition, the emission credits will be reported in units of kilograms rather than grams. We are also adopting an averaging program for CO emissions. Under this program, manufacturers can generate credits with engine families that have FELs below the CO emission standard to be used for engine families in their product line in the same model year that are above the CO standard. However, we are not establishing a banking program for CO emissions. As noted in the proposal, we are concerned that a banking program could result in a large accumulation of credits based on a given company's mix of engine technologies. Furthermore, because we generally allow trading only with banked credits, we are not allowing trading of CO emission credits. EPA proposed that manufacturers would not be able to earn credits for one pollutant while using credits to comply with the emissions standard for another pollutant. We are dropping that provision for the final rule. The proposed restriction was modeled on similar requirements in other ABT programs where there was concern that a manufacturer could use technologies to reduce one pollutant while increasing another pollutant. The types of technologies manufacturers are expected to use to comply with the new standards include direct- injection two-stroke engines or four-stroke engines. Both of these technologies should result in reductions in both HC+NOX emissions and CO emissions compared to current designs. While the technologies are expected to reduce both HC+NOX emissions and CO emissions, there could be situations where these technologies are capable of meeting one of the emission standards but not the other. EPA does not want to preclude such engines from being able to certify using the provisions of the ABT program and is therefore dropping the proposed restriction from the final rule. For OB/PWC engines subject to the new emission standards, we are adopting FEL caps to prevent the sale of very high-emitting engines. For HC+NOX, the FEL cap will be the applicable 2006 and later model year HC+NOX standard, which is dependent on the average power of an engine family. For CO, the FEL cap will be 150 g/ kW-hr above the newly adopted CO standard, which is also dependent on the average power of an engine family. We believe these FEL caps will allow a great deal of flexibility for manufacturers using credits, but will require manufacturers to stop producing engines that emit pollutants at essentially uncontrolled levels. We are specifying that OB/PWC engines are in a separate averaging set from SD/I engines, with an exception for certain jet boat engines. This means that credits earned by OB/PWC engines may be used only to offset higher emissions from other OB/PWC engines. Likewise, credits earned by SD/I engines may be used only to offset higher emissions from other SD/I engines. As described in Section III.C.2, manufacturers will be able to use credits generated from OB/PWC engines to demonstrate that their jet boat engines meet the HC+NOX and CO standards for SD/I engines if the majority of units sold in the United States from those related OB/PWC engine families are sold for use as OB/PWC engines. Finally, manufacturers may include as part of their federal credit calculation the sales of engines in California as long as they don't separately account for those emission credits under the California regulations. We originally proposed to exclude engines sold in California that are subject to the California ARB standards. However, we consider California's current HC+NOX standards to be equivalent to those we are adopting in this rulemaking, so we would expect a widespread practice of producing and marketing 50-state products. Therefore, as long as a manufacturer is not generating credits under California's averaging program for OB/PWC engines, we would allow manufacturers to count those engines when calculating credits under EPA's program. This is consistent with how EPA allows credits to be calculated in other nonroad sectors, such as recreational vehicles. (4) Durability Provisions We are keeping the useful life periods from 40 CFR part 91. The specified useful life for outboard engines is 10 years or 350 hours of operation, whichever comes first. The useful life for personal watercraft engines is 5 [[Page 59066]] years or 350 hours of operation, whichever comes first. (See Sec. 1045.103.) We are updating the specified emissions warranty periods for outboard and personal watercraft engines to align with our other emission control programs (see Sec. 1045.120). Most nonroad engines have emissions warranty periods that are half of the total useful life period. Accordingly, the new warranty period for outboard engines is five years or 175 hours of operation, whichever comes first. The new warranty period for personal watercraft engines is 30 months or 175 hours, whichever comes first. This contrasts somewhat with the currently specified warranty period of 200 hours or two years (or three years for specified major emission control components). The new approach will slightly decrease the warranty period in terms of hours, but will somewhat increase the period in terms of calendar years (or months). If the manufacturer offers a longer mechanical warranty for the engine or any of its components at no additional charge, we are requiring that the emission-related warranty for the respective engine or component must be extended by the same amount. The emission-related warranty includes components related to controlling exhaust, evaporative, and crankcase emissions from the engine. This approach to setting warranty requirements is consistent with provisions that apply in most other programs for nonroad engines. We are keeping the requirements related to demonstrating the durability of emission controls for purposes of certification (see Sec. 1045.235, Sec. 1045.240, and Sec. 1045.245). Manufacturers must run engines long enough to develop and justify full-life deterioration factors. This allows manufacturers to generate a deterioration factor that helps ensure that the engines will continue to control emissions over a lifetime of operation. The new requirement to generate deterioration factors for CO emissions is the same as that for HC+NOX emissions. For the HC+NOX standard, we are requiring that manufacturers use a single deterioration factor for the sum of HC and NOX emissions. However, if manufacturers get our approval to establish a deterioration factor on an engine that is tested with service accumulation representing less than the full useful life for any reason, we will require separate deterioration factors for HC and NOX emissions. The advantage of a combined deterioration factor is that it can account for an improvement in emission levels with aging. However, for engines that have service accumulation representing less than the full useful life, we believe it is not appropriate to extrapolate measured values indicating that emission levels for a particular pollutant will decrease. Under the current regulations, emission-related maintenance is not allowed during service accumulation to establish deterioration factors. The only maintenance that may be done must be (1) regularly scheduled, (2) unrelated to emissions, and (3) technologically necessary. This typically includes changing engine oil, oil filter, fuel filter, and air filter. In addition, we are specifying that manufacturers may not schedule critical emission-related maintenance during the useful life period (see Sec. 1045.125). This will prevent manufacturers from designing engines with emission controls that depend on scheduled maintenance that is not likely to occur with in-use engines. D. Changes to OB/PWC Test Procedures We are making a number of minor changes to the test procedures for OB/PWC to make them more consistent with the test procedures for other nonroad spark-ignition engines. These test provisions will apply to SD/ I marine engines as well. (1) Duty Cycle A duty cycle is the set of modes (engine speed and load) over which an engine is operated during a test. For purposes of exhaust emission testing, we are keeping the duty cycle specified for OB/PWC engines, with two adjustments (see Sec. 1045.505). First, we are requiring that manufacturers may choose to run the specified duty cycle as a ramped- modal cycle. Second, we are changing the low-power test mode from a specified 25 percent load condition to 25.3 percent load, which will complete the intended alignment with the E4 duty cycle adopted by the International Organization for Standardization. (2) Maximum Test Speed The definition of maximum test speed, where speed is the angular velocity of an engine's crankshaft (usually expressed in revolutions per minute, or rpm), is an important aspect of the duty cycles for testing. Engine manufacturers currently declare the rated speeds for their engines and then used the rated speed as the maximum speed for testing. However, we have established an objective procedure for measuring this engine parameter to have a clearer reference point for an engine's maximum test speed. This is important to ensure that engines are tested at operating points that correspond with in-use operation. This also helps ensure that the NTE zone is appropriately matched to in-use operating conditions. We are defining the maximum test speed for any engine to be the single point on an engine's maximum-power versus speed curve that lies farthest away from the zero-power, zero-speed point on a normalized maximum-power versus speed plot. In other words, consider straight lines drawn between the origin (speed = 0, load = 0) and each point on an engine's normalized maximum-power versus speed curve. The nominal value of maximum test speed is defined at that point where the length of this line reaches its maximum value. The engine mapping procedures in part 1065 that we referenced in the proposal allow manufacturers to declare a value for maximum test speed that is within 2.5 percent of the calculated (or measured) nominal value. Based on the manufacturers' descriptions of the way they instruct boat builders to match propellers to their engines, we have included in the final rule a special allowance for manufacturers to declare a value for maximum test speed that is up to 500 rpm below the calculated value. This equates to about 8 percent of the calculated value for most engines; however, we would never expect manufacturers to select a value for maximum test speed that is above the nominal value, so the total allowable range is not much greater than for other engines. We also note that the maximum test speed for a four-stroke engine that remains installed in a vessel is the highest engine speed that can occur. As long as the propeller matching and other vessel characteristics do not take the engine outside of the manufacturer's specified range, the engine would need to meet the Not-to-Exceed standards based on the in-use value for maximum test speed. These provisions related to maximum test speed apply equally to OB/PWC engines and SD/I engines. (3) 40 CFR Part 1065 We are requiring that OB/PWC engines certified to the new exhaust emission standards use the test procedures in 40 CFR part 1065 instead of those in 40 CFR part 91.\95\ Part 1065 includes detailed laboratory and equipment specifications and procedures for equipment calibration and emission measurements. These new procedures will apply starting with the introduction of new exhaust standards, [[Page 59067]] though we will allow manufacturers to start using these new procedures earlier as an alternative procedure. The procedures in part 1065 include updated provisions to account for newer measurement technologies and improved calculation and corrections procedures. Part 1065 also specifies more detailed provisions related to alternate procedures, including a requirement to conduct testing representative of in-use operation. In many cases, we allow carryover of emission test data from one year to another. After the implementation of the new standards, we will allow the carryover of any test data generated prior to 2009 under the test procedures in 40 CFR part 91. --------------------------------------------------------------------------- \95\ See our previous rulemakings related to 40 CFR part 1065 for more information about the changes in test provisions (70 FR 40420, July 13, 2005 and 67 FR 68242, November 8, 2002). --------------------------------------------------------------------------- (4) Engine Break-in Testing new engines requires a period of engine operation to stabilize emission levels. The regulations specify two separate figures for break-in periods. First, for certification, we establish a limit on how much an engine may operate and still be considered a ``low-hour'' engine. The results of testing with the low-hour engine are compared with a deteriorated value after some degree of service accumulation to establish a deterioration factor. For Large SI engines, we require that low-hour test engines have no more than 300 hours of engine operation. However, given the shorter useful life for marine engines, this will not make for a meaningful process for establishing deterioration factors, even if there is a degree of commonality between the two types of engines. We are requiring that low-hour marine spark-ignition engines generally have no more than 30 hours of engine operation (see Sec. 1045.801). This allows some substantial time for break-in, stabilization, and running multiple tests, without approaching a significant fraction of the useful life. The current regulation in part 91 specifies that manufacturers perform the low-hour measurement after no more than 12 hours of engine operation (see Sec. 91.408(a)(1)). The new allowance for up to 30 hours of engine operation is consistent with what we have done for recreational vehicles and will give manufacturers more time to complete a valid low-hour test. For production-line testing there is also a concern about how long an engine should operate to reach a stabilized emission level. We are keeping the provision in part 91 that allows for a presumed stabilization period of 12 hours (see Sec. 90.117(a)). We believe 12 hours is sufficient to stabilize the emissions from the engine. (5) Not-to-Exceed Test Procedures and Standards Section III.D.2 discusses the general concept and approach behind NTE standards for Marine SI engines. In addition, Section III.D.2 presents specific zones and limits for catalyst-equipped marine engines. We are applying the same general NTE testing provisions to OB/ PWC engines, including the same broad NTE zone and ambient conditions (see Sec. 1045.515). We anticipate that most OB/PWC engines subject to the NTE standards will use engine-based controls to meet the exhaust emission standards. For that reason, this discussion focuses on the NTE zone and subzones for engines not equipped with catalysts. Data presented in Chapter 4 of the RIA suggests that the emissions characteristics of marine engines are largely dependent on technology type. Four-stroke engines tend to have relatively constant emission levels throughout the NTE zone. In contrast, two-stroke engines tend to have high variability in emissions, not only within the NTE zone but between different engine designs as well. Therefore, we developed separate NTE approaches and standards for four-stroke and two-stroke engines. These approaches and standards are discussed below. (a) Four-Stroke Marine Engines The NTE approach for four-stroke marine engines without catalysts is similar to that for catalyst-equipped engines as described in Section III. We are applying the same NTE zone; however, we are establishing different subzones and emission limits based on data presented in the Final RIA. Emission data for four-stroke marine engines suggest that brake-specific emission rates are relatively constant throughout the NTE zone. One exception is slightly higher HC+NOX emissions at low power. To account for this, we are subdividing the NTE zone to have a low-power subzone below 50 percent of maximum test speed. In this low-power subzone, the HC+NOX NTE limit is 1.6, while it is 1.4 for the remainder of the NTE zone. The CO NTE limit is 1.5 throughout the NTE zone. Figure IV-1 presents the NTE zone and subzones. These limits would apply to all non- catalyzed four-stroke engines. See Section III.D.2 for a detailed discussion of NTE requirements that apply for catalyst-equipped engines (including OB/PWC engines). As discussed above in Section IV.C.2, we are providing extra lead time for 2010-2012 model year engines certified using preexisting data. The purpose of this provision is to allow testing and calibration work to better fit into product development cycles. We have received an indication that a small subset of existing outboard engines may need additional time to meet the 1.4 NTE limit at mid-range speeds due to technological challenges associated with high-power supercharging. Manufacturers have indicated that a slightly higher limit of 1.6 would be feasible in the 2013 time frame, but additional time would be needed for hardware changes to meet the 1.4 limit. To address this issue, we are temporarily expanding Subzone 2 to include mid-range speeds up to 70 percent of maximum test speed for supercharged outboard engines greater than 150 kW. Beginning with the 2015 model year, these engines would be subject to the same NTE zone and standards as other four- stroke engines. [[Page 59068]] [GRAPHIC] [TIFF OMITTED] TR08OC08.062 (b) Two-Stroke Marine Engines The emission data presented in Chapter 4 of the Final RIA for two- stroke direct-injection marine engines suggest that these engines have high variability in emissions, not only within the NTE zone but between different engine designs as well. Due to this variability, we do not believe that a flat (or stepped) limit in the NTE zone could be effectively used to establish meaningful standards for these engines. At the same time, we continue to believe that NTE standards are valuable for facilitating in-use testing. We therefore developed a weighted NTE approach specifically for these engines. In the long term, we may consider further emission reductions based on catalytic control applied to OB/PWC engines. In this case, we would revisit the appropriateness of the weighted NTE approach in the context of those standards. Under the weighted NTE approach, emission data is collected at five test points. These test points are idle, full power, and the speeds specified in Modes 2 through 4 of the 5-mode duty cycle. Similar to the 5-mode duty cycle, the five test points are weighted to achieve a composite value. This composite value must be no higher than 1.2 times the FEL for that engine family. The difference in this approach from the 5-mode duty cycle is that the test torque is not specified. During an in-use test, the engine would be set to the target speed and the torque value would be allowed to float. The actual torque would depend on the propeller design, the weight and condition of the boat, and other factors. In addition, the engine speed at wide open throttle would be based on actual performance on the boat. Because in-use engines installed in boats do not generally operate on the theoretical propeller curve used to define the 5-mode duty cycle, this approach helps facilitate NTE testing. At each test mode, limits are placed on allowable engine operation. These limits are generally based on the NTE zone presented above for four-stroke engines, but there are two exceptions. First, the lower torque limit at 40 percent speed is lowered slightly to better ensure that an engine on an in-use boat is capable of operating within the NTE zone. Second, the speed range is extended at wide-open throttle for the same reason. Figure IV-3 presents the NTE zone and subzones. These limits would apply to all non-catalyzed two-stroke engines. See Section III.D.2 for a detailed discussion of NTE requirements that apply to catalyst-equipped engines (including OB/PWC engines). [[Page 59069]] [GRAPHIC] [TIFF OMITTED] TR08OC08.063 During laboratory testing, any point within each of the four non- idle subzones may be chosen as test points. These test points do not necessarily need to lie on a propeller curve. Note that measured power should be used in the calculation of the weighted brake-specific emissions. (6) Test Fuel As described below in Section V.D.3, we are adopting provisions that will allow manufacturers to use a 10 percent ethanol blend for certification testing of exhaust emissions from Small SI engines as an alternative to the standard gasoline test fuel. We are adopting similar provisions for Marine SI engines in this rule. This option to use a 10 percent ethanol blend will begin with the implementation date of the new exhaust standards for both OB/PWC engines and SD/I engines. The option to use a 10 percent ethanol blend would apply to PLT testing as well if the manufacturer based their certification on the 10 percent ethanol blend. The test fuel specifications are based on using the current gasoline test fuel and adding ethanol until the blended fuel has 10 percent ethanol by volume. While we will allow use of a 10 percent ethanol blend for certification, we expect to use our test fuel without oxygenates for all confirmatory testing for exhaust emissions. Therefore, an engine manufacturer will want to consider the impacts of ethanol on emissions in evaluating the compliance margin for the standard, or in setting the FEL for the engine family if it is participating in the ABT program. We could decide at our own discretion to do exhaust emissions testing using a 10 percent ethanol blend if the manufacturer certified on that fuel. Ethanol has been blended into in-use gasoline for many years and its use has been increasing in recent years. Under provisions of the Energy Independence and Security Act of 2007, ethanol is required to be used in significantly greater quantities. We project that potentially 80 percent of the national gasoline pool will contain ethanol by 2010, making ethanol blends (up to 10 percent) the de facto in-use fuel. As ethanol blends become the main in-use fuel, we believe it makes sense for manufacturers to optimize their engine designs with regard to emissions, performance, and durability on such a fuel. While limited data on Marine SI engines operated on a 10 percent ethanol blend suggests the HC emissions will decrease and NOX emission will increase or stay the same, these effects result in small decreases in total HC+NOX emission levels, with the difference generally being around 10 percent. CARB is currently running a test program to look at the emission impacts of ethanol blends on a range of Marine SI engines. Based on the results of that test program, we may consider changes to the provisions allowing the use of a 10 percent ethanol blend for certification and production-line testing. E. Additional Certification and Compliance Provisions (1) Production-Line Testing We are continuing to require that manufacturers routinely test engines at the point of production to ensure that production variability does not affect the engine family's compliance with emission standards. The final rule includes a variety of amendments and adjustments as described in the proposal. We may also require manufacturers to perform production line testing under the selective enforcement auditing provisions of 40 CFR part 1068, subpart E. (2) In-Use Testing We are also continuing the requirements related to the [[Page 59070]] manufacturer-run in-use testing program. Under this program, manufacturers test field-aged engines to determine whether they continue to meet emission standards (see part 1045, subpart E). We are, however, making a variety of changes and clarifications to the current requirements, as described in the following sections. (a) Adjustments Related to Engine Selection Both EPA and manufacturers have gained insights from implementing the current program. Manufacturers have expressed a concern that engine families are selected rather late in the model year, which makes it harder to prepare a test fleet for fulfilling testing obligations. On the other hand, we have seen that manufacturers certify some of their engine families well into the model year. By making selections early in the model year, we will generally be foregoing the opportunity to select engine families for which manufacturers don't apply for certification until after the selections occur. To address these competing interests, we are adopting an approach that allows for early selection of engine families, while preserving the potential to require testing for engines that are certified later in the model year. For complete applications we receive by December 31 of a given calendar year for the following model year, we expect to select engine families for testing by the end of February of the following year. If we have not made a complete selection of engine families by the end of February, manufacturers have the option of making their own selections for in-use testing. The regulations include criteria to serve as guidance for manufacturers to make appropriate selections. For example, we expect manufacturers to most strongly consider those engine families with the highest projected sales volume and the smallest compliance margins. Manufacturers may also take into account past experience with engine families if they have already passed an in-use testing regimen and have not undergone significant design changes since that time. We will treat engine families differently for in-use testing if we receive the application after December 31. This applies, for example, if we receive a complete application for a 2010 engine family in February 2010. In these cases, the engine family will automatically be subject to in-use testing, without regard to the 25 percent limitation that will otherwise dictate our selections. This may appear to increase the potential test burden, but the clear majority of applications for certification are completed before the end of the calendar year for the following model year. This provision will eliminate the manufacturers' ability to game the testing system by delaying a family of potential concern until the next calendar year. We expect to receive few new applications after the end of the calendar year. This will be consistent with the manufacturers' interest in early family selections, without jeopardizing EPA's interest in being able to select from a manufacturer's full product lineup. (b) Crankcase Emissions Because the crankcase requirements are based on a design specification rather than emission measurements, the anticipated crankcase technologies are best evaluated simply by checking whether or not they continue to function as designed. As a result, we intend for an inspection of in-use engines to show whether these systems continue to function properly throughout the useful life, but we are not requiring manufacturers to include crankcase emission measurements as part of the in-use testing program described in this section. This is consistent with the approach we have taken in other programs. (c) In-Use Emission Credits Clean Air Act section 213 requires engines to comply with emission standards throughout the regulatory useful life, and section 207 requires a manufacturer to remedy in-use nonconformity when we determine that a substantial number of properly maintained and used engines fail to conform with the applicable emission standards (42 U.S.C. 7541). As described in the original rulemaking, a potential option to address a nonconformity is that manufacturers could use a calculation of emission credits generated under the in-use testing program to avoid a recall determination if an engine family's in-use testing results exceeded emission standards (61 FR 52095, October 4, 1996). We are adopting a more general approach to addressing potential noncompliance under the in-use testing program than is specified in 40 CFR part 91. The final regulations do not specify how manufacturers could generate emission credits to offset a nonconforming engine family. This new approach is preferred for two primary reasons. First, manufacturers will be able to use emission data generated from field testing to characterize an engine family's average emission level. This becomes necessarily more subjective, but allows us to consider a wider range of information in evaluating the degree to which manufacturers are complying with emission standards across their product line. Second, this approach makes clearer the role of the emission credits in our consideration to recall failing engines. We plan to consider, among other information, average emission levels from multiple engine families in deciding whether to recall engines from a failing engine family. We therefore believe it is not appropriate to have a detailed emission credit program defining precisely how and when to calculate, generate, and use credits that do not necessarily have value elsewhere. Not specifying how manufacturers generate emission credits under the in-use testing program gives us the ability to consider any appropriate test data in deciding what action to take. In generating this kind of information, some general guidelines will apply. For example, we expect manufacturers to share test data from all engines and all engine families tested under the in-use testing program, including nonstandard tests that might be used to screen engines for later measurement. This allows us to understand the manufacturers' overall level of performance in controlling emissions to meet emission standards. Average emission levels should be calculated over a running three-year period to include a broad range of testing without skewing the results based on old designs. Emission values from engines certified to different tiers of emission standards or tested using different measurement procedures should not be combined to calculate a single average emission level. Average emission levels should be calculated according to the following equation, rounding the results to 0.1 g/kW-hr: Average EL = [Sigma]i[(STD-CL)i x (UL)i x (Sales)i x Poweri x LFi] / [Sigma]i [(UL)i x (Sales)i x Poweri x LFi] Where: Average EL = Average emission level in g/kW-hr. Salesi = The number of eligible sales, tracked to the point of first retail sale in the U.S., for the given engine family during the model year. (STD-CL)i = The difference between the emission standard (or Family Emission Limit) and the average emission level for an in-use testing family in g/kW-hr. ULi = Useful life in hours. Poweri = The sales-weighted average maximum engine power for an engine family in kW. LFi = Load factor or fraction of maximum engine power utilized in use; use 0.50 for engine families used only in constant- [[Page 59071]] speed applications and 0.32 for all other engine families. We have adopted this same approach for the in-use testing program that applies for Large SI engines in 40 CFR part 1048. (3) Optional Procedures for Field Testing Outboard engines are inherently portable, so it may be easier to test them in the laboratory than in the field. However, there is a strong advantage to using portable measurement equipment to test personal watercraft and SD/I engines while the engine remains installed to avoid the effort of taking the engine out and setting it up in a laboratory. Field testing will also provide a much better means of measuring emissions to establish compliance with the NTE standards, because it is intended to ensure control of emissions during normal in- use operation that may not occur during laboratory testing over the specified duty cycle. We are adopting the field testing provisions described below as an option for all OB/PWC and SD/I engines. The regulations at 40 CFR part 1065, subpart J, specify how to measure emissions using portable measurement equipment. To test engines while they remain installed, analyzers are connected to the engine's exhaust to detect emission concentrations during normal operation. Exhaust volumetric flow rate and continuous power output are also needed to convert the analyzer responses to units of g/kW-hr for comparing to emission standards. These values can be calculated from measurements of the engine intake flow rate, the exhaust air-fuel ratio and the engine speed, and from torque information. Available small analyzers and other equipment may be adapted for measuring emissions in the field. A portable flame ionization detector can measure total hydrocarbon concentrations. A portable analyzer based on zirconia technology can measure NOX emissions. A nondispersive infrared (NDIR) unit can measure CO. We are requiring manufacturers to specify how they will intend to draw emission samples from in-use engines for testing installed engines. For example, emission samples can be drawn from the exhaust flow directly upstream of the point at which water is mixed into the exhaust flow. This should minimize collection of water in the extracted sample, though a water separator may be needed to maintain a sufficiently dry sample. Mass flow rates also factor into the torque calculation; this may be measured either in the intake or exhaust manifold. Calculating brake-specific emissions depends on determining instantaneous engine speed and torque levels. We are therefore requiring manufacturers to design their engine control systems to be able to continuously monitor engine speed and torque. We have already adopted this requirement for other mobile source programs where electronic engine control is used. Monitoring speed values is straightforward. For torque, the onboard computer needs to convert measured engine parameters into useful units. Manufacturers generally will need to monitor a surrogate value such as intake manifold pressure or throttle position (or both), then rely on a look-up table programmed into the onboard computer to convert these torque indicators into Newton-meters. Manufacturers may also want to program look-up tables for torque conversion into a remote scan tool. Part 1065 specifies the performance requirements for accuracy, repeatability, and noise related to speed and torque measurements. These tolerances are taken into account in the selection of the new NTE standards. We are adopting the requirement to meet the torque-broadcasting requirements in the 2013 model year, which aligns with the final implementation of the NTE standards. (4) Other Changes for In-Use Testing A question has been raised regarding the extent of liability if an engine family is found to be noncompliant during in-use testing. Because it can take up to two years to complete the in-use testing regimen for an engine family, we want to clarify the status of engines produced under that engine family's certificate, and under the certificates of earlier and later engine families that were effectively of the same design. For example, manufacturers in many cases use carryover data to continue certifying new engine families for a subsequent model year; this avoids the need to produce new test data for engines whose design does not change from year to year. For these cases, absent any contrary information from the manufacturer, we will maintain the discretion to include other applicable engine families in the scope of any eventual recall, as allowed by the Act. In response to comments received from manufacturers, we have agreed to adopt a provision allowing manufacturers to request hardship relief under the in-use testing program if conditions outside their control prevent them from completing the required testing. We would expect this to be a rare occurrence, but this provision will allow us to accommodate manufacturers if extreme unforeseen circumstances prevent a manufacturer from completing a test program. There are a variety of smaller changes to the in-use testing provisions as a result of updating the regulatory language to reflect the language changes that we adopted for similar testing with Large SI engines. First, we are removing the requirement to select engines that have had service accumulation representing less than 75 percent of the useful life. This gives manufacturers the flexibility to test somewhat older engines if they want to. Second, we are slightly adjusting the description of the timing of the test program, specifying that the manufacturer must submit a test plan within 12 months of EPA selecting the family for testing, with a requirement to complete all testing within 24 months. This contrasts with the current requirement to complete testing within 12 months after the start of testing, which in turn must occur within 12 months of family selection. We believe the modified approach allows additional flexibility without delaying the conclusion of testing. Third, we are requiring that manufacturers explain why they excluded any particular engines from testing. Finally, we are requiring manufacturers to report any noncompliance within 15 days after completion of testing for a family, rather than 15 days after an individual engine fails. This has the advantage for manufacturers and the Agency of a more unified reporting after testing is complete, rather than piecemeal reporting before conclusions can be drawn. (5) Use of Engines Already Certified to Other Programs In some cases, manufacturers may want to use engines already certified under our other programs. Engines certified to the emission standards for highway applications in part 86 or Large SI applications in part 1048 are meeting more stringent standards. We are therefore accepting the pre-existing certification for these engines used in marine applications, on the condition that the engine is not changed from its certified configuration in any way (see Sec. 1045.605). We allow this in a similar way for a limited number of engines certified to the Small SI emission standards (see Sec. 1045.610). The number of installed marine engines must generally be less then five percent of the total U.S. sales of that engine model in all applications. [[Page 59072]] (6) Import-Specific Information at Certification We are requiring additional information to improve our ability to oversee compliance related to imported engines (see Sec. 1045.205). In the application for certification, the following additional information is necessary: (1) The port or ports at which the manufacturer has imported engines over the previous 12 months, (2) the names and addresses of the agents the manufacturer has authorized to import the engines, and (3) the location of the test facilities in the United States where the manufacturer will test the engines if we select them for testing under a selective enforcement audit. See Section 1.3 of the Summary and Analysis of Comments for further discussion related to naming test facilities in the United States. (7) Alternate Fuels The emission standards apply to all spark-ignition engines regardless of the fuel they use. Almost all Marine SI engines operate on gasoline, but these engines may also operate on other fuels, such as natural gas, liquefied petroleum gas, ethanol, or methanol. The test procedures in 40 CFR part 1065 describe adjustments needed for operating test engines with oxygenated fuels. In some special cases, a single engine is designed to alternately run on different fuels. For example, some engines can switch back and forth between natural gas and LPG. We are adding a clarification to the regulations to describe how manufacturers would submit certification data and divide such engines into engine families. We would expect a manufacturer to submit test data on each fuel type. If manufacturers produce engines that run only on one fuel where that dedicated-fuel engine is identical to a dual-fuel engine with respect to that fuel, those engines could be included in the same family. This is also true for the second fuel. For example, if a manufacturer produces an engine that can run on both gasoline and LPG and also produces that engine model in gasoline-only and LPG-only versions without adjusting the calibration or other aspects of that configuration, those engines may all be included in the same engine family. Once an engine is placed into service, someone might want to convert it to operate on a different fuel. This would take the engine out of its certified configuration, so we are requiring that someone performing such a fuel conversion to go through a certification process. We will allow certification of the complete engine using normal certification procedures, or the aftermarket conversion kit could be certified using the provisions of 40 CFR part 85, subpart V. This contrasts with the provisions in part 91 that allow for fuel conversions that can be demonstrated not to increase emission levels above the applicable standard. We propose to apply this requirement starting January 1, 2010. (See Sec. 91.1103 and Sec. 1045.645.) (8) Special Provisions Related to Altitude As described in Section IV.C.1, we are allowing manufacturers to comply with emission standards at high altitudes using an altitude kit. Manufacturers using altitude kits to comply at altitude must take steps to describe their altitude kits in the application for certification and explain their basis for believing that engines with these altitude kits will comply with emission standards at high altitude. Manufacturers must also describe a plan for making information and parts available such that the widespread use of altitude kits will reasonably be expected in high-altitude areas. For a more thorough description of these compliance provisions, see the discussion in Section V.E.5 for nonhandheld Small SI engines. F. Other Adjustments to Regulatory Provisions We are moving the regulatory requirements for marine spark-ignition engines from 40 CFR part 91 to 40 CFR part 1045. This gives us the opportunity to update the details of our certification and compliance program to be consistent with the comparable provisions that apply to other engine categories. The following paragraphs highlight some of the provisions in the new language that may involve noteworthy changes from the current regulations in part 91. All these provisions apply equally to SD/I engines, except that they are not subject to the current requirements in 40 CFR part 91. We are making some adjustments to the criteria for defining engine families (see Sec. 1045.230). The fundamental principle behind engine families is to group together engines that will have similar emission characteristics over the useful life. As a result, all engines within an engine family must have the same approximate bore diameter and use the same method of air aspiration (for example, naturally aspirated vs. turbocharged). Under the previous regulation, manufacturers were allowed the discretion to consider bore and stroke dimensions and aspiration method for subdividing engine families beyond what was required under the primary criteria in Sec. 91.115. We believe engines with substantially different bore diameters will have combustion and operating characteristics that must be taken into account with unique engineering. Similarly, adding a turbocharger or supercharger changes the engine's combustion and emission control in important ways. We are also requiring that all the engines in an engine family use the same type of fuel. This may have been a simple oversight in the current regulations, since all OB/PWC engines operate on gasoline. However, if a manufacturer were to produce an engine model that runs on natural gas or another alternative fuel, that engine model should be in its own engine family. See Section IV.E.7 for a discussion of dual-fuel engines. Finally we are removing the provision currently in part 91 related to the engine-cooling mechanism. Manufacturers pointed out that raw-water cooling and separate-circuit cooling do not have a significant effect on an engine's emission characteristics. The new regulatory language related to engine labels remains largely unchanged from the previous requirements (see Sec. 1045.135). We are including a provision to allow manufacturers to print labels that have a different company's trademark. Some manufacturers in other programs have requested this flexibility for marketing purposes. The warranty provisions are described above. We are adding an administrative requirement to describe the provisions of the emission- related warranty in the owners manual (see Sec. 1045.120). We expect that many manufacturers already do this, but believe it is appropriate to require this as a routine practice. Certification procedures depend on establishing deterioration factors to predict the degradation in emission controls that occurs over the course of an engine's useful life. This typically involves service accumulation in the laboratory to simulate in-use operation. Since manufacturers do in-use testing to further characterize this deterioration rate, we are specifying that deterioration factors for certification must take into account any available data from in-use testing with similar engines. This provision applies in most of our emission control programs that involve routine in-use testing. To the extent this information is available, it should be factored into the certification process. For example, if in-use testing shows that emission deterioration is substantially higher than that characterized by the deterioration factor, we expect the manufacturer to factor the in-use data [[Page 59073]] into a new deterioration factor, or to revise durability testing procedures to better represent the observed in-use degradation. Maximum engine power for an engine family is an important parameter. For example, maximum engine power determines the applicable CO standard for engines at or below 40 kW. For bigger engines, emission credits are calculated based on total power output. As a result, we are specifying that manufacturers determine their engines' maximum engine power as the point of maximum engine power on the engine's nominal power curve (see Sec. 1045.140). This value may be established as a design value, but must be determined consistent with the engine mapping procedures in Sec. 1065.510. The manufacturer must adjust the declared value for maximum engine power if it does not fall within the range of values from production engines. The new requirements related to the application for certification will involve some new information, most of which is described above, such as installation instructions and a description of how engines comply with not-to-exceed standards (see Sec. 1045.205). In addition, we are requiring that manufacturers submit projected sales volumes for each family, rather than allowing manufacturers to keep these records and make them available upon request. Manufacturers already do this routinely and it is helpful to have ready access to this information to maintain compliance oversight for such things as emission credit calculations. We are also requiring that each manufacturer identify an agent for service in the United States. For companies based outside the United States, this ensures that we will be able to maintain contact regarding any official communication that may be required. We have adopted these same requirements for other nonroad programs. We are requiring that manufacturers use good engineering judgment in all aspects of their effort to comply with regulatory requirements. The regulations at Sec. 1068.5 describe how we will apply this provision and what we will require of manufacturers where we disagree with a manufacturer's judgment. We are also establishing new defect-reporting requirements. These requirements are described in Section VIII of the preamble to the proposed rule. It is common practice for one company to produce engine blocks that a second company modifies for use as a marine engine. Since our regulations prohibit the sale of uncertified engines, we are establishing provisions to clarify the status of these engines and defining a path by which these engines can be handled without violating the regulations. See Section VIII.C.1 for more information. G. Small-Business Provisions The OB/PWC market has traditionally been made up of large businesses. We anticipate that the OB/PWC standards will be met through the expanded use of existing cleaner engine technologies. Small businesses certifying to standards today are already using technologies that could be used to meet the new standards. As a result, we are adopting only three small business regulatory relief provisions for small business manufacturers of OB/PWC engines. We are allowing small business OB/PWC engine manufacturers to be exempt from PLT testing and to use assigned deterioration factors for certification. (EPA will provide guidance to engine manufacturers on the assigned deterioration factors prior to implementation of the new OB/PWC standards.) We are also extending the economic hardship relief to OB/PWC engine manufacturers that qualify as small businesses (see Sec. 1068.250). We are defining small business eligibility criteria for OB/PWC engine manufacturers based on an employee cut-off of 250 employees. In addition to the flexibilities noted above, all OB/PWC engine manufacturers, regardless of size, will be able to apply for the unusual circumstances hardship in Sec. 1068.245. Finally, all OB/PWC vessel manufacturers that rely on other companies to provide certified engines or fuel system components for their product will be able to apply for the hardship provisions in Sec. 1068.255. H. Technological Feasibility (1) Level of Standards Over the past several years, manufacturers have demonstrated their ability to achieve significant HC+NOX emission reductions from outboard and personal watercraft engines. This has largely been accomplished through the introduction of two-stroke direct injection engines and conversion to four-stroke engines. Recent certification data for these types of engines show that these technologies may be used to achieve emission levels significantly below the current exhaust emission standards. In fact, California standards require a 65 percent reduction beyond the current federal standards. Our own analysis of recent certification data shows that most four- stroke outboard engines and many two-stroke direct injection outboard engines can meet the final HC+NOX standard. Similarly, although PWC engines tend to have higher HC+NOX emissions, presumably due to their higher power densities, many of these engines can also meet the new HC+NOX standard. Although there is currently no CO standard for OB/PWC engines, OB/PWC manufacturers are required to report CO emissions from their engines (see Sec. 91.107(d)(9)). These emissions are based on test data from new engines and do not consider deterioration or compliance margins. Based on this data, all the two-stroke direct injection engines show emissions well below the new standards. In addition, the majority of four-stroke engines meet the new CO standards as well. We therefore believe the HC+NOX and CO emission standards will be achieved by phasing out conventional carbureted two- stroke engines and replacing them with four-stroke engines or two- stroke direct injection engines. This has been the market-driven trend over the last five years. Chapter 4 of the Final RIA presents charts that compare certification data to the new standards. (2) Implementation Dates We are implementing the new emission standards beginning with the 2010 model year. This gives two additional years beyond the implementation date of the same standards in California. This additional time may be necessary for manufacturers that do not sell engine models in California or that sell less than their full product lineup into the California market. We believe the same technology used to meet the 2008 standards in California could be used nationwide with the additional year allowed for any engine models not sold in California. Low-emission engines sold in California are generally sold nationwide as part of manufacturer compliance strategies for EPA's 2006 standards. Manufacturers have indicated that they are calibrating their four-stroke and direct-injection two-stroke engines to meet the California requirements. To meet the new standards, manufacturers' efforts will primarily center on phasing out their higher-emission carbureted two-stroke engines and producing more of their lower emission engines. (3) Technological Approaches Conventional two-stroke engines add a fuel-oil mixture to the intake air with a carburetor, and use the crankcase to force this mixed charge air into the combustion chamber. In the two-stroke [[Page 59074]] design, the exhaust gases must be purged from the cylinder while the fresh charge enters the cylinder. With traditional two-stroke designs, the fresh charge, with unburned fuel and oil, will push the exhaust gases out of the combustion chamber as the combustion event concludes. As a result, 25 percent or more of the fresh fuel-oil could pass through the engine unburned. This is known as scavenging losses. Manufacturers have phased out sales of the majority of their traditional two-stroke engines to meet the federal 2006 OB/PWC exhaust emission standards. However, many of these engines still remain in the product mix as a result of emission credits. One approach to minimizing scavenging losses in a two-stroke engine is through the use of direct fuel injection into the combustion chamber. The primary advantage of direct injection for a two-stroke engine is that the exhaust gases can be scavenged with fresh air and fuel can be injected into the combustion chamber after the exhaust port closes. As a result, hydrocarbon emissions, fuel economy, and oil consumption are greatly improved. Some users prefer two-stroke direct injection engines over four-stroke engines due to the higher power-to- weight ratio. Most of the two-stroke direct injection engines certified to the current OB/PWC emission standards have HC+NOX emissions levels somewhat higher than certified four-stroke engines. However, these engines also typically have lower CO emissions due to the nature of a heterogeneous charge. By injecting the fuel directly into a charge of air in the combustion chamber, localized areas of lean air/fuel mixtures are created where CO is efficiently oxidized. OB/PWC manufacturers are also achieving lower emissions through the use of four-stroke engine designs. Because a single combustion event takes place over two revolutions of the crankshaft, the fresh fuel-air charge can enter the combustion chamber after the exhaust valve is closed. This minimizes scavenging losses. Manufacturers currently offer four-stroke marine engines with maximum engine power ranging from 1.5 to more than 250 kW. These engines are available with carburetion, throttle-body fuel injection, or multi-point fuel injection. Based on the certification data, whether the engine is carbureted or fuel- injected does not have a significant effect on combined HC+NOX emissions. For PWC engines, the HC+NOX levels are somewhat higher, primarily due to their higher power-to- weight ratio. CO emissions from PWC engines are similar to those for four-stroke outboard engines. One manufacturer has certified two PWC engine models with oxidation catalysts. One engine model uses the oxidation catalyst in conjunction with a carburetor while the other uses throttle-body fuel injection. In this application, the exhaust system is shaped in such a way to protect the catalyst from water. The exhaust system is relatively large compared to the size of the engine. We are not aware of any efforts to develop a three-way catalyst system for PWC engines. We are also not aware of any development efforts to package a catalyst into the exhaust system of an outboard marine engine. In current designs, water and exhaust are mixed in the exhaust system to help cool the exhaust and tune the engine. Water can work its way up through the exhaust system because the lower end is under water and varying pressures in the exhaust stream can draw water against the prevailing gas flow. As discussed in Chapter 4 of the Final RIA, saltwater can be detrimental to catalyst performance and durability. In addition, outboard engines are designed with lower units that are designed to be as thin as possible to improve the ability to turn the engine on the back of the boat and to reduce drag on the lowest part of the unit. This raises concerns about the placement and packaging of catalysts in the exhaust stream. Certainly, the success of packaging catalysts in sterndrive and inboard boats in recent development efforts (see Section III) suggests that catalysts may be feasible for outboards with additional effort. However, this has not yet been demonstrated and significant development efforts will be necessary. (4) Regulatory Alternatives We considered a level of 10 g/kW-hr HC+NOX for OB/PWC engines above 40 kW with an equivalent percent reduction below the new standards for engines at or below 40 kW. This second tier of standards could apply in the 2012 or later time frame. Such a standard would be consistent with currently certified emission levels from a significant number of four-stroke outboard engines. We had three concerns with adopting this second tier of OB/PWC standards. First, while some four- stroke engines may be able to meet a 10 g/kW-hr standard with improved calibrations, it is not clear that all engines could meet this standard without applying catalyst technology. As described in Section IV.H.3, we believe it is not appropriate to base standards in this rule on the use of catalysts for OB/PWC engines. Second, certification data for personal watercraft engines show somewhat higher exhaust emission levels, so setting the standard at 10 g/kW-hr would likely require catalysts for many models. Third, it is not clear that two-stroke engines would be able to meet the more stringent standard, even with direct injection and catalysts. These engines operate with lean air- fuel ratios, so reducing NOX emissions with any kind of aftertreatment is especially challenging. Therefore, unlike the new standards for sterndrive and inboard engines, we are not adopting OB/PWC standards that require the use of catalysts. Catalyst technology would be necessary for significant additional control of HC+NOX and CO emissions for these engines. While there is good potential for eventual application of catalyst technology to outboard and personal watercraft engines, we believe the technology is not adequately demonstrated at this point. Much laboratory and in-water work is needed. (5) Our Conclusions We believe the final emission standards can be achieved by phasing out conventional carbureted two-stroke engines in favor of four-stroke engines or two-stroke direct injection engines. The four-stroke engines or two-stroke direct injection engines are already widely available from marine engine manufacturers. One or both of these technologies are currently in place for the whole range of outboard and personal watercraft engines. The new exhaust emission standards represent the greatest degree of emission control achievable in the contemplated time frame. While manufacturers can meet the standards with their full product line in 2010, requiring full compliance with a nationwide program earlier, such as in the same year that California introduces new emission standards, will pose an unreasonable requirement. Allowing two years beyond California's requirements is necessary to allow manufacturers to certify their full product line to the new standards, not only those products they will make available in California. Also, as described above, we believe the catalyst technology that will be required to meet emission standards substantially more stringent than we are adopting has not been adequately demonstrated for outboard or personal watercraft engines. As such, we believe the new standards for HC+NOX and CO emissions are the most stringent possible in this rulemaking. More time to gain experience with catalysts on sterndrive and inboard engines and a substantial engineering effort to apply that learning [[Page 59075]] to outboard and personal watercraft engines may allow us to pursue more stringent standards in a future rulemaking. As discussed in Section VII, we do not believe the final standards will have negative effects on energy, noise, or safety and may lead to some positive effects. V. Small SI Engines A. Overview This section applies to new nonroad spark-ignition engines with rated power at or below 19 kW (``Small SI engines''). These engines are most often used in lawn and garden applications, typically by individual consumers; they are many times also used by commercial operators and they provide power for a wide range of other home, industrial, farm, and construction applications. The engines are typically air-cooled single-cylinder models, though Class II engines (with displacement over 225 cc) may have two or three cylinders, and premium models with higher power may be water-cooled. We have already adopted two phases of exhaust standards for Small SI engines. The first phase of standards for nonhandheld engines generally led manufacturers to convert any two-stroke engines to four- stroke engines. These standards applied only at the time of sale. The second phase of standards for nonhandheld engines generally led manufacturers to apply emission control technologies, such as in- cylinder controls and improved carburetion, with the additional requirement that manufacturers needed to meet emission standards over a useful life period. As described in Section I, this final rule is the result of a Congressional mandate that springs from the new California ARB standards. In 2003, California ARB adopted more stringent standards for nonhandheld engines. These standards target emission reductions of approximately 35 percent below EPA's Phase 2 standards and are based on the expectation that manufacturers will use relatively low-efficiency three-way catalysts to control HC+NOX emissions. California ARB did not change the applicable CO emission standard.\96\ --------------------------------------------------------------------------- \96\ California ARB also adopted new fuel evaporative emission standards for equipment using handheld and nonhandheld engines. These included tank permeation standards for both types of equipment and hose permeation, running loss, and diurnal emission standards for nonhandheld equipment. See Section VI for additional information related to evaporative emissions. --------------------------------------------------------------------------- We are adding these new regulations for Small SI engines in 40 CFR part 1054 rather than changing the current regulations in 40 CFR part 90. This gives us the opportunity to update the details of our certification and compliance program that are consistent with the comparable provisions that apply to other engine categories and describe regulatory requirements in plain language. Most of the change in regulatory text provides improved clarity without changing procedures or compliance obligations. Where there is a change that warrants further attention, we describe the need for the change below. For nonhandheld engines, manufacturers must comply with all the provisions in part 1054 once the Phase 3 standards begin to apply in 2011 or 2012. For handheld engines, manufacturers must comply with the provisions in part 1054 starting in 2010. Note, however, that part 1054 specifies that certain provisions do not apply for handheld engines until sometime after 2010. Engines and equipment subject to part 1054 are also subject to the general compliance provisions in 40 CFR part 1068. These include prohibited acts and penalties, exemptions and importation provisions, selective enforcement audits, defect reporting and recall, and hearing procedures. See Section VIII of the preamble to the proposed rule for further discussion of these general compliance provisions. B. Engines Covered by This Rule This action includes more stringent exhaust emission standards for new nonroad engines with rated power at or below 19 kW that are sold in the United States. The exhaust standards are for nonhandheld engines (Classes I and II). As described in Section I, handheld Small SI engines (Classes III, IV, and V) are also subject to standards, but we are not changing the level of exhaust emission standards for these engines. As described in Section VI, we are also adopting new standards for controlling evaporative emissions from Small SI engines, including both handheld and nonhandheld engines. Certain of the provisions discussed in this Section V apply to both handheld and nonhandheld engines, as noted. Reference to both handheld and nonhandheld engines also includes marine auxiliary engines subject to the Small SI engine standards for that size engine. (1) Engines Covered by Other Programs The Small SI engine standards do not apply to recreational vehicles covered by EPA emission standards in 40 CFR part 1051. The regulations in part 1051 apply to off-highway motorcycles, snowmobiles, all-terrain vehicles, and certain offroad utility vehicles. However, if an amphibious vehicle or other recreational vehicle with an engine at or below 19 kW is not subject to standards under part 1051, its engine will need to meet the Small SI engine standards. We also do not consider vehicles such as go karts or golf carts to be subject to part 1051 because they are not intended for high-speed operation over rough terrain; these engines are also subject to Small SI engine standards. The Small SI engine standards do not apply to engines used in scooters or other vehicles that qualify as motor vehicles. Consistent with the current regulation under 40 CFR part 90, Small SI engine standards apply to spark-ignition engines used as generators or for other auxiliary power on marine vessels, but not to marine propulsion engines. As described below, we are finalizing more stringent exhaust emission standards that will apply uniquely to marine generator engines. Engines with rated power above 19 kW are subject to emission standards under 40 CFR part 1048. However, we adopted a special provision under part 1048 allowing engines with total displacement at or below 1000 cc and with rated power at or below 30 kW to meet the applicable Small SI engine standards instead of the standards in part 1048. For any engines that are certified using this provision, any emission standards that we adopt for Class II engines and equipment in this rulemaking (or in later rulemakings) will also apply at the same time. Since these engines are not required to meet the Small SI engine standards we have not included them in the analyses associated with this final rule. (2) Maximum Engine Power and Engine Displacement Under the current regulations, ``rated power'' and ``power rating'' are determined by the manufacturer with little or no direction for selecting appropriate values. We are establishing an objective approach to establishing the alternative term ``maximum engine power'' under the regulations (see Sec. 1054.140). This value has regulatory significance for Small SI engines only to establish whether or not engines are instead subject to Large SI engine standards. Determining maximum engine power is therefore relevant only for those engines that are approaching the line separating these two engine categories. We are requiring that manufacturers determine and report maximum engine power if their emission-data engine has a maximum modal power at or above 15 kW (at or [[Page 59076]] above 25 kW if engine displacement is at or below 1000 cc). Similarly, the regulations depend on engine displacement to differentiate engines for the applicability of different standards. The regulations currently provide no objective direction or restriction regarding the determination of engine displacement. We are defining displacement as the intended swept volume of the engine to the nearest cubic centimeter, where the engine's swept volume is the product of the internal cross-sectional area of the cylinders, the stroke length, and the number of cylinders. For both maximum engine power and displacement, the declared values must be within the range of the values from production engines considering normal production variability. This does not imply that production engines need to be routinely tested or measured to verify the declared values, but it serves to define a range of appropriate values and provides a mechanism by which we can ensure that the declared values conform to the production engines in question. If production engines are found to have different values for maximum engine power or displacement, this should be noted in a change to the application for certification. (3) Exempted or Excluded Engines Under the Clean Air Act, engines that are used in stationary applications are not nonroad engines. States are generally preempted from setting emission standards for nonroad engines but this preemption does not apply to stationary engines. EPA has adopted emission standards for stationary compression-ignition engines sold or used in the United States (71 FR 39154, July 11, 2006). EPA also recently adopted emission standards for stationary spark-ignition engines in a separate action (73 FR 3568, January 18, 2008). In pursuing emission standards for stationary engines, we have attempted to maintain consistency between stationary and nonroad requirements as much as possible. As explained in the stationary rule, stationary spark- ignition engines below 19 kW are almost all sold into residential applications so we believe it is not appropriate to include requirements for owners or operators that will normally be part of a program for implementing standards for stationary engines. As a result, we indicated in the stationary rule that it is most appropriate to set exhaust and evaporative emission standards for stationary spark- ignition engines and equipment below 19 kW as if they were used in nonroad applications. This will allow manufacturers to make a single product that meets all applicable EPA standards for both stationary and nonroad applications. The Clean Air Act provides for a different regulatory approach for engines used solely in competition. Rather than relying on engine design features that serve as inherent indicators of dedicated competitive use, we have taken the approach in other programs of more carefully differentiating competition and noncompetition models in ways that reflect the nature of the particular products. In the case of Small SI engines, we believe there are no particular engine design features that allow us to differentiate between engines that are used solely for competition from those with racing-type features that are not used solely for competition. We are requiring that handheld and nonhandheld equipment with engines meeting all the following criteria will be considered as being used solely for competition: • The engine (or equipment in which the engine is installed) may not be displayed for sale in any public dealership; • Sale of the equipment in which the engine is installed must be limited to professional competitors or other qualified competitors; • The engine must have performance characteristics that are substantially superior to noncompetitive models; • The engines must be intended for use only in competition events sanctioned (with applicable permits) by a state or federal government agency or other widely recognized public organization, with operation limited to competition events, performance-record attempts, and official time trials. We are also including a provision allowing us to approve an exemption for cases in which an engine manufacturer can provide clear and convincing evidence that an engine will be used solely for competition even though not all the above criteria apply for a given situation. This may occur, for example, if a racing association specifies a particular engine model in the competition rules, where that engine has design features that prevent it from being certified, or from being used for purposes other than competition. Engine manufacturers will make their request for each new model year and we will deny a request for future production if there are indications that some engines covered by previous requests are not being used solely for competition. Competition engines are produced and sold in very small quantities so manufacturers should be able to identify which engines qualify for this exemption. In the rulemaking for recreational vehicles, we chose not to apply standards to hobby products by exempting all reduced-scale models of vehicles that were not capable of transporting a person (67 FR 68242, November 8, 2002). We are extending that same provision to handheld and nonhandheld Small SI engines. (See Sec. 1054.5.) In the rulemaking to establish Phase 2 emission standards, we adopted an exemption for handheld and nonhandheld engines used in rescue equipment. The regulation does not require any request, approval, or recordkeeping related to the exemption. We discovered while conducting the SBAR Panel described in Section VI.G that some companies are producing noncompliant engines under this exemption. As a result, we are keeping this exemption but are adding several provisions to allow us to better monitor how it is used (see Sec. 1054.660). We are also keeping the requirement that equipment manufacturers use certified engines if they are available. We are updating this provision by adding a requirement that equipment manufacturers use an engine that has been certified to less stringent Phase 1 or Phase 2 standards if such an engine is available. We are explicitly allowing engine manufacturers to produce engines for this exemption (with permanent labels identifying the particular exemption), but only if they have a written request for each equipment model from the equipment manufacturer. We are further requiring that the equipment manufacturer notify EPA of the intent to produce emergency equipment with exempted engines. Also, to clarify the scope of this provision, we are defining ``emergency rescue situations'' as firefighting or other situations in which a person is retrieved from imminent danger. Finally, we are clarifying that EPA may discontinue the exemption on a case-by-case basis if we find that such engines are not used solely for emergency and rescue equipment or if we find that a certified engine is available to power the equipment safely and practically. We are applying the provisions of this section for new equipment built on or after January 1, 2010. The current regulations also specify an exemption allowing individuals to import up to three nonconforming handheld or nonhandheld engines one time. We are keeping this exemption with three adjustments (see Sec. 1054.630). First, we are allowing this exemption only for used equipment. Allowing [[Page 59077]] importation of new equipment under this exemption is not consistent with the intent of the provision, which is to allow people to move to the United States from another country and continue to use lawn and garden equipment that may already be in their possession. Second, we are allowing such an importation once every five years but are requiring a statement that the person importing the exempted equipment has not used this provision in the preceding five years. The current regulations allow only one importation in a person's lifetime without including any way of making that enforceable. We believe the new combination of provisions represents an appropriate balance between preserving the enforceability of the exemption within the normal flow of personal property for people coming into the country. Third, we are no longer requiring submission of the taxpayer identification number since this is not essential for ensuring compliance. We are applying these changes starting January 1, 2010. C. Final Requirements A key element of the new requirements for Small SI engines is the more stringent exhaust emission standards for nonhandheld engines. We are also finalizing several changes to the certification program that will apply to both handheld and nonhandheld engines. For example, we are clarifying the process for selecting an engine family's useful life, which defines the length of time over which manufacturers are responsible for meeting emission standards. We are also adding several provisions to update the program for allowing manufacturers to use emission credits to show that they meet emission standards. The following sections describe the elements of this rule. The timing for implementation of the new exhaust emission standards is described below. Unless we specify otherwise, all the additional regulatory changes will apply when engines are subject to the emission standards and the other provisions under 40 CFR part 1054. This will be model year 2012 for Class I engines and model year 2011 for Class II engines. For handheld engines, we are generally requiring that manufacturers comply with the provisions of part 1054, including the certification provisions, starting in the 2010 model year. These new requirements apply to handheld engines unless stated otherwise. For convenience we refer to the handheld emission standards in part 1054 as Phase 3 standards even though the numerical values remain unchanged from the Phase 2 standards. (1) Emission Standards Extensive testing and dialogue with manufacturers and other interested parties has led us to a much better understanding of the capabilities and limitations of applying emission control technologies to nonhandheld Small SI engines. As described in the Final RIA, we have collected a wealth of information related to the feasibility, performance characteristics, and safety implications of applying catalyst technology to these engines. We have concluded within the context of Clean Air Act section 213 that it is appropriate to establish emission standards that are consistent with those adopted by California ARB. We are finalizing HC+NOX emission standards of 10.0 g/kW-hr for Class I engines starting in the 2012 model year, and 8.0 g/kW-hr for Class II engines starting in the 2011 model year (see Sec. 1054.105). For both classes of nonhandheld engines we are maintaining the existing CO standard of 610 g/kW-hr. We are eliminating the defined subclasses for the smallest sizes of nonhandheld engines starting with implementation of the Phase 3 standards. Under the current regulations in part 90, Class I-A is designated for engines with displacement below 66 cc that may be used in nonhandheld applications. To address the technological constraints of these engines, all the current requirements for these engines are the same as for handheld engines. Class I-B is similarly designated for engines with displacement between 66 and 100 cc that may be used in nonhandheld applications. These engines are currently subject to a mix of provisions that result in an overall stringency that lies between handheld and nonhandheld engines. We are revising the regulations such that engines at or below 80 cc are subject to the Phase 3 standards for handheld engines and equipment in part 1054 starting in the 2010 model year. We are allowing engines at or below 80 cc to be used without restriction in nonhandheld equipment. The 80 cc threshold aligns with the California ARB program. For nonhandheld engines above 80 cc, we are treating them in every way as Class I engines. Based on the fact that it is more difficult for smaller displacement engines to achieve the same g/kW-hr emission level as larger displacement engines, it will be more of a challenge for manufacturers to achieve a 10.0 g/kW-hr HC+NOX level on these smallest Class I engines. However, for those engines unable to achieve the level of the new standards (either with or without a catalyst), manufacturers may elect to rely on emission credits to comply with emission standards. We believe all manufacturers producing engines formerly included in Class I-B also have a wide enough range of engine models that they will be able to generate sufficient credits to meet standards across the full product line. (See Sec. 1054.101 and Sec. 1054.801.) We are making another slight change to the definition of handheld engines that may affect whether an engine is subject to handheld or nonhandheld standards. The handheld definition relies on a weight threshold for certain engines. As recently as 1999, we affirmed that the regulation should allow for the fact that switching to a heavier four-stroke engine to meet emission standards might inappropriately cause an engine to no longer qualify as a handheld engine (64 FR 5252, February 3, 1999). The regulation accordingly specifies that the weight limit is 20 kilograms for one-person augers and 14 kilograms for other types of equipment, based on the weight of the engine that was in place before applying emission control technologies. We believe it is impractical to base a weight limit on product specifications that have become difficult to establish. We are therefore increasing each of the specified weight limits by two kilograms, representing the approximate additional weight related to switching to a four-stroke engine, and applying the new weight limit to all engines and equipment (see Sec. 1054.801). Finally, we are revising the list of applications identified in the handheld definition as being subject to the handheld standards. We are specifically adding hand-supported jackhammers or rammer/compactor to the handheld definition as we have approved these types of applications in the past as meeting the attributes laid out in the definition. We are removing the ``one-person'' term from the auger description in the handheld definition because some augers can be operated by two people, but still have other attributes that would lead to the equipment being considered handheld. We are also removing the specific mention of pumps and generators from the handheld definition if they are below the specified weight limit. With the change noted earlier that allows manufacturers to use engines below 80cc in either handheld or nonhandheld applications, we believe these applications no longer need to be cited for special treatment in the handheld definition. [[Page 59078]] The regulations in part 90 allow manufacturers to rely on altitude kits to comply with emission requirements at high altitude. We are continuing this approach but are clarifying that all nonhandheld engines must comply with Phase 3 standards without altitude kits at barometric pressures above 94.0 kPa, which corresponds to altitudes up to about 2,000 feet above sea level (see Sec. 1054.115). This will ensure that all areas east of the Rocky Mountains and most of the populated areas in Pacific Coast states will have compliant engines without depending on engine modifications. This becomes increasingly important as we anticipate manufacturers relying on technologies that are sensitive to controlling air-fuel ratio for reducing emissions. Engine manufacturers must identify in the owner's manual the altitude ranges for proper engine performance and emission control that are expected with and without the altitude kit. The owner's manual must also state that operating the engine with the wrong engine configuration at a given altitude may increase its emissions and decrease fuel efficiency and performance. See Section V.E.5 for further discussion related to the deployment of altitude kits where the manufacturers rely on them for operation at higher altitudes. We are adopting a slightly different approach for handheld engines with respect to altitude. Since we are not adopting more stringent exhaust emission standards, we believe it is appropriate to adopt provisions that are consistent with current practice at this time. We are therefore requiring handheld engines to comply with the current standards without altitude kits at barometric pressures above 96.0 kPa, which will allow for testing in most weather conditions at all altitudes up to about 1,100 feet above sea level. Spark-ignition engines used for marine auxiliary power (i.e., marine generator engines) are covered by the same regulations as land- based engines of the same size. However, the marine generator versions of Small SI engines are able to make use of ambient water for enhanced cooling of the engine and exhaust system. Exhaust systems for these engines are water-jacketed to maintain low surface temperatures to minimize the risk of fires on boats, where the generator is often installed in small compartments within the boat. Manufacturers of marine generator engines have recently developed advanced technology in an effort to improve fuel consumption and CO emission controls for marine generators. This advanced technology includes the use of electronic fuel injection and three-way catalysts. As a result, manufacturers are offering new products with more than a 99 percent reduction in CO and have expressed their intent to offer only these advanced-technology engines in the near future. They have stated that these low-CO engines are responsive to market demand. We are establishing a CO standard of 5.0 g/kW-hr CO for marine generator engines to reflect the recent trend in marine generator engine designs (see Sec. 1054.105). We believe this standard is necessary to prevent backsliding in CO emissions that could occur if new manufacturers were to attempt to enter the market with less expensive, high-CO designs. See Section II for a discussion of air quality concerns related to CO emissions. At this time, we are continuing the current regulatory approach for wintertime engines (e.g., engines used exclusively to power equipment such as snowthrowers and ice augers). Under this final rule, the HC+NOX exhaust emission standards will be optional for wintertime engines. However, if a manufacturer chooses to certify its wintertime engines to such standards, those engines will be subject to all the requirements as if the optional standards were mandatory. We are adopting a definition of wintertime engines to clarify which engines qualify for these special provisions. All engines subject to standards must continue to control crankcase emissions. In the case of snowthrower engines, crankcase emissions may be vented to the ambient air as long as manufacturers take crankcase emissions into account in demonstrating compliance with exhaust emission standards. (2) Useful Life The Phase 2 standards for Small SI engines included the concept that manufacturers are responsible for meeting emission standards over a useful life period. The useful life defines the design target for ensuring the durability of emission controls under normal in-use operation for properly maintained engines. Given the very wide range of engine applications, from very low-cost consumer products to commercial models designed for long-term continuous operation, we determined that a single useful life value for all products, which is typical for other engine programs, was not appropriate for Small SI engines. We proposed at that time to determine the useful life for an engine family based on specific criteria, but commenters suggested that such a requirement was overly rigid and unnecessary. The final rule instead specified three alternative useful life values, giving manufacturers the responsibility to select the useful life that was most appropriate for their engines and the corresponding types of equipment. The preamble to the Phase 2 final rule expressed a remaining concern that manufacturers might not select the most appropriate useful life value. This concern related to both ensuring effective in-use emission control and maintaining the integrity of emission-credit calculations. The preamble also stated our intent to periodically review the manufacturers' decisions to determine whether modifications to these rules would be appropriate. The regulations in Sec. 90.105 provide a benchmark for determining the appropriate useful life value for an engine family. The regulations direct manufacturers to select the useful life value that ``most closely approximates the expected useful lives of the equipment into which the engines are anticipated to be installed.'' To maintain a measure of accountability, we included a requirement that manufacturers document the basis for their selected useful life values. The suggested data included, among other things: (1) Surveys of the life spans of the equipment in which the subject engines are installed; (2) engineering evaluations of field-aged engines to ascertain when engine performance deteriorates to the point where utility and/or reliability is impacted to a degree sufficient to necessitate overhaul or replacement; and (3) failure reports from engine customers. These regulatory provisions identify the median time to retirement for in-use equipment as the marker for defining the useful life period. This allows manufacturers to consider that equipment models may fail before the engine has reached the point of failure and that engines may be installed in different types of equipment with varying usage patterns. Engines used in different types of equipment, or even engines used in the same equipment models used by different operators, may experience widely varying usage rates. The manufacturer is expected to make judgments that take this variability into account when estimating the median life of in-use engines and equipment. Several manufacturers have made a good faith effort to select appropriate useful life values for their engine families, either by selecting only the highest value, or by selecting higher values for families that appear more likely to be used in commercial applications. At the same time, we have observed several instances in which engine models are installed in [[Page 59079]] commercial equipment and marketed as long-life products but are certified to the minimum allowable useful life period. After assessing several ideas, we chose to adopt an approach that preserves the fundamental elements of the current provisions related to useful life but clarifies and enhances its implementation (see Sec. 1054.107). Manufacturers will continue to select the most appropriate useful life from the same nominal values to best match the expected in- use lifetime of the equipment into which the engines in the engine family will be installed. Manufacturers must continue to document the information supporting their selected useful life. We are adopting three provisions to address remaining concerns with the process of selecting useful life values. First, for manufacturers not selecting the highest available nominal value for useful life, we expect to routinely review the information to confirm that it complies with the regulation. Where our review indicates that the selected useful life may not be appropriate for an engine family, we may request further justification. If we determine from available information that a longer useful life is appropriate, the manufacturer must either provide additional justification or select a longer useful life for that engine family. We will encourage manufacturers to use the new provisions related to preliminary approval in Sec. 1054.210 if there is any uncertainty related to the useful life selection. We would rather work together early to establish this in the certification process rather than reviewing a completed application for certification to evaluate whether the completed durability demonstration is sufficient. Second, we are modifying the regulations to allow nonhandheld engine manufacturers to select a useful life value that is longer than the three specified nominal values. Manufacturers may choose to do this for the marketing advantage of selling a long-life product or they may want to generate emission credits that correspond to an expected lifetime that is substantially longer than we would otherwise allow. We are allowing manufacturers to select longer useful life values in 100- hour increments, up to 3,000 hours for Class I engines and up to 5,000 hours for Class II engines. Durability testing for certification will need to correspond to the selected useful life period. We have considered the possibility that a manufacturer might overstate an engine family's useful life to generate emission credits while knowing that engines may not operate that long. We believe the inherent testing burden and compliance liability is enough to avoid such a problem, but we are including the specified maximum values corresponding with the applicable useful life for comparable diesel engines or Large SI engines. We are not allowing for longer useful life values for handheld engines. Third, we are requiring that engines and equipment be labeled to identify the applicable useful life period. The current requirement allows manufacturers to identify the useful life with code letters on the engine's emission control information label, with the numerical value of the useful life spelled out in the owner's manual. We believe it is important for equipment manufacturers and consumers to be able to find an unambiguous designation showing the engine manufacturer's expectations about the useful life of the engine. Comments on the proposed rule also indicated an interest in using descriptive terms to identify the useful life on the label. We believe any terminology will communicate less effectively than the numerical value of the useful life, but we will allow manufacturers to use specified descriptive terms in addition to the number of hours. We are also including a provision in the final rule stating that the useful life is defined as a five-year period if the engine has not yet exceeded the specified number of operating hours during that time. This is consistent with our other engine programs. This does not affect the certification process. If we test an in-use engine within the five- year useful life period and there is no clear indication that it has not yet exceeded the specified number of operating hours, it would need to meet applicable emission standards. Conversely, if an engine has not yet exceeded the number of operating hours but the engine is six years old, it is no longer required to meet emission standards. (3) Averaging, Banking, and Trading EPA has included averaging, banking, and trading (ABT) programs in most of the emission control programs for highway and nonroad engines. EPA's existing Phase 2 regulations for Small SI engines include an exhaust ABT program (see 40 CFR 90.201 through 90.211). We are adopting an ABT program for the Phase 3 HC+NOX exhaust emission standards that is similar to the existing program (see part 1054, subpart H). The new exhaust ABT program is intended to enhance the ability of engine manufacturers to meet more stringent emission standards. The exhaust ABT program is also structured to avoid delay of the transition to the new exhaust emission controls. As described in Section VI.D, we are establishing a separate evaporative ABT program for fuel tanks used in Small SI equipment. Credits may not be exchanged between the exhaust ABT program and the evaporative ABT program. The exhaust ABT program has three main components. Averaging means the exchange of emission credits between engine families within a given engine manufacturer's product line for a specific model year. Engine manufacturers divide their product line into ``engine families'' that are comprised of engines expected to have similar emission characteristics throughout their useful life. Averaging allows a manufacturer to certify one or more engine families at levels above the applicable emission standard, but below a set upper limit. This level then becomes the applicable standard for all the engines in that engine family, for purposes of certification, in-use testing, and the like. However, the increased emissions must be offset by one or more engine families within that manufacturer's product line that are certified below the same emission standard, such that the average standard from all the manufacturer's engine families, weighted by engine power, regulatory useful life, and production volume, is at or below the level of the emission standard. Banking means the retention of emission credits by the engine manufacturer for use in averaging or trading for future model years. Trading means the exchange of emission credits between engine manufacturers which can then be used for averaging purposes, banked for future use, or traded to another engine manufacturer. Because we are not adopting any change in the general equation under which emission credits are calculated, EPA is allowing manufacturers to use Phase 2 credits generated under the part 90 ABT program for engines that are certified in the Phase 3 program under part 1054, within the limits described below. Furthermore, even though we are not establishing new exhaust emission standards for handheld engines, the handheld engine regulations are migrating to part 1054. Therefore, handheld engines will be included in the new ABT program under part 1054 with one change in the overall program as described below. Under an ABT program, averaging is allowed only between engine families in the same averaging set, as defined in the [[Page 59080]] regulations. For the exhaust ABT program, we are separating handheld engines and nonhandheld engines into two distinct averaging sets starting with the 2011 model year. Under the new program, credits may generally be used interchangeably between Class I and Class II engine families, with a limited restriction on Phase 3 credits during model years 2011 and 2012 as noted below. Likewise, credits can be used interchangeably between all three handheld engine classes (Classes III, IV, and V). Because the Phase 2 exhaust ABT program allowed exchange across all engine classes (i.e., allowing exchanges between handheld engines and nonhandheld engines), manufacturers using credits beginning with the 2011 model year will need to show that the credits were generated within the allowed category of engines. For many companies, especially those in the handheld market, this will potentially be straightforward since they are primarily in the handheld market. For companies that have a commingled pool of emission credits generated by both handheld engines and nonhandheld engines, this will take more careful accounting. Because manufacturers have been aware of this new requirement since the proposal, keeping records to distinguish handheld credits and nonhandheld credits will be relatively straightforward for 2006 and later model years. We are making two exceptions to the provision restricting credit exchanges between handheld engines and nonhandheld engines. Currently, some companies that are primarily nonhandheld engine manufacturers also sell a limited number of handheld engines. Under the Phase 2 program, these engine manufacturers can use credits from nonhandheld engines to offset the higher emissions of their handheld engines. Because we are not adopting new exhaust requirements for handheld engines, we are addressing this existing practice by specifying that an engine manufacturer may use emission credits from their nonhandheld engines for their handheld engines under certain conditions. Specifically, a manufacturer may use credits from their nonhandheld engines for their handheld engines only where the handheld engine family is certified in 2008 and later model years without any design changes from the 2007 model year and the FEL of the handheld engine family does not increase above the level that applied in the 2007 model year, unless such an increase is based on emission data from production engines. Furthermore, we are limiting the number of handheld engines for which a manufacturer can use emission credits from their nonhandheld engines to 30,000 per year. We believe these provisions allow for engine manufacturers to continue producing these handheld engines for use in existing handheld models of low-volume equipment applications while preventing new high-emitting handheld engine families from entering the market through the use of nonhandheld engine credits. (See Sec. 1054.740.) A second exception to the provision restricting credit exchanges between handheld engines and nonhandheld engines arises because of our handling of engines below 80cc. Under the new Phase 3 program, all engines below 80cc are considered handheld engines for the purposes of the emission standards. However, a few of these engines are used in nonhandheld applications. Therefore, EPA will allow a manufacturer to generate nonhandheld ABT credits from engines below 80cc for those engines a manufacturer has determined are used in nonhandheld applications. (The credits will be generated against the applicable handheld engine standard.) These nonhandheld credits could be used within the Class I and Class II engine classes to demonstrate compliance with the Phase 3 exhaust standards (subject to applicable restrictions). The credits generated by engines below 80cc used in handheld applications could only be used for other handheld engines. (See Sec. 1054.701.) Under an ABT program, a manufacturer establishes a ``family emission limit'' (FEL) for each participating engine family. This FEL may be above or below the standard. The FEL becomes the enforceable emission limit for all the engines in that family for purposes of compliance testing. FELs that are established above the standard may not exceed an upper limit specified in the ABT regulations. For nonhandheld engines we are establishing FEL caps to prevent the sale of very high-emitting engines. Under the new FEL caps, manufacturers will need to establish FELs at or below the levels of the Phase 2 HC+NOX emission standards of 16.1 g/kW-hr for Class I engines and 12.1 g/kW-hr for Class II engines. (The Phase 3 FEL cap for Class I engines with a displacement between 80 cc and 100 cc will be 40.0 g/kW-hr since these engines were Class I-B engines under the Phase 2 regulations and subject to this higher level.) For handheld engines, where we are not adopting new exhaust emission standards, we are maintaining the FEL caps as currently specified in the part 90 ABT regulations. For nonhandheld engines we are adding two special provisions related to the transition from Phase 2 to Phase 3 standards in Sec. 1054.740. First, we are providing incentives for manufacturers to produce and sell engines certified at or below the Phase 3 standards before the standards are scheduled to be implemented. Second, we are establishing provisions to allow the use of Phase 2 credits for a limited time under specific conditions. The following discussions describe each of these provisions in more detail for Class I engines and Class II engines separately. For Class I engines, engine manufacturers can generate early Phase 3 credits by producing engines with an FEL at or below 10.0 g/kW-hr prior to 2012. These early Phase 3 credits will be calculated and categorized into two distinct types of credits, Transitional Phase 3 credits and Enduring Phase 3 credits. For engines certified with an FEL at or below 10.0 g/kW-hr, the manufacturer will earn Transitional Phase 3 credits. The Transitional Phase 3 credits will be calculated based on the difference between 10.0 g/kW-hr and 15.0 g/kW-hr. (The 15.0 g/kW-hr level is the production-weighted average of Class I FEL values under the Phase 2 program.) Manufacturers could use the Transitional Phase 3 credits from Class I engines in 2012 through 2014 model years. For engines certified with an FEL below 10.0 g/kW-hr, manufacturers will earn Enduring Phase 3 credits in addition to the Transitional Phase 3 credits described above. The Enduring Phase 3 credits will be calculated based on the difference between the FEL for the engine family and 10.0 g/kW-hr (i.e., the applicable Phase 3 standard). The Enduring Phase 3 credits could be used once the Phase 3 standards are implemented without the model year restriction noted above for Transitional Phase 3 credits. Engine manufacturers may certify their Class I engines using Phase 2 credits generated by Class I or Class II engines for the first two years of the Phase 3 standards (i.e., model years 2012 and 2013) under certain conditions. The manufacturer must first use all of its available transitional Phase 3 credits to demonstrate compliance with the Phase 3 standards, subject to the cross-class credit restriction noted below which applies prior to model year 2013. If these Transitional Phase 3 credits are sufficient to demonstrate compliance, the manufacturer may not use Phase 2 credits. If these Transitional Phase 3 credits are insufficient to [[Page 59081]] demonstrate compliance, the manufacturer could use Phase 2 credits to a limited degree (under the conditions described below) to cover the remaining amount of credits needed to demonstrate compliance. If manufacturers still need credits to demonstrate compliance, they may then use their remaining Phase 3 credits (i.e., their Enduring Phase 3 credits or any other Phase 3 credits generated in 2012 or 2013, subject to the cross-class credit restriction noted below which applies prior to model year 2013). The maximum number of Phase 2 HC+NOX exhaust emission credits that manufacturers could use for their Class I engines will be calculated based on the characteristics of Class I engines produced during the 2007, 2008, and 2009 model years. For each of those years, the manufacturer will calculate a Phase 2 credit allowance using the ABT credit equation and inserting 1.6 g/kW-hr for the ``Standard--FEL'' term, and basing the rest of the values on the total production of Class I engines, the production-weighted power for all Class I engines, and production-weighted useful life value for all Class I engines produced in each of those years. Manufacturers will not include their wintertime engines in the calculations unless the engines are certified to meet the otherwise applicable HC+NOX emission standard. The maximum number of Phase 2 HC+NOX exhaust emission credits a manufacturer could use for their Class I engines (calculated in kilograms) will be the average of the three values calculated for model years 2007, 2008, and 2009. The calculation described above allows a manufacturer to use Phase 2 credits to cover a cumulative shortfall over the first two years for their Class I engines of 1.6 g/ kW-hr above the Phase 3 standard. The Phase 2 credit allowance for Class I engines could be used all in 2012, all in 2013, or partially in either or both model year's ABT compliance calculations. Because ABT compliance calculations must be done annually, the manufacturer will know its 2013 remaining allowance based on its 2012 calculation. For example, if a manufacturer uses all of its Phase 2 credit allowance in 2012, it will have no use of Phase 2 credits for 2013. Conversely, if a manufacturer doesn't use any Phase 2 credits in 2012, it will have all of its Phase 2 credit allowance available for use in 2013. If a manufacturer uses less than its calculated total credits based on the 1.6 g/kW-hr limit in 2012, the remainder will be available for use in 2013. This provision allows for limited use of Phase 2 emission credits to address the possibility of unanticipated challenges in reaching the Phase 3 emission levels in some cases or selling Phase 3 compliant engines early nationwide, without creating a situation that will allow manufacturers to substantially delay the introduction of Phase 3 emission controls. For Class II engines, engine manufacturers could generate early Phase 3 credits by producing engines with an FEL at or below 8.0 g/kW- hr prior to 2011. These early Phase 3 credits will be calculated and categorized as Transitional Phase 3 credits and Enduring Phase 3 credits. For engines certified with an FEL at or below 8.0 g/kW-hr, the manufacturer will earn Transitional Phase 3 credits. The Transitional Phase 3 credits will be calculated based on the difference between 8.0 g/kW-hr and 11.0 g/kW-hr. (The 11.0 g/kW-hr level is the production- weighted average of Class II FEL values under the Phase 2 program.) Manufacturers could use the Transitional Phase 3 credits from Class II engines in 2011 through 2013 model years. For engines certified with an FEL below 8.0 g/kW-hr, manufacturers will earn Enduring Phase 3 credits in addition to the Transitional Phase 3 credits described above. The Enduring Phase 3 credits will be calculated based on the difference between the FEL for the engine family and 8.0 g/kW-hr (i.e., the applicable Phase 3 standard). The Enduring Phase 3 credits could be used once the Phase 3 standards are implemented without the model year restriction noted above for Transitional Phase 3 credits. Engine manufacturers may certify their Class II engines using Phase 2 credits generated by Class I or Class II engines for the first three years of the Phase 3 standards (i.e., model years 2011, 2012 and 2013) under certain conditions. The manufacturer must first use all of its transitional Phase 3 credits to demonstrate compliance with the Phase 3 standards, subject to the cross-class credit restriction noted below which applies prior to model year 2013. If these Transitional credits are sufficient to demonstrate compliance, the manufacturer may not use Phase 2 credits. If these Transitional Phase 3 credits are insufficient to demonstrate compliance, the manufacturer could use Phase 2 credits to a limited degree (under the conditions described below) to cover the remaining amount of credits needed to demonstrate compliance. If the manufacturer still needs credits to demonstrate compliance, they may then use their remaining Phase 3 credits (i.e., their Enduring Phase 3 credits or any other Phase 3 credits generated in 2011, 2012, or 2013, subject to the cross-class credit restriction noted below which applies prior to model year 2013). The maximum number of Phase 2 HC+NOX exhaust emission credits a manufacturer could use for their Class II engines will be calculated based on the characteristics of Class II engines produced during the 2007, 2008, and 2009 model years. For each of those years, the manufacturer will calculate a Phase 2 credit allowance using the ABT credit equation and inserting 2.1 g/kW-hr for the ``Standard--FEL'' term, and basing the rest of the values on the total production of Class II engines, the production-weighted power for all Class II engines, and production-weighted useful life value for all Class II engines produced in each of those years. Manufacturers will not include their wintertime engines in the calculations unless the engines are certified to meet the otherwise applicable HC+NOX emission standard. The maximum number of Phase 2 HC+NOX exhaust emission credits a manufacturer could use for their Class II engines (calculated in kilograms) will be the average of the three values calculated for model years 2007, 2008, and 2009. The calculation described above allows a manufacturer to use Phase 2 credits to cover a cumulative shortfall over the first three years for their Class II engines of 2.1 g/kW-hr above the Phase 3 standard. The Phase 2 credit allowance for Class II engines could be used all in 2011, all in 2012, all in 2013, or partially in any or all three model year's ABT compliance calculations. Because ABT compliance calculations must be done annually, the manufacturer will know its remaining allowance based on its previous calculations. For example, if a manufacturer uses all of its Phase 2 credit allowance in 2011, it will have no Phase 2 credits for 2012 or 2013. However, if a manufacturer uses less than its calculated total credits based on the 2.1 g/kW-hr limit in 2011, it will have the remainder of its allowance available for use in 2012 and 2013. This provision allows for some use of Phase 2 emission credits to address the possibility of unanticipated challenges in reaching the Phase 3 emission levels in some cases or selling Phase 3 engines nationwide, without creating a situation that will allow manufacturers to substantially delay the introduction of Phase 3 emission controls. To avoid the use of credits to delay the introduction of Phase 3 technologies, we are also not allowing manufacturers to use Phase 3 credits from Class I engines to demonstrate compliance with Class II engines in the 2011 and 2012 model years. Similarly, [[Page 59082]] we are not allowing manufacturers to use Phase 3 credits from Class II engines to demonstrate compliance with Class I engines in the 2012 model year. The 1.6 kW-hr and 2.1 g/kW-hr allowances discussed above may not be exchanged across engine classes or traded among manufacturers. We are making one additional adjustment related to the exhaust ABT program for engines subject to the new emission standards. We are adopting a requirement that lowering an FEL after the start of production may occur only if the manufacturer has emission data from production engines justifying the lower FEL (see Sec. 1054.225). This prevents manufacturers from making FEL changes late in the model year to generate more emission credits (or use fewer emission credits) when there is little or no opportunity to verify whether the revised FEL is appropriate for the engine family. This provision is common in EPA's emission control programs for other engine categories. We are also requiring that any revised FEL can apply only for engines produced after the FEL change. This is necessary to prevent manufacturers from recalculating emission credits in a way that leaves no way of verifying that the engines produced prior to the FEL change met the applicable requirements. As described below in Section V.E.3, we are allowing equipment manufacturers to install a limited number of Class II engines, certified by engine manufacturers with a catalyst as Phase 3 engines, into equipment without the catalyst. (This is only allowed when the engine is shipped separately from the exhaust system under the provisions described in Section V.E.2.) Because engine manufacturers may be generating emission credits from these engines based on the use of a catalyst, EPA is concerned that engine manufacturers could be earning exhaust ABT credits for engines that are sold but never have the catalyst installed. Therefore, EPA believes it is appropriate to adjust such credits to account for the fact that equipment manufacturers may in many cases legally install a non-catalyzed muffler on an engine that is part of a family whose certification depends on the use of a catalyst. Therefore, EPA is adopting a 0.9 adjustment factor for calculating credits for engine families that are available under the delegated assembly provisions and are also participating in the TPEM program. In addition, EPA is including an option that will allow engine manufacturers to track the final configuration of the engines to determine the actual number of engines that were downgraded under the TPEM program. A manufacturer would need to track sales for all the equipment manufacturers purchasing the given engine family. The engine manufacturer could use the resulting number of engines that were not downgraded in its calculation of ABT credits for that specific engine family. Engine manufacturers may specifically direct equipment manufacturers not to participate in the TPEM program for certain engine models, which would allow for a more straightforward accounting of the number of engines that are downgraded under the TPEM program. For all emission credits generated by engines under the Phase 3 exhaust ABT program, we are allowing an indefinite credit life. We consider these emission credits to be part of the overall program for complying with Phase 3 standards. Given that we may consider further reductions beyond these standards in the future, we believe it will be important to assess the ABT credit situation that exists at the time any further standards are considered. Emission credit balances will be part of the analysis for determining the appropriate level and timing of new standards, consistent with the statutory requirement to establish standards that represent the greatest degree of emission reduction achievable, considering cost, safety, lead time, and other factors. If we were to allow the use of Phase 3 credits to meet future standards, we may need to adopt emission standards at more stringent levels or with an earlier start date than we would absent the continued (or limited) use of Phase 3 credits, depending on the level of Phase 3 credit banks. Alternatively, we could adopt future standards without allowing the use of Phase 3 credits. The final requirements in this rulemaking describe a middle path in which we allow the use of Phase 2 credits to meet the Phase 3 standards, with provisions that limit the extent and timing of using these credits. Finally, manufacturers may include as part of their federal credit calculation the sales of engines in California as long as they don't separately account for those emission credits under the California regulations. We originally proposed to exclude engines sold in California which are subject to the California ABR standards. However, we consider California's current HC+NOX standards to be equivalent to those we are adopting in this rulemaking, so we would expect a widespread practice of producing and marketing 50-state products. Therefore, as long as a manufacturer is not generating credits under California's averaging program for small engines, we would allow manufacturers to count those engines when calculating credits under EPA's program. This is consistent with how EPA allows credits to be calculated in other nonroad sectors, such as recreational vehicles. D. Testing Provisions The test procedures provide an objective measurement for establishing whether engines comply with emission standards. The following sections describe a variety of changes to the current test procedures. Except as identified in the following sections, we are preserving the testing-related regulatory provisions that currently apply under 40 CFR part 90 for Phase 2 engines. Note that there is no presumption that any previous approvals, guidance, or judgments related to alternatives, deviations, or interpretations of the testing requirements under the Phase 1 or Phase 2 program will continue to apply; any decisions on such issues will be handled going forward on a case-by-case basis. (1) Migrating Procedures to 40 CFR Part 1065 Manufacturers have been using the procedures in 40 CFR part 90 to test their engines for certification of Phase 1 and Phase 2 engines. As part of a much broader effort, we have adopted comprehensive testing specifications in 40 CFR part 1065 that are intended to serve as the basis for testing all types of engines. The procedures in part 1065 include updated information reflecting the current state of available technology. We are applying the procedures in part 1065 to nonhandheld engines starting with new certification testing in 2013 and later model years as specified in 40 CFR part 1054, subpart F. The procedures in part 1065 identify new types of analyzers and update a wide range of testing specifications, but leave intact the fundamental approach for measuring exhaust emissions. There is no need to shift to the part 1065 procedures for nonhandheld engines before 2013. This allows manufacturers time to make any necessary adjustments or upgrades in their lab equipment and procedures. While any new certification testing for nonhandheld engines will be subject to the part 1065 procedures starting in model year 2013, manufacturers will be allowed to continue certifying nonhandheld engines using carryover data generated under the part 90 procedures. We are not setting new exhaust emission standards for handheld engines so there is no natural point in [[Continued on page 59083]]