[Federal Register: October 5, 2001 (Volume 66, Number 194)]
[Proposed Rules]               
[Page 51147-51196]
From the Federal Register Online via GPO Access [wais.access.gpo.gov]
[DOCID:fr05oc01-54]                         
 
[[pp. 51147-51196]] Control of Emissions From Nonroad Large Spark Ignition Engines 
and Recreational Engines (Marine and Land-Based)

[[Continued from page 51146]]

[[Page 51147]]

pose a challenge, but one that is feasible taking into consideration 
the availability and cost of technology, time, noise, energy, and 
safety.

VI. Recreational Vehicles and Engines

A. Overview

    This section applies to recreational vehicles. We are proposing to 
set new emission standards for snowmobiles, off-highway motorcycles, 
and all-terrain vehicles (ATVs). The engines used in these vehicles are 
a subset of nonroad SI engines.\137\ In our program to set standards 
for nonroad SI engines below 19 kW (Small SI), we excluded recreational 
vehicles because they have different design characteristics and usage 
patterns than certain other engines in the Small SI category. For 
example, engines typically found in the Small SI category are used in 
lawn mowers, chainsaws, trimmers, and other lawn and garden 
applications. These engines tend to have low power outputs and operate 
at constant loads and speeds, whereas recreational vehicles can have 
high power outputs with highly variable engine loads and speeds. This 
suggests that these engines should be tested differently than Small SI 
engines. In the same way, we are proposing to treat snowmobiles, off-
highway motorcycles, and ATVs separately from our Large SI engine 
program, which is described in Section IV. For recreational vehicles 
that are not snowmobiles, off-highway motorcycles, or ATVs, we propose 
to apply the standards otherwise applicable to nonroad SI engines (see 
Section VI.B.2).
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    \137\ Almost all recreational vehicles are equipped with SI 
engines. Any diesel engines used in these applications must meet our 
emission standards for nonroad diesel engines.
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    We are proposing emission standards for hydrocarbons (HC), and 
carbon monoxide (CO) from all recreational vehicles and NOX 
from off-highway motorcycles and ATVs. Many of these vehicles use two-
stroke engines which emit high levels of HC and CO. We believe that 
vehicle and engine manufacturers will be able to use technology already 
established for other types of engines, such as highway motorcycles, 
small spark-ignition engines, and marine engines, to meet these near-
term standards. To encourage the introduction of low-emission 
technology such as catalytic control and the conversion from two-stroke 
to four-stroke engines, we are also proposing a Voluntary Low Emission 
Standards program. We also recognize that there are many small 
businesses that manufacture recreational vehicles; we are therefore 
proposing several regulatory special compliance provisions to reduce 
the burden of emission regulations on small businesses.
1. What Are Recreational Vehicles and Who Makes Them?
    We are proposing to adopt new emission standards for off-highway 
motorcycles, all-terrain vehicles (ATVs), and snowmobiles. Eight 
manufacturers dominate the sales of these recreational vehicles. Of 
these eight manufacturers, seven of them manufacture a combination of 
two or more of the three main types of recreational vehicles. For 
example, there are four companies that manufacture both off-highway 
motorcycles and ATVs. There are three companies that manufacture ATVs 
and snowmobiles; one company manufactures all three. These eight 
companies represent approximately 95 percent of all domestic sales of 
recreational vehicles.
    a. Off-highway motorcycles. Motorcycles come in a variety of 
configurations and styles. For the most part, however, they are two-
wheeled, self-powered vehicles. Off-highway motorcycles are similar in 
appearance to highway motorcycles, but there are several important 
distinctions between the two types of machines. Off-highway motorcycles 
are not street-legal and are primarily operated on public and private 
lands over trails and open areas. Off-highway motorcycles tend to be 
much smaller, lighter and more maneuverable than their larger highway 
counterparts. They are equipped with relatively small-displacement 
single-cylinder two-or four-stroke engines ranging from 48 to 650 cubic 
centimeters (cc). The exhaust systems for off-highway motorcycles are 
distinctively routed high on the frame to prevent damage from brush, 
rocks, and water. Off-highway motorcycles are designed to be operated 
over varying surfaces, such as dirt, sand, or mud, and are equipped 
with knobby tires to give better traction in off-road conditions. 
Unlike highway motorcycles, off-highway motorcycles have fenders 
mounted far from the wheels and closer to the rider to keep dirt and 
mud from spraying the rider and clogging between the fender and tire. 
Off-highway motorcycles are also equipped with more advanced suspension 
systems than those for highway motorcycles. This allows the operator to 
ride over obstacles and make jumps safely.
    Five companies dominate sales of off-highway motorcycles. They are 
long-established, large corporations that manufacture several different 
products including highway and off-highway motorcycles. These five 
companies account for 90 to 95 percent of all domestic sales of off-
highway motorcycles. There are also several relatively small companies 
that manufacture off-highway motorcycles, many of which specialize in 
racing or competition machines.
    b. All-terrain vehicles. ATVs have been in existence for a long 
time, but have become increasingly popular over the last 25 years. Some 
of the earliest and most popular ATVs were three-wheeled off-highway 
models with large balloon tires. Due to safety concerns, the three-
wheeled ATVs were phased-out in the mid-1980s and replaced by the 
current and more popular four-wheeled vehicle known as ``quad runners'' 
or simply ``quads.'' Quads resemble the earlier three-wheeled ATVs 
except that the single front wheel was replaced with two wheels 
controlled by a steering system. The ATV steering system uses 
motorcycle handlebars, but otherwise looks and operates like an 
automotive design. The operator sits on and rides the quad much like a 
motorcycle. The engines used in quads tend to be very similar to those 
used in off-highway motorcycles--relatively small, single-cylinder two- 
or four-stroke engines. Quads are typically divided into utility and 
sport models. The utility quads are designed for recreational use but 
have the ability to perform many utility functions, such as plowing 
snow, tilling gardens, and mowing lawns. They are typically heavier and 
equipped with relatively large four-stroke engines and automatic 
transmissions with a reverse gear. Sport quads are smaller and designed 
primarily for recreational purposes. They are equipped with two-or 
four-stroke engines and manual transmissions.
    There are two other less common types of ATVs, both of which are 
six-wheeled models. One looks similar to a large golf cart with a bed 
for hauling cargo, much like a pick-up truck. These ATVs are typically 
manufactured by the same companies that make quad runners and use 
similar engines. The other can operate both in water and on land. These 
amphibious ATVs typically have small gasoline-powered engines similar 
to those found in lawn and garden tractors, rather than the motorcycle 
engines used in quads, though some use automotive-based Large SI 
engines.
    Of all of the types of recreational vehicles, ATVs have the largest 
number of major manufacturers. All but one of the companies noted above 
for off-highway motorcycles and snowmobiles are significant ATV 
producers. These seven companies represent over 95

[[Page 51148]]

percent of total domestic ATV sales. The remaining 5 percent of sales 
come from importers, which tend to import less expensive, youth-
oriented ATVs.
    c. Snowmobiles. Snowmobiles, also referred to as ``sleds,'' are 
tracked vehicles designed to operate over snow. Snowmobiles have some 
similarities to off-highway motorcycles and ATVs. A snowmobile rider 
sits on and rides a snowmobile similar to an ATV. Snowmobiles use high-
powered two- and three-cylinder two-stroke engines that look similar to 
off-highway motorcycle engines. Rather than wheels, snowmobiles are 
propelled by a track system similar to what is used on a bulldozer. The 
snowmobile is steered by two skis at the front of the sled. Snowmobiles 
use handlebars similar to off-highway motorcycles and ATVs. The typical 
snowmobile seats two riders comfortably. Over the years, snowmobile 
performance has steadily increased to the point that many snowmobiles 
currently have engines over 100 horsepower and are capable of exceeding 
100 miles per hour. The proposed definition for snowmobiles includes a 
limit of 1.5-meter width to differentiate conventional snowmobiles from 
ice-grooming machines and snow coaches, which use very different 
engines. We request comment on this definition and on any other 
approaches to differentiate these products.
    There are four major snowmobile manufacturers, accounting for more 
than 99 percent of all domestic sales. The remaining sales come from 
very small manufacturers who tend to specialize in expensive, high-
performance designs.
    d. Other recreational vehicles. Currently, our Small SI nonroad 
engine regulations cover all recreational engines that are under 19 kW 
(25 hp) and have either an installed speed governor or a maximum engine 
speed less than 5,000 rpm. Recreational vehicles currently covered by 
the Small SI standards include go-carts, golf carts, and small mini-
bikes. Although some off-highway motorcycles, ATVs and snowmobiles have 
engines with rated horsepower less than 19 kW, they all have maximum 
engine speeds greater than 5,000 rpm. Thus they have not been included 
in the Small SI regulations. The only other types of small recreational 
engines not covered by the Small SI rule are those engines under 19 kW 
that aren't governed and have maximum engine speed of at least 5,000 
rpm. There are relatively few such vehicles with recreational engines 
not covered by the Small SI regulations. The best example of vehicles 
that fit in this category are scooters and skateboards that are powered 
by very small gasoline spark-ignition engines. The engines used on 
these vehicles are typically the same as those used in string trimmers 
or other lawn and garden equipment, which are covered under the Small 
SI regulations. Because these engines are generally already covered by 
the Small SI regulations and are the same as, or very similar to, 
engines as those used in lawn and garden applications, we are proposing 
to revise the Small SI rules to cover these engines under the Small SI 
regulations. To avoid any problems in transitioning to meet emission 
standards, we propose to apply these standards in 2006. We request 
comments on these issues.
2. What Is the Regulatory History for Recreational Vehicles?
    California ARB established standards for off-highway motorcycles 
and ATVs, which took effect in January 1997 (1999 for vehicles with 
engines of 90 cc or less). California has not adopted standards for 
snowmobiles. The standards, shown in Table VI.A-1, are based on the 
highway motorcycle chassis test procedures. Manufacturers may certify 
ATVs to optional standards, also shown in Table VI.A-1, which are based 
on the utility engine test procedure.\138\ This is the test procedure 
over which Small SI engines are tested. The stringency level of the 
standards was based on the emission performance of 4-stroke engines and 
advanced 2-stroke engines with a catalytic converter. California ARB 
anticipated that the standards would be met initially through the use 
of high performance 4-stroke engines.
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    \138\ Notice of Off-Highway Recreational Vehicle Manufacturers 
and All Other Interested Parties Regarding Alternate Emission 
Standards for All-Terrain Vehicles, Mail Out #95-16, April 28, 1995, 
California ARB (Docket A-2000-01, document II-D-06).

 Table VI.A-1.--California Off-highway Motorcycle and ATV Standards for
                        Model Year 1997 and later
             [1999 and later for engines at or below 90 cc]
------------------------------------------------------------------------
                                                        HC   NOX  CO  PM
------------------------------------------------------------------------
Off-highway motorcycle and ATV standards (g/km).....  \a\ 1  ...  15  ..
                                                         .2

------------------------------------------------------------------------
                                                          HC +
                                                          NOX     CO  PM
------------------------------------------------------------------------
Optional standards for ATV engines below 225 cc (g/bhp-  \a\12.  300  ..
 hr)..................................................        0
Optional standards for ATV engines at or above 225 cc    \a\10.  300  ..
 (g/bhp-hr)...........................................        0
------------------------------------------------------------------------
\a\ Corporate-average standard.

    California revisited the program because a lack of certified 
product from manufacturers was reportedly creating economic hardship 
for dealerships. The number of certified off-highway motorcycle models 
was particularly inadequate.\139\ In 1998, California revised the 
program, allowing the use of uncertified products in off-highway 
vehicle recreation areas with regional/seasonal use restrictions. 
Currently, noncomplying vehicles may be sold in California and used in 
attainment areas year-round and in nonattainment areas during months 
when exceedances of the state ozone standard are not expected. For 
enforcement purposes, certified and uncertified products are identified 
with green and red stickers, respectively. Only about one-third of off-
highway motorcycles selling in California are certified. All certified 
products have 4-stroke engines.
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    \139\ Initial Statement of Reasons, Public Hearing to Consider 
Amendments to the California Regulations for New 1997 and Later Off-
highway Recreational Vehicles and Engines, California ARB, October 
23, 1998 (Docket A-2000-01, document II-D-08).
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B. Engines Covered by This Proposal

    We are proposing new emission standards for all new off-highway 
motorcycles, all-terrain vehicles (ATVs), and snowmobiles. We are also 
proposing to apply existing Small SI emission standards to other 
recreational vehicles, as described above. The engines used in these 
vehicles tend to be small, air-or liquid-cooled, reciprocating Otto-
cycle engines that operate on gasoline.\140\ With the exception of what 
we define as ``other recreational vehicles,'' these engines are 
designed to be used in vehicles, where engine performance is 
characterized by highly transient operation, with a wide range of 
engine speed and load capability. Maximum engine speed is typically 
well above 5,000 rpm. Also, with the exception of snowmobiles, the 
vehicles are typically equipped with transmissions rather than torque 
converters to ensure performance under a variety of operating 
conditions.\141\
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    \140\ Otto cycle is another name for a spark-ignition engine 
which utilizes a piston with homogeneous external or internal air 
and fuel mixture formation and spark ignition.
    \141\ Snowmobiles use continuously variable transmissions, which 
tend to operate like torque converters.

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[[Page 51149]]

1. Two-Stroke vs. Four-Stroke Engines
    The engines used by recreational vehicles can be separated into two 
distinct designs: two-stroke and four-stroke. The distinction between 
two-stroke and four-stroke engines is important for emissions because 
two-stroke engines tend to emit much greater amounts of unburned 
hydrocarbons (HC) and particulate matter (PM) than four-stroke engines 
of similar size and power. Two-stroke engines also have greater fuel 
consumption than four-stroke engines, but they also tend to have higher 
power output per-unit displacement, lighter weight, and better cold-
starting performance. These advantages, combined with a simple design 
and lower manufacturing costs, tend to make two-stroke engines popular 
as a power unit for recreational vehicles. With the exception of a few 
youth models, almost all snowmobiles use two-stroke engines. Currently, 
about 63 percent of all off-highway motorcycles (predominantly in high 
performance, youth, and entry-level bikes) and 20 percent of all ATVs 
sold in the United States use two-stroke engines.
    The basis for the differences in engine performance and exhaust 
emissions between two-stroke and four-stroke engines can be found in 
the fundamental differences in how two-stroke and four-stroke engines 
operate. Four-stroke operation takes place in four distinct steps: 
intake, compression, power, and exhaust. Each step corresponds to one 
up or down stroke of the piston or 180 deg. of crankshaft rotation. The 
first step of the cycle is for an intake valve in the combustion 
chamber to open during the intake stroke, allowing a mixture of air and 
fuel to be drawn into the cylinder while the piston moves down the 
cylinder. The intake valve then closes and the momentum of the 
crankshaft causes the piston to move back up the cylinder, compressing 
the air and fuel mixture. At the very end of the compression stroke, 
the air and fuel mixture is ignited by a spark from a spark plug and 
begins to burn. As the air and fuel mixture burns, increasing 
temperature and pressure cause the piston to move back down the 
cylinder. This is referred to as the ``power'' stroke. At the bottom of 
the power stroke, an exhaust valve opens in the combustion chamber and 
as the piston moves back up the cylinder, the burnt gases are pushed 
out through the exhaust valve to the exhaust manifold, and the cycle is 
complete.
    In a four-stroke engine, combustion and the resulting power stroke 
occur only once every two revolutions of the crankshaft. In a two-
stroke engine, combustion occurs every revolution of the crankshaft. 
Two-stroke engines eliminate the intake and exhaust strokes, leaving 
only compression and power strokes. This is due to the fact that two-
stroke engines do not use intake and exhaust valves. Instead, they have 
intake and exhaust ports in the sides of the cylinder walls. With a 
two-stroke engine, as the piston approaches the bottom of the power 
stroke, it uncovers exhaust ports in the wall of the cylinder. The high 
pressure combustion gases blow into the exhaust manifold. As the piston 
gets closer to the bottom of the power stroke, the intake ports are 
uncovered, and fresh mixture of air and fuel are forced into the 
cylinder while the exhaust ports are still open. Exhaust gas is 
``scavenged'' or forced into the exhaust by the pressure of the 
incoming charge of fresh air and fuel. In the process, however, some 
mixing between the exhaust gas and the fresh charge of air and fuel 
takes place, so that some of the fresh charge is also emitted in the 
exhaust. Losing part of the fuel out of the exhaust during scavenging 
causes very high hydrocarbon emission characteristics of two-stroke 
engines. The other major reason for high HC emissions from two-stroke 
engines is their tendency to misfire under low-load conditions due to 
greater combustion instability.
2. Applicability of Small SI Regulations
    In our regulations for Small SI engines, we established criteria, 
such as rated engine speed at or above 5,000 rpm and the use of a speed 
governor, that excluded engines used in certain types of recreational 
vehicles (see 40 CFR Sec. 90.1(b)(5)). Engines used in some other types 
of recreational vehicles may be covered by the Small SI standards, 
depending on the characteristics of the engines. For example, 
lawnmower-type engines used in go carts would typically be covered by 
the Small SI standards because they don't operate above 5000 rpm. 
Similarly, engines used in golf carts are also included in the Small SI 
program. As discussed above, we are proposing to revise the Small SI 
regulations to include all recreational engines except those in off-
highway motorcycles, ATVs, snowmobiles, and hobby engines. We are 
proposing to remove the 5,000 rpm and speed governor criteria from the 
applicability provisions of the Small SI regulations.
    There may, however, be instances where an ATV, off-road motorcycle, 
or snowmobile manufacturer currently uses a certified small utility 
engine in their vehicle, and could be required to recertify that engine 
to the recreational vehicle standards in the future. Relatively slow-
moving amphibious ATVs would be one example where certified small 
utility engines may be used. We request comment on whether or not we 
should allow off-road motorcycles, ATVs, and snowmobiles to be 
certified to the Small SI standards in cases where a manufacturer has 
chosen to use a certified small utility engine. We also request comment 
on retaining the 5,000-rpm rated speed criteria for determining the 
applicability of the Small SI standards for snowmobiles, ATVs, and off-
road motorcycles. Further, we request comment and information on any 
vehicles that currently have an engine certified to Small SI standards 
which would be required to certify to the recreational vehicle 
standards due to this regulatory change.
3. Hobby Engines
    The Small SI rule categorized SI engines used in model cars, boats, 
and airplanes as recreational engines and exempted them from the Small 
SI program.\142\ We continue to believe that it would be inappropriate 
to include hobby engines in the Small SI program because of significant 
engine design and use differences. At this time, we also believe that 
hobby engines are substantially different than engines used in 
recreational vehicles and, as discussed below, we are not proposing to 
include SI hobby engines in this proposal.
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    \142\ 65 FR 24929, April 25, 2000.
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    There are about 8,000 spark-ignition engines sold per year for use 
in scale-model aircraft, cars, and boats.\143\ This is a very small 
subsection of the overall model engine market, most of which are glow-
plug engines that run on a mix of castor oil, methyl alcohol, and nitro 
methane.\144\ A typical SI hobby engine is approximately 25 cc with a 
horsepower rating of about 1-3 hp, though larger engines are available. 
These SI engines are specialty products sold in very low volumes, 
usually not more than a few hundred units per engine line annually. 
Many of the engines are used in model airplanes, but they are also used 
in other types of models such as cars and boats. These engines, 
especially the larger

[[Page 51150]]

displacement models, are frequently used in competitive events by more 
experienced operators. The racing engines sometimes run on methanol 
instead of gasoline. In addition, the engines are usually installed and 
adjusted by the hobbyist who selects an engine that best fits the 
particular model being constructed.
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    \143\ Comments submitted by Hobbico on behalf of Great Plains 
Model Distributors and Radio Control Hobby Trade Association, 
February 5, 2001, Docket A-2000-01, document II-D-58.
    \144\ Glow plug hobby engines are considered compression 
ignition engines (diesel) because they lack a spark ignition system 
and throttle (see definition of compression ignition, 40 CFR 
Sec. 89.2). The nonroad diesel engine regulations (40 CFR Sec. 89.2) 
do not apply to hobby engines and therefore these engines are 
unregulated.
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    The average annual hours of operation has been estimated to be 
about 12.2 hours per year.\145\ The usage rate is very low compared to 
other recreational or utility engine applications due to the nature of 
their use. Much of the hobby revolves around building the model and 
preparing the model for operation. The engine and model must be 
adjusted, maintained, and repaired between uses.
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    \145\ Comments submitted by Hobbico on behalf of Great Plains 
Model Distributors and Radio Control Hobby Trade Association, 
February 5, 2001, Docket A-2000-01, document II-D-58.
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    SI model engines are highly specialized and differ significantly in 
design compared to engines used in other recreational or utility engine 
applications. While some of the basic components such as pistons may be 
the similar, the materials, airflow, cooling, and fuel delivery systems 
are considerably different.\146\ \147\ Some SI model engines are scale 
replicas of multi-cylinder aircraft or automobile engines and are 
fundamentally different than SI engines used in other applications. 
Model-engine manufacturers often select lighter-weight materials and 
simplified designs to keep engine weight down, often at the expense of 
engine longevity. Hobby engines use special ignition systems designed 
specifically for the application to be lighter than those used in other 
applications. To save weight, hobby engines typically lack pull 
starters that are found on other engines. Hobby engines must be started 
by spinning the propeller. In addition, the models themselves vary 
significantly in their design, introducing packaging issues for engine 
manufacturers.
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    \146\ E-mail from Carl Maroney of the Academy of Model 
Aeronautics to Christopher Lieske, of EPA, June 4, 2001, Docket A-
2000-01, document II-G-144.
    \147\ Comments submitted by Hobbico on Behalf of Great Plains 
Model Distributors and Radio Control Hobby Trade Association, 
February 5, 2001, Docket A-2000-01, document II-D-58.
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    We are not proposing to include SI hobby engines in the 
recreational vehicles program at this time. The engines differ 
significantly from the recreational engines included in the proposal in 
their design and use, as noted above. Emission-control strategies 
envisioned for other recreational vehicles may not be well suited for 
hobby engines because of their design, weight constraints, and 
packaging limitations. Approaches such as using a 4-stroke engine, a 
catalyst, or fuel injection all would involve increases in weight, 
which would be particularly problematic for model airplanes. The 
feasibility of these approaches for these engines is questionable. 
Reducing emissions, even if feasible, would likely involve fundamental 
engine redesign and substantial R&D efforts. The costs of achieving 
emission reductions are likely to be much higher per engine than for 
other recreational applications because the R&D costs would be spread 
over very low sales volumes. The cost of fundamentally redesigning the 
engines could double the cost of some engines.
    By contrast, because of their very low sales volumes, annual usage 
rates, and relatively short engine life cycle, SI hobby engine emission 
contributions are extremely small compared to recreational vehicles. 
The emission reductions possible from regulating such engines would be 
minuscule (we estimate that SI hobby engines as a whole account for 
less than 30 tons of HC nationally per year, much less than 0.01% of 
Mobile Source HC emissions).\148\ Thus, the cost per ton associated 
with regulating such engines would be well above any regulations 
previously adopted under the mobile source program (we estimate 
potential cost per ton for HC to over $200,000 per ton compared to less 
than $2,500 per ton for most other mobile source programs).
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    \148\ For further information on the feasibility, emission 
inventories, and costs, see ``Analysis of Spark Ignition Hobby 
Engines'', Memorandum from Chris Lieske to Docket A-2000-01, 
document II-G-144.
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    In addition, hobby engines differ significantly in their in-use 
operating characteristics compared to small utility engines and other 
recreational vehicle engines. It is unclear if the test procedures 
developed and used for other types of SI engine applications would be 
sufficiently representative for hobby engines. We are not aware of any 
efforts to develop an emission test cycle or conduct any emission 
testing of these engines. In addition, because installing, optimizing, 
maintaining, and repairing the engines are as much a part of the hobby 
as operating the engine, emission standards could fundamentally alter 
the hobby itself. Engines with emission-control systems would be more 
complex and the operator would need to be careful not to make changes 
that would cause the engine to exceed emission standards.
    For all the above reasons, we do not have adequate information and 
are not able to propose emission standards and test procedures for SI 
hobby engines at this time. We request comment on the above points, 
including feasibility, cost, and benefits associated with potential 
control technologies for these engines. We also request comment on any 
other information or unique characteristics of hobby engines that 
should be taken into consideration.
4. Competition Off-Highway Motorcycles
    Currently, a large portion of off-highway motorcycles are designed 
as competition/racing motorcycles. These models often represent a 
manufacturer's high-performance offerings in the off-highway market. 
Most such motorcycles are of the motocross variety, although some high 
performance enduro models are marketed for competition use.\149\ \150\ 
These high-performance motorcycles are largely powered by 2-stroke 
engines, though some 4-stroke models have been introduced in recent 
years.
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    \149\ A motocross bike is typically a high performance off-
highway motorcycle that is designed to be operated in motocross 
competition. Motocross competition is defined as a circuit race 
around an off-highway closed-course. The course contains numerous 
jumps, hills, flat sections, and bermed or banked turns. The course 
surface usually consists of dirt, gravel, sand, and mud. Motocross 
bikes are designed to be very light for quick handling and easy 
maneuverability. They also come with large knobby tires for 
traction, high fenders to protect the rider from flying dirt and 
rocks, aggressive suspension systems that allow the bike to absorb 
large amounts of shock, and are powered by high performance engines. 
They are not equipped with lights.
    \150\ An enduro bike is very similar in design and appearance to 
a motocross bike. The primary difference is that enduros are 
equipped with lights and have slightly different engine performance 
that is more geared towards a broader variety of operation than a 
motocross bike. An enduro bike needs to be able to cruise at high 
speeds as well as operate through tight woods or deep mud.
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    Competition events for motocross motorcycles mostly involve closed-
course or track racing. Other types of off-highway motorcycles are 
usually marketed for trail or open-area use. When used for competition, 
these models are likely to be involved in point-to-point competition 
events over trails or stretches of open land. There are also 
specialized off-highway motorcycles that are designed for competitions 
such as ice racing, drag racing, and observed trials competition. A few 
races involve professional manufacturer-sponsored racing teams. Amateur 
competition events for off-highway motorcycles are also held frequently 
in many areas of the U.S.
    Clean Air Act subsections 216 (10) and (11) exclude engines and 
vehicles ``used solely for competition'' from nonroad engine and 
nonroad vehicle regulations. In our previous nonroad

[[Page 51151]]

engine emission-control programs, we have generally defined the term as 
follows:

    Used solely for competition means exhibiting features that are 
not easily removed and that would render its use other than in 
competition unsafe, impractical, or highly unlikely.

    If retained for the recreational vehicles program, the above 
definition may be useful for identifying certain models that are 
clearly used only for competition. For example, there are motorcycles 
identified as ``observed trials'' motorcycles which are designed 
without a standard seat because the rider does not sit down during 
competition. This feature would make recreational use unlikely:)
    Most motorcycles marketed for competition do not appear to have 
obvious physical characteristics that constrain their use to 
competition. Upon closer inspection, however, there are several 
features and characteristics for many competition motorcycles that 
would make recreational use unlikely. For example, motocross bikes are 
not equipped with lights or a spark arrester, which prohibits them from 
legally operating on public lands (e.g., roads, parks, state land, 
federal land, etc.).\151\ Vehicle performance of modern motocross bikes 
are so advanced (e.g., extremely high power-to-weight ratios and 
advanced suspension systems) that it is highly unlikely that these 
machines would be used for recreational purposes. In addition, 
motocross and other competition off-highway motorcycles typically do 
not come with a warranty, which would further deter the purchase and 
use of competition bikes for recreational operation.\152\ We believe 
these features should be sufficient in distinguishing competition 
motorcycles from recreational motorcycles. We are specifically 
proposing the following features as indicative of motorcycles used 
solely for competition: absence of a headlight or other lights; the 
absence of a spark arrester; suspension travel greater than 10 inches; 
and an engine displacement greater than 50 cc.
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    \151\ A spark arrester is a device located in the end of the 
tailpipe that catches carbon sparks coming from the engine before 
they get out of the exhaust system. This is important when a bike is 
used off-highway, where hot carbon sparks falling in grassy or 
wooded areas could result in fires.
    \152\ Most manufacturers of motocross racing motorcycles do not 
offer a warranty. Some manufacturers do, however, offer very limited 
(1 to 3 months) warranties under special conditions.
---------------------------------------------------------------------------

    Vehicles not meeting the applicable criteria listed above would be 
excluded only in cases where the manufacturer has clear and convincing 
evidence that the vehicles for which the exemption is being sought will 
be used solely for competition. Examples of this type of evidence could 
be technical rationale explaining the differences between a competition 
and non-competition motorcycle, marketing and/or sales information 
indicating the intent of the motorcycle for competition purposes, or 
survey data from users indicating the competitive nature of the 
motorcycle.
    Although there are several features that distinguish competition 
motorcycles from recreational motorcycles, several parties have 
commented that they believe motorcycles designed for competition use 
may be used for recreational purposes, rather than solely for 
competition. This is of particular concern because competition 
motorcycles represent about 29 percent of total off-highway motorcycle 
sales or approximately 43,000 units per year. However, a study on the 
characterization of off-highway motorcycle usage found that there are 
numerous--and increasingly popular--amateur off-highway motorcycle 
competitions across the country, especially motocross.\153\ The 
estimated number of off-highway motorcycle competitors is as high as 
80,000. Since it is very common for competitive riders to replace their 
machines every one to two years, the sale of 43,000 off-highway 
competition motorcycles appears to be a reasonable number, considering 
the number of competitive participants. We are therefore confident 
that, although we are proposing to exclude a high percentage of off-
highway motorcycles as being competition machines, this definition is 
appropriate because a high percentage of these motorcycles are in fact 
used solely for competition.
---------------------------------------------------------------------------

    \153\ Characterization of Off-Road Motorcycle, ICF Consulting, 
September 2001, A-2000-1 document II-A-81.
---------------------------------------------------------------------------

    We are very interested in receiving input on the proposed 
competition exclusion. We request comment on ways the program can be 
established to exclude motorcycles used solely for competition, 
consistent with the Act, without excluding vehicles that are also used 
for other purposes. We specifically request comment on the identifying 
characteristics of competition vehicles in Sec. 1051.620 of the 
proposed regulations. Ideally, the program can be established in a way 
that provides reasonable certainty at certification. However, 
approaches could include reasonable measures at time of sale or in-use 
that would ensure that the competition exclusion is applied 
appropriately.

C . Proposed Standards

1. What Are the Proposed Standards and Compliance Dates?
    a. Off-highway Motorcycles and ATVs. We are proposing HC plus 
NOX and CO standards for off-highway motorcycles and ATVs. 
We expect the largest benefit to come from reducing HC emissions from 
two-stroke engines. Two-stroke engines have very high HC emission 
levels. Baseline NOX levels are relatively low for engines 
used in these applications and therefore NOX standards serve 
only to cap NOX emissions for these engines. Comparable CO 
reductions can be expected from both 2-stroke and 4-stroke engines, as 
CO levels are similar for the two engine types. We are also proposing 
averaging, banking and trading provisions for off-highway motorcycles 
and ATVs, as discussed below.
    2006 Standards. In the current off-highway motorcycle and ATV 
market, consumers can choose between two-stroke and four-stroke models 
in most sizes and categories. Each engine type offers unique 
performance characteristics. Some manufacturers specialize in two-
stroke or four-stroke models, while others offer a mix of models. The 
HC standard is likely to be a primary determining factor for what 
technology manufacturers choose to employ to meet emission standards 
overall. HC emissions can be reduced substantially by switching from 
two-stroke to four-stroke engines. Four-stroke engines are very common 
in off-highway motorcycle and ATV applications. Eighty percent of all 
ATVs sold are four-stroke. In addition, approximately 55 percent of 
non-competition off-highway motorcycles are four-stroke. Certification 
results from California ARB's emission-control program for off-highway 
motorcycles and ATVs, combined with our own baseline emission testing, 
provides ample data on the emission-control capability of four-stroke 
engines in off-highway motorcycles and ATV applications. Off-highway 
motorcycles certified to California ARB standards for the 2000 model 
year have HC certification levels ranging from 0.4 to 1.0 g/km. These 
motorcycles have engines ranging in size from 48 to 650 cc; none of 
these use catalysts.
    In determining what standards to set for off-highway motorcycles 
and ATVs, we considered several approaches. One approach was to 
establish separate standards for two-stroke and four-stroke engines. 
This would take into

[[Page 51152]]

consideration the fact that it could be expensive and difficult for 
two-stroke engines to meet the same emission levels as four-stroke 
engines. The problem with this approach is that two-stroke engines emit 
up to 25 times more HC emissions than four-stroke engines. Four stroke 
engines are currently being used on most, if not all, of the different 
subclasses of ATVs and off-highway motorcycles that we would be 
regulating, and we believe they can be used on all such subclasses. We 
are concerned that setting lesser standards for two-stroke engines 
could possibly result in the increase of two-stroke engine usage at the 
expense of four-stroke engines, which would result in a greater level 
of emissions and could miss the opportunity for a more appropriate and 
cost-effective standard. As a result, we proposing an approach that 
would require a single set of off-highway motorcycle and ATV standards 
for all engine types, similar to California ARB. We believe that this 
approach is consistent with our statutory requirement to propose 
standards that achieve the greatest emission reduction achievable, 
considering cost, noise, and safety factors.We ask for comment on this 
proposed approach and the rationale underlying this approach.
    In 1994, California ARB adopted emission standards for off-highway 
motorcycles and ATVs. At the time, these standards were stringent 
enough that manufacturers were unable to provide performance-oriented 
off-highway motorcycles and ATVs that met the standards. As a result, 
ARB allowed manufacturers to sell non-compliant off-highway motorcycles 
and ATVs, resulting in approximately a third of the off-highway 
motorcycles and ATVs sold being compliant with the standards. Four-
stroke engine technology has advanced considerably since the ARB 
regulations went into effect. Manufacturers are now capable of offering 
four-stroke engines that provide excellent performance. However, this 
performance can be achieved only as long as manufacturers are allowed 
to operate four-stroke engines with a slightly rich air and fuel 
mixture, which can result in somewhat higher HC and CO emissions. 
However, the HC emissions from four-stroke engines even when they 
operate rich are significantly lower than those from two-stroke 
engines. The market appears to be shifting to four-stroke technology.
    As discussed above in Section # B.1.4, the CAA requires us to 
exempt from emission standards off-highway motorcycles and ATVs used 
for competition. We expect several competition off-highway motorcycle 
models, most equipped with two-stroke engines, to continue to be 
available. We are concerned that setting standards as stringent as 
ARB's would result in a performance penalty for four-strokes which 
could encourage consumers who want performance-oriented off-highway 
motorcycles to purchase competition vehicles in lieu of purchasing 
compliant machines that don't provide the desired performance. That is 
why we are proposing emission standards that are slightly less 
stringent than the California ARB. We believe that our proposed 
emission standards would allow the continued advancement of four-stroke 
technology and are a good compromise between available emission-control 
technology, cost, and vehicle performance.
    We are proposing exhaust emission standards for off-highway 
motorcycles and ATVs to take effect in the 2006 model year. We would 
allow a short phase-in of 50-percent implementation in the 2006 model 
year with full implementation in 2007. These standards apply to testing 
with the highway motorcycle Federal Test Procedure (FTP) test cycle. 
For HC+NOX emissions, the standard is 2.0 g/km (3.2 g/mi). 
For CO emissions, the standard is 25.0 g/km (40.5 g/mi). These emission 
standards would allow us to set near-term requirements to introduce the 
low-emission technologies for substantial emission reductions with 
minimal lead time. We expect manufacturers to meet these standards 
using four-stroke engines with some low-level modifications to fuel-
system calibrations. These systems would be similar to those used for 
many years in highway applications, but not necessarily with the same 
degree of sophistication.
    We considered proposing several alternative sets of standards. The 
first alternative considered was to set the HC+NOX standard 
at a level higher than 2.0 g/km, since this standard could prove to be 
difficult for a two-stroke engine to achieve. However, since two-stroke 
engines emit so much higher levels of HC than four-stroke engines, and 
HC emission-control technology for two-stroke engines is more expensive 
and complicated, we would expect that such a standard would have to be 
considerably higher than 2.0 g/km, perhaps in the range of 10 to12 g/
km. Even a standard this high would still likely require secondary air 
injection and a catalytic converter for most two-stroke engines to 
comply. We believe that the concerns over high catalyst temperatures 
and potential negative impacts on engine performance would most likely 
result in manufacturers choosing to convert two-stroke applications to 
four-stroke, especially since four-stroke engines are already so 
prevalent in off-highway motorcycle and ATV applications. In addition, 
we believe that the cost differential between air injection and a 
catalyst for a two-stroke engine and using a four-stroke engine would 
be minimal. We request comment on such a standard, and on the costs and 
emissions benefits associated with that approach. Commenters should 
include a recommendation for the level of the standard.
    We also considered setting the HC+NOX standard at a 
level lower than 2.0 g/km, since it is possible to use a catalyst on a 
four-stroke engine and achieve lower emission levels. We decided that 
for off-highway motorcycles, the technologies necessary to meet 
emission standards lower than our proposed level of 2.0 g/km for 
HC+NOX could be prohibitive due to several factors such as 
limited catalyst locations that are considered safe to the operator and 
potential negative engine performance impacts (see our discussion on 
proposed 2009 standards for more detail). These issues are not as 
important for ATVs. However, it would be difficult to implement them by 
the 2006 model year since 20 percent of the fleet is still two-stroke 
and manufacturers would need time to convert their fleet to four-
stroke. Therefore, we are not proposing a HC+NOX standard 
lower than 2.0 g/km for off-highway motorcycles and are instead 
proposing a second phase of standards for ATVs in the 2009 model year. 
We are asking for comment on this aspect of the proposal, and on such a 
standard.
    Some youth-oriented off-highway motorcycles and ATVs with small 
engine displacements have engine governors limiting vehicle speeds. In 
the case of ATVs, the Consumer Product Safety Commission (CPSC) limit 
youth ATVs with engine displacements between 50 and 100 cc to a top 
speed of 35 mph. Similarly, ATVs with engine displacements of 50 cc and 
less are limited to a top speed of 15 mph. Many small off-highway 
motorcycles use the same governors. For vehicles with a displacement 
greater than 50 cc, we believe the FTP is an appropriate test cycle 
because of the transient capability of these vehicles. However, for the 
vehicles with engine displacements of 50 cc and less, the governed top 
speed of 15 mph restricts the operation of these vehicles to either 
idle or the governed wide-open throttle setting, similar to a lawn 
mowers. It may not make sense to require these small-displacement 
vehicles to be tested over

[[Page 51153]]

the FTP. Therefore, we propose that off-highway motorcycles and ATVs 
with an engine displacement of 50 cc or less have the option to certify 
to the proposed off-highway motorcycle and ATV standards discussed 
above or to meet the Phase 1 Small SI emission standards for non-
handheld Class I engines. We request comment on this option.
    ATV manufacturers have requested that we allow them the option of 
certifying ATVs to the same optional exhaust emission standards as 
allowed by California ARB. California allows ATVs to be optionally 
tested using the California ARB utility engine test cycle (SAE J1088) 
and procedures. In California, manufacturers may use the J1088 engine 
test cycle to meet the California Small Off-Road Engine emission 
standards. Manufacturers were required to submit some emission data 
from the various modes of the J1088 test cycles to show that emissions 
from these modes were comparable to FTP emissions. California allowed 
this option because the goal of their program was to encourage the use 
of four-stroke engine technology in ATVs. The lawn and garden test 
cycle and standards were considered stringent enough to encourage 
manufacturers to switch from two-stroke engines to four-stroke engines. 
We continue to be concerned that the J1088 test cycle doesn't represent 
actual ATV operation, but for our Phase 1 standards, our goal is to 
encourage manufacturers to switch from two-stroke to four-stroke engine 
technology. Therefore, to facilitate this phase-in we are proposing 
here that manufacturers may optionally certify ATVs using the 
California utility cycle and standards as shown in Table VI.C-1 instead 
of the FTP standards of 2.0 g/km HC+NOX and 25 g/km CO 
discussed above.

       Table VI.C-1.--California Utility Engine Emission Standards
------------------------------------------------------------------------
     Engine displacement            HC+NOX                 CO
------------------------------------------------------------------------
Less than 225 cc.............  12.0 g/hp-hr...  300 g/hp-hr
                               (16.1 g/kW-hr).  (400 g/kW-hr)
Greater than 225 cc..........  10.0 g/hp-hr...  300 g/hp-hr
                               (13.4 g/kW-hr).  (400 g/kW-hr)
------------------------------------------------------------------------

    Some manufacturers have expressed concern about the stringency of 
the proposed standards for some small displacement (e.g., less than 80 
cc) youth off-highway motorcycles and ATVs. They have also stated that 
some of these small vehicles may have a difficult time operating over 
the FTP cycle. Therefore, we request comment on the ability of small 
displacement youth off-highway motorcycles and ATVs to operate over the 
FTP test cycle and meet our proposed emission standards.
    2009 Standards. As stated above, we expect manufacturers to meet 
the proposed 2006 standards by using four-stroke engines with minor 
modifications to fuel calibrations. Several technologies are available 
to further reduce emissions from off-highway motorcycles and ATVs. The 
most likely choices would be the use of electronic fuel injection, 
secondary air injection into the exhaust system, and catalytic 
converters. Although these technologies would be capable of further 
emission reductions, there are potential concerns with applying each of 
these technologies to off-highway motorcycles. The complexity and 
increased cost of electronic fuel injection makes it problematic for 
off-highway motorcycle applications. Off-highway motorcycle 
manufacturers and enthusiasts have expressed concern over possible leg 
burns resulting from catalysts since off-highway motorcycles have 
exhaust systems that run higher up on the frame. They are concerned 
that if a rider were to fall over with the motorcycle on top of them, 
the hot catalyst could burn the rider. Catalysts and secondary air also 
have the potential to adversely affect engine performance. Since 
motorcycle performance is paramount for off-highway motorcycles, any 
technologies that could impact performance or pose a perceived safety 
threat could encourage consumers to purchase high-performance 
competition motorcycles rather than recreational motorcycles. For ATVs, 
however, the design of the vehicle is more receptive to placing a 
catalyst on the exhaust. Since the engine is further inside the vehicle 
with numerous plastic fairings around the engine, the operator's legs 
are far away and shielded from the exhaust pipe. ATV engines also tend 
to have lower power output than off-highway motorcycle engines, making 
the use of secondary air or catalysts more tolerable.
    Since ATV design and use are more conducive to these more advanced 
emission-control technologies than off-highway motorcycles, we believe 
it is appropriate to pursue more advanced emission-control technologies 
for ATVs. We also note that the usage rate and population of ATVs is 
growing substantially compared to off-highway motorcycles. We expect 
that, with additional time to optimize designs to better control 
emissions, manufacturers of ATVs should be able to meet more stringent 
emission standards. Starting with the 2009 model year for ATVs only, we 
propose to apply emission standards of 1.0 g/km (1.6 g/mi) for 
HC+NOX emissions and 25 g/km (40.5 g/mi) for CO emissions. 
As with the Phase 1 standards, we are proposing a two-year phase-in, 
with 50 percent of models complying in 2009 and all models complying in 
2010.
    We are proposing that ATVs would be required to meet a 1.0 g/km 
HC+NOX standard because we believe it can be met by using 
four-stroke engines with secondary air injection. Secondary air 
injection is a common HC emission-control technology used on highway 
motorcycles. It's use is more transparent to the ATV operator than a 
catalyst and is a relatively inexpensive means of achieving significant 
emission reductions. Depending on several variables, some models may 
have a more difficult time meeting the Phase 2 standards without the 
use of a catalyst. Therefore, while we expect ATV manufacturers to meet 
the Phase 2 standards for many of their models using four-stroke 
engines with air injection, they may also choose to use a combination 
of several possible emission-control technologies, including base-
engine modifications, improved fuel-system calibrations, electronic 
fuel injection, and catalytic converters. Off-highway motorcycles would 
continue to meet the 2006 standards described above.
    Several ATV manufacturers have expressed concern over being able to 
meet tighter HC+NOX standards while still meeting the 
proposed CO standards. They have asked us to increase or even eliminate 
the CO standard for Phase 2. Therefore, we request comment on whether 
the CO standard for Phase 2 should be increased from the proposed level 
of 25 g/km.

[[Page 51154]]

    We are proposing to discontinue the provision allowing 
manufacturers of ATVs the option to certify to the California utility 
engine test procedure and emission standards for Phase 2 ATVs. We 
propose to require that manufacturers test all Phase 2 ATVs with the 
highway motorcycle FTP test procedure. Manufacturers have expressed 
concerns over the cost of building emission test cells equipped with 
chassis dynamometers and the representativeness of the FTP relative to 
in-use ATV operation. They argue that the FTP is no more representative 
of ATV operation than the steady-state J1088 engine test cycle. While 
it may be true that the chassis-based FTP test cycle is not fully 
representative of in-use ATV operation, there is currently very limited 
data addressing this. California is in the process of gathering in-use 
operating data for ATVs. Preliminary examination of that data is too 
inconclusive to determine whether the FTP is adequately representative 
of in-use ATV operation. It does indicate that the five steady-state 
modes captured in the J1088 cycle are not adequately representative of 
ATV operation. It has long been known that ATVs experience considerable 
transient operation, similar to automobiles and motorcycles. The 
California data support this view. The chassis-based FTP used for 
certification of motorcycles, while possibly not ideal for ATVs, 
therefore appears to be more representative of ATV operation than the 
J1088 test cycle. With this in mind, we request comment on the 
possibility of developing an alternate test cycle and procedure for 
ATVs that would be more representative of typical ATV operation. An 
alternate test cycle could be chassis-based or engine-based, but would 
need to incorporate transient operation. If an acceptable alternative 
cycle is developed, we would reassess whether our proposed emission 
test procedure for Phase 2 would still be appropriate.
    As with the 2006 proposed emission standards, we request comment on 
the ability of small-displacement ATVs to operate over the FTP test 
cycle and meet our proposed emission standards.
    We request comment on whether a Phase 2 standard for ATVs is 
appropriate, and on the proposed level of the Phase 2 standard. We also 
request comment on technology, cost, and safety issues associated with 
a possible second phase of off-highway motorcycle emission standards.
    b. Snowmobiles. We are proposing CO and HC standards for 
snowmobiles. We are requesting comment on whether we should set 
standards for PM and NOX emissions from snowmobiles, and 
what appropriate levels would be. As previously discussed, snowmobile 
engines are almost exclusively two-stroke. As such, they emit high 
levels of HC and PM. However, we are not proposing PM standards at this 
time for snowmobiles, because limits on HC emissions will serve to 
simultaneously limit PM. We considered adding a regulatory requirement 
for manufacturers to measure and report PM emission rates along with 
their other certification data, but we did not include such a 
requirement in the proposed regulations. We are most concerned about 
the cost to manufacturers if they were required to build PM measurement 
capabilities into all of their test facilities. We request comment on 
the need for PM emission data, and whether it is necessary to put a 
requirement in the regulations.
    We are not proposing NOX standards for snowmobiles 
because they are primarily operated during the winter months when ozone 
is not a concern. However, we are proposing that manufacturers measure 
NOX emission rates and report them in their applications for 
certification. We believe that this would provide necessary 
information, but would not be a significant burden for manufacturers. 
We request comment on this element of the proposal.
    2006 Standards. We are proposing standards for snowmobiles to take 
effect for all models starting in the 2006 model year: 275 g/kW-hr (205 
g/hp-hr) for CO and 100 g/kW-hr (75 g/hp-hr) for HC. As discussed 
below, we are proposing an emission-credit program with these 
standards. Thus, we expect manufacturers to meet these proposed 
standards using a variety of technologies and strategies across their 
product lines. Snowmobiles pose some unique problems for implementing 
emission-control technologies and strategies. Snowmobiles are very 
sensitive to weight, power, and packaging constraints. Current 
snowmobile designs have very high power-to-weight ratios, allowing for 
excellent performance. Manufacturers have stated that if snowmobile 
performance declines, customers will either stop purchasing 
snowmobiles, or will replace original equipment (e.g., emission-control 
technology) with uncertified aftermarket parts. The desire for low 
weight is perceived as a safety issue, since operators may have to drag 
their sleds out of deep snow. Styling, especially very low-profile 
hoods, has also become paramount among snowmobile enthusiasts. All 
these concerns mean that it may be initially more difficult for 
manufacturers to develop a broad range of technologies capable of 
significant emission reductions. Some manufacturers may aggressively 
pursue clean carburetion and associated engine modifications and apply 
those uniformly across their entire product line. Others may choose to 
apply more advanced technologies such as direct or semi-direct 
injection to some of their more expensive, high-performance sleds and 
be less aggressive in pursuing emission reductions from their lower-
priced offerings in order to optimize the fit of different technologies 
(and their associated costs) to the various product offerings. We also 
expect some manufacturers to offer some models featuring four-stroke 
engines.
    We are proposing to require all snowmobiles to meet the proposed 
first phase of emission standards beginning with the 2006 model year. 
We request comment on options to ease the transition to the new 
standards, as described in Section VI.C.2.b.
    Due to the unique performance requirements for snowmobiles, we 
believe our proposed 2006 standards would be challenging for 
manufacturers and would result in cleaner snowmobiles. While some 
advanced technologies such as two-stroke direct injection and four-
stroke engines, would be found in some models, many models would still 
be equipped with two-stroke engines with relatively minor engine 
modifications resulting in minimum emission reductions, while some 
models may not even have any emission controls.
    2010 Standards. We have had many discussions with manufacturers 
about emission control technologies. We have also closely examined the 
certification emission results of outboard boat engines and personal 
watercraft (PWC) equipped with two-stroke direct injection and four-
stroke engines. It is our belief that with sufficient lead time, 
manufacturers can successfully implement these technologies across a 
much broader range of their snowmobile fleet. Manufacturers have 
indicated to us that two-stroke engines equipped with direct fuel 
injection systems could reduce HC emissions by 70 to 75 percent and 
reduce CO emissions by 50 to 60 percent. Certification results for 1999 
and 2000 model year outboard engines and PWC support the manufacturers 
projections. In addition, two snowmobile manufacturers plan to sell a 
four-stroke model next year. These manufacturers indicated that their 
machines are capable of HC reductions in the 70 to 95 percent range, 
with CO reductions of 60 to 80 percent. Therefore, we believe that with

[[Page 51155]]

sufficient time it is feasible for snowmobile manufacturers to achieve 
a greater penetration of advanced emission control technologies 
throughout their fleets and reduce emissions further.
    We are, therefore, proposing a second phase of average standards to 
take effect with the 2010 model year. The proposed 2010 average 
standards are 200 g/kW-hr (149 g/hp-hr) for CO and 75 g/kW-hr (56 g/hp-
hr) for HC. These standards represent a 50% reduction in HC and CO 
emissions from the current average baseline levels. We believe that 
implementation in 2010 would provide sufficient time for advanced 
technologies to be more broadly available. We also believe that 
manufacturers will have had adequate time to make appropriate 
modifications to snowmobile designs (e.g., styling and packaging 
issues) so they can more broadly spread advanced emission-control 
technologies across their product lines. We expect these standards 
would be met through the application of direct injection two-stroke 
technology and, to a much lesser extent, four-stroke technology, to 
cover about half of overall production, with the remaining models 
utilizing clean carburetion and electronic fuel injection, along with 
the associated engine modifications. The actual mix of technologies 
used would be the manufacturers choice, but the data mentioned above 
gives us reason to believe that the basic technology exists to meet the 
standard based on a 50-percent reduction. We believe that the lead time 
provided to meet these standards is sufficient to overcome the 
technical hurdles discussed below in Section VI.F.2.
    We request comment on our second phase of snowmobile standards. In 
particular, we are interested in comments on the level of the 
standards, our technical assessment and potential fleet mix 
projections, any safety, reliability, or performance considerations 
associated with adoption of four-stroke technology. We also request 
comment on the cost of adopting such standards and the effects on sales 
and consumer satisfaction. We are also interested in further 
information addressing the benefits associated with such a standard.
    c. Noise Standards. The Noise Control Act (42 U.S.C. 4901 et seq.) 
authorizes EPA to establish noise emission standards for motorized 
equipment. Under this authority, we established noise emission 
standards for motorcycles and three-wheeled ATVs in 40 CFR Part 205 (45 
FR 86708, December 31, 1980). These regulations include voluntary ``Low 
noise emission product standards'' for motorcycles Sec. CFR 
205.152(c)).
    Prior to proposal, we received public comments requesting that we 
consider setting new noise standards for recreational vehicles. Noise 
from these vehicles in public parks or other public lands can adversely 
impact other activities. However, at this time we do not have funding 
to pursue noise standards for nonroad equipment that does not have an 
existing noise requirement.
2. Are There Opportunities for Averaging, Emission Credits, or Other 
Flexibilities?
    a. Averaging, Banking and Trading. Historically, voluntary 
emission-credit programs have allowed a manufacturer to certify one or 
more engine families at emission levels above the applicable emission 
standards, provided that the increased emissions are offset by one or 
more engine families certified below the applicable standards. With 
averaging alone, the average of all emissions for a particular 
manufacturer's production must be at or below that level of the 
applicable emission standards. We are proposing separate emission-
credit programs for snowmobiles, off-highway motorcycles, and ATVs. We 
are proposing an emissions credit program for the optional Phase 1 ATV 
engine-based standards as well as the chassis-based standards. We 
request comment on whether or not averaging, banking, and trading adds 
value to the engine-based option considering the level of the standards 
being proposed.
    In addition to the averaging program just described, the proposed 
emission-credit program contains banking and trading provisions, which 
allow manufacturers to generate emission credits and bank them for 
future use in their own averaging program or sell them to another 
entity. We are not proposing a credit life limit or credit discounting 
for these credits. Unlimited credit life and no discounting increases 
the incentive to introduce the clean technologies needed to gain 
credits. In order to generate credits, the average emissions level must 
be below the standard, so the credits would be the result of reductions 
in excess of those required by the standards.
    We are seeking comment on whether or not a credit life limit (e.g., 
three years) is needed to ensure that manufacturers do not have the 
opportunity to, in effect, postpone the Phase 2 standards for several 
years for one or more vehicle families. Unlimited credit life has the 
potential to interfere with the timely and orderly phase-in of future 
standards, especially if the manufacturer is able to bank large amounts 
of credits during intervening years. This is a concern here because the 
proposed level of the Phase 1 standards may provide considerable 
opportunity for credit generation for manufacturers that can market a 
significant number of relatively clean models early in the program. For 
example, some 4-stroke ATV models are likely to have emissions levels 
below the Phase 1 standards, allowing for considerable credit 
generation.
    We also request comment on how this issue may differ for credits 
generated under Phase 2, where the affect on the next tier of standard 
is not a complicating issue. We would have the opportunity to consider 
and reassess such a provision if and when we were to propose a third 
phase of standards. In addition, we request comments on an alternative 
approach of not allowing credits generated in Phase 1 to be used in 
Phase 2.
    For off-highway motorcycles and ATVs, we are proposing to allow 
averaging for the HC plus NOX standard. Off-highway 
motorcycle and ATVs would be averaged separately to avoid providing an 
advantage in the market to companies that offer both types of products 
over those that produce only one type. In addition, there are differing 
degrees of stringency in the standards for ATVs and off-road 
motorcycles long-term and we do not want off-road motorcycle credits to 
dilute the effectiveness of the Phase 2 ATV standards. Also, ATVs 
certified to the chassis-based standards and engine-based standards 
would be considered separate averaging groups with no credit exchanges 
between the two. We are not allowing credit exchanges between engine 
and chassis-based testing because there is little, if any, correlation 
between the two test cycles. Without a strong correlation, it is not 
possible to establish an exchange rate between the two programs. We are 
not proposing a CO averaging, banking, and trading program because the 
level of the standard does not appear to add substantial technological 
challenge to the program, especially for Phase 1. The usefulness of CO 
averaging may not warrant the additional complexity of an averaging 
program. We request comment on the need for a CO ABT program for Phase 
2, and on the proposed approach for separate ABT programs.
    For the Phase 2 ATV standards, we are proposing a maximum allowable 
Family Emission Limit (FEL) of 2.0 g/km HC plus NOX (the 
Phase 1 standard). In several other ABT programs, we have

[[Page 51156]]

established a cap at the previous emission standard to ensure a minimum 
level of control long term. We request comment on whether or not an FEL 
limit is appropriate to ensure a minimum level of control for all 
models. Please see the discussion on this issue in the recreational 
marine diesel section of this document for more information. We request 
comment specifically on how this approach could affect product 
offerings and consumer choice. We also request comment on the level of 
the emissions cap and alternative levels.
    For snowmobiles, we are proposing an emission-credit program for 
both CO and HC. We are proposing that maximum allowable Family Emission 
Limits be set at the current average baseline emission levels of 400 g/
kW-hr (300 g/hp-hr) CO and 150 g/kW-hr (110 g/hp-hr) HC. This cap 
ensure a minimum level of control for each snowmobile certified under 
the program. We believe that this is appropriate due to the potential 
for personal exposure to very high levels of emissions as well as the 
potential for high levels of emissions in areas where several 
snowmobiles are operated in a group. We request comment on the level of 
the cap for Phase 1. We also request comment on whether it would be 
appropriate to set more stringent maximum allowable Family Emission 
Limits for 2010 and later model year snowmobiles, for example, at the 
levels of the 2006 standards. We are interested in comment on any 
potential impacts a more stringent cap may have on the variety of 
products available to the consumer. We are proposing that manufacturers 
may not both generate and use credits for the different pollutants 
within a given engine family.
    We request comment on all aspect of the proposed ABT program, 
including on the administrative and liability provisions provided in 
the proposed regulatory text.
    b. Early Credits and Alternative Phase-in Schedule. We are 
interested in but are not specifically proposing opportunities for 
early credits, and other flexibilities, as discussed below. We are 
proposing no phase-in schedule for snowmobiles and a two-year phase-in 
schedule for off-road motorcycles and ATVs. While we believe adequate 
lead-time is provided to meet the proposed standards, we recognize that 
some flexibility in timing could help manufacturers transition their 
full product line to new standards. We are requesting comment on three 
specific approaches to providing additional flexibility to 
manufacturers, described below. We are interested in how these 
provisions could be established in a way that would be environmentally 
neutral and yet also provide manufacturers with flexibility.
    We are not proposing provisions for early generation of credits, 
because we have not been able to resolve our concerns about substantial 
windfall credits (credits generated relatively easily from baseline 
engines). For example, there could be substantial credits available for 
snowmobile manufacturers that have developed four-stroke snowmobile 
models. Also, some baseline ATV and off-highway motorcycles could also 
have relatively low emission levels. However, as discussed below, we 
are seeking comment on approaches for early credits that could address 
concerns regarding windfall credits.
    Under an early emission-credit approach, manufacturers could earn 
credits by reducing emissions earlier than required, then use those 
credits after the program begins. Because there is a wide variation in 
baseline emission levels, we would need to consider taking steps to 
ensure that manufacturers do not generate windfall credits. One way to 
address the concern for windfall credits would be to allow credits only 
for emission reductions below the proposed standards and limit the life 
of those credits to three years. We believe this approach may ensure 
that manufacturers would generate credits only through the use of 
cleaner technologies. It also ensures that the credits would not 
adversely impact the long-term effectiveness of the program. This 
approach would provide incentive for manufacturers to pull ahead 
significantly cleaner technologies. We request comment on early credits 
for CO and HC emissions for snowmobiles and HC+NOX emissions 
for off-road motorcycles and ATVs, and a requirement that the credit-
generating engines also meet the standards for the other regulated 
pollutants.
    Under the second approach, an alternative phase-in schedule, 
manufacturers would be provided with a one-for-one credit in the phase-
in schedule for selling complying recreational vehicles prior to the 
start of the program. Manufacturers who pull ahead a percentage of 
their product line would get a phase-in credit to be used during the 
initial years of the program (i.e., 2008 and earlier). For example, if 
a snowmobile manufacturer phased in 10 percent of their product line 
early in 2005, they could then phase-in 90 percent, rather than 100 
percent, of their product line in 2006. We would expect this to be a 
transitional provision limited to the first few years of the program 
(all vehicles would need to be certified by 2008). We could implement 
the program through a calculation based on the sum of the phase-in 
percentages over a series of model years. For example, for snowmobiles, 
the sum of the phase-in percentages over model years 2004-2008 could be 
required to be equal to or greater than 300% (100% each for 2006, 2007, 
and 2008). For off-road motorcycles and ATVs, the calculation would 
take into account the 50/100 percent phase-in schedule for 2006/2007, 
with a requirement that the sum of the phase-in be equal to or greater 
than 250 percent. For example, an alternative phase-in schedule of 25/
50/75/100 percent in 2005 through 2008 would be acceptable. The 
calculation of the percentage phase-in would be the same as that for 
the standard program.
    An alternative to early banking or a revised phase-in would be 
``family-banking.'' Under the ``family-banking'' concept, we would 
allow manufacturers to certify an engine family early. For each year of 
certifying an engine family early, the manufacturer would be able to 
delay certification of a smaller engine family by one year. This would 
be based on the actual sales of the early family and the projected 
sales volumes of the late family; this would require no calculation or 
accounting of emission credits.
    We request comment on the above approaches or any other approach 
that would help manufacturers bring the product lines into compliance 
to the proposed standards without compromising emissions reductions 
(see Sec. 1048.145 of the proposed regulations). We request comment on 
the merits of the various approaches noted above, and others commenter 
may wish to suggest. We request that commenters provide detailed 
comments on how the approaches should be set up, enhanced, or 
constrained to ensure that they serve their purpose without diminishing 
the overall effectiveness of the standards.
3. Is EPA Proposing Voluntary Low-Emission Standards for These Engines?
    We are proposing a Voluntary Low-Emission Standards program for 
recreational vehicles. The purpose of this program is two-fold; first, 
to encourage new emission-control technology and second, to aid the 
consumer in choosing clean technologies. At the point of purchase, 
manufacturers could add a tag designating qualifying vehicles to inform 
consumers which engines are certified by this program and listing the 
certification levels of the vehicles. In addition, we are suggesting 
that manufacturers provide information about the program in the vehicle

[[Page 51157]]

Owner's Manual. To qualify for this program, engines must meet the 
voluntary standards described below. Manufacturers choosing to sell 
engines with this designation may generate certification emission 
credits from these technologies.
    The general purpose of the Voluntary Low-Emission Standards program 
is to provide incentives to manufacturers to produce clean products and 
thus create market choices for consumers to purchase these 
products.\154\ We believe that EPA designation of clean technologies 
through this voluntary program can provide useful information to 
consumers. We request comment on the merits and design of the program 
and also on additional measures we can take to encourage this program 
and prohibit misuse.
---------------------------------------------------------------------------

    \154\ The snowmobile industry (see docket item II-G-221) and a 
group of public health and environmental organizations (see docket 
item II-G-139) have both expressed their general support for 
labeling programs that can provide information on the environmental 
performance of various products to consumers.
---------------------------------------------------------------------------

    We are proposing Voluntary Low-Emission Standards for off-highway 
motorcycles and ATVs of 0.8 g/km (1.3 g/mi) HC+NOX and 12 g/
km (24.3 g/mi) CO. These emission levels are consistent with the 2008 
standards proposed by California ARB for highway motorcycles. We 
believe that off-highway motorcycles and ATVs could meet these 
voluntary standards by employing some of the same technologies 
manufacturers will use to meet the 2008 California emission standards 
for highway motorcycles. We request comment on the level of the 
standards and the need for lower voluntary standards for Phase 2 of the 
ATV program.
    We are proposing Voluntary Low Emission Standards for snowmobiles 
of 200 g/kW-hr (149 g/hp-hr) for CO and 75 g/kW-hr (56 g/hp-hr) for HC 
through 2009 model year snowmobiles. These are the same levels as our 
proposed phase 2 standards. For the 2010 model year and later, the 
standards are 120 g/kW-hr (89 g/hp-hr) for CO and 45 g/kW-hr (34 g/hp-
hr) for HC for any snowmobiles. We believe these voluntary standards 
could be met with either direct injection two-stroke, or four-stroke 
technology. Snowmobiles included in this program may generate credits 
for use in the proposed emission-credit program. We request comment on 
the level of the voluntary standards being proposed and whether we 
should consider more or less stringent voluntary standards for 
snowmobiles.
4. What Durability Provisions Apply?
    We are proposing several additional provisions to ensure that 
emission controls would be effective throughout the life of the 
vehicle. This section discusses these proposed provisions for 
recreational vehicles. More general certification and compliance 
provision, which would apply across the different vehicle categories in 
this proposal, are discussed in Sections III and VII, respectively.
    a. How long would my engine have to comply? We propose to require 
manufacturers to produce off-highway motorcycle and ATV engines that 
comply over their full useful life, where useful life is the period 
that lasts either 5 years or until the vehicle accumulates 30,000 
kilometers, whichever occurs first. We would consider this 30,000-
kilometer value to be a minimum kilometer value for useful life, and 
would require manufacturers to comply for a longer period in those 
cases where they design their vehicles to be operated longer than 
30,000 kilometers.
    For snowmobiles, we are proposing a minimum useful life of 5 years 
or 300 hours of operation, whichever occurs first. We based these 
values on discussions with manufacturers regarding typical snowmobile 
life, and on emission-modeling data regarding typical snowmobile usage 
rates.\155\
---------------------------------------------------------------------------

    \155\ EPA memorandum, ``Emission Modeling for Recreational 
Vehicles,'' from Linc Wehrly to Docket A-98-01, November 13, 2000.
---------------------------------------------------------------------------

    We request comment on the proposed useful life values. Any comments 
in support of a different useful life should include documentation of 
typical life and operation.
    b. Would I have to warrant my engine's emission controls? We are 
proposing a design/defect warranty period of 3 years, with an hours or 
kilometers limit equal to half the useful life interval proposed above. 
During this time manufacturers would repair or replace free of charge 
emission-related components that fail. Because this warranty 
requirement applies only for emission-related components, manufacturers 
are not responsible for routine maintenance that is currently performed 
for uncontrolled engines (e.g., changing oil filters or carburetors).
    c. How would I demonstrate emission durability during 
certification? For off-highway motorcycles and ATVs, we are proposing 
the same durability demonstration requirements that apply to highway 
motorcycles. This includes a requirement to run the engines long enough 
to test for exhaust emissions at the end of the useful life. This 
allows manufacturers to generate a deterioration factor that helps 
ensure that the engines will continue to control emissions over a 
lifetime of operation.
    d. What maintenance would be allowed during service accumulation? 
For vehicles certified to the proposed useful life, no emission-related 
maintenance would be allowed during service accumulation. The only 
maintenance that would be allowed is regularly scheduled maintenance 
unrelated to emissions that is technologically necessary. This could 
typically include changing engine oil, oil filter, fuel filter, and air 
filter.
5. Do These Standards Apply to Alternative-Fueled Engines?
    These proposed standards apply to all spark-ignited recreational 
vehicles, without regard to the type of fuel used. However, because we 
are not aware of any alternative-fueled recreational vehicles sold into 
the U.S. market, we are not proposing extensive special provisions to 
address them at this time.
6. Is EPA Controlling Crankcase Emissions?
    We are proposing to require that new off-highway motorcycles and 
ATVs be built to prevent crankcase emissions. This means that engines 
would no longer emit crankcase vapors directly to the atmosphere. The 
typical control strategy is to route the crankcase vapors back to the 
engine intake. This proposal is consistent with our previous regulation 
of crankcase emissions from such diverse sources as highway 
motorcycles, outboard and personal watercraft marine engines, 
locomotives, and passenger cars. We have data from California ARB 
showing that a performance-based four-stroke off-highway motorcycle 
experienced considerably higher tailpipe emission results when 
crankcase emissions were routed back into the intake of the engine, 
illustrating the potentially high levels of crankcase emissions that 
exist.\156\ We are also proposing closed crankcases on new snowmobiles. 
This requirement is only relevant for four-stroke snowmobiles, however, 
since two-stroke engines, by virtue of their operation, have closed 
crankcases. Information on the costs and benefits of this action can be 
found in the Draft Regulatory Support Document.
---------------------------------------------------------------------------

    \156\ Memo to Docket from Linc Wehrly, dated September 10, 2001. 
(A-2000-1) document II-B-25.
---------------------------------------------------------------------------

D. Proposed Testing Requirements

1. What Duty Cycles Are Used To Measure Emissions?
    Testing a vehicle or engine for emissions consists of exercising it 
over

[[Page 51158]]

a prescribed duty cycle of speeds and loads, typically using a chassis 
or engine dynamometer. The nature of the duty cycle used for 
determining compliance with emission standards during the certification 
process is critical in evaluating the likely emission performance of 
engines designed to those standards. Duty cycles must be relatively 
comparable to the way equipment is actually used because if they are 
not, then compliance with emission standards would not assure that 
emissions from the equipment are actually being reduced in use as 
intended.
    a. Off-highway Motorcycles and ATVs. For off-highway motorcycles 
and ATVs, we propose that the current highway motorcycle test procedure 
be used for measuring emissions. The highway motorcycle test procedure 
is the same test procedure as used for light-duty vehicles (i.e., 
passenger cars and trucks) and is referred to as the Federal Test 
Procedure (FTP). The FTP for a particular class of engine or equipment 
is actually the aggregate of all of the emission tests that the engine 
or equipment must meet to be certified. However, the term FTP has also 
been used traditionally to refer to the exhaust emission test based on 
the Urban Dynamometer Driving Schedule (UDDS), also referred to as the 
LA4 (Los Angeles Driving Cycle #4). The UDDS is a chassis dynamometer 
driving cycle that consists of numerous ``hills'' which represent a 
driving event. Each hill includes accelerations, steady-state 
operation, and decelerations. There is an idle between each hill. The 
FTP consists of a cold start UDDS, a 10 minute soak, and a hot start. 
The emissions from these three separate events are collected into three 
unique bags. Each bag represents one of the events. Bag 1 represents 
cold transient operation, bag 2 represents cold stabilized operation, 
and bag 3 represents hot transient operation.
    Highway motorcycles are divided into three classes based on engine 
displacement, with Class I (50 to 169 cc) being the smallest and Class 
III (280 cc and over) being the largest. The highway motorcycle 
regulations allow Class I motorcycles to be tested on a less severe 
UDDS cycle than the Class II and III motorcycles. This is accomplished 
by reducing the acceleration and deceleration rates on some of the more 
aggressive ``hills.'' We propose that this same class/cycle distinction 
be allowed for off-highway motorcycles and ATVs. In other words, off-
highway motorcycles and ATVs with an engine displacement between at or 
below 169 cc would be tested over the FTP test cycle for Class I 
highway motorcycles. Off-highway motorcycles and ATVs with engine 
displacements greater than 169 cc would be tested over the FTP test 
cycle for Class II and Class III highway motorcycles. Some 
manufacturers have expressed concern over the ability of some small-
displacement (e.g., less than 80 cc) youth off-highway motorcycles and 
ATVs to operate over the FTP. We request comment on the ability of 
these small-displacement vehicles to operate over the FTP test cycle. 
We also request comment on whether or not it would be appropriate to 
allow all ATVs to be certified using the Class I cycle.
    Some manufacturers have noted that they do not currently have 
chassis-based test facilities capable of testing ATVs. Manufacturers 
have noted that requiring chassis-based testing for ATVs would require 
them to invest in additional testing facilities that can handle ATVs, 
since ATVs do not fit on the same roller(s) as motorcycles used in 
chassis testing. Some manufacturers also have stated that low-pressure 
tires on ATVs would not stand up to the rigors of a chassis dynamometer 
test. California provides manufacturers with the option of certifying 
ATVs using the engine-based, utility engine test procedure (SAE J1088), 
and most manufacturers use this option for certifying their ATVs. 
Manufacturers have facilities to chassis-test motorcycles and therefore 
California does not provide an engine-testing certification option for 
motorcycles.
    We have tested numerous ATVs over the FTP and have found that 
several methods can be used to test ATVs on chassis dynamometers. The 
most practical method for testing an ATV on a motorcycle dynamometer is 
to disconnect one of the drive wheels and test with only one drive 
wheel in contact with the dynamometer. For chassis dynamometers set up 
to test light-duty vehicles, wheel spacers or a wide axle can be 
utilized to make sure the drive wheels fit the width of the 
dynamometer. We have found that the low-pressure tires have withstood 
dynamometer testing without any problems.
    We acknowledge that a chassis dynamometer could be very costly to 
purchase and difficult to put in place in the short run, especially for 
smaller manufacturers. Therefore, we are proposing that for the model 
years 2006 through 2009, ATV manufacturers would be allowed the option 
to certify using the J1088 engine test cycle per the California off-
highway motorcycle and ATV program. After 2009, this option would end 
and the FTP would be the required test cycle. If an alternate transient 
test cycle (engine or chassis) correlates with the FTP or better 
represents in-use ATV operation, we would consider allowing 
manufacturers to use the alternative test cycle in place of the FTP.
    b. Snowmobiles. We are proposing to adopt the snowmobile duty cycle 
developed by Southwest Research Institute (SwRI) in cooperation with 
the International Snowmobile Manufacturers Association (ISMA) for all 
snowmobile emission testing.\157\ The test procedure consists of two 
main parts; the duty cycle that the snowmobile engine would operate 
over during testing and other testing protocols surrounding the 
measurement of emissions (sampling and analytical equipment, 
specification of test fuel, atmospheric conditions for testing, etc.). 
While the duty cycle we are proposing was developed specifically to 
reflect snowmobile operation, many of the testing protocols are well 
established in other EPA emission-control programs and have been simply 
adapted where appropriate for snowmobiles.
---------------------------------------------------------------------------

    \157\ ``Development and Validation of a Snowmobile Engine 
Emission Test Procedure,'' Jeff J. White, Southwest Research 
Institute and Christopher W. Wright, Arctic Cat, Inc., Society of 
Automotive Engineers paper 982017, September, 1998. (A-2000-1) 
document II-D-05.
---------------------------------------------------------------------------

    The snowmobile duty cycle was developed by instrumenting several 
snowmobiles and operating them in the field in a variety of typical 
riding styles, including aggressive (trail), moderate (trail), double 
(trail with operator and one passenger), freestyle (off-trail), and 
lake driving. A statistical analysis of the collected data produced the 
five mode steady-state test cycle is shown in Table VI.D-1.

                              Table VI.D-1.--Proposed Snowmobile Engine Test Cycle
----------------------------------------------------------------------------------------------------------------
                  Mode                        1            2            3            4                5
----------------------------------------------------------------------------------------------------------------
Normalized Speed.......................            1         0.85         0.75         0.65  Idle
Normalized Torque......................            1         0.51         0.33         0.19  0

[[Page 51159]]

Relative Weighting (%).................           12           27           25           31  5
----------------------------------------------------------------------------------------------------------------

    We believe this duty cycle is representative of typical snowmobile 
operation and is therefore appropriate for demonstrating compliance 
with the proposed snowmobile emission standards. We request comment on 
this proposed duty cycle, and on any alternatives that we should 
consider.
    The other proposed testing protocols are largely derived from our 
regulations for marine outboard and personal watercraft engines, as 
recommended in the SwRI/ISMA test cycle development work (61 FR 52088, 
October 4, 1996). The testing equipment and procedures from that 
regulation are generally appropriate for snowmobiles. Unlike 
snowmobiles, however, the marine engines tend to operate in fairly warm 
ambient temperatures. Thus, some provision needs to be made in the 
snowmobile test procedure to account for the colder ambient 
temperatures typical of snowmobile operation. Since snowmobile 
carburetors are jetted for specific ambient temperatures and pressures, 
we could take one of two general approaches. The first is to require 
testing at ambient temperatures typical of snowmobile operation, with 
appropriate jetting. A variation of this option is to simply require 
that the engine inlet air temperature be representative of typical 
snowmobile operation, without requiring that the entire test cell be at 
that temperature. The second is to allow testing at higher temperatures 
than typically experienced during snowmobile operation, with jetting 
appropriate to the warmer ambient temperatures.
    We are proposing that snowmobile engine inlet air temperature be 
between -15 deg. C and -5 deg. C (5 deg. F and 23 deg. F), but that the 
ambient temperature in the test cell not be required to be 
refrigerated. We believe this approach strikes an appropriate balance 
between the need to test at conditions that are representative of 
actual use, and the fact that simply cooling the inlet air would be 
significantly less costly than requiring a complete cold test cell.
    We request comment on whether we should allow snowmobile engine 
testing to be done according to the test procedures developed by 
Southwest Research Institute. Under those procedures testing is done at 
warmer ambient temperatures than typical of snowmobile operation. 
Appropriate jetting under this approach is determined by extrapolating 
from the manufacturer's jet chart (if necessary).
    We invite comment on all aspects of the proposed test procedures.
2. What Fuels Will Be Used During Emission Testing?
    We are proposing to use the same fuel specifications for all 
recreational vehicles as we currently use for highway motorcycles and 
light-duty vehicles, which is representative of a summertime blend. We 
believe that off-highway motorcycles and ATVs use the same fuel as 
highway motorcycles. While snowmobiles typically operate during 
wintertime, we believe it is appropriate to use summertime gasoline for 
testing, primarily because it is the fuel that was used for the 
snowmobile emission testing that supported the development of our 
baseline emission estimates. Also, the majority of snowmobile HC 
emissions are a result of scavenging losses (unburned fuel from the 
intake charge exiting the combustion chamber with the exhaust gases). 
The primary difference between summertime and wintertime gasoline 
blends is the volatility, which is not likely to have a significant 
effect on scavenging losses. However, given that snowmobiles typically 
operate during wintertime, we request comment on whether we should 
consider a unique test fuel specifically for snowmobiles, and what 
specifications might be appropriate for such a fuel. Also, if we were 
to consider a unique snowmobile test fuel based on wintertime gasoline 
properties, should the proposed standards be adjusted in any way to 
account for the fact that the baseline emission estimates were 
developed from test data utilizing summertime blends.
3. Are There Production-Line Testing Provisions for These Engines?
    We are proposing that recreational vehicle or engine manufacturers 
perform emission tests on a small percentage of their production as it 
leaves the assembly line to ensure that production vehicles operate at 
certified emission levels. The broad outline of this program is 
discussed in Section III.C.4 above. We are proposing that production-
line testing be performed using the same test procedures as for 
certification testing. We request comment on all aspects of the 
proposed production-line testing requirements, including engine 
sampling rates and options for using alternative testing methods.

E. Special Compliance Provisions

    As described in Section XI.B, the report of the Small Business 
Advocacy Review Panel addresses the concerns of small-volume 
manufacturers of recreational vehicles.

Off-Highway Motorcycles and ATVs

    To identify representatives of small businesses for this process, 
we used the definitions provided by the Small Business Administration 
for motorcycles, ATVs, and snowmobiles (fewer than 500 employees). 
Eleven small businesses agreed to serve as small-entity 
representatives. These companies represented a cross-section of off-
highway motorcycle, ATV, and snowmobile manufacturers, as well as 
importers of off-highway motorcycles and ATVs.
    As discussed above, our proposed emission standards for off-highway 
motorcycles and ATVs will likely necessitate the use of 4-stroke 
engines. Most small-volume off-highway motorcycle and ATV importers--
and to a lesser degree, small-volume manufacturers--currently use 2-
stroke engines. While 4-stroke engines are in widespread use in 
motorcycles and ATVs in general, their adoption by any manufacturer is 
still a significant business challenge. Small manufacturers of these 
engines could face additional challenges in certifying engines to 
emission standards, because the cost of certification would be spread 
over the relatively few engines they produce. These higher per-unit 
costs could place small manufacturers at a competitive disadvantage 
without specific provisions to address this burden.
    We are proposing to apply the flexibilities described below to 
engines produced or imported by small entities with combined off-
highway motorcycle and ATV annual sales of fewer than 5,000 units. The 
SBAR Panel recommended these provisions to address the potentially 
significant adverse effects on small entities of an emission standard 
that will likely result in the use of four-stroke engines. The 5,000-
unit threshold is intended to focus these flexibilities on those 
segments of the market where the need

[[Page 51160]]

is likely to be greatest and to ensure that the flexibilities do not 
result in significant adverse environmental effects during the period 
of additional lead-time recommended below.\158\ We request comment on 
the appropriateness of the 5,000-unit threshold. In addition, we 
propose to limit use of some or all of these flexibilities to entities 
that are in existence or have product sales at the time of proposal to 
avoid creating arbitrary opportunities in the import sector, and to 
guard against the possibility of corporate reorganization, entry into 
the market, or other action for the sole purpose of circumventing 
emission standards. We request comment on any such restrictions.
---------------------------------------------------------------------------

    \158\ For example, importers may have access to large supplies 
of vehicles from major overseas manufacturers and potentially could 
substantially increase their market share by selling less expensive 
noncomplying products.
---------------------------------------------------------------------------

    We also request comment on allowing small entities with sales in 
excess of 5,000 units to certify using the flexible approaches 
described below for several engines equal to their 2000 or 2001 sales 
level. This would assure that all small entities currently in the 
market would be able to take advantage of these approaches. In 
addition, we request comment on when small entities must notify EPA 
that they intend to use the small-entity flexibilities.
    During the Panel's outreach meeting with small entities on issues 
related to recreational ATVs and off-road motorcycles, small entities 
expressed particular concern that a federal emission standard requiring 
manufacturers to switch to four-stroke engines might increase costs to 
the point that many small importers and manufacturers could experience 
significant adverse effects. As noted above, the Panel recommendations 
are designed to reduce the burden on small entities without 
compromising the environmental benefits of the program. However, it is 
possible that even with the broad flexibility under consideration, 
costs to small entities may still be too high. Also, they may not be 
able to recover costs without losing much or all of their business. We 
seek comment on the effect of the proposed standard on small entities, 
including any data or related studies to estimate the extent to which 
sales of their products are likely to be reduced as a result of changes 
in product price resulting from the proposed standards, more 
specifically from the conversion of two-stroke technology to four-
stroke technology. Additionally, we seek comment on any differences in 
costs between small and large manufacturers. We plan to assess 
information received in response to this request to inform the final 
rule decision-making process on whether additional flexibility (beyond 
that proposed below) is warranted.

Snowmobiles

    There are only a few small snowmobile manufacturers and they sell 
only a few hundred engines a year, which represents less than 0.5 
percent of total annual production. Therefore, the per-unit cost of 
regulation could be significantly higher for these small entities 
because they produce very low volumes. Additionally, these companies do 
not have the design and engineering resources to tackle compliance with 
emission standard requirements at the same time as large manufacturers 
and tend to have limited ability to invest the capital necessary to 
conduct emission testing related to research, development, and 
certification. Finally, the requirements of the snowmobile program may 
be infeasible or highly impractical because some small-volume 
manufacturers may have typically produced engines with unique designs 
or calibrations to serve niche markets (such as mountain riding). Our 
proposed snowmobile emission standards could impose significant 
economic hardship on these few manufacturers whose market presence is 
small. We therefore believe significant flexibility is necessary and 
appropriate for this category of small entities, as described below.

Flexibilities

1. Additional Lead Time
    We believe additional lead-time would be a way of reducing the 
burden to meet the proposed standards. This would provide extra time 
for technology to develop and, in the case of importers, extra time to 
resolve supplier issues that may arise. We propose a delay of two years 
beyond the date larger businesses would be required to comply. For ATVs 
and snowmobiles, the two-year delay would also apply to the timing of 
the proposed Phase 2 standards.
    In addition, for small snowmobile manufacturers, we propose that 
the emission standards be phased in over an additional two years at a 
rate of 50 percent, then 100 percent. Phase 1 would be phased in at 50/
50/100 percent in 2008/2009/2010 and Phase 2 would be phased in 50/50/
100 percent in 2012/2013/2014. We seek comment on whether a longer time 
period is appropriate given the costs of compliance for small 
businesses and the relationship between importers and their suppliers.
2. Design-Based Certification
    The process of certification is a business cost and lead time issue 
that may place a disproportionate burden on small entities, 
particularly importers. Certification is a fixed cost of doing 
business, which is potentially more burdensome on a unit-cost basis for 
small entities. It is potentially an even greater challenge, since some 
small entities will either contract emission testing to other parties 
or, in the case of importers, perhaps rely on off-shore manufacturers 
to develop and certify imported engines.
    We propose to permit small-volume manufacturers to use design-based 
certification, which would allow us to issue a certificate to a small 
business for the emission-performance standard based on a demonstration 
that engines or vehicles meet design criteria rather than by emission 
testing. The intent is to demonstrate that an engine using a design 
similar to or superior than that being used by larger manufacturers to 
meet the proposed emission standards would ensure compliance with the 
proposed standards. The demonstration would be based in part on 
emission test data from engines of a similar design. Under a design-
based certification program, a manufacturer would provide evidence in 
the application for certification that an engine or vehicle would meet 
the applicable standards for its useful life based on its design (e.g., 
the use a four-stroke engine, advanced fuel injection, or any other 
particular technology or calibration). The design criteria could 
include specifications for engine type, calibrations (spark timing, 
air/fuel ratio, etc.), and other emission-critical features, including, 
if appropriate, catalysts (size, efficiency, precious metal loading). 
Manufacturers would submit adequate engineering and other information 
about their individual designs showing that they meet emission 
standards for the useful life. We request comment on how these 
provisions should be implemented. We also seek comment on whether we 
should allow large manufacturers to use similar provisions on a limited 
basis.
3. Broaden Engine Families
    We propose an approach that would allow for relaxed criteria for 
what constitutes an engine or vehicle family. It would allow small 
businesses to put all their models into one vehicle or engine family 
(or more) for certification purposes if appropriate. Manufacturers 
would then certify their engines using the ``worst-case'' configuration 
within the family.

[[Page 51161]]

    A small manufacturer might need to conduct certification emission 
testing rather than pursuing design-based certification. Such a 
manufacturer would likely find broadened engine families useful.
4. Production-Line Testing Waiver
    As discussed above, we are proposing to require manufacturers to 
test a small sampling of production engines to ensure that production 
engines meet emission standards. We propose to waive production-line 
testing for small entities and request comment on whether limits for 
this waiver would be appropriate. This would eliminate or substantially 
limit production-line testing requirements for small businesses. It 
could be limited to engine/vehicle families under a given production 
volume or could be applied broadly to small businesses. This is likely 
to be important to small businesses, many of which do not have testing 
facilities on-site and would rely on outside contractors for testing.
5. Use of Assigned Deterioration Factors for Certification
    We propose to provide small entities with the option of using 
assigned deterioration factors. Rather than performing a durability 
demonstration for each family for certification, manufacturers would 
elect to use deterioration factors determined by us to demonstrate 
emission levels at the end of the useful life, thus reducing the 
development and testing burden. This could be a very useful and cost-
beneficial option for a small manufacturer opting to perform 
certification emission testing instead of design-based certification.
6. Using Emission Standards and Certification From Other EPA Programs
    A wide array of engines that have been certified to other EPA 
programs could be used in recreational vehicles. For example, there is 
a large variety of engines certified to EPA lawn and garden standards 
(Small SI). We propose to allow manufacturers of recreational vehicles 
to use engines certified to any other EPA standards for five years. 
Under this approach, engines certified to the Small SI standards could 
be used in recreational vehicles, and such engines would be subject to 
the Small SI standards and related provisions rather than the 
Recreational Vehicle program. The small business using the engine would 
not have to recertify the engine, provided the manufacturer does not 
alter the engine in such a way as to cause it to exceed the emission 
standards it was originally certified as meeting. Also, the 
recreational vehicle application may not be the primary intended 
application for the engine. We request comment on which of the already 
established standards and programs would be a useful certification 
option for small businesses.
    Additionally, a certified snowmobile engine produced by a large 
snowmobile manufacturer could be used by a small snowmobile 
manufacturer, provided the small manufacturer did not alter the engine 
in such a way as to cause it to exceed the snowmobile emission 
standards. This would provide a reasonable degree of emission control 
provided all other elements of the program were met. For example, if 
the only change a manufacturer were to make to the certified engine was 
to replace the stock Y-pipes and exhaust pipes with pipes of similar 
configuration or the stock muffler and air intake box with a muffler 
and air box of similar air flow, the engine could, subject to our 
review, still be eligible for this flexibility option. The manufacturer 
could also change the carburetor to have a leaner air/fuel ratio 
without losing eligibility. We believe that the manufacturer in such 
cases could establish a reasonable basis for knowing that emissions 
performance is not negatively affected be the changes. However, if the 
manufacturer were to change the bore or stroke of the engine, the 
engine would no longer qualify, as emissions could increase. We propose 
to allow the above approach for small snowmobile manufacturers.
7. Averaging, Banking, and Trading
    For the overall program, we are proposing corporate-average 
emission standards with opportunities for banking and trading of 
emission credits. We would expect the averaging provisions to be most 
helpful to manufacturers with broad product lines. Small manufacturers 
and small importers with only a few models might not have as much 
opportunity to take advantage of these flexibilities. However, we 
received comment from one small manufacturer supporting these types of 
provisions as a critical component of the program. We request comment 
on how the provisions could be enhanced for small business to make them 
more useful.
8. Hardship Provisions
    We are proposing provisions to address hardship circumstances, as 
described in Section VII.C.
9. Unique Snowmobile Engines
    Even with the broad flexibilities described above, there may be a 
situation where a small snowmobile manufacturer cannot comply. 
Therefore, we propose an additional provision to allow a small 
snowmobile manufacturer to petition us for relaxed standards for one or 
more engine families. The manufacturer would have to justify that the 
engine has unique design, calibration, or operating characteristics 
that make it atypical and infeasible or highly impractical to meet the 
emission-reduction requirements, considering technology, cost, and 
other factors. At our discretion, we would then set an alternative 
standard at a level between the prescribed standard and the baseline 
level. Such a standard would be intended to apply until the engine 
family is retired, or modified in such a way as to increase emissions. 
These engines would be excluded from the averaging calculation. We seek 
comment on allowing this provision for up to 300 engines per year per 
manufacturer, which would ensure that it is sufficiently available for 
those manufacturers needing it most.
    We seek comment on initial and deadline dates for submitting these 
petitions. While any relief would be enacted for the first year 
standards apply, there may be value to getting feedback early. It would 
seem reasonable that the first date for submittals would be during the 
first year of requirements for large manufacturers. The deadline for 
submittals might be at some time during the last year of the small-
business delay.

F. Technological Feasibility of the Standards

1. Off-Highway Motorcycles and ATVs
    We believe the proposed standards are technologically feasible 
given the availability of emission-control technologies in the context 
of the proposed program, as described below.
    a. What are the baseline technologies and emission levels? As 
discussed earlier, off-highway motorcycles and ATVs are equipped with 
relatively small (48 to 650 cc) high-performance two- or four-stroke 
single cylinder engines that are either air- or liquid-cooled.\159\ 
Since these vehicles are unregulated outside of the state of 
California, the main emphasis of engine design is on performance, 
durability, and cost and thus they generally have no emission controls. 
The fuel systems used on these engines are almost exclusively 
carburetors. Two-stroke engines

[[Page 51162]]

lubricate the piston and crankshaft by mixing oil with the air and fuel 
mixture. This is accomplished by most contemporary 2-stroke engines 
with a pump that sends two-cycle oil from a separate oil reserve to the 
carburetor where it is mixed with the air and fuel mixture. Some less 
expensive two-stroke engines require that the oil be mixed with the 
gasoline in the fuel tank. Four-stroke engines inject oil via a pump 
throughout the engine as the means of lubrication. With the exception 
of those vehicles certified in California, most of these engines are 
unregulated and thus have no emission controls. For performance and 
durability reasons, off-highway motorcycle and ATV engines all tend to 
operate with a ``rich'' air and fuel mixture. That is, they operate 
with excess fuel, which enhances performance and allows engine cooling 
to promote longer engine life. However, rich operation results in high 
levels of HC, CO, and PM emissions. Also, two-stroke engines tend to 
have high scavenging losses, where up to a third of the unburned air 
and fuel mixture goes out of the exhaust resulting in high levels of HC 
emissions.
---------------------------------------------------------------------------

    \159\ The engines are small relative to automotive engines. For 
example, automotive engines typically range from one liter to well 
over five liters in displacement, whereas off-highway motorcycles 
would range from 0.05 liters to 0.65 liters.
---------------------------------------------------------------------------

    b. What technology approaches are available to control emissions? 
Several approaches are available to control emissions from off-highway 
motorcycles and ATVs. The simplest approach would consist of 
modifications to the base engine, fuel system, cooling system, and 
recalibration of the air and fuel mixture. These could, for example, 
consist of changes to valve timing for four-stroke engines, changing 
from air- to liquid-cooling, and the use of advanced carburetion 
techniques or electronic fuel injection in lieu of traditional 
carburetion systems. Other approaches could include the use of 
secondary air injected into the exhaust, an oxidation or three-way 
catalyst, or a combination of secondary air and a catalyst. The engine 
technology that may have the most potential for maximizing emission 
reductions from two-stroke engines is the use of direct fuel injection. 
Direct fuel injection is able to reduce or even eliminate scavenging 
losses by pumping only air through the engine and then injecting fuel 
into the combustion chamber after the intake and exhaust ports have 
closed. The use of oxidation catalysts in conjunction with direct 
injection could potentially reduce emissions even further. Finally, 
conversion of two-stroke engine technology to four-stroke engine 
technology would significantly reduce HC emissions.
    None of these technologies should have any negative noise, safety, 
or energy impacts. Fuel injection can improve the combustion process 
which can result in lower engine noise. The vast majority of four-
stroke engines used in off-highway motorcycles and ATVs are 
considerably quieter than their two-stroke counterparts. Fuel injection 
has no impact on safety and four-stroke engines often have a more 
``forgiving'' power band which means the typical operator may find the 
performance of the machine to be more reasonable and safe. The use of 
fuel injection, the enleanment of the air and fuel mixture and the use 
of four-stroke technology all can result in significant reductions in 
fuel consumption.
    c. What technologies are most likely to be used to meet the 
proposed standards? 2006 Standards. Four-Stroke Engines. We believe 
off-highway motorcycles and ATVs utilizing four-stroke engines will 
need only to make some minor calibration changes and improvements to 
the carburetor to meet our proposed emission standards for the 2006 
model year. The calibration changes will most likely consist of 
reducing the amount of fuel in the air/fuel mixture. This is commonly 
referred to as enleaning the air/fuel ratio. Although four-stroke 
engines produce considerably lower levels of HC than two-stroke 
engines, the four-stroke engines used in off-highway motorcycles and 
ATVs all tend to be calibrated to operate with a rich air/fuel ratio 
for performance and durability benefits. This rich operation results in 
high levels of CO, since CO is formed in the engine when there is a 
lack of oxygen to complete combustion. We believe that many of these 
engines are calibrated to operate richer than needed, because they have 
either never had to consider emissions when optimizing air/fuel ratio 
or those that are certified to the California standards can operate 
richer because the California ATV CO standards are fairly lenient. 
Thus, we do not believe the standards will significantly reduce the 
performance or durability of these engines. Carburetion improvements 
could include increased carburetor tolerances, which would ensure more 
precise flow of fuel and air resulting in better fuel atomization 
(i.e., smaller fuel droplets), better combustion and less emissions.
    Since our proposed emission standards are for HC+NOX, as 
well as for CO, manufacturers will have to use an emission-control 
strategy or technology that doesn't cause NOX emissions to 
increase disproportionately. However, since all of these vehicles 
operate with rich air/fuel ratios, as discussed above, NOX 
levels from these engines are generally low and strategies designed to 
focus on HC reduction should allow manufacturers to meet our proposed 
standards without significantly increasing NOX levels.
    Two-Stroke Engines. Off-highway motorcycles and ATVs using two-
stroke engines will present a greater challenge for compliance with the 
proposed standards. We believe it is possible for a two-stroke engine 
equipped with direct injection and an oxidation catalyst to meet our 
proposed standards. However, there are several issues associated with 
direct injection, such as system durability and the need for high 
electrical system output, that need to be resolved before it can be 
successfully integrated into off-highway motorcycle and ATV 
applications by the 2006 model year. For example, there is concern over 
how durable a direct injection system would be when exposed to harsh 
environmental conditions such as water, mud, rocks and sand, to name a 
few. The typical electrical system on a two-stroke off-highway 
motorcycle and ATV uses a magneto system which produces between 250 and 
300 watts of electrical power. A typical direct injection system needs 
up to 1,000 watts of electrical power, meaning a traditional low-cost 
magneto system would be insufficient and possibly have to be replaced 
with an expensive and cumbersome alternator, similar to what is used on 
automobiles. For these reasons, and because of the potential 
complexities and cost of a direct injection system, we anticipate that 
most manufacturers would chose to convert models using two-stroke 
engines to four-stroke engines. Most manufacturers have experience with 
four-stroke engine technology and currently have several models powered 
by four-stroke engines. This is especially true in the ATV market where 
four-stroke engines account for 80 percent of sales. Because four-
stroke engines have been so prevalent over the last 10 years in the 
off-highway motorcycle and ATV industry, manufacturers have developed a 
high level of confidence in four-stroke technology and its application. 
In addition to converting to four-stroke technology, manufacturers will 
also most likely have to make some minor calibration and carburetion 
improvements to meet the proposed 2006 emission standards.
    2009 Standards. As discussed above, the proposed 2009 standards are 
proposed to apply only to ATVs. To meet these standards, we believe 
manufacturers will need to use four-stroke engines with further 
advancements in carburetor calibrations and improved tolerances or 
possibly

[[Page 51163]]

even switch to electronic fuel injection for some models. There is 
currently one manufacturer who uses electronic fuel injection in their 
off-highway motorcycles and ATVs. The technologies most likely to be 
used to meet these standards are secondary air and/or an oxidation 
catalytic converter.
    Secondary air has been used by passenger cars and highway 
motorcycles for many years as a means to help control HC and CO. The 
hot exhaust gases coming from the combustion chamber contain 
significant levels of unburned HC and CO. If sufficient oxygen is 
present, these gases will continue to react in the exhaust system, 
reducing the amount of pollution emitted into the atmosphere. To assure 
that sufficient oxygen is present in the exhaust, air is injected into 
the exhaust system. For off-highway motorcycles and ATVs, the 
additional air can be injected into the exhaust manifold using a series 
of check valves which use the normal pressure pulsations in the exhaust 
manifold to draw air from outside. We have tested several four-stroke 
ATVs with secondary air injected into the exhaust manifold and found 
that the HC and CO emission levels were at or below our proposed 2009 
standards (further details of our secondary air testing are described 
in the Draft Regulatory Support Document). Thus, we believe secondary 
air injection alone could be a viable technology used by ATV 
manufacturers to meet our proposed 2010 standards.
    We also tested several ATVs with oxidation catalysts. We evaluated 
several different catalyst configurations with varying size, loading, 
cell density, and washcoat. We also examined different catalyst 
locations in the exhaust system. We found that a relatively small 
oxidation catalyst located in the exhaust system produced emission 
levels below our proposed emission standards. Therefore, we also 
believe that the use of an oxidation catalyst could be another viable 
technology available to ATV manufacturers to meet our proposed 2009 
emission standards.
2. Snowmobiles
    a. What are the baseline technologies and emission levels? As 
discussed earlier, snowmobiles are equipped with relatively small high-
performance two-stroke two and three cylinder engines that are either 
air- or liquid-cooled. Since these vehicles are currently unregulated, 
the main emphasis of engine design is on performance, durability, and 
cost and thus they have no emission controls. The fuel system used on 
these engines are almost exclusively carburetors, although some have 
electronic fuel injection. Two-stroke engines lubricate the piston and 
crankshaft by mixing oil with the air and fuel mixture. This is 
accomplished by most contemporary 2-stroke engines with a pump that 
sends two-cycle oil from a separate oil reserve to the carburetor where 
it is mixed with the air and fuel mixture. Some less expensive two-
stroke engines require that the oil be mixed with the gasoline in the 
fuel tank. Snowmobiles currently operate with a ``rich'' air and fuel 
mixture. That is, they operate with excess fuel, which enhances 
performance and allows engine cooling which promotes longer lasting 
engine life. However, rich operation results in high levels of HC, CO, 
and PM emissions. Also, two-stroke engines tend to have high scavenging 
losses, where up to a third of the unburned air and fuel mixture goes 
out of the exhaust resulting in high levels of raw HC. Current average 
snowmobile emission rates are 397 g/kW-hr (296 g/hp-hr) CO and 150 g/
kW-hr (111 g/hp-hr) HC.
    b. What technology approaches are available to control emissions? 
We believe the proposed standards would be technologically feasible. A 
variety of technologies are currently available or in stages of 
development to be available for use on 2-stroke snowmobiles. These 
include improvements to carburetion (improved fuel control and 
atomization, as well as improved production tolerances), enleanment 
strategies for both carbureted and fuel injected engines, and semi-
direct and direct fuel injection. In addition to these 2-stroke 
technologies, converting to 4-stroke engines is feasible for some 
snowmobile types. Each of these is discussed in the following 
paragraphs.
    There are several things that can be done to improve carburetion in 
snowmobile engines. First, strategies to improve fuel atomization would 
promote more complete combustion of the fuel/air mixture. Additionally, 
production tolerances could be improved for more consistent fuel 
metering. Both of these things would allow for more accurate control of 
the air/fuel ratio. In conjunction with these improvements in 
carburetion, the air/fuel ration could be leaned out some. Snowmobile 
engines are currently calibrated with rich air/fuel ratios for 
durability reasons. Leaner calibrations would serve to reduce CO and HC 
emissions. Such calibration changes could reduce snowmobile engine 
durability. However, there are many engine improvements that could be 
made to regain lost durability that occurs with leaner calibration. 
These include changes to the cylinder head, pistons, ports and pipes to 
reduce knock. In addition critical engine components could be made more 
robust to improve durability.
    The same calibration changes to the air/fuel ratio just discussed 
for carbureted engines could also be employed, possibly with more 
accuracy, with the use of fuel injection. At least one major snowmobile 
manufacturer currently employs electronic fuel injection on several of 
its snowmobile models.
    In addition to rich air/fuel ratios, one of the main reasons that 
two-stroke engines have such high HC emission levels is that they 
release a substantial amount of unburned fuel into the atmosphere as a 
result from scavenging losses, as described above. One way to reduce or 
eliminate such losses is to inject the fuel into the cylinder after the 
exhaust port has closed. This can be done by injecting the fuel into 
the cylinder through the transfer port (semi-direct injection) or 
directly into the cylinder (direct injection). Both of these approaches 
are currently being used successfully in two-stroke personal watercraft 
engines. We believe these technologies hold promise for application to 
snowmobiles. Manufacturers must address a variety of technical design 
issues for adapting the technology to snowmobile operation, such as 
operating in colder ambient temperatures and at variable altitude. The 
several years of lead time give manufacturers time to incorporate these 
development efforts into their overall research plan as they apply 
these technologies to snowmobiles.
    In addition to the two-stroke technologies just discussed, the use 
of four-stroke engines in snowmobiles is another feasible approach to 
reduce emissions. Since they do not scavenge the exhaust gases with the 
incoming air/fuel mixture, four-stroke engines have inherently lower HC 
emissions compared to two-strokes. Four-stroke engines have a lower 
power to weight ratio than two-stroke engines and are heavier. Thus, 
they are more appropriately used in snowmobile models where extreme 
power and acceleration are not the primary selling points. Such models 
include touring and sport trail sleds, as opposed to high performance 
sleds such as those used for aggressive trail, cross country, mountain 
and lake riding.
    c. What technologies are most likely to be used to meet the 
proposed standards. 2006 Standards. We expect that, in the context of 
an emission-credit program, manufacturers might choose to take 
different paths to meet the

[[Page 51164]]

proposed 2006 model year emission standards. We expect that many of the 
reductions required will come from aggressive implementation of 
improved carburetion and enleanment strategies. Manufacturers have 
indicated to us that direct injection strategies can result in emission 
reductions of 70 to 75 percent for HC and 60 to 65 percent for CO. 
Certification results from 2000 model year outboard engines and PWC 
support such reductions. At least one manufacturer has indicated that 
direct injection technology will be available for snowmobiles on at 
least some models well in advance of 2006. We believe that as 
manufacturers learn to apply direct injection strategies they may 
choose to implement those technologies on some of their more expensive 
sleds and use less aggressive technologies, such as improved 
carburetion and enleanment on their lower performance models. Finally, 
there are at least two snowmobile manufacturers planning on offering 
four-stroke models in the future, and we expect further interest in 
four-strokes to develop for those snowmobile categories for which four-
strokes are a good fit.
    2010 Standards. We expect that, in the context of an emission 
credit program, manufacturers would choose to apply enleanment 
strategies and the associated engine modification to roughly half of 
their production. The rest of their production would encompass 
primarily direct injection two stroke and to a much lesser extent, four 
stroke technology.

VII. General Nonroad Compliance Provisions

    This section describes a wide range of compliance provisions that 
apply generally to all of the engines and vehicles that would be 
subject to the proposed standards. Several of these provisions apply 
not only to manufacturers, but also to equipment manufacturers 
installing certified engines, remanufacturing facilities, operators, 
and others.
    The proposed regulatory text for the compliance requirements for 
Large SI and recreational vehicles would be contained in a new Part 
1068 of title 40, entitled ``General Compliance Programs for Nonroad 
Engines.'' The compliance provisions for marine engines would be the 
same as those in our existing programs for commercial diesel marine 
engines (40 CFR part 94), which are similar to the provisions proposed 
in 40 CFR part 1068.
    The following discussion of the general nonroad provisions follows 
the proposed regulatory text. For ease of reference, the subpart 
designations are provided. We request comment on all these provisions.

A. Miscellaneous Provisions (Part 1068, Subpart A)

    This regulation contains some general provisions, including general 
applicability and the definitions that apply to Part 1068. Other 
provisions concern good engineering judgment, how we would handle 
confidential information; how the EPA Administrator delegates decision-
making authority; and when we may inspect a manufacturer's facilities, 
engines, or records.
    The process of testing engines and preparing an application for 
certification requires the manufacturer to make a variety of judgments. 
This includes, for example, selecting test engines, operating engines 
between tests, and developing deterioration factors. Section 1068.5 of 
the proposed regulations describes the methodology we propose to use to 
evaluate concerns related to manufacturers' use of good engineering 
judgment in cases where the manufacturer has such discretion. If we 
find a problem in these areas, we would take into account the degree to 
which any error in judgment was deliberate or in bad faith. This 
subpart is consistent with provisions in the final rule for light-duty 
highway vehicles and commercial marine diesel engines.

B. Prohibited Acts and Related Requirements (Part 1068, Subpart B)

    The proposed provisions in this subpart lay out a set of 
prohibitions for engine manufacturers, equipment manufacturers, 
operators, and engine rebuilders to ensure that engines comply with the 
emission standards. These provisions are summarized below, but readers 
are encouraged to review the proposed regulatory text. These provisions 
are intended to help ensure that each new engine sold or otherwise 
entered into commerce in the United States is certified to the relevant 
standards, that it remains in its certified configuration throughout 
its lifetime, and that only certified engines are used in the 
appropriate nonroad equipment.
1. General Prohibitions (Sec. 1068.100)
    This proposed regulation contains several prohibitions consistent 
with the Clean Air Act. No one may sell an engine in the United States 
without a valid certificate of conformity issued by EPA, deny us access 
to relevant records, or keep us from entering a facility to test or 
inspect engines. In addition, no one may remove or disable a device or 
design element that may affect an engine's emission levels, or 
manufacture any device that will make emission controls ineffective, 
which we would consider tampering. We have generally applied the 
existing policies developed for tampering with highway engines and 
vehicles to nonroad engines.\160\ Other prohibitions reinforce 
manufacturers' obligations to meet various certification requirements. 
We also prohibit selling engine parts that prevent emission-control 
systems from working properly. Finally, for engines that are excluded 
for certain applications (i.e., stationary or solely for competition), 
we generally prohibit using these engines in other applications.
---------------------------------------------------------------------------

    \160\ ``Interim Tampering Enforcement Policy,'' EPA memorandum 
from Norman D. Shulter, Office of General Counsel, June 25, 1974 
(Docket A-2000-01; document II-B-20).
---------------------------------------------------------------------------

    These proposed prohibitions are the same as those that apply to 
other engines we have regulated in previous rulemakings. Each 
prohibited act has a corresponding maximum penalty as specified in 
Clean Air Act section 205. As provided for in the Federal Civil 
Penalties Inflation Adjustment Act of 1990, Public Law 10-410, these 
maximum penalties are in 1970 dollars and should be periodically 
adjusted by regulation to account for inflation. The current penalty 
amount for each violation is $27,500.\161\
---------------------------------------------------------------------------

    \161\ EPA acted to adjust the maximum penalty amount in 1996 (61 
FR 69364, December 31, 1996). See also 40 CFR part 19.
---------------------------------------------------------------------------

2. Equipment Manufacturer Provisions (Sec. 1068.105)
    According to this proposed regulation, equipment manufacturers may 
not sell new equipment with uncertified engines once the emission 
standards begin to apply. We would allow a grace period for equipment 
manufacturers to use up their supply of uncertified engines, as long as 
they follow their normal inventory practices for buying engines.
    We propose to require equipment manufacturers to observe the engine 
manufacturers emission-related installation specifications to ensure 
that the engine remains consistent with the application for 
certification. This may include such things as radiator specifications, 
placement of catalytic converters, diagnostic signals and interfaces, 
and steps to minimize evaporative emissions.
    If equipment manufacturers install a certified engine in a way that 
obscures the engine label, we propose to require them to add a 
duplicate label on the equipment. Equipment manufacturers may make 
these labels or get them from the engine manufacturer.

[[Page 51165]]

    If equipment manufacturers don't fulfill the responsibilities we 
describe in this section, we would consider them to be violating one or 
more of the prohibited acts described above.
3. In-Service Engines (Sec. 1068.110)
    The proposed regulations would prevent manufacturers from requiring 
owners to use any certain brand of aftermarket parts and give the 
manufacturer responsibility for engine servicing related to emissions 
warranty, leaving the responsibility for all other maintenance with the 
owner. This proposed regulation would also reserve our right to do 
testing (or require testing) to investigate potential defeat devices, 
as authorized by the Act.
4. Engine Rebuilding (Sec. 1068.120)
    We are proposing to establish rebuild provisions for all the 
nonroad engines subject to the proposed emission standards. This 
approach is similar to what applies to heavy-duty highway engines, 
nonroad diesel engines, and commercial marine diesel engines. This is 
necessary to prevent an engine rebuilder from rebuilding engines in a 
way that disables the engine's emission controls or compromises the 
effectiveness of the emission-control system. For businesses involved 
in commercial engine rebuilding, we are proposing minimal recordkeeping 
requirements so rebuilders can show that they comply with regulations.
    In general, we propose to require that anyone who rebuilds a 
certified engine must restore it to its original (or a lower-emitting) 
configuration. We are proposing to add unique requirements for 
rebuilders to replace some critical emission-control components such as 
fuel injectors and oxygen sensors in all rebuilds for engines that use 
those technologies. We are also proposing that rebuilders replace an 
existing catalyst if there is evidence that the catalyst is not 
functional; for example, if a catalyst has lost its physical integrity 
with loose pieces rattling inside, it would need to be replaced. See 
Sec. 1068.65 for more detailed information.
    The proposed rebuilding provisions define good rebuilding practices 
to help rebuilders avoid violating the prohibition on ``removing or 
disabling'' emission-control systems. We therefore propose to extend 
these provisions to individuals who rebuild their own engines, but 
without any recordkeeping requirements.
    We request comment on applying these proposed requirements for 
engine rebuilding and maintenance to the engines and vehicles subject 
to this rulemaking. In addition, we request comment on the associated 
recordkeeping requirements.

C. Exemptions (Part 1068, Subpart C)

    We are proposing to include several exemptions for certain specific 
situations. Most of these are consistent with previous rulemakings. We 
highlight the new or different proposed provisions in the following 
paragraphs. In general, exempted engines would need to comply with the 
requirements only in the sections related to the exemption. Note that 
additional restrictions could apply to importing exempted engines (see 
Section VII.D). Also, we are also proposing that we may require 
manufacturers (or importers) to add a permanent label describing that 
the engine is exempt from emission standards for a specific purpose. In 
addition to helping us enforce emission standards, this would help 
ensure that imported engines clear Customs without difficulty.
1. Testing
    Anyone would be allowed to request an exemption for engines used 
only for research or other investigative purposes.
2. Manufacturer-Owned Engines
    Engines that are used by engine manufacturers for development or 
marketing purposes could be exempted from regulation if they are 
maintained in the manufacturers' possession and are not used for any 
revenue-generating service.
3. Display Engines
    Engine manufacturers would get an exemption without request if the 
engines are for display only.
4. National Security
    Engine manufacturers could receive an exemption for engines they 
can show are needed by an agency of the federal government responsible 
for national defense. For cases where the engines will not be used on 
combat applications, the manufacturer would have to request the 
exemption with the endorsement of the procuring government agency.
5. Exported Engines
    Engines that will be exported to countries that don't have the same 
emission standards as those that apply in the United States would be 
exempted without need for a request. This exemption would not be 
available if the destination country has the same emission standards as 
those in the United States.
6. Competition Engines
    New engines that are used solely for competition are excluded from 
regulations applicable to nonroad engines. For purposes of our 
certification requirements, a manufacturer would receive an exemption 
if it can show that it produces the engine specifically for use solely 
in competition. In addition, engines that have been modified for use in 
competition would be exempt from the prohibition against tampering 
described above (without need for request). The literal meaning of the 
term ``used solely for competition'' would apply for these 
modifications. We would therefore not allow the engine to be used for 
anything other than competition once it has been modified. This also 
applies to someone who would later buy the engine, so we would require 
the person modifying the engine to remove or deface the original engine 
label and inform a subsequent buyer in writing of the conditions of the 
exemption.
7. Replacement Engines
    An exemption would be available to engine manufacturers without 
request if that is the only way to replace an engine from the field 
that was produced before the current emission standards took effect. If 
less stringent standards applied to the old engine when it was new, the 
replacement engine would also have to meet those standards.
8. Hardship Related to Economic Burden
    There are two types of hardship provisions. The first type of 
hardship program would allow small businesses to petition EPA for 
additional lead time (e.g., up to 3 years) to comply with the 
standards. A small manufacturer would have to make the case that it has 
taken all possible business, technical, and economic steps to comply 
but the burden of compliance costs would have a significant impact on 
the company's solvency. A manufacturer would be required to provide a 
compliance plan detailing when and how it would achieve compliance with 
the standards. Hardship relief could include requirements for interim 
emission reductions and/or purchase and use of emission credits. The 
length of the hardship relief decided during review of the hardship 
application would be up to one year, with the potential to extend the 
relief as needed. The second hardship program would allow companies to 
apply for hardship relief if circumstances outside their control cause 
the failure to comply (i.e., supply contract broken by parts supplier) 
and if the failure to sell the subject engines would have a major 
impact on the company's solvency. See the proposed

[[Page 51166]]

regulatory text in 40 CFR 1068.240 and 1068.241 for additional details.
9. Hardship for Equipment Manufacturers
    Equipment manufacturers in many cases depend on engine 
manufacturers to supply certified engines in time to produce complying 
equipment by the date emission standards begin to apply. This is 
especially true for industrial and marine applications. In other 
programs, we have heard of certified engines being available too late 
for equipment manufacturers to adequately accommodate changing engine 
size or performance characteristics. To address this concern, we are 
proposing to allow equipment manufacturers to request up to one extra 
year before using certified engines if they are not at fault and would 
face serious economic hardship without an extension. See the proposed 
regulatory text in 40 CFR 1068.245 for additional information.

D. Imports (Part 1068, Subpart D)

    In general, the same certification requirements would apply to 
engines and equipment whether they are produced in the U.S. or are 
imported. This proposed regulation also includes some additional 
provisions that would apply if someone wants to import an exempted or 
excluded engine. For example, the importer would need written approval 
from us to import any exempted engine; this is true even if an 
exemption for the same reason doesn't require approval for engines 
produced in the U.S.
    All the proposed exemptions described above for new engines would 
also apply to importation, though some of these apply only on a 
temporary basis. If we approve a temporary exemption, it would be 
available only for a defined period and could require the importer to 
post bond while the engine is in the U.S. There are several additional 
proposed exemptions that would apply only to imported engines.

--Identical configuration: This would be a permanent exemption to allow 
individuals to import engines that were designed and produced to meet 
applicable emission standards. These engines may not have the emission 
label only because they were not intended for sale in the United 
States. This exemption would apply to all the nonroad engines covered 
by this proposal. We did not finalize this exemption for commercial 
marine diesel engines, since we expected no individuals to own or 
import such an engine.
--Personal use: This would be a permanent exemption to allow 
individuals to import engines for their personal use. To prevent abuse 
of this exemption, we would require that importers own the exempted 
engines and we would generally exempt only one of each type of engine 
over an individual's lifetime.
--``Antique'' engines: We would generally treat used engines as new if 
they are imported without a certificate of conformity. However, this 
permanent exemption would allow for importation of uncertified engines 
if they are more than 20 years old in their original configuration.
--Repairs or alterations: This would be a temporary exemption to allow 
companies to repair or modify engines. This exemption would not allow 
for operating the engine, except as needed to do the intended work.
--Diplomatic or military: This would be a temporary exemption to allow 
diplomatic or military personnel to use uncertified engines during 
their term of service in the U.S.

    We request comment on all the proposed exemptions for domestically 
produced and imported engines and vehicles.

E. Selective Enforcement Audit (Part 1068, Subpart E)

    Clean Air Act section 206(b) gives us the discretion in any program 
with vehicle or engine emission standards to do selective enforcement 
auditing of production engines. In selective enforcement auditing, we 
would choose an engine family and give the manufacturer a test order 
detailing a testing program to show that production-line engines meet 
emission standards. The proposed regulation text describes the audit 
procedures in greater detail.
    We intend generally to rely on manufacturers' testing of 
production-line engines to show that they comply with emission 
standards. However, we reserve our right to do selective enforcement 
auditing if we have reason to question the emission testing conducted 
and reported by the manufacturer.

F. Defect Reporting and Recall (Part 1068, Subpart F)

    We are proposing provisions for defect reporting. Specifically, we 
are proposing that manufacturers tell us when they learn of a defect 
occurring 25 times or more for engine families with annual sales up to 
10,000 units. This threshold of defects would increase proportionately 
for larger families. For catalyst-related defects, we propose a 
threshold of approximately half the frequency of noncatalyst problems 
to trigger a defect report. While these thresholds would depend on 
engine family sales, counting defects would not be limited to a single 
engine family. For example, if a manufacturer learns that operators 
reported 25 cases of a short-circuit in the electronic control unit 
from three different low-volume engine models spread over five years, 
that would trigger the need to file a defect report. This information 
could come from warranty claims, customer complaints, product 
performance surveys, or anywhere else. The proposed regulation language 
in Sec. 1068.501 also provides information on the thresholds for 
triggering a further investigation for where a defect report is more 
likely to be necessary. We request comment on the proposed defect 
reporting provisions.
    Under Clean Air Act section 207, if we determine that a substantial 
number of engines within an engine family, although properly used and 
maintained, do not conform to the appropriate emission standards, the 
manufacturer will be required to remedy the problem and conduct a 
recall of the noncomplying engine family. However, we also recognize 
the practical difficulty in implementing an effective recall program 
for nonroad engines. It would likely be difficult to properly identify 
all the affected owners absent a nationwide registration requirement 
similar to that for cars and trucks. The response rate for affected 
owners or operators to an emission-related recall notice is also a 
critical issue to consider. We recognize that in some cases, recalling 
noncomplying nonroad engines may not achieve sufficient environmental 
protection, so our intent is to generally allow manufacturers to 
nominate alternative remedial measures to address most potential 
noncompliance situations. We expect that successful implementation of 
appropriate alternative remediation would obviate the need for us to 
make findings of substantial nonconformity under section 207 of the 
Act. We would consider alternatives nominated by a manufacturer based 
on the following criteria; the alternatives should--
    (1) Represent a new initiative that the manufacturer was not 
otherwise planning to perform at that time, with a clear connection to 
the emission problem demonstrated by the engine family in question;
    (2) Cost more than foregone compliance costs and consider the time 
value of the foregone compliance costs and the foregone environmental 
benefit of the engine family;
    (3) Offset at least 100 percent of the emission exceedance relative 
to that

[[Page 51167]]

required to meet emission standards (or Family Emission Limits); and
    (4) Be possible to implement effectively and expeditiously and to 
complete in a reasonable time.
    These criteria would guide us in evaluating projects to determine 
whether their nature and burden is appropriate to remedy the 
environmental impact of the nonconformity. We request comment on this 
approach to addressing the Clean Air Act provisions related to recall. 
In addition, we request comment on the proposed requirement to keep 
recall-related records until three years after a manufacturer completes 
all responsibilities under a recall order.

G. Public Hearings (Part 1068, Subpart G)

    According to this regulation, manufacturers would have the 
opportunity to challenge our decision to suspend, revoke, or void an 
engine family's certificate. This also applies to our decision to 
reject the manufacturer's use of good engineering judgment (see 
Sec. 1068.005). Part 1068, subpart G, describes the proposed procedures 
for a public hearing to resolve such a dispute.

VIII. General Test Procedures

    The regulatory text in part 1065 is written with the intent to 
apply broadly to EPA engine programs. This proposal, however, applies 
to anyone who tests engines to show that they meet the emission 
standards for Large Industrial SI engines or for recreational vehicles. 
This includes certification testing, as well as all production-line and 
in-use testing. See the program descriptions above for testing 
provisions that are unique to Large SI engines. We may later propose to 
apply the same provisions to other engines, with any appropriate 
additions and changes. Recreational marine diesel engines would use the 
test procedures already adopted in 40 CFR part 94.

A. General Provisions

    As we have done in previous programs, we are proposing specific 
test procedures to define how measurements are to be made, but would 
allow the use of alternate procedures if they are shown to be 
equivalent to our specified procedures. The test procedures proposed in 
part 1065 are derived from our test procedures in 40 CFR Part 86 for 
highway heavy-duty gasoline engines and light-duty vehicles. The 
procedures have been simplified (and to some extent generalized) to 
better fit nonroad engines. We request comment on all aspects of these 
proposed test procedures. We also request comment regarding whether any 
additional parts of the test procedures contained in 40 CFR part 86 
(for highway vehicles and engines), in other parts that apply to 
nonroad engines, or in ISO 8178 should be incorporated into the final 
test procedures.

B. Laboratory Testing Equipment

    The proposed regulations do not specify the type of engine or 
chassis dynamometer that must be used during testing. Rather, they 
include performance criteria that must be met during each test. These 
criteria are intended to ensure that deviations from the specified 
speed and load duty cycle are small. Steady-state testing calls for a 
minimal degree of sophistication in the dynamometer system.
    Measuring emissions during transient operation calls for a greater 
degree of sophistication than steady-state testing. For chassis testing 
of recreational vehicles, we propose to use the specifications adopted 
in 40 CFR part 86 for highway engines. For Large SI engines, we based 
the dynamometer specifications around the capabilities of current 
dynamometers with enhanced control capabilities. Furthermore, we would 
require any EPA confirmatory testing to meet more stringent 
specifications than manufacturers testing their own engines.
    In addition, for transient testing with recreational vehicles and 
any testing with Large SI engines, the proposed regulations specify 
that emissions be measured using a full-dilution constant-volume 
sampler (CVS) like those used to measure emissions from highway 
engines. This means that during a test, an engine's exhaust would be 
routed into a dilution tunnel where it would be mixed with air, and 
then sampled using a bag sampler system. After the test, the 
concentrations of HC, CO, and NOX in the bag would be 
measured using conventional laboratory analyzers.
    For industrial spark-ignition engines and snowmobiles, the proposed 
steady-state test procedures specify measuring emissions with dilute-
sampling equipment. Some manufacturers have expressed a preference to 
continue with their established practice of using raw-sampling 
equipment and procedures. While we believe dilute-sampling is most 
appropriate for these engines, the proposed provisions for alternate 
testing procedures may allow for raw-sampling measurements. As 
specified in paragraph 1065.010(c)(3) of the proposed regulations, we 
would allow manufacturers to use alternate procedures that are shown to 
be equivalent to the proposed procedures. We request comment on this 
approach to emission-measurement procedures. Specifically, we request 
comment on the degree of equivalence that should be shown to gain 
approval of alternate procedures. See the final rule for 2007 heavy-
duty highway engine emission standards for one approach of defining a 
tolerance on equivalence for alternate procedures (66 FR 5002, January, 
18, 2001).

C. Laboratory Testing Procedures

    We are proposing specific procedures for running the test. These 
procedures are outlined briefly here, with a more detailed description 
of the most significant aspects. Before starting the test, it would be 
necessary to operate the engine for some time to improve the stability 
of the emissions, or to make the engine more representative of in-use 
engines. This is called service accumulation, and may take one of two 
forms. In the first method, a new engine is operated for about 50 hours 
as a break-in period. This would be done for most or all emission-data 
engines (for certification). The second method is much longer (up to 
the full useful life), and is done to obtain deterioration factors.
    Once an engine is ready for testing, it is connected to the 
dynamometer with its exhaust flowing into the dilution tunnel. The 
dynamometer is controlled to make the engine follow the specified duty 
cycle. A continuous sample would be collected from the dilution tunnel 
for each test segment or test mode using sample bags. These bags would 
then be analyzed to determine the concentrations of HC, CO, and 
NOX.
1. Test Speeds
    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. Until recently, we relied on engine manufacturers to declare 
reasonable rated speeds for their engines and then used the rated speed 
as the maximum test speed. However, to have a more objective measure of 
an engine's maximum test speed, we have established an objective 
procedure for measuring this engine parameter.\162\
---------------------------------------------------------------------------

    \162\ See the final rule for commercial marine diesel engines 
for a broader discussion of maximum test speed (64 FR 249, December 
29, 1999).
---------------------------------------------------------------------------

    We propose to define the maximum test speed for any engine to be 
the single point on an engine's maximum-power versus speed curve that 
lies farthest away from the zero-power, zero-speed point on a 
normalized maximum-power

[[Page 51168]]

versus speed plot. In other words, consider straight lines drawn 
between the origin (speed = 0, load = 0) and each point on an engine's 
normalized maximum-power versus speed curve. Maximum test speed is 
defined at that point where the length of this line reaches its maximum 
value. For constant-speed engines, maximum test speed is the engine's 
rated speed.
    Intermediate speed for steady-state duty cycles is generally 
defined as the speed at which the engine generates its maximum torque 
value. However, in cases where the maximum torque occurs at a speed 
that is less than 60 percent or greater than 75 percent of the rated 
speed, the intermediate speed is often specified as either 60 or 75 
percent of rated speed, whichever is closer to the speed of maximum 
torque. We propose to use this approach, using the maximum test speed 
described above to calculate these percentage values.
    We request comment on applying this method of determining rated 
speed to ATVs certified to engine-based emission standards, 
recreational marine diesel engines, and Large SI engines.
2. Maintenance
    As described in Section III.C.1, we are proposing limits on the 
amount of scheduled maintenance manufacturers may prescribe for their 
customers to ensure that engines continue to meet emission standards. 
If manufacturers would specify unreasonably frequent maintenance, there 
would be little assurance that in-use engines would continue to operate 
at certified emission levels. We would also apply these minimum 
maintenance intervals to engines the manufacturer operates for service 
accumulation before testing for emissions. For example, manufacturers 
could not install a new catalyst on a Large SI engine after 2,000 hours 
of operation, then select that engine for the in-use testing program. 
Similarly, manufacturers could not replace fuel-system components on a 
recreational vehicle during the course of service accumulation for 
establishing deterioration factors. We would not restrict scheduling of 
routine maintenance item such as changing engine oil and replacing oil, 
fuel, or air filters. We may also allow changing spark plugs, even 
though we are aware that spark plugs can significantly affect 
emissions.

IX. Projected Impacts

    This section summarizes the projected impacts of the proposed 
emission standards. The anticipated environmental benefits are compared 
with the projected cost of the program for an assessment of the cost 
per ton of reducing emissions for this proposal.

A. Environmental Impact

    To estimate nonroad engine and vehicle emission contributions, we 
used the latest version of our NONROAD emissions model. This model 
computes emission levels for a wide variety of nonroad engines, and 
uses information on emission rates, operating data, and population to 
determine annual emission levels of various pollutants. A more detailed 
description of the methodology used for projecting inventories and 
projections for additional years can be found in the Chapter 6 of the 
Draft Regulatory Support Document. We request comment on all aspects of 
the emission inventory analysis, including the usage rates and other 
inputs used in the analysis.
    Tables IX.A-1 and IX.A-2 contain the projected emission inventories 
for the years 2010 and 2020, respectively, from the engines and 
vehicles subject to this proposal under the base case (i.e., without 
the proposed standards taking effect) and assuming the proposed 
standards take effect. The percent reductions based on a comparison of 
estimated emission inventories with and without the proposed emission 
standards are also presented.

                                                   Table IX.A-1.--2010 Projected Emissions Inventories
                                                                  [Thousand short tons]
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                                                  Exhaust CO                      Exhaust NOX                      Exhaust HC**
                                                      --------------------------------------------------------------------------------------------------
                       Category                                      With                             With                             With
                                                       Base case   proposed   Percent   Base case   proposed   Percent   Base case   proposed   Percent
                                                                  standards  reduction             standards  reduction             standards  reduction
--------------------------------------------------------------------------------------------------------------------------------------------------------
Industrial SI >19kW..................................      2,615      1,152         56        397        152         62        293        111         62
Snowmobiles..........................................        567        415         27          1          1          0        213        155         27
ATVs.................................................      3,901      3,380         13         21         21          0      1,098        756         31
Off-highway motorcycles..............................        194        172         11          1          1          0        143        112         22
Recreational Marine diesel*..........................          5          5          0         31         29          7        0.9        1.0         10
                                                      --------------------------------------------------------------------------------------------------
      Total..........................................      7,282      5,124         30        451        204         55      1,748      1,135        35
--------------------------------------------------------------------------------------------------------------------------------------------------------
* We also anticipate a 2 percent reduction in direct PM from a baseline of inventory of 1,184 tons in 2010 to a control inventory of 1,158 tons.
** The Industrial SI >19 kW estimate includes both exhaust and evaporative emissions.

                                                   Table IX.A-2.--2020 Projected Emissions Inventories
                                                                  [Thousand short tons]
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                                                  Exhaust CO                      Exhaust NOX                      Exhaust HC**
                                                      --------------------------------------------------------------------------------------------------
                       Category                                      With                             With                             With
                                                       Base case   proposed   Percent   Base case   proposed   Percent   Base case   proposed   Percent
                                                                  standards  reduction             standards  reduction             standards  reduction
--------------------------------------------------------------------------------------------------------------------------------------------------------
Industrial SI >19kW..................................      2,991        231         92        486         77         84        346         50         86
Snowmobiles..........................................        609        227         63          2          2          0        229         85         63
ATVs.................................................      4,589      3,041         34         25         25          0      1,301        205         84
Off-highway motorcycles..............................        208        154         26          1          1          0        154         77         50
Recreational Marine diesel*..........................          6          6          0         39         32         17        1.3        1.0         25
                                                      --------------------------------------------------------------------------------------------------

[[Page 51169]]

      Total..........................................      8,404      3,658         56        552        137         75      2,032        418        79
--------------------------------------------------------------------------------------------------------------------------------------------------------
* We also anticipate a 6 percent reduction in direct PM from a baseline of inventory of 1,470 tons in 2020 to a control inventory of 1,390 tons.
** The Industrial SI >19 kW estimate includes both exhaust and evaporative emissions.

    As described in Section II, we project there would also be 
environmental benefits associated with reduced haze in many sensitive 
areas.
    Finally, anticipated reductions in hydrocarbon emissions correspond 
with reduced emissions of the toxic air emissions referenced in Section 
II.

B. Economic Impact

    In assessing the economic impact of setting emission standards, we 
have made a best estimate of the technologies and their associated 
costs to meet the proposed standards. In making our estimates we have 
relied on our own technology assessment, which includes information 
supplied by individual manufacturers and our own in-house testing. 
Estimated costs include variable costs (for hardware and assembly time) 
and fixed costs (for research and development, retooling, and 
certification). The analysis also considers total operating costs, 
including maintenance and fuel consumption. Cost estimates based on the 
projected technologies represent an expected change in the cost of 
engines as they begin to comply with new emission standards. All costs 
are presented in 2001 dollars. Full details of our cost analysis can be 
found in Chapter 5 of the Draft Regulatory Support Document. We request 
comment on this cost information, and the issues discussed below.
    Cost estimates based on the current projected costs for our 
estimated technology packages represent an expected incremental cost of 
vehicles in the near term. For the longer term, we have identified 
factors that would cause cost impacts to decrease over time. First, we 
project that manufacturers will generally recover their fixed costs 
over a five-year period, so these costs disappear from the analysis 
after the fifth year of production. Second, the analysis incorporates 
the expectation that manufacturers and suppliers will apply ongoing 
research and manufacturing innovation to making emission controls more 
effective and less costly over time. Research in the costs of 
manufacturing has consistently shown that as manufacturers gain 
experience in production and use, they are able to apply innovations to 
simplify machining and assembly operations, use lower cost materials, 
and reduce the number or complexity of component parts.\163\ (see the 
Draft Regulatory Support Document for additional information). The cost 
analysis generally incorporates this learning effect by decreasing 
estimated variable costs by 20 percent starting in the third year of 
production and an additional 20 percent starting in the sixth year of 
production.
---------------------------------------------------------------------------

    \163\ For further information on learning curves, see Chapter 5 
of the Economic Impact, from Regulatory Impact Analysis--Control if 
Air Pollution from New Motor Vehicles: Tier 2 Motor Vehicle 
Emissions Standards and Gasoline Sulfur Control Requirements, 
EPA420-R-99-023, December 1999. A copy of this document is included 
in Air Docket A-2000-01, at Document No. II-A-83. The interested 
reader should also refer to previous final rules for Tier 2 highway 
vehicles (65 FR 6698, February 10, 2000), marine diesel engines (64 
FR 73300, December 29, 1999), nonroad diesel engines (63 FR 56968, 
October 23, 1998), and highway diesel engines (62 FR 54694, October 
21, 1997).
---------------------------------------------------------------------------

    Table IX.B-1 summarizes the projected costs to meet the new 
emission limits (retail-price equivalent). Long-term impacts on engine 
costs are expected to decrease as manufacturers fully amortize their 
fixed costs and learn to optimize their designs and production 
processes to meet the standards more efficiently. The tables also show 
our projections of reduced operating costs for some engines (calculated 
on a net present value basis), which generally results from substantial 
reductions in fuel consumption.
    We estimate that the anticipated increase in the cost of producing 
new Large SI engines for the proposed 2004 standards is estimated to 
range from $550 to $800, depending on fuel type, with a composite 
estimated cost of $600. This cost is attributed to upgrading engines to 
operate with closed-loop fuel systems and three-way catalysts. These 
technologies also improve the overall performance of these engines, 
including improvements to fuel economy that result in reduced operating 
costs that fully offset the additional hardware cost. We further 
estimate additional costs of $45 for the 2007 standards, which 
primarily involves additional development time to optimize engines 
using the same closed-loop systems with three-way catalysts. While 
these costs are a small percentage of the cost of industrial equipment, 
we are aware that this is no small change in this very competitive 
market. Given the compelling advantages of improved performance and 
reduced operating expenses, however, we believe manufacturers will 
generally be able to recover their costs over time.\164\ We request 
comment on whether these estimated costs associated with emission 
controls would affect larger or smaller engines disproportionately to 
the overall cost of producing the engines.
---------------------------------------------------------------------------

    \164\ Chapter 5 of the Draft Regulatory Support Document 
describes why we believe market forces haven't already led 
manufacturers to add fuel-saving technologies to their products.
---------------------------------------------------------------------------

    Projected costs for ATVs and off-highway motorcycles average 
between $50 and $150 per unit. Initial standards are based on the 
emission-control capability of engines four-stroke engines. Those 
models that convert from two-stroke to four-stroke technology will see 
substantial fuel savings in addition to greatly reduced emissions. The 
second phase of standards for ATVs is based on recalibrating four-
stroke engines for lower emissions and adding a two-way catalyst or 
other device to further reduce emissions. With an averaging program 
that allows manufacturers to apply varying degrees of technology to 
different models, we believe they will be able to tailor emission 
controls in a way that reflects the marketing constraints for their 
products. Fuel savings and improved performance offsets the additional 
cost of producing most of these vehicles.
    We expect that the cost of the 2006 snowmobile standards will 
average $55 per snowmobile. These costs are based on manufacturers 
leaning out the air/fuel mixture, improving carburetors for better fuel 
control and less production

[[Page 51170]]

variation, and modifying the engine to withstand higher temperatures 
and potential misfire episodes attributed to enleanment. We expect that 
the 2010 standards will be met through the application of direct 
injection 2-stroke technology on a significant portion of the fleet, as 
well as some conversion to 4-stroke engines. We project that the cost 
of these controls would average $216 per snowmobile, although we 
believe these costs would be offset by fuel savings and improved 
performance.
    Recreational marine diesel engines would be expected to see 
increased costs averaging $443 per engine in the near term. We expect 
manufacturers to meet the proposed standards by improving fuel 
injection systems and making general design changes to the geometries, 
configurations, and calibrations of their engines. These figures are 
somewhat lower than we have projected for the comparable commercial 
marine engines, since the recreational models generally already have 
some of the emission-control technologies needed to meet the proposed 
emission standards.

                  Table IX.B-1.--Estimated Average Cost Impacts of Proposed Emission Standards
----------------------------------------------------------------------------------------------------------------
                                                                                     Increased       Lifetime
                                                                                    production       operating
                           Engine type                               Standard        cost per        costs per
                                                                                      engine*      engine (NPV)
----------------------------------------------------------------------------------------------------------------
Large SI........................................................            2004            $600         -$3,985
Large SI........................................................            2007              45  ..............
Snowmobiles.....................................................            2006              55  ..............
Snowmobiles.....................................................            2010             216            -509
ATVs............................................................            2006              60            -102
ATVs............................................................            2009              52  ..............
Off-highway motorcycles.........................................            2006             151             -98
Marine diesel...................................................            2006             443  ..............
----------------------------------------------------------------------------------------------------------------
* The estimated long-term costs decrease by about 35 percent. Costs presented for second-phase standards for
  Large SI and ATVs are incremental to the first-phase standards.

    The above analysis presents unit cost estimates for each engine 
type. These costs represent the total set of costs the engine 
manufacturers will bear to comply with emission standards. With current 
and projected estimates of engine and equipment sales, we translate 
these costs into projected direct costs to the nation for the new 
emission standards in any year. A summary of the annualized costs to 
manufacturers by equipment type is presented in Table IX.B-2. (The 
annualized costs are determined over the first twenty-years that the 
proposed standards would be effective.) The annual cost savings due to 
reduced operating expenses, start slowly, then increase as greater 
numbers of compliant engines enter the fleet. Table IX.B-2 presents a 
summary of the annualized reduced operating costs as well. Overall, we 
project, based on information currently available to us, that the 
annualized net savings to the economy would be approximately $260 
million per year.

Table IX.B-2.--Estimated Annual Cost to Manufacturers and Annual Savings
     From Reduced Operating Costs of the Proposed Emission Standards
------------------------------------------------------------------------
                                                            Annualized
                                            Annualized     savings from
                                              cost to         reduced
               Engine type                 manufacturers     operating
                                            (millions/         costs
                                               year)        (millions/
                                                               year)
------------------------------------------------------------------------
Large SI................................             $85            $324
Snowmobiles.............................              24              28
ATVs....................................              59              81
Off-highway motorcycles.................              13              10
Marine Diesel...........................               3               0
                                         -------------------------------
      Aggregate.........................             184             443
------------------------------------------------------------------------

C. Cost per Ton of Emissions Reduced

    We calculated the cost per ton of emission reductions for the 
proposed standards. For snowmobiles, this calculation is on the basis 
of CO emissions. For all other engines, we attributed the entire cost 
of the proposed program to the control of ozone precursor emissions (HC 
or NOX or both). A separate calculation could apply to 
reduced CO or PM emissions in some cases. Assigning the full compliance 
costs to a narrow emissions basis leads to cost-per-ton values that 
underestimate of the value of the proposed program.
    Table IX.C-1 presents the near-term discounted cost-per-ton 
estimates for the various engines covered by the proposal. (The 
aggregate cost-per-ton estimates are over the first 20 years of the 
proposed programs.) Reduced operating costs more than offset the 
increased cost of producing the cleaner engines for Phase 1 Large SI, 
Phase 1 ATV, and Phase 2 snowmobile engines. The cost to society and 
the associated cost-per-ton figures for these engines, and the 
aggregate values for all engines covered by this proposal, therefore 
show a net savings resulting from the proposed emission standards. The 
table presents these as $0 per ton, rather than calculating a negative 
value that has no clear meaning.

[[Page 51171]]

                    Table IX.C-1.--Estimated Cost-per-Ton of the Proposed Emission Standards
----------------------------------------------------------------------------------------------------------------
                                                               Discounted cost per ton   Discounted cost per ton
                                                  Discounted          of HC+NOX                   of CO
                                                  reductions ---------------------------------------------------
            Engine type               Standard    per engine    Without                   Without
                                                    (short        fuel      With fuel       fuel      With fuel
                                                   tons) *      savings      savings      savings      savings
----------------------------------------------------------------------------------------------------------------
Large SI (Composite of all fuels).         2004         3.14         $220           $0  ...........  ...........
Large SI (Composite of all fuels).         2007         0.56           80           80  ...........  ...........
Snowmobiles.......................         2006         1.18  ...........  ...........          $50          $50
Snowmobiles.......................         2010         0.32  ...........  ...........          670            0
ATVs..............................         2006         0.88           70            0  ...........  ...........
ATVs..............................         2009         0.09          550          550  ...........  ...........
Off-highway motorcycles...........         2006         0.37          310          110  ...........  ...........
Marine diesel.....................         2006         0.68          580          580  ...........  ...........
Aggregate.........................  ...........  ...........          140            0          100           0
----------------------------------------------------------------------------------------------------------------
* HC+NOX reductions, except snowmobiles which are CO reductions.

D. Additional Benefits

    For most of the engine categories contained in today's proposal, we 
expect there will be a fuel savings as manufacturers redesign their 
engines to comply with the proposed standards. For ATVs and off-highway 
motorcycles, the fuel savings will be realized as manufacturers switch 
from 2-stroke to 4-stroke technologies. For snowmobiles, the fuel 
savings will be realized as manufacturers switch some of their engines 
to more fuel efficient 2-stroke technologies and some of their engines 
to 4-stroke technologies. For Large SI engines, the fuel savings will 
be realized as manufacturers adopt more sophisticated and more 
efficient fuel systems. This is true for all fuels. Overall, we project 
the fuel savings associated with the anticipated changes in technology 
would be about 730 million gallons per year once the program is fully 
phased in. These savings are factored into the calculated costs and 
costs per ton of reduced emissions, as described above.
    The controls in this rule are a cost-effective means of obtaining 
reductions in NOX, NMHC and CO emissions. A related subject 
concerns the value of the health and welfare benefits these reductions 
might produce. While we have not conducted a formal benefit-cost 
analysis for this rule, we believe the benefits of this rule clearly 
will greatly outweigh any cost.
    Ozone causes a range of health problems related to breathing, 
including chest pain, coughing, and shortness of breath. Exposure to PM 
(including secondary PM formed in the atmosphere from NOX 
and NMHC emissions) has been associated in epidemiological studies with 
premature death, increased emergency room visits, and increased 
respiratory symptoms, and exacerbation of existing cardio-pulmonary 
disease. Children, the elderly, and individuals with pre-existing 
respiratory conditions are most at risk regarding both ozone and PM. In 
addition, ozone and PM adversely affect the environment in various 
ways, including crop damage, acid rain, and visibility impairment. A 
discussion of the health and welfare effects from ozone and PM can be 
found in Section II of this preamble. Interested readers should also 
refer to Chapter 1 of the Draft Regulatory Support Document for this 
rule and Chapter 2 of EPA's ``Regulatory Impact Analysis: Heavy-Duty 
Engine and Vehicle Standards and Highway Diesel Fuel Sulfur Control 
Requirements.''\165\
---------------------------------------------------------------------------

    \165\ Regulatory Impact Analysis: Heavy-Duty Engine and Vehicle 
Standards and Highway Diesel Fuel Sulfur Control Requirements, 
document EPA420-R-00-026, December 2000. Docket No. 1-2000-01, 
Document No. II-A-13. This document is also available at http://
www.epa.gov/otaq/diesel.htm#documents.
---------------------------------------------------------------------------

    In two recent mobile-source control rules, for light-duty vehicles 
(the Tier 2/Gasoline Sulfur rule) and for highway heavy-duty engines 
and diesel fuel, we conducted a full analysis of the expected benefits 
once those rules are fully implemented. These rules, which primarily 
reduced NOX and NMHC emissions, were seen to yield health 
and welfare benefits far exceeding the costs. EPA projected that 
besides reducing premature mortality, these rules will reduce chronic 
bronchitis cases, hospital admissions for respiratory and 
cardiovascular causes, asthma attacks and other respiratory symptoms, 
emergency room visits for asthma attacks, acute bronchitis, work loss 
days, minor restricted activity days, and decreased worker 
productivity.
    The majority of the benefits from those recent rules were due to 
their NOX and NMHC emission reductions. Given the 
similarities in pollutants being controlled, we would expect this rule 
to produce similar benefits per ton of emission reduction. Since the 
cost per ton of emission reduction for this rule is substantially lower 
than that for the two previous rules, we would expect an even more 
favorable benefit-cost ratio. Thus, we believe that the value of the 
health and welfare benefits of this rule would substantially outweigh 
any cost.

X. Public Participation

    We request comment on all aspects of this proposal. This section 
describes how you can participate in this process.

A. How Do I Submit Comments?

    We are opening a formal comment period by publishing this document. 
We will accept comments for the period indicated under DATES above. If 
you have an interest in the program described in this document, we 
encourage you to comment on any aspect of this rulemaking. We request 
comment on various topics throughout this proposal.
    We attempted to incorporate all the comments received in response 
to the Advance Notice of Proposed Rulemaking, though not all comments 
are addressed directly in this document. Anyone who has submitted 
comments on the Advance Notice, or any previous publications related to 
this proposal, and feels that those comments have not been adequately 
addressed is encouraged to resubmit comments as appropriate.
    Your comments will be most useful if you include appropriate and 
detailed supporting rationale, data, and analysis. If you disagree with 
parts of the proposed program, we encourage you to suggest and analyze 
alternate approaches to meeting the air quality goals described in this 
proposal. You should send all comments, except those containing 
proprietary information, to our Air Docket (see Addresses) before the 
end of the comment period.
    If you submit proprietary information for our consideration, you 
should clearly separate it from other comments

[[Page 51172]]

by labeling it ``Confidential Business Information.'' You should also 
send it directly to the contact person listed under FOR FURTHER 
INFORMATION CONTACT instead of the public docket. This will help ensure 
that no one inadvertently places proprietary information in the docket. 
If you want us to use your confidential information as part of the 
basis for the final rule, you should send a nonconfidential version of 
the document summarizing the key data or information. We will disclose 
information covered by a claim of confidentiality only through the 
application of procedures described in 40 CFR part 2. If you don't 
identify information as confidential when we receive it, we may make it 
available to the public without notifying you.

B. Will There Be a Public Hearing?

    We will hold a public hearing in the Washington, DC area on October 
24 and a second public hearing in Denver, CO on October 31. The 
hearings will start at 9:30 am and continue until everyone has had a 
chance to speak.
    If you would like to present testimony at a public hearing, we ask 
that you notify the contact person listed above at least ten days 
before the hearing. You should estimate the time you will need for your 
presentation and identify any needed audio/visual equipment. We suggest 
that you bring copies of your statement or other material for the EPA 
panel and the audience. It would also be helpful if you send us a copy 
of your statement or other materials before the hearing.
    We will make a tentative schedule for the order of testimony based 
on the notifications we receive. This schedule will be available on the 
morning of each hearing. In addition, we will reserve a block of time 
for anyone else in the audience who wants to give testimony.
    We will conduct the hearing informally, and technical rules of 
evidence won't apply. We will arrange for a written transcript of the 
hearing and keep the official record of the hearing open for 30 days to 
allow you to submit supplementary information. You may make 
arrangements for copies of the transcript directly with the court 
reporter.

XI. Administrative Requirements

A. Administrative Designation and Regulatory Analysis (Executive Order 
12866)

    Under Executive Order 12866 (58 FR 51735, October 4, 1993), the 
Agency must determine whether the regulatory action is ``significant'' 
and therefore subject to review by the Office of Management and Budget 
(OMB) and the requirements of this Executive Order. The Executive Order 
defines a ``significant regulatory action'' as any regulatory action 
that is likely to result in a rule that may:
     Have an annual effect on the economy of $100 million or 
more or adversely affect in a material way the economy, a sector of the 
economy, productivity, competition, jobs, the environment, public 
health or safety, or State, Local, or Tribal governments or 
communities;
     Create a serious inconsistency or otherwise interfere with 
an action taken or planned by another agency;
     Materially alter the budgetary impact of entitlements, 
grants, user fees, or loan programs, or the rights and obligations of 
recipients thereof; or
     Raise novel legal or policy issues arising out of legal 
mandates, the President's priorities, or the principles set forth in 
the Executive Order.
    A Draft Regulatory Support Document has been prepared and is 
available in the docket for this rulemaking and at the internet address 
listed under ADDRESSES above. This action was submitted to the Office 
of Management and Budget for review under Executive Order 12866. 
Estimated annual costs of this rulemaking, which proposes standards for 
engines in four distinct categories, are estimated to be $184 million 
per year, thus this proposed rule is considered economically 
significant. Written comments from OMB and responses from EPA to OMB 
comments are in the public docket for this rulemaking.

B. Regulatory Flexibility Act (RFA), As Amended by the Small Business 
Regulatory Enforcement Fairness Act of 1996 (SBREFA), 5 U.S.C. 601 et 
seq.

1. Overview
    The RFA generally requires an agency to prepare a regulatory 
flexibility analysis of any rule subject to notice and comment 
rulemaking requirements under the Administrative Procedure Act or any 
other statute unless the agency certifies that the rule will not have a 
significant economic impact on a substantial number of small entities. 
Small entities include small businesses, small organizations, and small 
governmental jurisdictions.
    For purposes of assessing the impacts of today's rule on small 
entities, small entity is defined as: (1) A small business that meet 
the definition for business based on SBA size standards (see table 
below); (2) a small governmental jurisdiction that is a government of a 
city, county, town, school district or special district with a 
population of less than 50,000; and (3) a small organization that is 
any not-for-profit enterprise which is independently owned and operated 
and is not dominant in its field. The following table provides an 
overview of the primary SBA small business categories potentially 
affected by this regulation.

   Primary SBA Small Business Categories Potentially Affected by This
                           Proposed Regulation
------------------------------------------------------------------------
                                  NAICS a     Defined by SBA as a small
           Industry                codes            business if b
------------------------------------------------------------------------
Motorcycles and motorcycle           336991  500 employees.
 parts manufacturers.
Snowmobile and ATV                   336999  500 employees.
 manufacturers.
Independent Commercial               421110  100 employees.
 Importers of Vehicles and
 parts.
Nonroad SI engines............       333618  1,000 employees.
Internal Combustion Engines...       333618  1,000 employees.
Boat Building and Repairing...       336612  500 employees.
Fuel Tank Manufacturers.......       336211  1,000 employees.
------------------------------------------------------------------------
Notes:
a North American Industry Classification System
b According to SBA's regulations (13 CFR part 121), businesses with no
  more than the listed number of employees or dollars in annual receipts
  are considered ``small entities'' for purposes of a regulatory
  flexibility analysis.

[[Page 51173]]

2. Background
    In accordance with Section 603 of the RFA, EPA prepared an initial 
regulatory flexibility analysis (IRFA) that examines the impact of the 
proposed rule on small entities along with regulatory alternatives that 
could reduce that impact. The IRFA is available for review in the 
docket and is summarized below.
    The process of establishing standards for nonroad engines began in 
1991 with a study to determine whether emissions of carbon monoxide 
(CO), oxides of nitrogen ( NOX), and volatile organic 
compounds (VOCs) from new and existing nonroad engines, equipment, and 
vehicles are significant contributors to ozone and CO concentrations in 
more than one area that has failed to attain the national ambient air 
quality standards for ozone and CO.\166\ In 1994, EPA finalized its 
finding that nonroad engines as a whole ``are significant contributors 
to ozone or carbon monoxide concentrations'' in more than one ozone or 
carbon monoxide nonattainment area.\167\
---------------------------------------------------------------------------

    \166\ ``Nonroad Engine and Vehicle Emission Study--Report and 
Appendices,'' EPA-21A-201, November 1991 (available in Air docket A-
91-24). It is also available through the National Technical 
Information Service, referenced as document PB 92-126960.
    \167\ 59 FR 31306 (July 17, 1994).
---------------------------------------------------------------------------

    Upon this finding, the Clean Air Act (CAA or the Act) requires EPA 
to establish standards for all classes or categories of new nonroad 
engines that cause or contribute to air quality nonattainment in more 
than one ozone or carbon monoxide (CO) nonattainment area. Since the 
finding in 1994, EPA has been engaged in the process of establishing 
programs to control emissions from nonroad engines used in many 
different applications. Nonroad categories already regulated include:
     Land-based compression ignition (CI) engines (e.g., farm 
and construction equipment),
     Small land-based spark-ignition (SI) engines (e.g., lawn 
and garden equipment, string trimmers).
     Marine engines (outboards, personal watercraft, CI 
commercial, CI engines 37kW),
     Locomotive engines.
    On December 7, 2000, EPA issued an Advance Notice of Proposed 
Rulemaking (ANPRM). As discussed in the ANPRM, the proposal under 
development will be a continuation of the process of establishing 
standards for nonroad engines and vehicles, as required by CAA section 
213(a)(3). If, as expected, standards for these engines and vehicles 
are established, essentially all new nonroad engines will be required 
to meet emissions control requirements. The proposal being developed 
covers compression-ignition recreational marine engines. It also covers 
several nonroad spark ignition (SI) engine applications, as follows:
     Land-based recreational engines (for example, engines used 
in snowmobiles, off-highway motorcycles, and all-terrain vehicles 
(ATVs)),
     Marine sterndrive and inboard (SD/I) engines and boats 
powered by SI marine engines,\168\
---------------------------------------------------------------------------

    \168\ As a shorthand notation in this document, we are using 
``recreational marine engines'' to mean recreational marine diesel 
engines and all gasoline SD/I engines, even though some SD/I 
applications could be commercial. We are similarly using 
``recreational boats'' to mean boats powered by recreational marine 
diesel engines as well as all boats powered by gasoline engines, 
even though some gasoline engine-powered boats may be commercial.
---------------------------------------------------------------------------

     Land-based engines rated over 19 kW (Large SI) (for 
example, engines used in forklifts); this category includes auxiliary 
marine engines, which are not used for propulsion.
    EPA found that the nonroad engines described above cause or 
contribute to air quality nonattainment in more than one ozone or 
carbon monoxide (CO) nonattainment area.\169\ CAA section 213 (a)(3) 
requires EPA to establish standards that achieve the greatest degree of 
emissions reductions achievable taking cost and other factors into 
account. EPA plans to propose emissions standards and related programs 
consistent with the requirements of the Act.
---------------------------------------------------------------------------

    \169\ See Final Finding, ``Control of Emissions from New Nonroad 
Spark-Ignition Engines Rated above 19 Kilowatts and New Land-Based 
Recreational Spark-Ignition Engines'' elsewhere in today's Federal 
Register for EPA's finding for Large SI engines and recreational 
vehicles. EPA's findings for marine engines are contained in 61 FR 
52088 (October 4, 1996) for gasoline engines and 64 FR 73299 
(December 29, 1999) for diesel engines.
---------------------------------------------------------------------------

    In addition to proposing standards for the nonroad vehicles and 
engines noted above, EPA also intends to review EPA requirements for 
highway motorcycles. The emissions standards for highway motorcycles 
were established twenty-three years ago. These standards allow 
motorcycles to emit about 100 times as much per mile as new cars and 
light trucks. California recently adopted new emissions standards for 
highway motorcycles, and new standards and testing cycles are being 
considered internationally. There may be opportunities to reduce 
emissions in a cost-effective way.
    The program under consideration will cover engines and vehicles 
that vary in design and use, and many readers may only be interested in 
one or two of the applications. There are various ways EPA could group 
the engines and present information. For purposes of the proposed rule 
EPA has chosen to group engines by common applications (e.g, 
recreational land-based engines, marine engines, large spark ignition 
engines used in commercial applications).
3. Summary of Regulated Small Entities
    The small entities directly regulated by this proposed rule are the 
following:
    a. Recreational Vehicles (ATVs, snowmobiles, and off-highway 
motorcycles). The ATV sector has the broadest assortment of 
manufacturers. There are seven companies representing over 95 percent 
of total domestic ATV sales. The remaining 5 percent come from 
importers who tend to import inexpensive, youth-oriented ATVs from 
China and other Asian nations. We have identified 21 small companies 
that offer off-road motorcycles, ATVs, or both products. Annual unit 
sales for these companies can range from a few hundred to several 
thousand units per year.
    Based on available industry information, four major manufacturers, 
Arctic Cat, Bombardier (also known as Ski-Doo), Polaris, and Yamaha, 
account for over 99 percent of all domestic snowmobile sales. The 
remaining one percent comes from very small manufacturers who tend to 
specialize in unique and high performance designs. We have identified 
three small manufacturers of snowmobiles and one potential small 
manufacturer who hopes to produce snowmobiles within the next year.
    Two of these manufacturers (Crazy Mountain and Fast), plus the 
potential newcomer (Redline) specialize in high performance versions of 
standard recreational snowmobile types (i.e., travel and mountain 
sleds). The other manufacturer (Fast Trax) produces a unique design, 
which is a scooter-like snowmobile designed to be ridden standing up. 
Most of these manufacturers build less than 50 units per year.
    b. Highway Motorcycles. Of the numerous manufacturers supplying the 
U.S. market for highway motorcycles, Honda, Harley Davidson, Yamaha, 
Kawasaki, Suzuki, and BMW are the largest, accounting for 95 percent or 
more of the total U.S. sales. All of these companies except Harley-
Davidson and BMW also manufacture off-road motorcycles and ATVs for the 
U.S. market. Harley-Davidson is the only company manufacturing highway 
motorcycles exclusively in the U.S. for the U.S. market.
    Since highway motorcycles have had to meet emission standards for 
the last

[[Page 51174]]

twenty years, EPA has good information on the number of companies that 
manufacture or market highway motorcycles for the U.S. market in each 
model year. In addition to the big six manufacturers noted above, EPA 
finds as many as several dozen more companies that have operated in the 
U.S. market in the last couple of model years. Most of these are U.S. 
companies that are either manufacturing or importing motorcycles, 
although a few are U.S. affiliates of larger companies in Europe or 
Asia. Some of the U.S. manufacturers employ only a few people and 
produce only a handful of custom motorcycles per year, while others may 
employ several hundred and produce up to several thousand motorcycles 
per year.
    c. Marine Vessels. Marine vessels include the boat, engine, and 
fuel system. The evaporative emission controls discussed above may 
affect the boat builders and/or the fuel tank manufacturers. Exhaust 
emission controls including NTE requirements, as addressed in the 
August 29, 1999 SBAR Panel Report, would affect the engine 
manufacturers and may affect boat builders.
    EPA has less precise information about recreational boat builders 
than is available about engine manufacturers. EPA has utilized several 
sources, including trade associations and Internet sites when 
identifying entities that build and/or sell recreational boats. EPA has 
also worked with an independent contractor to assist in the 
characterization of this segment of the industry. Finally, EPA has 
obtained a list of nearly 1,700 boat builders known to the U.S. Coast 
Guard to produce boats using engines for propulsion. At least 1,200 of 
these companies install engines that use gasoline fueled engines and 
would therefore be subject to the evaporative emission control program 
discussed above. More than 90% of the companies identified so far would 
be considered small businesses as defined by SBA. EPA continues to 
develop a more complete picture of this segment of the industry and 
will provide additional information as it becomes available.
    Based on information supplied by a variety of recreational boat 
builders, fuel tanks for boats using SI marine engines are usually 
purchased from fuel tank manufacturers. However, some boat builders 
construct their own fuel tanks. The boat builder provides the 
specifications to the fuel tank manufacturer who helps match the fuel 
tank for a particular application. It is the boat builder's 
responsibility to install the fuel tank and connections into their 
vessel design. For vessels designed to be used with small outboard 
engines, the boat builder may not install a fuel tank; therefore, the 
end user would use a portable fuel tank with a connection to the 
engine.
    EPA has determined that total sales of tanks for gasoline marine 
applications is approximately 550,000 units per year. The market is 
broken into manufacturers that produce plastic tanks and manufacturers 
that produce aluminum tanks. EPA has determined that there are at least 
seven companies that make plastic fuel tanks with total sales of 
approximately 440,000 units per year. EPA has determined that there at 
least four companies that make aluminum fuel tanks with total sales of 
approximately 110,000 units per year. All but one of these plastic and 
aluminum fuel tank manufacturers is a small business as defined under 
SBA.
    EPA has determined that there are at least 16 companies that 
manufacture CI diesel engines for recreational vessels. Nearly 75 
percent of diesel engines sales for recreational vessels in 2000 can be 
attributed to three large companies. Six of the 16 identified companies 
are considered small businesses as defined by SBA. Based on sales 
estimates for 2000, these six companies represent approximately 4 
percent of recreational marine diesel engine sales. The remaining 
companies each comprise between two and seven percent of sales for 
2000.
    EPA has determined that there are at least 24 companies that 
manufacture SD/I gasoline engines (including airboats and jet boats) 
for recreational vessels. Seventeen of the identified companies are 
considered small businesses as defined by SBA. These 17 companies 
represent approximately 6 percent of recreational gasoline marine 
engines sales for 2000. Approximately 70-80 percent of gasoline SD/I 
engines manufactured in 2000 can be attributed to one company. The next 
largest company is responsible for about 10-20 percent of 2000 sales.
    d. Large Spark Ignition Engines. EPA is aware of one engine 
manufacturer of Large SI engines that qualifies as a small business. 
This company plans to produce engines that meet the standards adopted 
by CARB in 2004, with the possible exception of one engine family. If 
EPA adopts long-term standards, this would require manufacturers to do 
additional calibration and testing work. If EPA adopts new test 
procedures (including transient operation), there may also be a cost 
associated with upgrading test facilities.
4. Potential Reporting, Record Keeping, and Compliance
    For any emission control program, EPA must have assurances that the 
regulated engines will meet the standards. Historically, EPA programs 
have included provisions placing manufacturers responsible for 
providing these assurances. The program that EPA is considering for 
manufacturers subject to this proposal may include testing, reporting, 
and record keeping requirements. Testing requirements for some 
manufacturers may include certification (including deterioration 
testing), and production line testing. Reporting requirements would 
likely include test data and technical data on the engines including 
defect reporting. Manufacturers would likely have to keep records of 
this information.
5. Related Federal Rules
    The Panel is aware of several other current Federal rules that 
relate to the proposed rule under development. During the Panel's 
outreach meeting, SERs specifically pointed to Consumer Product Safety 
Commission (CPSC) regulations covering ATVs, and noted that they may be 
relevant to crafting an appropriate definition for a competition 
exclusion in this category. The Panel recommends that EPA continue to 
consult with the CPSC in developing a proposed and final rule in order 
to better understand the scope of the Commission's regulations as they 
may relate to the competition exclusion.
    Other SERs, representing manufacturers of marine engines, noted 
that the U.S. Coast Guard regulates vessel tanks, most notably tank 
pressure and anti-siphoning requirements for carburetted engines. Tank 
manufacturers would have to take these requirements into account in 
designing evaporative control systems. The Panel recommends that EPA 
continue to work with the Coast Guard to evaluate the safety 
implications of any proposed evaporative emissions standards and to 
avoid interference with Coast Guard safety regulations.
    The Panel is also aware of other Federal rules that relate to the 
categories that EPA would address with the proposed rule, but are not 
likely to affect policy considerations in the rule development process. 
For example, there are now EPA noise standards covering off-road 
motorcycles; however, EPA expects that most emission control devices 
are likely to reduce, rather than increase, noise, and that therefore 
the noise standards are not likely to be important in developing a 
proposed rule.

[[Page 51175]]

    OTAQ is currently developing a proposal that would revise the rule 
assigning fees to be paid by parties required to certify engines in 
return for continuing Government oversight and testing. Among other 
options, EPA could propose to extend the fee structure to several 
classes of non-road engines for which requirements are being 
established for the first time under the Recreation Rule. The Panel 
understands that EPA will carefully examine the potential impacts of 
the Fees Rule on small businesses. The Panel also notes that EPA's 
Office of Air Quality, Planning, and Standards (OAQPS) is preparing a 
Maximum Achievable Control Technology (MACT) standard for Engine 
Testing Facilities, which is a related matter.
6. Significant Panel Findings
    The Panel considered a wide range of options and regulatory 
alternatives for providing small businesses with flexibility in 
complying with the proposed emissions standards and related 
requirements. As part of the process, the Panel requested and received 
comment on several ideas for flexibility that were suggested by SERs 
and Panel members. The major options recommended by the Panel are 
summarized below. The complete set of recommendations can be found in 
Section 9 of the Panel's full Report.
    Many of the flexible approaches recommended by the Panel can be 
applied to several of the equipment categories that would potentially 
be affected by the proposed rule EPA is developing. These approaches 
are identified in Table 1. First Tier Flexibilities: Based on 
consultations with SERs, the Panel believes that the first four 
provisions in Table 1 are likely to provide the greatest flexibility 
for many small entities. These provisions are likely to be most 
valuable because they either provide more time for compliance (e.g., 
additional leadtime and hardship provisions) or allow for certification 
of engines based on particular engine designs or certification to other 
EPA programs. Second Tier Flexibilities: The remaining four approaches 
have the potential to reduce near-term and even long-term costs once a 
small entity has a product it is preparing to certify. These are 
important in that the costs of testing multiple engine families, 
testing a fraction of the production line, and/or developing 
deterioration factors can be significant. Small businesses could also 
meet an emission standard on average or generate credits for producing 
engines which emit at levels below the standard; these credits could 
then be sold to other manufacturers for compliance or banked for use in 
future model years.
    During the consultation process, it became evident that, in a few 
situations, it could be helpful to small entities if unique provisions 
were available. Five such provisions are described below.
    a. Snowmobiles. The Panel recommends EPA seek comment on a 
provision which would allow small snowmobile manufacturers to petition 
EPA for a relaxed standard for one or more engine families, up to 300 
engines per year, until the family is retired or modified, if such a 
standard is justifiable based on the criteria described in the Panel 
report.
    b. ATVs and Off-road Motorcycles. The Panel recommends that the 
hardship provision for ATVs and off-road motorcycles allow hardship 
relief to be reviewed annually for a period that EPA anticipates will 
likely be no more than two years in order for importers to obtain 
complying products.
    c. Large SI. The Panel recommends that small entities be granted 
the flexibility initially to reclassify a small number of their small 
displacement engines into EPA's small spark-ignition engine program (40 
CFR 90). Small entities would be allowed to use those requirements in 
lieu of the requirements EPA intends to propose for large entities.
    d. Marine Vessel Tanks. Most of this sector involves small fuel 
tank manufacturers and small boat builders. The Panel recommends that 
the program be structured with longer lead times and an early credit 
generation program to enable the fuel tank manufacturers to implement 
controls on tanks on a schedule consistent with their normal turnover 
of fuel tank molds.
    e. Highway Motorcycles. The California Air Resources Board (CARB) 
has found that California's Tier 2 standard is potentially infeasible 
for small manufacturers. Therefore, the Panel recommends that EPA delay 
making decisions on the applicability to small businesses of Tier 2 or 
other such revisions to the federal regulations until California's 2006 
review is complete.
7. Summary of SBREFA Process and Panel Outreach
    As required by section 609(b) of the RFA, as amended by SBREFA, EPA 
conducted outreach to small entities and convened a Small Business 
Advocacy Review Panel to obtain advice and recommendations of 
representatives of the small entities that potentially would be subject 
to the rule's requirements.
    On May 3, 2001, EPA's Small Business Advocacy Chairperson convened 
this Panel under Section 609(b) of the Regulatory Flexibility Act (RFA) 
as amended by the Small Business Regulatory Enforcement Fairness Act of 
1996 (SBREFA). In addition to the Chair, the Panel consisted of the 
Director of the Assessment and Standards Division (ASD) within EPA's 
Office of Transportation and Air Quality, the Chief Counsel for 
Advocacy of the Small Business Administration, and the Deputy 
Administrator of the Office of Information and Regulatory Affairs 
within the Office of Management and Budget. As part of the SBAR 
process, the Panel met with small entity representatives (SERs) to 
discuss the potential emission standards and, in addition to the oral 
comments from SERs, the Panel solicited written input. In the months 
preceding the Panel process, EPA conducted outreach with small entities 
from each of the five sectors as described above. On May 18, 2001, the 
Panel distributed an outreach package to the SERs. On May 30 and 31, 
2001, the Panel met with SERs to hear their comments on preliminary 
alternatives for regulatory flexibility and related information. The 
Panel also received written comments from the SERs in response to the 
discussions at this meeting and the outreach materials. The Panel asked 
SERs to evaluate how they would be affected under a variety of 
regulatory approaches, and to provide advice and recommendations 
regarding early ideas for alternatives that would provide flexibility 
to address their compliance burden.
    SERs representing companies in each of the sectors addressed by the 
Panel raised concerns about the potential costs of complying with the 
rules under development. For the most part, their concerns were focused 
on two issues: (1) The difficulty (and added cost) that they would face 
in complying with certification requirements associated with the 
standards EPA is developing, and (2) the cost of meeting the standards 
themselves. SERs observed that these costs would include the 
opportunity cost of deploying resources for research and development, 
expenditures for tooling/retooling, and the added cost of new engine 
designs or other parts that would need to be added to equipment in 
order to meet EPA emission standards. In addition, in each category, 
the SERs noted that small manufacturers (and in the case of one 
category, small importers) have fewer resources and are therefore less 
well equipped to undertake these new activities and expenditures. 
Furthermore, because their product lines tend to be smaller,

[[Page 51176]]

any additional fixed costs must be recovered over a smaller number of 
units. Thus, absent any provisions to address these issues, new 
emission standards are likely to impose much more significant adverse 
effects on small entities than on their larger competitors.
    The Panel discussed each of the issues raised in the outreach 
meetings and in written comments by the SERs. The Panel agreed that EPA 
should consider the issues raised by the SERs and that it would be 
appropriate for EPA to propose and/or request comment on various 
alternative approaches to address these concerns. The Panel's key 
discussions centered around the need for and most appropriate types of 
regulatory compliance alternatives for small businesses. The Panel 
considered a variety of provisions to reduce the burden of complying 
with new emission standards and related requirements. Some of these 
provisions would apply to all companies (e.g., averaging, banking, and 
trading), while others would be targeted at the unique circumstances 
faced by small businesses. A complete discussion of the regulatory 
alternatives recommended by the Panel can be found in the Final Panel 
Report. Copies of the Final Report can be found in the docket for this 
rulemaking or at www.epa.gov/sbrefa. Summaries of the Panel's 
recommended alternatives for each of the sectors subject to this action 
can be found in the respective sections of the preamble.
    As required by section 609(b) of the RFA, as amended by SBREFA, EPA 
also conducted outreach to small entities and convened a Small Business 
Advocacy Review Panel to obtain advice and recommendations of 
representatives of the small entities that potentially would be subject 
to the rule's requirements. EPA's Small Business Advocacy Chairperson 
convened this on May 3, 2001. In addition to the Chair, the Panel 
consisted of the Director of the Assessment and Standards Division 
(ASD) within EPA's Office of Transportation and Air Quality, the Chief 
Counsel for Advocacy of the Small Business Administration, and the 
Deputy Administrator of the Office of Information and Regulatory 
Affairs within the Office of Management and Budget.
    The proposal being developed covers diesel engines used in 
recreational marine applications. It also covers several nonroad spark 
ignition (SI) engine applications, as follows:
     Land-based recreational engines (for example, engines used 
in snowmobiles, off-highway motorcycles, and all-terrain vehicles 
(ATVs)),
     Marine sterndrive and inboard (SD/I) engines and boats 
powered by SI marine engines,
     Land-based engines rated over 19 kW (Large SI) (for 
example, engines used in forklifts); this category includes auxiliary 
marine engines, which are not used for propulsion.
    In addition to the nonroad vehicles and engines noted above, EPA 
also intends to update EPA requirements for highway motorcycles. 
Finally, the proposal being developed included evaporative emission 
control requirements for gasoline fuel tanks and systems used on marine 
vessels.
    The Panel met with Small Entity Representatives (SERs) to discuss 
the potential emissions standards and, in addition to the oral comments 
from SERs, the Panel solicited written input. In the months preceding 
the Panel process, EPA conducted outreach with small entities from each 
of the five sectors as described above. On May 18, 2001, the Panel 
distributed an outreach package to the SERs. On May 30 and 31, 2001, 
the Panel met with SERs to hear their comments on preliminary options 
for regulatory flexibility and related information. The Panel also 
received written comments from the SERs in response to the discussions 
at this meeting and the outreach materials. The Panel asked SERs to 
evaluate how they would be affected under a variety of regulatory 
approaches, and to provide advice and recommendations regarding early 
ideas to provide flexibility. See Section 8 of the Panel Report for a 
complete discussion of SER comments, and Appendices A and B for 
summaries of SER oral comments and SER written comments.
    Consistent with the RFA/SBREFA requirements, the Panel evaluated 
the assembled materials and small-entity comments on issues related to 
the elements of the IRFA. A copy of the Panel report is included in the 
docket for this proposed rule. The following are Panel recommendations 
adopted by the Agency. Please note all Panel recommendations were 
adopted for this proposal.
    a. Related Federal Rules. The Panel recommends that EPA continue to 
consult with the CPSC in developing a proposed and final rule in order 
to better understand the scope of the Commission's regulations as they 
may relate to the competition exclusion. In addition, the Panel 
recommends that EPA continue to work with the Coast Guard to evaluate 
the safety implications of any proposed evaporative emissions standards 
and to avoid interference with Coast Guard safety regulations.
    b. Regulatory Flexibility Alternatives. The Panel recommends that 
EPA consider and seek comments on a wide range of alternatives, 
including the flexibility options described below.
    c. Large SI Engines. The Panel recommends that EPA propose several 
possible provisions to address concern that the new EPA standards could 
potentially place small businesses at a competitive disadvantage to 
larger entities in the industry. These provisions are described below.
    Using Certification and Emissions Standards from Other EPA 
Programs. The Panel made several recommendations for this provision. 
First, the Panel recommends that EPA temporarily expand this 
arrangement to allow small numbers of constant-speed engines up to 2.5 
liters (up to 30 kW) to be certified to the Small SI standards. Second, 
the Panel further recommends that EPA seek comment on the 
appropriateness of limiting the sales level of 300. Third, the Panel 
recommends that EPA request comment on the anticipated cap of 30 kW on 
the special treatment provisions outlined above, or whether a higher 
cap on power rating is appropriate. Finally, the Panel recommends that 
EPA propose to allow small-volume manufacturers producing engines up to 
30 kW to certify to the small SI standards during the first 3 model 
years of the program. Thereafter, the standards and test procedures 
which could apply to other companies at the start of the program would 
apply to small businesses.
    Delay of Proposed Standards. If EPA includes a second phase of 
standards in its proposal, the Panel recommends that EPA propose to 
delay the applicability of these standards to small-volume 
manufacturers for three years beyond the date at which they would 
generally apply to accommodate the possibility that small companies 
need to undertake further design work to adequately optimize their 
designs and to allow them to recover the costs associated with the 
Phase 1 emission standards that EPA is contemplating.
    Production Line Testing. The Panel made several recommendations for 
this provision. First, the Panel recommends that EPA adopt provisions 
that allow more flexibility than is available under the California 
Large SI program or other EPA programs generally to address the concern 
that production-line testing is another area where small-volume 
manufacturers typically face a difficult testing burden. Second, the 
Panel recommends that EPA allow small-volume manufacturers to have a 
reduced testing rate if they have consistently good test results from

[[Page 51177]]

testing production-line engines. Finally, the Panel recommends that EPA 
allow small-volume manufacturers to use alternative low-cost testing 
options to show that production-line engines meet emission standards.
    Deterioration Factors. The Panel recommends that EPA allow small-
volume manufacturers to develop a deterioration factor based on 
available emissions measurements and good engineering judgement.
    Hardship Provision. The Panel recommends that EPA propose two types 
of hardship provisions for Large SI engines. First the Panel recommends 
that EPA allow small businesses to petition EPA for additional lead 
time (e.g., up to 3 years) to comply with the standards. Second, the 
Panel recommends that EPA allow small businesses to apply for hardship 
relief if circumstances outside their control cause the failure to 
comply (i.e., supply contract broken by parts supplier) and if the 
failure to sell the subject engines would have a major impact on the 
company's solvency.
    d. Off-Road Motorcycles and All-Terrain Vehicles (ATVs). The Panel 
made the following recommendations for this subcategory.
    The Panel recommends that EPA propose to apply the flexibilities 
described below to engines produced or imported by small entities with 
combined off-road motorcycle and ATV annual sales of less than 5,000 
units per model year.
    The Panel recommends that EPA request comment on the 
appropriateness of the 5,000 unit per model year threshold.
    The Panel recommends that EPA request comment on allowing small 
entities with sales in excess of 5,000 units to certify using the 
flexible approaches described below for a number of engines equal to 
their 2000 or 2001 sales level.
    The Panel recommends that EPA describe and seek comment on the 
effect of the proposed standard on these entities, including a request 
for any data and/or related studies to estimate the extent to which 
sales of their products are likely to be reduced as a result of changes 
in product price that are attributable to the proposed standards.
    The Panel recommends that, in the final rule, EPA assess any 
information received in response to this request for purposes of 
informing the final rule decision making process on whether additional 
flexibility (beyond that considered in this report) is warranted.
    Additional Lead-time to Meet the Proposed Standards. First, the 
Panel recommends that EPA propose at least a two year delay, but seek 
comment on whether a larger time period is appropriate given the costs 
of compliance for small businesses and the relationship between 
importers and their suppliers. Second, the Panel recommends that EPA 
provide additional time for small volume manufacturers to revise their 
manufacturing process, and would allow importers to change their supply 
chain to acquire complying products. Third, the Panel recommends that 
EPA request comment on the appropriate length for a delay (lead-time).
    Design Certification. First, the Panel recommends that EPA propose 
to permit small entities to use design certification. Second, the Panel 
recommends that EPA work with the Small Entity Representatives and 
other members of the industry to develop appropriate criteria for such 
design based certification.
    Broaden Engine Families. The Panel recommends that EPA request 
comment on engine family flexibility and conducting design-based 
certification emissions testing.
    Production Line Testing Waiver. The Panel recommends that EPA 
propose to provide small manufacturers and small importers a waiver 
from manufacturer production line testing. The Panel also recommends 
that EPA request comment on whether limits or the scope of this waiver 
are appropriate.
    Use of Assigned Deterioration Factors During Certification. The 
Panel recommends that EPA propose to provide small business with the 
option to use assigned deterioration factors.
    Using Certification and Emissions Standards from Other EPA 
Programs. The Panel recommends that EPA propose to provide small 
business with this flexibility through the fifth year of the proposed 
program and request comment on which of the already established 
standards and programs are believed to be a useful certification option 
for the small businesses.
    Averaging, Banking, and Trading. The Panel recommends that EPA 
propose to provide small business with the same averaging, banking, and 
trading program flexibilities proposed for large manufacturers and 
request comment on how the provisions could be enhanced for small 
business to make them more useful.
    Hardship Provisions. The Panel recommends that EPA propose two 
types of hardship program for off-road motorcycles and ATVs: (1) EPA 
should allow small manufacturers and small importers to petition EPA 
for limited additional lead-time to comply with the standards; and (2) 
allow small manufacturers and small importers to apply for hardship 
relief if circumstances outside their control cause the failure to 
comply (i.e. supply contract broken by parts supplier) and if failure 
to sell the subject engines or vehicles would have a major impact on 
the company's solvency.
    The Panel also recommends that EPA propose both aspects of the 
hardship provisions for small off-road motorcycle and ATV manufacturers 
and importers and seek comment on the implementation provisions.
    e. Marine Vessels. Burden Reduction Approaches Designed for Small 
Boat Builders and Fuel Tank Manufacturers.
    Smooth Transition to Proposed Standards. The Panel recommends that 
EPA propose an approach that would implement any evaporative standards 
five years after a regulation for marine engines takes effect. The 
Panel also recommends that EPA seek comment on this five year period 
and on whether there are small entities whose product line is dominated 
by tanks that turn over at a time rate slower time than five years.
    Design-Based Certification. The Panel recommends that EPA propose 
to grant small businesses the option of certifying to the evaporative 
emission performance requirements based on fuel tank design 
characteristics that reduce emissions. The Panel also recommends that 
EPA seek comment on and consider proposing an approach that would allow 
manufacturers to use this averaging approach with designs other than 
those listed in the final rule.
    ABT of Emission Credits with Design-Based Certification. The Panel 
recommends that EPA allow manufacturers using design-based 
certification to generate credits. The Panel also recommends that EPA 
provide adequately detailed design specifications and associated 
emission levels for several technology options that could be used to 
certify.
    Broadly Defined Product Certification Families. The Panel 
recommends that EPA take comment on the need for broadly defined 
emission families and how these families should be defined.
    Hardship Provisions. The Panel recommends that EPA propose two 
types of hardship programs for marine engine manufacturers and fuel 
tank manufacturers: (1) Allow small businesses to petition EPA for 
additional lead time to comply with the standards; and (2) allow small 
businesses to apply for hardship relief if circumstances outside their 
control cause the failure to comply (i.e. supply contract broken by 
parts supplier) and if the failure to sell the subject fuel tanks

[[Page 51178]]

or boats would have a major impact on the company's solvency. The Panel 
also recommends that EPA work with small manufacturers to develop these 
criteria and how they would be used.
    Burden Reduction Approaches Designed for Small Marinizers of Marine 
Engines with Respect to NTE Provisions. The Panel recommends that EPA 
propose to specifically include NTE in this design-based approach, if 
EPA proposes a standard that includes NTE for small marinizers.
    f. Snowmobiles. Delay of Proposed Standards. The Panel recommends 
that EPA propose to delay the standards for small snowmobile 
manufacturers by two years from the date at which other manufacturers 
would be required to comply. The Panel also recommends that EPA propose 
that the emission standards for small snowmobile manufacturers be 
phased in over an additional two year (four years to fully implement 
the standard).
    Design-Based Certification. The Panel recommends that EPA take 
comment on how a design-based certification could be applied to small 
snowmobile manufacturers and that EPA work with the small entities in 
the design and implementation of this concept.
    Broader Engine Families. The Panel recommends that EPA propose a 
provision for small snowmobile manufactures that would use relaxed 
criteria for what constitutes an engine or vehicle family.
    Elimination of Production Line Testing Requirements. The Panel 
recommends that EPA propose that small snowmobile manufacturers not be 
subject to production line testing requirements.
    Use of Assigned DF During Certification. The Panel recommends that 
EPA propose to allow small snowmobile manufacturers to elect to use 
deterioration factors determined by EPA to demonstrate end of useful 
life emission levels, thus reducing development/testing burden rather 
than performing a durability demonstration for each engine family as 
part of the certification testing requirement.
    Using Certification and Emission Standards from Other EPA Programs. 
If the manufacturer were to change the bore or stroke of the engine, it 
is likely that the engine would no longer qualify as emissions could 
increase, allow this option for small snowmobile manufacturers.
    Averaging, Banking and Trading. The Panel recommends that EPA 
propose an averaging, banking and trading program for snowmobiles, and 
seek comment on additional ABT flexibilities it should consider for 
small snowmobile manufacturers.
    Hardship Provisions. The Panel recommends that EPA propose two 
types of hardship programs for small snowmobile manufacturers: (1) 
Allow small snowmobile manufacturers to petition EPA for additional 
lead time to comply with the standards; and (2) allow small snowmobile 
manufacturers to apply for hardship relief if circumstances outside 
their control cause the failure to comply (i.e. supply contract broken 
by parts supplier) and if failure to sell the subject engines or 
vehicles would have a major impact on the company's solvency.
    Unique Snowmobile Engines. The Panel recommends that EPA seek 
comment on an additional provision, which would allow a small 
snowmobile manufacturer to petition EPA for relaxed standards for one 
or more engine families. The Panel also recommends that EPA allow a 
provision for EPA to set an alternative standard at a level between the 
prescribed standard and the baseline level until the engine family is 
retired or modified in such a way as to increase emission and for the 
provision to be extended for up to 300 engines per year per 
manufacturer would assure it is sufficiently available for those 
manufacturers for whom the need is greatest. Finally, the Panel 
recommends that EPA seek comment on initial and deadline dates for the 
submission of such petitions.
    g. Highway Motorcycles. The Panel recommends that EPA include the 
flexibilities described below for small entities with highway 
motorcycle annual sales of less than 3,000 units per model year 
(combined Class I, II, and III motorcycles) and fewer than 500 
employees.
    Delay of Proposed Standards. The Panel recommends that EPA propose 
to delay compliance with the Tier 1 standard of 1.4 g/km 
HC+NOX until the 2008 model year for small volume 
manufacturers. The Panel also recommends that EPA seek comment on 
whether additional time is needed for small businesses to comply with 
the Federal program. The Panel recommends that EPA participate with 
CARB in the 2006 progress review as these provisions are revisited, and 
delay making decisions on the applicability to small businesses of Tier 
2 or other revisions to the federal regulations that are appropriate 
following the review. The Panel also recommends that any potential Tier 
2 requirements for small manufacturer motorcycles consider potential 
test procedure changes arising from the ongoing World Motorcycle Test 
Cycle work described in the Panel Report.
    Broader Engine Families. The Panel recommends that EPA deep the 
current existing regulations for small volume highway motorcycle 
manufacturers.
    Exemption from Production Line Testing. The Panel recommends that 
EPA keep the current provisions for no mandatory production line 
testing requirement for highway motorcycles and allow the EPA to 
request production vehicles from any certifying manufacturer for 
testing.
    Averaging, Banking, and Trading (ABT). The Panel recommends that 
EPA propose an ABT program for highway motorcycles.
    Hardship Provisions. The Panel recommends that EPA propose two 
types of hardship programs for highway motorcycles: (1) Allow small 
businesses to petition EPA for additional lead time to comply with the 
standards; and (2) allow small businesses to apply for hardship relief 
if circumstances outside their control cause the failure to comply 
(i.e. supply contract broken by parts supplier) and if failure to sell 
the subject engines or vehicles would have a major impact on the 
company's solvency. The Panel also recommends that EPA request comment 
on the California requirements, which do not include hardship 
provisions.
    Reduced Certification Data Submittal and Testing Requirements. The 
Panel recommends that EPA keep current EPA regulations allow 
significant flexibility for certification by manufacturers who project 
fewer than 10,000 unit sales of combined Class I, II, and III 
motorcycles.
    We invite comments on all aspects of the proposal and its impacts 
on small entities.

C. Paperwork Reduction Act

    The information collection requirements (ICR) in this proposed rule 
will be submitted for approval to the Office of Management and Budget 
(OMB) under the Paperwork Reduction Act, 44 U.S.C. 3501 et seq. We will 
announce in a separate Federal Register Notice that the ICR has been 
submitted to OMB and will take comments on the proposed ICR at that 
time.
    The Agency may not conduct or sponsor an information collection, 
and a person is not required to respond to a request for information, 
unless the information collection request displays a currently valid 
OMB control number. The OMB control numbers for EPA's regulations are 
listed in 40 CFR Part 9 and 48 CFR Chapter 15.

[[Page 51179]]

D. Intergovernmental Relations

1. Unfunded Mandates Reform Act
    Title II of the Unfunded Mandates Reform Act of 1995 (UMRA), Public 
Law 104-4, establishes requirements for federal agencies to assess the 
effects of their regulatory actions on state, local, and tribal 
governments and the private sector. Under section 202 of the UMRA, EPA 
generally must prepare a written statement, including a cost-benefit 
analysis, for proposed and final rules with ``federal mandates'' that 
may result in expenditures to state, local, and tribal governments, in 
the aggregate, or to the private sector, of $100 million or more in any 
one year. Before promulgating an EPA rule for which a written statement 
is needed, section 205 of the UMRA generally requires EPA to identify 
and consider a reasonable number of regulatory alternatives and adopt 
the least costly, most cost-effective, or least burdensome alternative 
that achieves the objectives of the rule. The provisions of section 205 
do not apply when they are inconsistent with applicable law. Moreover, 
section 205 allows EPA to adopt an alternative other than the least 
costly, most cost-effective, or least burdensome alternative if the 
Administrator publishes with the final rule an explanation of why that 
alternative was not adopted.
    Before EPA establishes any regulatory requirements that may 
significantly or uniquely affect small governments, including tribal 
governments, it must have developed under section 203 of the UMRA a 
small government agency plan. The plan must provide for notifying 
potentially affected small governments, enabling officials of affected 
small governments to have meaningful and timely input in the 
development of EPA regulatory proposals with significant federal 
intergovernmental mandates, and informing, educating, and advising 
small governments on compliance with the regulatory requirements.
    This rule contains no federal mandates for state, local, or tribal 
governments as defined by the provisions of Title II of the UMRA. The 
rule imposes no enforceable duties on any of these governmental 
entities. Nothing in the rule would significantly or uniquely affect 
small governments.
    EPA has determined that this rule contains federal mandates that 
may result in expenditures of more than $100 million to the private 
sector in any single year. EPA believes that the proposal represents 
the least costly, most cost-effective approach to achieve the air 
quality goals of the rule. The costs and benefits associated with the 
proposal are discussed in Section IX and in the Draft Regulatory 
Support Document, as required by the UMRA.
2. Consultation and Coordination With Indian Tribal Governments 
(Executive Order 13084)
    On January 1, 2001, Executive Order 13084 was superseded by 
Executive Order 13175. However, the proposed rule was developed during 
the period when Executive Order 13084 was still in force, and so tribal 
considerations were addressed under Executive Order 13084. Development 
of the final rule will address tribal considerations under Executive 
Order 13175.
    Under Executive Order 13084, EPA may not issue a regulation that is 
not required by statute, that significantly or uniquely affects the 
communities of Indian tribal governments, and that imposes substantial 
direct compliance costs on those communities, unless the Federal 
government provides the funds necessary to pay the direct compliance 
costs incurred by the tribal governments, or EPA consults with those 
governments. If EPA complies by consulting, Executive Order 13084 
requires EPA to provide to the Office of Management and Budget, in a 
separately identified section of the preamble to the rule, a 
description of the extent of EPA's prior consultation with 
representatives of affected tribal governments, a summary of the nature 
of their concerns, and a statement supporting the need to issue the 
regulation. In addition, Executive Order 13084 requires EPA to develop 
an effective process permitting elected officials and other 
representatives of Indian tribal governments ``to provide meaningful 
and timely input in the development of regulatory policies on matters 
that significantly or uniquely affect their communities.''
    This proposal does not significantly or uniquely affect the 
communities of Indian Tribal governments. The proposed emission 
standards and other related requirements for private businesses in this 
proposal would have national applicability, and thus would not uniquely 
affect the communities of Indian Tribal Governments. Further, no 
circumstances specific to such communities exist that would cause an 
impact on these communities beyond those discussed in the other 
sections of this proposal. Thus, EPA's conclusions regarding the 
impacts from the implementation of this proposed rule discussed in the 
other sections are equally applicable to the communities of Indian 
Tribal governments. Accordingly, the requirements of Section 3(b) of 
Executive Order 13084 do not apply to this rule.

E. National Technology Transfer and Advancement Act

    Section 12(d) of the National Technology Transfer and Advancement 
Act of 1995 (``NTTAA''), Public Law 104-113, Section 12(d) (15 U.S.C. 
272 note) directs EPA to use voluntary consensus standards in its 
regulatory activities unless doing so would be inconsistent with 
applicable law or otherwise impractical. Voluntary consensus standards 
are technical standards (e.g., materials specifications, test methods, 
sampling procedures, and business practices) that are developed or 
adopted by voluntary consensus standards bodies. NTTAA directs EPA to 
provide Congress, through OMB, explanations when the Agency decides not 
to use available and applicable voluntary consensus standards.
    This proposed rule involves technical standards. The following 
paragraphs describe how we specify testing procedures for engines 
subject to this proposal.
    The International Organization for Standardization (ISO) has a 
voluntary consensus standard that can be used to test Large SI engines. 
However, the current version of that standard (ISO 8178) is applicable 
only for steady-state testing, not for transient testing. As described 
in the Draft Regulatory Support Document, transient testing is an 
important part of the proposed emission-control program for these 
engines. We are therefore not proposing to adopt the ISO procedures in 
this rulemaking.
    Underwriters Laboratories (UL) has adopted voluntary consensus 
standards for forklifts that are relevant to the proposed requirements 
for Large SI engines. UL sets a maximum temperature specification for 
gasoline and, for forklifts used in certain applications, defines 
requirements to avoid venting from gasoline fuel tanks. We are 
proposing a different temperature limit, because the maximum 
temperature specified by UL does not prevent fuel boiling. We are 
proposing separate measures to address venting of gasoline vapors, 
because of UL's provisions to allow venting with an orifice up to 1.78 
mm (0.070 inches). We believe forklifts with such a vent would have 
unnecessarily high evaporative emissions. If the UL standard is revised 
to address these technical concerns, the UL standards would appropriate 
to reference in our regulations. An additional concern relates to the 
fact that the UL requirements apply only to forklifts (and not all 
forklifts in the case of the restriction on vapor venting). EPA

[[Page 51180]]

regulations would therefore need to, at a minimum, extend any published 
UL standards to other engines and equipment to which the UL standards 
would otherwise not apply.
    We are proposing to test off-highway motorcycles and all-terrain 
vehicles with the Federal Test Procedure, a chassis-based transient 
test. There is no voluntary consensus standard that would adequately 
address engine or vehicle operation for suitable emission measurement. 
Furthermore, we are interested in pursuing an engine-based test 
procedure for all-terrain vehicles. We would need to develop a new duty 
cycle for this, because there is no acceptable engine duty cycle today 
that would adequately represent the way these engines operate. For 
snowmobiles, we are proposing test procedures based on work that has 
been published, but not yet adopted as a voluntary consensus standard.
    For recreational marine diesel engines, we are proposing the same 
test procedures that we have adopted for commercial marine diesel 
engines (with a new duty cycle appropriate for recreational 
applications). We are again proposing these procedures in place of the 
ISO 8178 standard that would apply to these engines. We believe that 
ISO 8178 relies too heavily on reference testing conditions. Because 
our test procedures need to represent in-use operation typical of 
operation in the field, they must be based on a range of ambient 
conditions. We determined that the ISO procedures are not broadly 
usable in their current form, and therefore should not be adopted by 
reference. We remain hopeful that future ISO test procedures will be 
developed that are usable and accurate for the broad range of testing 
needed, and that such procedures could then be adopted. We expect that 
any such development of revised test procedures will be done in 
accordance with ISO procedures and in a balanced and transparent manner 
that includes the involvement of all interested parties, including 
industry, U.S. EPA, foreign government organizations, state 
governments, and environmental groups. In so doing, we believe that the 
resulting procedures would be ``global'' test procedures that can 
facilitate the free flow of international commerce for these products.

F. Protection of Children (Executive Order 13045)

    Executive Order 13045, ``Protection of Children from Environmental 
Health Risks and Safety Risks'' (62 FR 19885, April 23, 1997) applies 
to any rule that (1) is determined to be ``economically significant'' 
as defined under Executive Order 12866, and (2) concerns an 
environmental health or safety risk that EPA has reason to believe may 
have a disproportionate effect on children. If the regulatory action 
meets both criteria, Section 5-501 of the Order directs the Agency to 
evaluate the environmental health or safety effects of the planned rule 
on children, and explain why the planned regulation is preferable to 
other potentially effective and reasonably feasible alternatives 
considered by the Agency.
    This proposed rule is not subject to the Executive Order because it 
does not involve decisions on environmental health or safety risks that 
may disproportionately affect children.
    The effects of ozone and PM on children's health were addressed in 
detail in EPA's rulemaking to establish the NAAQS for these pollutants, 
and EPA is not revisiting those issues here. EPA believes, however, 
that the emission reductions from the strategies proposed in this 
rulemaking will further reduce air toxics and the related adverse 
impacts on children's health.

G. Federalism (Executive Order 13132)

    Executive Order 13132, entitled ``Federalism'' (64 FR 43255, August 
10, 1999), requires EPA to develop an accountable process to ensure 
``meaningful and timely input by State and local officials in the 
development of regulatory policies that have federalism implications.'' 
``Policies that have federalism implications'' is defined in the 
Executive Order to include regulations that have ``substantial direct 
effects on the States, on the relationship between the national 
government and the States, or on the distribution of power and 
responsibilities among the various levels of government.''
    Under Section 6 of Executive Order 13132, EPA may not issue a 
regulation that has federalism implications, that imposes substantial 
direct compliance costs, and that is not required by statute, unless 
the Federal government provides the funds necessary to pay the direct 
compliance costs incurred by State and local governments, or EPA 
consults with State and local officials early in the process of 
developing the proposed regulation. EPA also may not issue a regulation 
that has federalism implications and that preempts State law, unless 
the Agency consults with State and local officials early in the process 
of developing the proposed regulation.
    Section 4 of the Executive Order contains additional requirements 
for rules that preempt State or local law, even if those rules do not 
have federalism implications (i.e., the rules will not have substantial 
direct effects on the States, on the relationship between the national 
government and the states, or on the distribution of power and 
responsibilities among the various levels of government). Those 
requirements include providing all affected State and local officials 
notice and an opportunity for appropriate participation in the 
development of the regulation. If the preemption is not based on 
express or implied statutory authority, EPA also must consult, to the 
extent practicable, with appropriate State and local officials 
regarding the conflict between State law and Federally protected 
interests within the agency's area of regulatory responsibility.
    This proposed rule does not have federalism implications. It will 
not have substantial direct effects on the States, on the relationship 
between the national government and the States, or on the distribution 
of power and responsibilities among the various levels of government, 
as specified in Executive Order 13132.
    Although Section 6 of Executive Order 13132 does not apply to this 
rule, EPA did consult with representatives of various State and local 
governments in developing this rule. EPA has also consulted 
representatives from STAPPA/ALAPCO, which represents state and local 
air pollution officials.
    In the spirit of Executive Order 13132, and consistent with EPA 
policy to promote communications between EPA and State and local 
governments, EPA specifically solicits comment on this proposed rule 
from State and local officials.

H. Energy Effects (Executive Order 13211)

    This rule is not a ``significant energy action'' as defined in 
Executive Order 13211, ``Actions Concerning Regulations That 
Significantly Affect Energy Supply, Distribution, or Use'' (66 FR 28355 
(May 22, 2001)) because it is not likely to have a significant adverse 
effect on the supply, distribution or use of energy. The proposed 
standards have for their aim the reduction of emission from certain 
nonroad engines, and have no effect on fuel formulation, distribution, 
or use. Generally, the proposed program leads to reduced fuel usage due 
to the improvements in engine control technologies.

I. Plain Language

    This document follows the guidelines of the June 1, 1998 Executive 
Memorandum on Plain Language in Government Writing. To read the text of

[[Page 51181]]

the regulations, it is also important to understand the organization of 
the Code of Federal Regulations (CFR). The CFR uses the following 
organizational names and conventions.
Title 40--Protection of the Environment
Chapter I--Environmental Protection Agency
    Subchapter C--Air Programs. This contains parts 50 to 99, where the 
Office of Air and Radiation has usually placed emission standards for 
motor vehicle and nonroad engines.
    Subchapter U--Air Programs Supplement. This contains parts 1000 to 
1299, where we intend to place regulations for air programs in future 
rulemakings.
    Part 1048--Control of Emissions from New, Large, Nonrecreational, 
Nonroad Spark-ignition Engines. Most of the provisions in this part 
apply only to engine manufacturers.
    Part 1051--Control of Emissions from Recreational Engines and 
Vehicles.
    Part 1065--General Test Procedures for Engine Testing. Provisions 
of this part apply to anyone who tests engines to show that they meet 
emission standards.
    Part 1068--General Compliance Provisions for Engine Programs. 
Provisions of this part apply to everyone.
    Each part in the CFR has several subparts, sections, and 
paragraphs. The following illustration shows how these fit together.

Part 1048
Subpart A
Section 1048.001
    (a)
    (b)
    (1)
    (2)

    (i)
    (ii)
    (A)
    (B)

    A cross reference to Sec. 1048.001(b) in this illustration would 
refer to the parent paragraph (b) and all its subordinate paragraphs. A 
reference to ``Sec. 1048.001(b) introductory text'' would refer only to 
the single, parent paragraph (b).

List of Subjects

40 CFR Part 89

    Environmental protection, Administrative practice and procedure, 
Confidential business information, Imports, Labeling, Motor vehicle 
pollution, Reporting and recordkeeping requirements, Research, Vessels, 
Warranties.

40 CFR Part 90

    Environmental protection, Administrative practice and procedure, 
Air pollution control, Confidential business information, Imports, 
Labeling, Reporting and recordkeeping requirements, Research, 
Warranties.

40 CFR Parts 91 and 1051

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

40 CFR Parts 94

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

40 CFR Part 1048

    Environmental protection, Administrative practice and procedure, 
Air pollution control, Confidential business information, Imports, 
Labeling, Penalties, Reporting and recordkeeping requirements, 
Research, Warranties.

40 CFR Part 1065

    Environmental protection, Administrative practice and procedure, 
Reporting and recordkeeping requirements, Research.

40 CFR Part 1068

    Environmental protection, Administrative practice and procedure, 
Confidential business information, Imports, Motor vehicle pollution, 
Penalties, Reporting and recordkeeping requirements, Warranties.

    Dated: September 14, 2001.
Christine Todd Whitman,
Administrator.
    For the reasons set out in the preamble, title 40, chapter I of the 
Code of Federal Regulations is proposed to be amended as set forth 
below.

PART 89--CONTROL OF EMISSIONS FROM NEW AND IN-USE NONROAD 
COMPRESSION-IGNITION ENGINES

    1. The authority for part 89 continues to read as follows:

    Authority: 42 U.S.C. 7521, 7522, 7523, 7524, 7525, 7541, 7542, 
7543, 7545, 7547, 7549, 7550, and 7601(a).

Subpart A--[Amended]

    2. Section 89.2 is amended by adding definitions for ``Aircraft'' 
and ``Spark-ignition'' in alphabetic order and revising the definition 
of ``Compression-ignition'' to read as follows:

Sec. 89.2  Definitions.

* * * * *
    Aircraft means any vehicle capable of sustained air travel above 
treetop heights.
* * * * *
    Compression-ignition means relating to a type of reciprocating, 
internal-combustion engine that is not a spark-ignition engine.
* * * * *
    Spark-ignition means relating to a type of engine with a spark plug 
(or other sparking device) and with operating characteristics 
significantly similar to the theoretical Otto combustion cycle. Spark-
ignition engines usually use a throttle to regulate intake air flow to 
control power during normal operation.
* * * * *

PART 90--CONTROL OF EMISSIONS FROM NONROAD SPARK-IGNITION ENGINES 
AT OR BELOW 19 KILOWATTS

    3. The heading to part 90 is revised to read as set forth above.
    4. The authority for part 90 continues to read as follows:

    Authority: 42 U.S.C. 7521, 7522, 7523, 7524, 7525, 7541, 7542, 
7543, 7547, 7549, 7550, and 7601(a).

Subpart A--[Amended]

    5. Section 90.1 is revised to read as follows:

Sec. 90.1  Applicability.

    (a) This part applies to new nonroad spark-ignition engines and 
vehicles with gross power output at or below 19 kilowatts (kW) used for 
any purpose, unless we exclude them under paragraph (c) of this 
section.
    (b) This part also applies to engines with a gross power output 
above 19 kW if the manufacturer uses the provisions of 40 CFR 1048.615 
or 1048.145 to exempt them from the requirements of 40 CFR part 1048. 
Compliance with the provisions of this part is a required condition of 
that exemption.
    (c) The following nonroad engines and vehicles are not subject to 
the provisions of this part:
    (1) Engines used in snowmobiles, all-terrain vehicles, or off-
highway motorcycles and regulated in 40 CFR part 1051. This part 
nevertheless applies to engines used in all-terrain vehicles or off-
highway motorcycles if the manufacturer uses the provisions of 40 CFR 
1051.615 to exempt them from the requirements of 40 CFR part 1051. 
Compliance with the provisions of this part is a required condition of 
that exemption.

[[Page 51182]]

    (2) Engines used in highway motorcycles. See 40 CFR part 86, 
subpart E.
    (3) Propulsion marine engines. See 40 CFR parts 91 and 1045. This 
part applies with respect to auxiliary marine engines.
    (4) Engines used in aircraft. See 40 CFR part 87.
    (5) Engines certified to meet the requirements of 40 CFR part 1048.
    (6) Hobby engines.
    (7) Engines that are used exclusively in emergency and rescue 
equipment where no certified engines are available to power the 
equipment safely and practically, but not including generators, 
alternators, compressors or pumps used to provide remote power to a 
rescue tool. The equipment manufacturer bears the responsibility to 
ascertain on an annual basis and maintain documentation available to 
the Administrator that no appropriate certified engine is available 
from any source.
    (d) Engines subject to the provisions of this subpart are also 
subject to the provisions found in subparts B through N of this part, 
except that subparts C, H, M and N of this part apply only to Phase 2 
engines as defined in this subpart.
    (e) Certain text in this part is identified as pertaining to Phase 
1 or Phase 2 engines. Such text pertains only to engines of the 
specified Phase. If no indication of Phase is given, the text pertains 
to all engines, regardless of Phase.
    6. Section 90.2 is amended by adding a new paragraph (c) to read as 
follows:

Sec. 90.2  Effective dates.

* * * * *
    (c) Notwithstanding paragraphs (a) and (b) of this section, engines 
used in recreational vehicles with engine rated speed greater than or 
equal to 5,000 rpm and with no installed speed governor are not subject 
to the provisions of this part through the 2005 model year. Starting 
with the 2006 model year, all the requirements of this part apply to 
engines used in these vehicles if they are not included in the scope of 
40 CFR part 1051.
    7. Section 90.3 is amended by adding definitions for ``Aircraft'', 
``Hobby engines'', ``Marine engine'', ``Marine vessel'', 
``Recreational'', and ``United States'' in alphabetical order, to read 
as follows:

Sec. 90.3  Definitions.

* * * * *
    Aircraft means any vehicle capable of sustained air travel above 
treetop heights.
* * * * *
    Hobby engines means engines used in reduced-scale models of 
vehicles that are not capable of transporting a person (for example, 
model airplanes).
    Marine engine means an engine that someone installs or intends to 
install on a marine vessel.
    Marine vessel means a vehicle that is capable of operation in water 
but is not capable of operation out of water. Amphibious vehicles are 
not marine vessels.
* * * * *
    Recreational means, for purposes of this part, relating to a 
vehicle intended by the vehicle manufacturer to be operated primarily 
for pleasure. Note that snowmobiles, all-terrain vehicles, and off-
highway motorcycles are recreational vehicles that we regulate under 40 
CFR part 1051.
* * * * *
    United States means the States, the District of Columbia, the 
Commonwealth of Puerto Rico, the Commonwealth of the Northern Mariana 
Islands, Guam, American Samoa, the U.S. Virgin Islands, and the Trust 
Territory of the Pacific Islands.
* * * * *

Subpart B--[Amended]

    8. Section 90.103 is amended by redesignating paragraph (a)(2)(v) 
as paragraph (a)(2)(vi) and adding a new paragraph (a)(2)(v) to read as 
follows:

Sec. 90.103  Exhaust emission standards.

    (a) * * *
    (2) * * *
    (v) The engine must be used in a recreational application, with a 
combined total vehicle dry weight under 20 kilograms;
* * * * *

PART 91--CONTROL OF EMISSIONS FROM MARINE SPARK-IGNITION ENGINES

    9. The authority for part 91 continues to read as follows:

    Authority: 42 U.S.C. 7521, 7522, 7523, 7524, 7525, 7541, 7542, 
7543, 7547, 7549, 7550, and 7601(a).

Subpart A--[Amended]

    10. Section 91.3 is amended by adding the definition for United 
States in alphabetical order to read as follows:

Sec. 91.3  Definitions.

* * * * *
    United States means the States, the District of Columbia, the 
Commonwealth of Puerto Rico, the Commonwealth of the Northern Mariana 
Islands, Guam, American Samoa, the U.S. Virgin Islands, and the Trust 
Territory of the Pacific Islands.
* * * * *

Subpart E--[Amended]

    11. Section 91.419 is amended in paragraph (b) by revising the 
equations for MHCexh and Mexh to read as follows:

Sec. 91.419  Raw emission sampling calculations.

* * * * *
    (b) * * *
    MHCexh=12.01+1.008 x 
* * * * *
[GRAPHIC] [TIFF OMITTED] TP05OC01.001

[[Page 51183]]

* * * * *

Subpart G--[Amended]

    12. Appendix A to Subpart G of part 91 is amended by revising Table 
1 to read as follows:

Appendix A to Subpart G of Part 91--Sampling Plans for Selective 
Enforcement Auditing of Marine Engines

                   Table 1.--Sampling Plan Code Letter
------------------------------------------------------------------------
          Annual engine family sales                  Code letter
------------------------------------------------------------------------
20-50........................................  AA1 1
------------------------------------------------------------------------
20-99........................................  A 1
------------------------------------------------------------------------
100-299......................................  B
------------------------------------------------------------------------
300-499......................................  C
------------------------------------------------------------------------
500 or greater...............................  D
------------------------------------------------------------------------
\1\ A manufacturer may optionally use either the sampling plan for code
  letter ``AA'' or sampling plan for code letter ``A'' for Selective
  Enforcement Audits of engine families with annual sales between 20 and
  50 engines. Additional, the manufacturers may switch between these
  plans during the audit.

* * * * *

Subpart I--[Amended]

    13. Section 91.803 is amended by revising paragraph (a) to read as 
follows:

Sec. 91.803  Manufacturer in-use testing program.

    (a) EPA shall annually identify engine families and those 
configurations within families which the manufacturers must then 
subject to in-use testing. For each model year, EPA may identify the 
following number of engine families for testing, based on the 
manufacturer's total number of engine families to which this subpart is 
applicable produced in that model year:
    (1) For manufactures with three or fewer engine families, EPA may 
identify a single engine family.
    (2) For manufacturers with four or more engine families, EPA may 
identify a number of engine families that is no greater than twenty-
five percent of the manufacturer's total number of engine families.
* * * * *

PART 94--CONTROL OF EMISSIONS FROM MARINE COMPRESSION-IGNITION 
ENGINES

    14. The heading to part 94 is revised to read as set forth above.
    15. The authority citation for part 94 continues to read as 
follows:

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

Subpart A--[Amended]

    16. Section 94.1 is revised to read as follows:

Sec. 94.1  Applicability.

    (a) Except as noted in paragraphs (b) and (c) of this section, the 
provisions of this part apply to manufacturers (including post-
manufacture marinizers and dressers), rebuilders, owners and operators 
of:
    (1) Marine engines that are compression-ignition engines 
manufactured (or that otherwise become new) on or after January 1, 
2004;
    (2) Marine vessels manufactured (or that otherwise become new) on 
or after January 1, 2004 and which include a compression-ignition 
marine engine.
    (b) Notwithstanding the provision of paragraph (c) of this section, 
the requirements and prohibitions of this part do not apply to three 
types of marine engines:
    (1) Category 3 marine engines;
    (2) Marine engines with rated power below 37 kW; or
    (3) Marine engines on foreign vessels.
    (c) The provisions of Subpart L of this part apply to everyone with 
respect to the engines identified in paragraph (a) of this section.
    17. Section 94.2 is amended by revising paragraph (b) introductory 
text, removing the definition for ``Commercial marine engine'', 
revising definitions for ``Compression-ignition'', ``Designated 
officer'', ``Passenger'', ``Recreational marine engine'', 
``Recreational vessel'', and ``United States'', and adding new 
definitions for ``Commercial'', ``Small-volume boat builder'', ``Small-
volume manufacturer'', and ``Spark-ignition'' in alphabetical order to 
read as follows:

Sec. 94.2  Definitions.

* * * * *
    (b) As used in this part, all terms not defined in this section 
shall have the meaning given them in the Act:
* * * * *
    Commercial means relating to an engine or vessel that is not a 
recreational marine engine or a recreational vessel.
* * * * *
    Compression-ignition means relating to an engine that is not a 
spark-ignition engine.
* * * * *
    Designated Officer means the Manager, Engine Programs Group (6403-
J), U.S. Environmental Protection Agency, 1200 Pennsylvania Ave., 
Washington, DC 20460.
* * * * *
    Passenger has the meaning given by 46 U.S.C. 2101 (21) and (21a). 
This generally means that a passenger is a person that pays to be on 
the vessel.
* * * * *
    Recreational marine engine means a Category 1 propulsion marine 
engine that is intended by the manufacturer to be installed on a 
recreational vessel, and which is permanently labeled as follows: 
``THIS ENGINE IS CATEGORIZED AS A RECREATIONAL MARINE ENGINE UNDER 40 
CFR PART 94. INSTALLATION OF THIS ENGINE IN ANY NONRECREATIONAL VESSEL 
IS A VIOLATION OF FEDERAL LAW SUBJECT TO CIVIL PENALTY.''.
    Recreational vessel has the meaning given in 46 U.S.C 2101 (25), 
but excludes ``passenger vessels'' and ``small passenger vessels'' as 
defined by 46 U.S.C. 2101 (22) and (35) and excludes vessels used 
solely for competition. In general, for this part, ``recreational 
vessel'' means a vessel that is intended by the vessel manufacturer to 
be operated primarily for pleasure or leased, rented or chartered to 
another for the latter's pleasure, excluding the following vessels:
    (1) Vessels of less than 100 gross tons that carry more than 6 
passengers (as defined in this section).
    (2) Vessels of 100 gross tons or more that carry one or more 
passengers (as defined in this section).
    (3) Vessels used solely for competition.
* * * * *
    Small-volume boat builder means a boat manufacturer with fewer than 
500 employees and with annual U.S.-directed production of fewer than 
100 boats. For manufacturers owned by a parent company, these limits 
apply to the combined production and number of employees of the parent 
company and all its subsidiaries.
    Small-volume manufacturer means a manufacturer with annual U.S.-
directed production of fewer than 1,000 internal combustion engines 
(marine and nonmarine). For manufacturers owned by a parent company, 
the limit applies to the production of the parent company and all its 
subsidiaries.
    Spark-ignition means relating to a type of engine with a spark plug 
(or other sparking device) and with operating characteristics 
significantly similar to the theoretical Otto combustion cycle. Spark-
ignition engines usually use a throttle to regulate

[[Page 51184]]

intake air flow to control power during normal operation.
* * * * *
    United States means the States, the District of Columbia, the 
Commonwealth of Puerto Rico, the Commonwealth of the Northern Mariana 
Islands, Guam, American Samoa, the U.S. Virgin Islands, and the Trust 
Territory of the Pacific Islands.
* * * * *
    18. Section 94.7 is amended by revising paragraph (e) to read as 
follows:

Sec. 94.7  General standards and requirements.

* * * * *
    (e) Electronically controlled engines subject to the emission 
standards of this part shall broadcast on engine's controller area 
networks engine torque (as percent of maximum at that speed) and engine 
speed.
    19. Section 94.8 is amended by revising paragraphs (a), (e), (f) 
introductory text, and (f)(1) to read as follows:

Sec. 94.8  Exhaust emission standards.

    (a) Exhaust emissions from marine compression-ignition engines 
shall not exceed the applicable exhaust emission standards contained in 
Table A-1 as follows:

                         Table A-1.--Primary Tier 2 Exhaust Emission Standards (g/kW-hr)
----------------------------------------------------------------------------------------------------------------
 Engine size liters/cylinder, rated                              Model     THC+ NOX g/
                power                        Category           year\a\       kW-hr      CO g/kW-hr   PM g/kW-hr
----------------------------------------------------------------------------------------------------------------
disp.  0.9 and power  37   Category 1 Commercial.         2005          7.5          5.0         0.40
 kW.
                                      Category Recreational          2007          7.5          5.0         0.40
                                       1.
                                     ---------------------------------------------------------------------------
0.9  disp.  1.2 all power  Category 1 Commercial.         2004          7.2          5.0         0.30
 levels.
                                      Category 1                     2006          7.2          5.0         0.30
                                       Recreational.
                                     ---------------------------------------------------------------------------
1.2  disp.  2.5 all power  Category 1 Commercial.         2004          7.2          5.0         0.20
 levels.
                                      Category 1                     2006          7.2          5.0         0.20
                                       Recreational.
                                     ---------------------------------------------------------------------------
2.5  disp.  5.0 all power  Category 1 Commercial.         2007          7.2          5.0         0.20
 levels.
                                      Category 1                     2009          7.2          5.0         0.20
                                       Recreational.
                                     ---------------------------------------------------------------------------
5.0  disp.  15.0 all       Category 2............         2007          7.8          5.0         0.27
 power levels.
                                     ---------------------------------------------------------------------------
15.0  disp.  20.0 power    Category 2............         2007          8.7          5.0         0.50
 3300 kW.
                                     ---------------------------------------------------------------------------
15.0  disp.  20.0 power    Category 2............         2007          9.8          5.0         0.50
  3300 kW.
                                     ---------------------------------------------------------------------------
20.0  disp.  25.0 all      Category 2............         2009          9.8          5.0         0.50
 power levels.
                                     ---------------------------------------------------------------------------
25.0  disp.  30.0........  Category 2............         2007         11.0          5.0        0.50
----------------------------------------------------------------------------------------------------------------
a The model years listed indicate the model years for which the specified standards start.

* * * * *
    (e) Exhaust emissions from propulsion engines subject to the 
standards (or FELs) in paragraph (a), (c), or (f) of this section shall 
not exceed:
    (1) Commercial marine engines. (i) 1.20 times the applicable 
standards (or FELs) when tested in accordance with the supplemental 
test procedures specified in Sec. 94.106 at loads greater than or equal 
to 45 percent of the maximum power at rated speed or 1.50 times the 
applicable standards (or FELs) at loads less than 45 percent of the 
maximum power at rated speed.
    (ii) As an option, the manufacturer may choose to comply with 
limits of 1.25 times the applicable standards (or FELs) when tested 
over the whole power range in accordance with the supplemental test 
procedures specified in Sec. 94.106, instead of the limits in paragraph 
(e)(1)(i) of this section.
    (2) Recreational marine engines. (i) 1.20 times the applicable 
standards (or FELs) when tested in accordance with the supplemental 
test procedures specified in Sec. 94.106 at loads greater than or equal 
to 45 percent of the maximum power at rated speed and speeds less than 
95 percent of maximum test speed, or 1.50 times the applicable 
standards (or FELs) at loads less than 45 percent of the maximum power 
at rated speed, or 1.50 times the applicable standards (or FELs) at any 
loads for speeds greater than or equal to 95 percent of the maximum 
test speed.
    (ii) As an option, the manufacturer may choose to comply with 
limits of 1.25 times the applicable standards (or FELs) when tested 
over the whole power range in accordance with the supplemental test 
procedures specified in Sec. 94.106, instead of the limits in paragraph 
(e)(2)(i) of this section.
    (f) The following defines the requirements for low emitting Blue 
Sky Series engines:
    (1) Voluntary standards. Engines may be designated ``Blue Sky 
Series'' engines through the 2010 model year by meeting the voluntary 
standards listed in Table A-2, which apply to all certification and in 
use testing, as follows:

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

* * * * *
    20. Section 94.9 is amended by revising paragraphs (a) introductory 
text and (a)(1) to read as follows:

[[Page 51185]]

Sec. 94.9  Compliance with emission standards.

    (a) The general standards and requirements in Sec. 94.7 and the 
emission standards in Sec. 94.8 apply to each new engine throughout its 
useful life period. The useful life is specified both in years and in 
hours of operation, and ends when either of the values (hours of 
operation or years) is exceeded.
    (1) The minimum useful life is:
    (i) 10 years or 1,000 hours of operation for recreational Category 
1 engines;
    (ii) 10 years or 10,000 hours of operation for commercial Category 
1 engines;
    (iii) 10 years or 20,000 hours of operation for Category 2 engines.
* * * * *
    21. Section 94.12 is amended by revising the introductory text and 
paragraphs (a) and (b)(1) and adding a new paragraph (f) to read as 
follows:

Sec. 94.12  Interim provisions.

    This section contains provisions that apply for a limited number of 
calendar years or model years. These provisions apply instead of the 
other provisions of this part.
    (a) Compliance date of standards. Certain companies may delay 
compliance with emission standards. Companies wishing to take advantage 
of this provision must inform the Designated Officer of their intent to 
do so in writing before the date that compliance with the standards 
would otherwise be mandatory.
    (1) Post-manufacture marinizers may elect to delay the model year 
of the Tier 2 standards for commercial engines as specified in 
Sec. 94.8 by one year for each engine family.
    (2) Small-volume manufacturers may elect to delay the model year of 
the Tier 2 standards for recreational engines as specified in Sec. 94.8 
by five years for each engine family.
    (b) Early banking of emission credits. (1) A manufacturer may 
optionally certify engines manufactured before the date the Tier 2 
standards take effect to earn emission credits under the averaging, 
banking, and trading program. Such optionally certified engines are 
subject to all provisions relating to mandatory certification and 
enforcement described in this part. Manufacturers may begin earning 
credits for recreational engines on [date 30 days after publication of 
the final rule in the Federal Register].
* * * * *
    (f) Flexibility for small-volume boat builders. Notwithstanding the 
other provisions of this part, manufacturers may sell uncertifed 
recreational engines to small-volume boat builders during the first 
five years for which the emission standards in Sec. 94.8 apply, subject 
to the following provisions:
    (1) The U.S.-directed production volume of boats from any small-
volume boat builder using uncertified engines during the total five-
year period may not exceed 80 percent of the manufacturer's average 
annual production for the three years prior to the general 
applicability of the recreational engine standards in Sec. 94.8, except 
as allowed in paragraph (f)(2) of this section.
    (2) Small-volume boat builders may exceed the production limits in 
paragraph (f)(1) of this section, provided it does not exceed 20 boats 
during the five-year period or 10 boats in any single calendar year. 
This does not apply to boats powered by engines with displacement 
greater than 2.5 liters per cylinder.
    (3) Small-volume boat builders must keep records of all the boats 
and engines produced under this paragraph (f), including boat and 
engine model numbers, serial numbers, and dates of manufacture. Records 
must also include information verifying compliance with the limits in 
paragraph (f)(1) or (f)(2) of this section. Keep these records until at 
least two full years after you no longer use the provisions in this 
paragraph (f).

Subpart B--[Amended]

    22. Section 94.104 is amended by redesignating paragraph (c) as 
paragraph (d) and adding a new paragraph (c) to read as follows:

Sec. 94.104  Test procedures for Category 2 marine engines.

* * * * *
    (c) Conduct testing at ambient temperatures from 13 deg. C to 
30 deg. C.
    23. Section 94.105 is amended by revising paragraph (b) text 
preceding Table B-1, revising ``#'' to read ``'' in 
footnotes 1 and 2 in the tables in paragraphs (b), (c)(1), (c)(2), and 
(d)(1), and adding a new paragraph (e) to read as follows:

Sec. 94.105  Duty cycles.

* * * * *
    (b) General cycle. Propulsion engines that are used with (or 
intended to be used with) fixed-pitch propellers, and any other engines 
for which the other duty cycles of this section do not apply, shall be 
tested using the duty cycle described in the following Table B-1:
* * * * *
    (e) Recreational. For the purpose of determining compliance with 
the emission standards of Sec. 94.8, recreational engines shall be 
tested using the duty cycle described in Table B-5, which follows:

                                   Table B-5.--Recreational Marine Duty Cycle
----------------------------------------------------------------------------------------------------------------
                                                                            Percent of    Minimum
                                             Engine speed \1\ (percent of    maximum      time in     Weighting
                 Mode No.                        maximum test speed)        test power      mode       factors
                                                                               \2\       (minutes)
----------------------------------------------------------------------------------------------------------------
1.........................................  100..........................          100          5.0         0.08
----------------------------------------------------------------------------------------------------------------
2.........................................  91...........................           75          5.0         0.13
----------------------------------------------------------------------------------------------------------------
3.........................................  80...........................           50          5.0         0.17
----------------------------------------------------------------------------------------------------------------
4.........................................  63...........................           25          5.0         0.32
----------------------------------------------------------------------------------------------------------------
5.........................................  idle.........................            0          5.0        0.30
----------------------------------------------------------------------------------------------------------------
\1\ Engine speed:  2 percent of point.
\2\ Power: 2 percent of engine maximum value.

    24. Section 94.106 is amended by revising paragraphs (b) 
introductory text, (b)(1) introductory text, (b)(2) introductory text, 
and (b)(3) introductory text and adding a new paragraph (b)(5) to read 
as follows:

[[Page 51186]]

Sec. 94.106  Supplemental test procedures.

* * * * *
    (b) The specified Not to Exceed Zones for marine engines are 
defined as follows. These Not to Exceed Zones apply, unless a modified 
zone is established under paragraph (c) of this section.
    (1) For commercial Category 1 engines certified using the duty 
cycle specified in Sec. 94.105(b), the Not to Exceed zones are defined 
as follows:
* * * * *
    (2) For Category 2 engines certified using the duty cycle specified 
in Sec. 94.105(b), the Not to Exceed zones are defined as follows:
* * * * *
    (3) For engines certified using the duty cycle specified in 
Sec. 94.105(c)(2), the Not to Exceed zones are defined as follows:
* * * * *
    (5) For recreational marine engines certified using the duty cycle 
specified in Sec. 94.105(e), the Not to Exceed zones are defined as 
follows:
    (i) The Not to Exceed zone is the region between the curves power = 
1.15  x  SPD\2\ and power = 0.85  x  SPD\4\, excluding all operation 
below 25% of maximum power at rated speed and excluding all operation 
below 63% of maximum test speed.
    (ii) This zone is divided into three subzones, one below 45% of 
maximum power at maximum test speed; one above 95% of maximum test 
speed; and a third area including all of the remaining area of the NTE 
zone.
    (iii) SPD in paragraph (b)(3)(i) of this section refers to percent 
of maximum test speed.
    (iv) See Figure B-4 for an illustration of this Not to Exceed zone 
as follows:
BILLING CODE 6560-50-P

[[Page 51187]]

[GRAPHIC] [TIFF OMITTED] TP05OC01.002

BILLING CODE 6560-50-C
    25. Section 94.108 is amended in paragraph (a)(1) by revising 
footnote 1 in Table B-5 to read as follows:

Sec. 94.108  Test fuels.

    (a) * * * (1) * * *

              Table B-5.--Federal Test Fuel Specifications
------------------------------------------------------------------------

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

                  *        *        *        *        *

------------------------------------------------------------------------
\1\ All ASTM procedures in this table have been incorporated by
  reference. See Sec.  94.5.

* * * * *

Subpart C--[Amended]

    26. Section 94.203 is amended by revising paragraphs (d)(14) and 
(d)(16) to read as follows:

Sec. 94.203  Application for certification.

* * * * *
    (d) * * *
    (14) A statement that all the engines included in the engine family 
comply with the Not To Exceed standards

[[Page 51188]]

specified in Sec. 94.8(e) when operated under all conditions which may 
reasonably be expected to be encountered in normal operation and use; 
the manufacturer also must provide a detailed description of all 
testing, engineering analyses, and other information which provides the 
basis for this statement.
* * * * *
    (16) A statement indicating duty-cycle and application of the 
engine (e.g., used to propel planing vessels, use to propel vessels 
with variable-pitch propellers, constant-speed auxiliary, recreational, 
etc.).
* * * * *
    27. Section 94.204 is amended by removing ``and'' at the end of 
paragraph (b)(9), adding ``; and'' at the end of paragraph (b)(10), 
adding a new paragraph (b)(11), and revising paragraph (e) to read as 
follows:

Sec. 94.204  Designation of engine families.

* * * * *
    (b) * * *
    (11) Class (commercial or recreational).
* * * * *
    (e) Upon request by the manufacturer, the Administrator may allow 
engines that would be required to be grouped into separate engine 
families based on the criteria in paragraph (b) or (c) of this section 
to be grouped into a single engine family if the manufacturer 
demonstrates that the engines will have similar emission 
characteristics; however, recreational and commercial engines may not 
be grouped in the same engine family. This request must be accompanied 
by emission information supporting the appropriateness of such combined 
engine families.
    28. Section 94.209 is revised to read as follows:

Sec. 94.209  Special provisions for post-manufacture marinizers and 
small-volume manufacturers.

    (a) Broader engine families. Instead of the requirements of 
Sec. 94.204, an engine family may consist of any engines subject to the 
same emission standards. This does not change any of the requirements 
of this part for showing that an engine family meets emission 
standards. To be eligible to use the provisions of this paragraph (a), 
the manufacturer must demonstrate one of the following:
    (1) It is a post-manufacture marinizer and that the base engines 
used for modification have a valid certificate of conformity issued 
under 40 CFR part 89 or 40 CFR part 92 or the heavy-duty engine 
provisions of 40 CFR part 86.
    (2) It is a small-volume manufacturer.
    (b) Hardship relief. Post-manufacture marinizers, small-volume 
manufacturers, and small-volume boat builders may take any of the 
otherwise prohibited actions identified in Sec. 94.1103(a)(1) if 
approved in advance by the Administrator, subject to the following 
requirements:
    (1) Application for relief must be submitted to the Designated 
Officer in writing prior to the earliest date in which the applying 
manufacturer would be in violation of Sec. 94.1103. The manufacturer 
must submit evidence showing that the requirements for approval have 
been met.
    (2) The conditions causing the impending violation must not be 
substantially the fault of the applying manufacturer.
    (3) The conditions causing the impending violation must jeopardize 
the solvency of the applying manufacturer if relief is not granted.
    (4) The applying manufacturer must demonstrate that no other 
allowances under this part will be available to avoid the impending 
violation.
    (5) Any relief may not exceed one year beyond the date relief is 
granted.
    (6) The Administrator may impose other conditions on the granting 
of relief including provisions to recover the lost environmental 
benefit.
    (c) Extension of deadlines. Small-volume manufacturers may use the 
provisions of 40 CFR 1068.241 to ask for an extension of a deadline to 
meet emission standards. We may require that you use available base 
engines that have been certified to emission standards for land-based 
engines until you are able to produce engines certified to the 
requirements of this part.
    29. Section 94.212 is amended by revising paragraph (b)(10) to read 
as follows:

Sec. 94.212  Labeling.

* * * * *
    (b) Engine labels. * * *
    (10) The application for which the engine family is certified. (For 
example: constant-speed auxiliary, variable-speed propulsion engines 
used with fixed-pitch propellers, recreational, etc.)
* * * * *
    30. Section 94.218 is amended by adding a new paragraph (d)(2)(iv) 
to read as follows:

Sec. 94.218  Deterioration factor determination.

* * * * *
    (d) * * *
    (2) * * *
    (iv) Assigned deterioration factors. Small-volume manufacturers may 
use deterioration factors established by EPA.

Subpart D--[Amended]

    31. Section 94.304 is amended by revising paragraph (k) to read as 
follows:

Sec. 94.304  Compliance requirements.

* * * * *
    (k) The following provisions limit credit exchanges between 
different types of engines:
    (1) Credits generated by Category 1 engine families may be used for 
compliance by Category 1 or Category 2 engine families. Credits 
generated from Category 1 engine families for use by Category 2 engine 
families must be discounted by 25 percent.
    (2) Credits generated by Category 2 engine families may be used for 
compliance only by Category 2 engine families.
    (3) Credits may not be exchanged between recreational and 
commercial engines.
* * * * *

Subpart F--[Amended]

    32. Section 94.501 is amended by revising paragraph (a) to read as 
follows:

Sec. 94.501  Applicability.

    (a) The requirements of this subpart are applicable to 
manufacturers of engines subject to the provisions of Subpart A of this 
part, excluding small-volume manufacturers.
* * * * *
    33. Section 94.503 is amended by adding a new paragraph (d) to read 
as follows:

Sec. 94.503  General requirements.

* * * * *
    (d) If you certify an engine family with carryover emission data, 
as described in Sec. 94.206(c), and these equivalent engine families 
consistently meet the emission standards with production-line testing 
over the preceding two-year period, you may ask for a reduced testing 
rate for further production-line testing for that family. The minimum 
testing rate is one engine per engine family. If we reduce your testing 
rate, we may limit our approval to a single model year.

Subpart J--[Amended]

    34. Section 94.907 is amended by revising paragraphs (d) and (g) to 
read as follows:

Sec. 94.907  Engine dressing exemption.

* * * * *
    (d) New marine engines that meet all the following criteria are 
exempt under this section:
    (1) You must produce it by marinizing an engine covered by a valid 
certificate

[[Page 51189]]

of conformity from one of the following programs:
    (i) Heavy-duty highway engines (40 CFR part 86).
    (ii) Land-based nonroad diesel engines (40 CFR part 89).
    (iii) Locomotive engines (40 CFR part 92).
    (2) The engine must have the label required under 40 CFR part 86, 
89, or 92.
    (3) You must not make any changes to the certified engine that 
could reasonably be expected to increase its emissions. For example, if 
you make any of the following changes to one of these engines, you do 
not qualify for the engine dressing exemption:
    (i) Changing any fuel system parameters from the certified 
configuration.
    (ii) Replacing an original turbocharger, except that small-volume 
manufacturers of recreational engines may replace an original 
turbocharger with one that matches the performance of the original 
turbocharger.
    (iii) Modify or design the marine engine cooling or aftercooling 
system so that temperatures or heat rejection rates are outside the 
original engine manufacturer's specified ranges.
    (4) You must make sure that fewer than 50 percent of the engine 
model's total sales, from all companies, are used in marine 
applications.
* * * * *
    (g) If your engines do not meet the criteria listed in paragraphs 
(d)(2) through (d)(4) of this section, they will be subject to the 
standards and prohibitions of this part. Marinization without a valid 
exemption or certificate of conformity would be a violation of 
Sec. 94.1103(a)(1) and/or the tampering prohibitions of the applicable 
land-based regulations (40 CFR part 86, 89, or 92).
* * * * *

Subpart K--[Amended]

    35. Section 94.1103 is amended by revising paragraph (a)(5) to read 
as follows:

Sec. 94.1103  Prohibited acts.

    (a) * * *
    (5) For a manufacturer of marine vessels to distribute in commerce, 
sell, offer for sale, or deliver for introduction into commerce a new 
vessel containing an engine not covered by a certificate of conformity 
applicable for an engine model year the same as or later than the 
calendar year in which the manufacture of the new vessel is initiated. 
(Note: For the purpose of this paragraph (a)(5), the manufacture of a 
vessel is initiated when the keel is laid, or the vessel is at a 
similar stage of construction.) In general, you may use up your normal 
inventory of engines not certified to new emission standards if they 
were built before the date of the new standards. However, we consider 
stockpiling of these engines to be a violation of paragraph 
(a)(1)(i)(A) of this section.
* * * * *
    37. A new subchapter U is added to read as follows:

SUBCHAPTER U--AIR POLLUTION CONTROLS

PART 1048--CONTROL OF EMISSIONS FROM NEW, LARGE NONROAD SPARK-
IGNITION ENGINES

Subpart A--Determining How To Follow This Part
Sec.
1048.1   Does this part apply to me?
1048.5   May I exclude any engines from this part's requirements?
1048.10   What main steps must I take to comply with this part?
1048.15   Do any other regulation parts affect me?
1048.20   What requirements from this part apply to my excluded 
engines?
Subpart B--Emission Standards and Related Requirements
1048.101  What exhaust emission standards must my engines meet?
1048.105  What steps must I take to address evaporative emissions?
1048.110  How must my engines diagnose malfunctions?
1048.115  What other requirements must my engines meet?
1048.120  What warranty requirements apply to me?
1048.125  What maintenance instructions must I give to buyers?
1048.130  What installation instructions must I give to equipment 
manufacturers?
1048.135  How must I label and identify the engines I produce?
1048.140  How do I certify my engines to more stringent, voluntary 
standards?
1048.145  What provisions apply only for a limited time?
Subpart C--Certifying Engine Families
1048.201  What are the general requirements for submitting a 
certification application?
1048.205  How must I prepare my application?
1048.210  May I get preliminary approval before I complete my 
application?
1048.215  What happens after I complete my application?
1048.220  How do I amend the maintenance instructions in my 
application?
1048.225  How do I amend my application to include new or modified 
engines?
1048.230  How do I select engine families?
1048.235  How does testing fit with my application for a certificate 
of conformity?
1048.240  How do I determine if my engine family complies with 
emission standards?
1048.245  What records must I keep and make available to EPA?
1048.250  When may EPA deny, revoke, or void my certificate of 
conformity?
Subpart D--Testing Production-line Engines
1048.301  When must I test my production-line engines?
1048.305  How must I prepare and test my production-line engines?
1048.310  How must I select engines for production-line testing?
1048.315  How do I know when my engine family does not comply?
1048.320  What happens if one of my production-line engines fails to 
meet emission standards?
1048.325  What happens if an engine family does not comply?
1048.330  May I sell engines from an engine family with a suspended 
certificate of conformity?
1048.335  How do I ask EPA to reinstate my suspended certificate?
1048.340  When may EPA revoke my certificate under this subpart and 
how may I sell these engines again?
1048.345  What production-line testing records must I send to EPA?
1048.350  What records must I keep?
Subpart E--Testing In-Use Engines
1048.401  What testing requirements apply to my engines that have 
gone into service?
1048.405  How does this program work?
1048.410  How must I select, prepare, and test my in-use engines?
1048.415  How can I use in-use emission credits?
1048.420  What happens if my in-use engines do not meet 
requirements?
1048.425  What in-use testing information must I report to EPA?
1048.430  What records must I keep?
Subpart F--Test Procedures
1048.501  What procedures must I use to test my engines?
1048.505  What steady-state duty cycles apply for laboratory 
testing?
1048.510  What transient duty cycles apply for laboratory testing?
1048.515  Field-testing procedures.
Subpart G--Compliance Provisions
1048.601  What compliance provisions apply to these engines?
1048.605  What are the provisions for exempting engines from the 
requirements of this part if they are already certified under the 
motor-vehicle program?
1048.610  What are the provisions for producing nonroad equipment 
with engines already certified under the motor-vehicle program?
1048.615  What are the provisions for exempting engines designed for 
lawn and garden applications?

[[Page 51190]]

Subpart H--Definitions and Other Reference Information
1048.701  What definitions apply to this part?
1048.705  What symbols, acronyms, and abbreviations does this part 
use?
1048.710  What materials does this part reference?
1048.715  How should I request EPA to keep my information 
confidential?
1048.720  How do I request a public hearing?

Appendix I to Part 1048--Transient Duty Cycle for Constant-Speed 
Engines

Appendix II to Part 1048--Transient Duty Cycle for Engines That Are Not 
Constant-Speed Engines

    Authority: 42 U.S.C. 7401-7671(q).

Subpart A--Determining How to Follow This Part

Sec. 1048.1  Does this part apply to me?

    (a) This part applies to you if you manufacture or import new, 
spark-ignition, nonroad engines (defined in Sec. 1048.701) with rated 
power above 19 kW, unless we exclude them under Sec. 1048.5.
    (b) If you manufacture or import engines with rated power at or 
below 19 kW that would otherwise be covered by 40 CFR part 90, you may 
choose to meet the requirements of this part instead. In this case, all 
the provisions of this part apply for those engines.
    (c) Note in subpart G of this part that 40 CFR part 1068 applies to 
everyone, including anyone who manufactures, installs, owns, operates, 
or rebuilds any of the engines this part covers or equipment containing 
these engines.
    (d) You need not follow this part for engines you produce before 
the 2004 model year, unless you certify voluntarily. See Sec. 1048.100, 
Sec. 1048.145, and the definition of model year in Sec. 1048.701 for 
more information about the timing of new requirements.
    (e) See Secs. 1048.701 and 1048.705 for definitions and acronyms 
that apply to this part.

Sec. 1048.5  May I exclude any engines from this part's requirements?

    (a) You may exclude the following nonroad engines:
    (1) Engines used in snowmobiles, all-terrain vehicles, or off-
highway motorcycles and regulated in 40 CFR part 1051.
    (2) Propulsion marine engines. See 40 CFR part 91. This part 
applies with respect to auxiliary marine engines.
    (b) You may exclude engines used in aircraft. See 40 CFR part 87.
    (c) You may exclude stationary engines, except that you must meet 
the requirements in Sec. 1048.20. In addition, the prohibitions in 40 
CFR 1068.101 restrict the use of stationary engines for non-stationary 
purposes.
    (d) See subpart G of this part and 40 CFR part 1068, subpart C, for 
exemptions of specific engines.
    (e) Send the Designated Officer a written request if you want us to 
determine whether this part covers or excludes certain engines. 
Excluding engines from this part's requirements does not affect other 
requirements that may apply to them.

Sec. 1048.10  What main steps must I take to comply with this part?

    (a) You must have a certificate of conformity from us for each 
engine family before you do any of the following with a new engine 
covered by this part: Sell, offer for sale, introduce into commerce, 
distribute or deliver for introduction into commerce, or import it into 
the United States. ``New'' engines may include some already placed in 
service (see the definition of ``new nonroad engine'' and ``new nonroad 
equipment'' in Sec. 1048.701). You must get a new certificate of 
conformity for each new model year.
    (b) To get a certificate of conformity and comply with its terms, 
you must do five things:
    (1) Meet the emission standards and other requirements in subpart B 
of this part.
    (2) Apply for certification (see subpart C of this part).
    (3) Do routine emission testing on production engines (see subpart 
D of this part).
    (4) Do emission testing on in-use engines, as we direct (see 
subpart E of this part).
    (5) Follow our instructions throughout this part.
    (c) Subpart F of this part and 40 CFR part 1065 describe the 
procedures you must follow to test your engines.
    (d) Subpart G of this part and 40 CFR part 1068 describe 
requirements and prohibitions that apply to engine manufacturers, 
equipment manufacturers, owners, operators, rebuilders, and all others.

Sec. 1048.15  Do any other regulation parts affect me?

    (a) Part 1065 of this chapter describes procedures and equipment 
specifications for testing engines. Subpart F of this part describes 
how to apply the provisions of part 1065 of this chapter to show you 
meet the emission standards in this part.
    (b) Part 1068 of this chapter describes general provisions, 
including these seven areas:
    (1) Prohibited acts and penalties for engine manufacturers, 
equipment manufacturers, and others.
    (2) Rebuilding and other aftermarket changes.
    (3) Exemptions for certain engines.
    (4) Importing engines.
    (5) Selective enforcement audits of your production.
    (6) Defect reporting and recall.
    (7) Procedures for public hearings.
    (c) Other parts of this chapter affect you if referenced in this 
part.

Sec. 1048.20  What requirements from this part apply to my excluded 
engines?

    (a) Manufacturers of stationary engines that would otherwise need 
to meet the requirements of this part must add a permanent label or tag 
identifying each engine. This applies equally to importers. To meet 
labeling requirements, you must do the following things:
    (1) Attach the label or tag in one piece so no one can remove it 
without destroying or defacing it.
    (2) Make sure it is durable and readable for the engine's entire 
life.
    (3) Secure it to a part of the engine needed for normal operation 
and not normally requiring replacement.
    (4) Write it in block letters in English.
    (5) Instruct equipment manufacturers that they must place a 
duplicate label as described in Sec. 1068.105 of this chapter if they 
obscure the engine's label.
    (b) Engine labels or tags required under this section must have the 
following information:
    (1) Include the heading ``Emission Control Information.''
    (2) Include your full corporate name and trademark.
    (3) State the engine displacement (in liters) and rated power.
    (4) State: ``THIS ENGINE IS EXCLUDED FROM THE REQUIREMENTS OF 40 
CFR PART 1048 AS A ``STATIONARY ENGINE.'' INSTALLING OR USING THIS 
ENGINE IN ANY OTHER APPLICATION MAY BE A VIOLATION OF FEDERAL LAW 
SUBJECT TO CIVIL PENALTY.''.

Subpart B--Emission Standards and Related Requirements

Sec. 1048.101  What exhaust emission standards must my engines meet?

    (a) The exhaust emission standards in Table 1 of Sec. 1048.101 
apply for steady-state measurement of emissions with the duty-cycle 
test procedures in subpart F of this part:

[[Page 51191]]

 Table 1 of Sec.  1048.101.--Steady-State Duty-Cycle Emission Standards
                                (g/kW-hr)
------------------------------------------------------------------------
                               Emission standards    Alternate emission
                             ----------------------       standards
         Model year                                ---------------------
                                HC+NOX       CO       HC+NOX       CO
------------------------------------------------------------------------
2004-2006...................        4.0       50.0  .........  .........
------------------------------------------------------------------------
2007 and later..............        3.4        3.4        1.3       27.0
------------------------------------------------------------------------

    (b) The exhaust emission standards in Table 2 of Sec. 1048.101 
apply for transient measurement of emissions with the duty-cycle test 
procedures in subpart F of this part:

 Table 2 of Sec.  1048.101.--Transient Duty-Cycle Emission Standards (g/
                                 kW-hr)
------------------------------------------------------------------------
                               Emission standards    Alternate emission
                             ----------------------       standards
         Model year                                ---------------------
                                HC+NOX       CO       HC+NOX       CO
------------------------------------------------------------------------
2007 and later..............        3.4        3.4        1.3       27.0
------------------------------------------------------------------------

    (c) The exhaust emission standards in Table 3 of Sec. 1048.101 
apply for emission measurements with the field-test procedures in 
subpart F of this part:

 Table 3 of Sec.  1048.101.--Field-testing Emission Standards (g/kW-hr)
------------------------------------------------------------------------
                               Emission standards    Alternate emission
                             ----------------------       standards
         Model year                                ---------------------
                                HC+NOX       CO       HC+NOX       CO
------------------------------------------------------------------------
2007 and later..............        4.7        5.0        1.8       41.0
------------------------------------------------------------------------

    (d) You may choose to meet the alternate emission standards instead 
of the regular emission standards, as described in paragraphs (a) 
through (c) of this section.
    (e) The standards apply for the model years listed in the tables in 
this section. You may choose to certify earlier model years.
    (f) Apply the exhaust emission standards in this section for 
engines using all fuels. You must meet the numerical emission standards 
for hydrocarbons in this section based on the following types of 
hydrocarbon emissions for engines powered by the following fuels:
    (1) Gasoline- and LPG-fueled engines: THC emissions.
    (2) Natural gas-fueled engines: NMHC emissions (for testing to show 
that these engines meet the emission standards in paragraph (c) of this 
section, disregard hydrocarbon emissions).
    (3) Alcohol-fueled engines: THCE emissions.
    (g) Certain engines with total displacement at or below 1000 cc may 
comply with the requirements of 40 CFR part 90 instead of complying 
with the emission standards in this section, as described in 
Sec. 1048.615.
    (h) You must show in your certification application that your 
engines meet the exhaust emission standards in paragraphs (a) through 
(c) of this section over their full useful life. The minimum useful 
life is 5,000 hours of operation or seven years, whichever comes first. 
Specify a longer useful life under either of two conditions:
    (1) If you design, advertise, or market your engine to operate 
longer than the minimum useful life (your recommended time until 
rebuild may indicate a longer design life).
    (2) If your basic mechanical warranty is longer than the minimum 
useful life.
    (i) Refer to Sec. 1048.240 to apply deterioration factors.
    (j) Apply this subpart to all testing, including production-line 
and in-use testing, as described in subparts D and E of this part.

Sec. 1048.105  What steps must I take to address evaporative emissions?

    (a) Starting in the 2007 model year, if you produce an engine that 
runs on a volatile liquid fuel (such as gasoline), you must take the 
following steps to address evaporative emissions:
    (1) Specify and incorporate design features to avoid venting fuel 
vapors directly to the atmosphere. Evaporative hydrocarbon emissions 
must be less than 0.2 grams per gallon of fuel tank capacity during a 
nine-hour period of gradually increasing ambient temperatures from 22 
to 36 deg. C with fuel meeting the specifications in 40 CFR 1065.210, 
when measured from an engine with a complete fuel system using the 
equipment and procedures specified in 40 CFR 86.107-96 and 86.133-96. 
You may rely on any of the following designs instead of doing emission 
tests to show that you meet this requirement:
    (i) Use a tethered or self-closing gas cap on a fuel tank that 
stays sealed up to a positive pressure of 24.5 kPa (3.5 psi) or a 
vacuum pressure of 10.5 kPa (1.5 psi).
    (ii) Use a tethered or self-closing gas cap on a fuel tank that 
stays sealed up to a positive or vacuum pressure of 7 kPa (1 psi). Use 
an inflatable, nonpermeable bag that occupies the vapor space inside 
the fuel tank, exchanging air with the ambient as needed to prevent 
pressure buildup in the tank. The volume of the inflatable bag must be 
at least 30 percent of the total tank volume.
    (iii) Use a tethered or self-closing gas cap on a fuel tank that 
stays sealed except for venting to a charcoal canister. The engine must 
be designed to draw hydrocarbons from the canister into the engine's 
combustion chamber as needed to prevent evaporative emissions during 
normal operation.
    (iv) Use a tethered or self-closing gas cap on a collapsible 
bladder tank. A collapsible bladder tank is one that

[[Page 51192]]

changes in volume as needed to accommodate the changing amount of 
liquid fuel, thus eliminating the vapor space.
    (2) For nonmetallic fuel lines, specify and use products that meet 
the Category 1 specifications in SAE J2260 ``Nonmetallic Fuel System 
Tubing with One or More Layers,'' November 1996 (incorporated by 
reference in Sec. 1048.710).
    (3) Liquid fuel in the fuel tank may not reach boiling during 
continuous engine operation in the final installation at an ambient 
temperature of 30 deg. C. Gasoline with a volatility of 9 RVP begins to 
boil at about 53 deg. C. You may satisfy this requirement by specifying 
and incorporating design features to prevent fuel boiling under all 
normal operation.
    (b) If other companies install your engines in their equipment, 
give them any appropriate instructions, as described in Sec. 1048.130.

Sec. 1048.110  How must my engines diagnose malfunctions?

    (a) Equip your engines with a diagnostic system. Starting in the 
2007 model year, make sure your system will detect significant 
malfunctions in its emission-control system using one of the following 
protocols:
    (1) If your emission-control strategy depends on maintaining air-
fuel ratios at stoichiometry, an acceptable diagnostic design would 
identify malfunction whenever the air-fuel ratio does not cross 
stoichiometry for one minute. You may use other diagnostic strategies 
if we approve them in advance.
    (2) If the protocol described in paragraph (a)(1) of this section 
does not apply to your engine, you must use an alternative approach 
that we approve in advance.
    (b) Use a malfunction-indicator light (MIL). Make sure the MIL is 
readily visible to the operator; it may be any color except red. When 
the MIL goes on, it must display ``Check Engine,'' ``Service Engine 
Soon,'' or a similar message that we approve. You may use sound in 
addition to the light signal. The MIL must go on under each of these 
circumstances:
    (1) When a malfunction occurs, as described in paragraph (a) of 
this section.
    (2) When the diagnostic system cannot send signals to meet the 
requirement of paragraph (b)(1) of this section.
    (3) When the engine's ignition is in the ``key-on'' position before 
starting or cranking. The MIL should go out after engine starting if 
the system detects no malfunction.
    (c) Control when the MIL can go out. If the MIL goes on to show a 
malfunction, it must remain on during all later engine operation until 
servicing corrects the malfunction. If the engine is not serviced, but 
the malfunction does not recur for three consecutive engine starts 
during which the malfunctioning system is evaluated and found to be 
working properly, the MIL may stay off during later engine operation.
    (d) Store trouble codes in computer memory. Record and store in 
computer memory any diagnostic trouble codes showing a malfunction that 
should illuminate the MIL. The stored codes must identify the 
malfunctioning system or component as uniquely as possible. Make these 
codes available through the data link connector as described in 
paragraph (g) of this section. You may store codes for conditions that 
do not turn on the MIL. The system must store a separate code to show 
when the diagnostic system is disabled (from malfunction or tampering).
    (e) Make data, access codes, and devices accessible. Make all 
required data accessible to us without any access codes or devices that 
only you can supply. Ensure that anyone servicing your engine can read 
and understand the diagnostic trouble codes stored in the onboard 
computer with generic tools and information.
    (f) Consider exceptions for certain conditions. Your diagnostic 
systems may disregard trouble codes for the first three minutes after 
engine starting. You may ask us to approve diagnostic-system designs 
that disregard trouble codes under other conditions that would produce 
an unreliable reading, damage systems or components, or cause other 
safety risks. This might include operation at altitudes over 8,000 
feet.
    (g) Follow standard references for formats, codes, and connections. 
Follow conventions defined in the following documents (incorporated by 
reference in Sec. 1048.710), or ask us to approve using updated 
versions of these documents:
    (1) ISO 9141-2 February 1994, Road vehicles--Diagnostic systems 
Part 2.
    (2) ISO 14230-4 June 2000, Road vehicles--Diagnostic systems--KWP 
2000 requirements for emission-related systems.

Sec. 1048.115  What other requirements must my engines meet?

    Your engines must meet the following requirements:
    (a) Closed crankcase. Design and produce your engines so they 
release no crankcase emissions into the atmosphere.
    (b) Torque broadcasting. Electronically controlled engines must 
broadcast their speed and output shaft torque (in newton-meters) on 
their controller area networks. Engines may alternatively broadcast a 
surrogate value for torque that can be read with a remote device. This 
information is necessary for testing engines in the field (see 
Sec. 1065.515 of this chapter). This requirement applies beginning in 
the 2007 model year.
    (c) EPA access to broadcast information. If we request it, you must 
provide us any hardware or tools we would need to readily read, 
interpret, and record all information broadcast by an engine's on-board 
computers and electronic control modules. If you broadcast a surrogate 
parameter for torque values, you must provide us what we need to 
convert these into torque units. We will not ask for hardware or tools 
if they are readily available commercially.
    (d) Emission sampling capability. Produce all your engines to allow 
sampling of exhaust emissions in the field. This sampling requires 
either exhaust ports downstream of any aftertreatment devices or the 
ability to extend the exhaust pipe by 20 cm. This is necessary to 
minimize any diluting effect from ambient air at the end of the exhaust 
pipe.
    (e) Adjustable parameters. If your engines have adjustable 
parameters, make sure they meet all the requirements of this part for 
any adjustment in the physically available range.
    (1) We do not consider an operating parameter adjustable if you 
permanently seal it or if ordinary tools cannot readily access it.
    (2) We may require that you set adjustable parameters to any 
specification within the adjustable range during certification testing, 
production-line testing, selective enforcement auditing, or any 
required in-use testing.
    (f) Prohibited controls. You may not design engines with an 
emission-control system that emits any noxious or toxic substance that 
the engine would not emit during operation in the absence of such a 
system, except as specifically permitted by regulation.
    (g) Defeat devices. You may not equip your engines with a defeat 
device. A defeat device is an auxiliary emission-control device or 
other control feature that reduces the effectiveness of emission 
controls under conditions you may reasonably expect the engine to 
encounter during normal operation and use. This does not apply to 
auxiliary

[[Page 51193]]

emission-control devices you identify in your certification application 
if any of the following is true:
    (1) The conditions of concern were substantially included in your 
prescribed duty cycles.
    (2) You show your design is necessary to prevent catastrophic 
engine (or equipment) damage or accidents.
    (3) The reduced effectiveness applies only to starting the engine.

Sec. 1048.120  What warranty requirements apply to me?

    (a) You must warrant to the ultimate buyer that the new engine 
meets two conditions:
    (1) You have designed, built, and equipped it to meet the 
requirements of this part.
    (2) It is free from defects in materials and workmanship that may 
keep it from meeting these requirements.
    (b) Your emission-related warranty must be valid for at least 50 
percent of the engine's useful life in hours of operation or at least 
three years, whichever comes first. In the case of a high-cost 
warranted part, the warranty must be valid for at least 70 percent of 
the engine's useful life in hours of operation or at least five years, 
whichever comes first. You may offer a warranty more generous than we 
require. This warranty may not be shorter than any published or 
negotiated warranty you offer for the engine or any of its components. 
If an engine has no tamper-proof hour meter, we base the warranty 
periods in this paragraph only on the engine's age (in years).
    (c) The emission-related warranty must cover components whose 
failure would increase an engine's emissions, includeing electronic 
controls, fuel injection (for liquid or gaseous fuels), exhaust-gas 
recirculation, aftertreatment, or any other system you develop to 
control emissions. In general, we consider replacing or repairing other 
components to be the owner's responsibility.
    (d) You may exclude from your warranty a component named in 
paragraph (c) of this section, if it meets both of the following 
conditions:
    (1) It was in general use on similar engines before January 1, 
2000.
    (2) Its failure would clearly degrade the engine's performance 
enough that the operator would need to repair or replace it.
    (e) You may limit your emission-related warranty's validity to 
properly maintained engines, as described in Sec. 1068.115 of this 
chapter.
    (f) If you make an aftermarket part, you may--but do not have to--
certify that using the part will still allow engines to meet emission 
standards, as described in Sec. 85.2114 of this chapter.

Sec. 1048.125  What maintenance instructions must I give to buyers?

    Give the ultimate buyer of each new engine written instructions for 
properly maintaining and using the engine, including the emission-
control system. The maintenance instructions also apply to service 
accumulation on your test engines, as described in 40 CFR part 1065, 
subpart E.
    (a) Critical emission-related maintenance. You may schedule 
critical maintenance on particular devices if you meet the following 
conditions:
    (1) You may ask us to approve maintenance on air-injection, fuel-
system, or ignition components, aftertreatment devices, exhaust gas 
recirculation systems, crankcase ventilation valves, or oxygen sensors 
only if it meets two criteria:
    (i) Operators are reasonably likely to do the maintenance you call 
for.
    (ii) Engines need the maintenance to meet emission standards.
    (2) We will accept scheduled maintenance as reasonably likely to 
occur in use if you satisfy any of four conditions:
    (i) You present data showing that, if a lack of maintenance 
increases emissions, it also unacceptably degrades the engine's 
performance.
    (ii) You present survey data showing that 80 percent of engines in 
the field get the maintenance you specify at the recommended intervals.
    (iii) You provide the maintenance free of charge and clearly say so 
in maintenance instructions for the customer.
    (iv) You otherwise show us that the maintenance is reasonably 
likely to be done at the recommended intervals.
    (b) Minimum maintenance intervals. You may not schedule emission-
related maintenance within the minimum useful life period for 
aftertreatment devices, fuel injectors, sensors, electronic control 
units, and turbochargers.
    (c) Noncritical emission-related maintenance. For engine parts not 
listed in paragraph (a) or (b) of this section, you may recommend any 
additional amount of inspection or maintenance. But you must state 
clearly that these steps are not necessary to keep the emission-related 
warranty valid. Also, do not take these inspection or maintenance steps 
during service accumulation on your test engines.
    (d) Source of parts and repairs. Print clearly on the first page of 
your written maintenance instructions that any repair shop or person 
may maintain, replace, or repair emission-control devices and systems. 
Make sure your instructions require no component or service identified 
by brand, trade, or corporate name. Also, do not directly or indirectly 
distinguish between service by companies with which you have a 
commercial relationship and service by independent repair shops or the 
owner. You may disregard the requirements in this paragraph (d) if you 
do one of two things:
    (1) Provide a component or service without charge under the 
purchase agreement.
    (2) Get us to waive this prohibition in the public's interest by 
convincing us the engine will work properly only with the identified 
component or service.

Sec. 1048.130  What installation instructions must I give to equipment 
manufacturers?

    (a) If you sell an engine for someone else to install in a piece of 
nonroad equipment, give the buyer of the engine written instructions 
for installing it consistent with the requirements of this part. Make 
sure these instructions have the following information:
    (1) Include the heading: ``Emission-related installation 
instructions.''
    (2) State: ``Failing to follow these instructions when installing a 
certified engine in a piece of nonroad equipment violates federal law 
(40 CFR 1068.105(b)), subject to fines or other penalties as described 
in the Clean Air Act.''.
    (3) Describe any other instructions needed to install an exhaust 
aftertreatment device consistent with your application for 
certification.
    (4) Describe the steps needed to control evaporative emissions, as 
described in Sec. 1048.105.
    (5) Describe any necessary steps for installing the diagnostic 
system described in Sec. 1048.110.
    (6) Describe any limits on the range of applications needed to 
ensure that the engine operates consistently with your application for 
certification. For example, if your engines are certified only for 
constant-speed operation, tell equipment manufacturers not to install 
the engines in variable-speed applications. Also, if you need to avoid 
sustained high-load operation to meet the field-testing emission 
standards we specify in Sec. 1048.101(c), describe how the equipment 
manufacturer must properly size the engines for a given application.
    (7) Describe any other instructions to make sure the installed 
engine will operate according to design specifications in your 
application for certification.

[[Page 51194]]

    (8) State: ``If you obscure the engine's emission label, you must 
place a duplicate label on your equipment, as described in 40 CFR 
1068.105.''.
    (b) You do not need installation instructions for engines you 
install in your own equipment.

Sec. 1048.135  How must I label and identify the engines I produce?

    (a) Assign each production engine a unique identification number 
and permanently and legibly affix or engrave it on the engine.
    (b) At the time of manufacture, add a permanent label identifying 
each engine. To meet labeling requirements, do four things:
    (1) Attach the label in one piece so it is not removable without 
being destroyed or defaced.
    (2) Design and produce it to be durable and readable for the 
engine's entire life.
    (3) Secure it to a part of the engine needed for normal operation 
and not normally requiring replacement.
    (4) Write it in block letters in English.
    (c) On your engine label, do 13 things:
    (1) Include the heading ``EMISSION CONTROL INFORMATION.''
    (2) Include your full corporate name and trademark.
    (3) State: ``THIS ENGINE IS CERTIFIED TO OPERATE ON [specify 
operating fuel or fuels].''
    (4) Identify the emission-control system; your identifiers must use 
names and abbreviations consistent with SAE J1930, which we incorporate 
by reference (see Sec. 1048.710).
    (5) List all requirements for fuel and lubricants.
    (6) State the date of manufacture [DAY (optional), MONTH, and 
YEAR]; if you stamp this information on the engine and print it in the 
owner's manual, you may omit it from the label.
    (7) State: ``THIS ENGINE MEETS U.S. ENVIRONMENTAL PROTECTION AGENCY 
REGULATIONS FOR [MODEL YEAR] LARGE NONROAD SI ENGINES.''
    (8) Include EPA's standardized designation for the engine family.
    (9) State the engine's displacement (in liters) and rated power.
    (10) State the engine's useful life (see Sec. 1048.101(h)).
    (11) List specifications and adjustments for engine tuneups; show 
the proper position for the transmission during tuneup and state which 
accessories should be operating.
    (12) Describe other information on proper maintenance and use.
    (13) Identify the emission standards to which you have certified 
the engine.
    (d) Some of your engines may need more information on the label.
    (1) If you have an engine family that has been certified only for 
constant-speed engines, add to the engine label ``CONSTANT-SPEED 
ONLY.''
    (2) If you certify an engine to the voluntary standards in 
Sec. 1048.140, add to the engine label ``BLUE SKY SERIES.''
    (3) If you produce an engine we exempt from the requirements of 
this part, see 40 CFR part 1068, subparts C and D, for more label 
information.
    (e) Some engines may not have enough space for a label with all the 
required information. In this case, you may omit the information 
required in paragraphs (c)(3), (c)(4), (c)(5), and (c)(12) of this 
section if you print it in the owner's manual instead.
    (f) If you are unable to meet these labeling requirements, you may 
ask us to modify them consistent with the intent of this section.
    (g) If you obscure the engine label while installing the engine in 
the vehicle, you must place a duplicate label on the vehicle. If 
someone else installs the engine in a vehicle, give them duplicate 
labels if they ask for them (see 40 CFR 1068.105).

Sec. 1048.140  How do I certify my engines to more stringent, voluntary 
standards?

    This section defines voluntary standards that allow you to produce 
engines with a recognized level of superior emission control. We refer 
to these as ``Blue Sky Series'' engines. If you certify engines under 
this section, they must meet one of the following standards:
    (a) For the 2003 model year, an engine family may qualify for 
designation as ``Blue Sky Series'' by meeting all the requirements in 
this part that apply to 2004 model year engines. This includes all 
testing and reporting requirements.
    (b) For the 2003 through 2006 model years, an engine family may 
qualify for designation as ``Blue Sky Series'' by meeting all the 
requirements in this part that apply to 2007 model year engines. This 
includes all testing and reporting requirements.
    (c) Any engine family may qualify for designation as ``Blue Sky 
Series'' by meeting all the requirements in this part, while certifying 
to the following voluntary emission standards:
    (1) 1.3 g/kW-hr HC+NOX and 3.4
g/kW-hr CO using steady-state and transient test procedures, as 
described in subpart F of this part.
    (2) 1.8 g/kW-hr HC+NOX and 4.7
g/kW-hr CO using field-testing procedures, as described in subpart F of 
this part.

Sec. 1048.145  What provisions apply only for a limited time?

    The provisions in this section apply instead of other provisions in 
this part. This section describes when these interim provisions expire.
    (a) Family banking. You may certify an engine family to comply with 
all the 2007 model year requirements before 2007. For each year of 
early compliance for an engine family, you may delay certification by 
one year for a different engine family with smaller projected power-
weighted nationwide sales. For example, if you sell 1,000 engines with 
an average power rating of 50 kW certified a year early, you may delay 
certification for another engine family with an average power rating of 
100 kW of up to 500 engines. You must notify us as soon as you are 
aware of such a discrepancy between projected and actual sales.
    (b) Hydrocarbon standards. For 2004 through 2006 model years, 
manufacturers may use nonmethane hydrocarbon measurements to 
demonstrate compliance with applicable emission standards.
    (c) Transient emission testing. Engines rated over 560 kW are 
exempt from the transient emission standards in Sec. 1048.101(b).
    (d) In-use emission credits with steady-state testing. You may 
generate credits for the in-use averaging program described in 
Sec. 1048.415 using steady-state test procedures for 2004 through 2006 
model years.
    (e) Optional early field testing. For 2004 through 2006 model 
years, manufacturers may optionally use the field-testing procedures in 
subpart F of this part for any in-use testing required under subpart E 
of this part. In this case, the same emission standards apply to both 
steady-state testing and field testing.
    (f) Small-volume provisions. Special provisions apply to you if you 
manufacture fewer than 300 engines per year that are subject to the 
standards of this part.
    (1) For 2004 through 2006 model year engines, the lawn and garden 
exemption described in Sec. 1048.615 applies to your engines with total 
displacement up to 2500 cc with rated power at or below 30 kW. To 
qualify for this exemption, you must meet a CO emission standard of 130 
g/kW-hr using the procedures specified in 40 CFR part 90.
    (2) For 2007 through 2009 model year engines, you may optionally 
comply with the emission standards and other requirements that would 
otherwise apply starting in 2004.
    (3) If you qualify for the hardship provisions in Sec. 1068.241 of 
this chapter,

[[Page 51195]]

we may approve extensions of up to three years total.

Subpart C--Certifying Engine Families

Sec. 1048.201  What are the general requirements for submitting a 
certification application?

    (a) Send us an application for a certificate of conformity for each 
engine family. Each application is valid for only one model year.
    (b) The application must not include false or incomplete statements 
or information (see Sec. 1048.250). We may choose to ask you to send us 
less information than we specify in this subpart, but this would not 
change your recordkeeping requirements.
    (c) Use good engineering judgment for all decisions related to your 
application (see Sec. 1068.5 of this chapter).
    (d) An authorized representative of your company must approve and 
sign the application.

Sec. 1048.205  How must I prepare my application?

    In your application, you must do all the following things:
    (a) Describe the engine family's specifications and other basic 
parameters of the engine's design. List the types of fuel you intend to 
use to certify the engine family (for example, gasoline, liquefied 
petroleum gas, methanol, or natural gas).
    (b) Explain how the emission-control system operates. Describe in 
detail all the system's components, auxiliary emission-control devices, 
and all fuel-system components you will install on any production or 
test engine. Explain why any auxiliary emission-control devices are not 
defeat devices (see Sec. 1048.115(g)). Do not include detailed 
calibrations for components unless we ask for them.
    (c) Explain how the engine diagnostic system works, describing 
especially the engine conditions (with the corresponding diagnostic 
trouble codes) that cause the malfunction-indicator light to go on. 
Propose what you consider to be extreme conditions under which the 
diagnostic system should disregard trouble codes, as described in 
Sec. 1048.110.
    (d) Describe the engines you selected for testing and the reasons 
for selecting them.
    (e) Describe any special or alternate test procedures you used (see 
Sec. 1048.501).
    (f) Identify the duty cycle and the number of engine operating 
hours used to stabilize emission levels. Describe any scheduled 
maintenance you did.
    (g) List the specifications of the test fuel to show that it falls 
within the required ranges we specify in 40 CFR part 1065, subpart C.
    (h) Identify the engine family's useful life.
    (i) Propose maintenance and use instructions for the ultimate buyer 
of each new engine (see Sec. 1048.125).
    (j) Propose emission-related installation instructions if you sell 
engines for someone else to install in a piece of nonroad equipment 
(see Sec. 1048.130).
    (k) Identify each high-cost warranted part and show us how you 
calculated its replacement cost, including the estimated retail cost of 
the part, labor rates, and labor hours to diagnose and replace 
defective parts.
    (l) Propose an emission-control label.
    (m) Present emission data for HC, NOX, and CO on a test 
engine to show your engines meet the duty-cycle emission standards we 
specify in Sec. 1048.101(a) and (b). Show these figures before and 
after applying deterioration factors for each engine. Include test data 
for each type of fuel on which you intend for engines in the engine 
family to operate (for example, gasoline, liquefied petroleum gas, 
methanol, or natural gas).
    (n) Report all test results, including those from invalid tests or 
from any nonstandard tests (such as measurements based on exhaust 
concentrations in parts per million).
    (o) Identify the engine family's deterioration factors and describe 
how you developed them. Present any emission test data you used for 
this.
    (p) Describe all adjustable operating parameters (see 
Sec. 1048.115(d)), including the following:
    (1) The nominal or recommended setting and the associated 
production tolerances.
    (2) The intended physically adjustable range.
    (3) The limits or stops used to establish adjustable ranges.
    (4) Production tolerances of the limits or stops used to establish 
each physically adjustable range.
    (5) Information showing that someone cannot readily modify the 
engines to operate outside the physically adjustable range.
    (q) Describe everything we need to read and interpret all the 
information broadcast by an engine's onboard computers and electronic 
control modules and state that you will give us any hardware or tools 
we would need to do this. You may reference any appropriate publicly 
released standards that define conventions for these messages and 
parameters. Format your information consistent with publicly released 
standards.
    (r) If your engine family includes a volatile liquid fuel, propose 
a set of design parameters and instructions for installing the engine 
to minimize evaporative emissions (see Sec. 1048.115(g)).
    (s) State whether your engine will operate in variable-speed 
applications, constant-speed applications, or both. If your 
certification covers only constant-speed applications, describe how you 
will prevent use of these engines in variable-speed applications.
    (t) State that all the engines in the engine family comply with the 
field-testing emission standards we specify in Sec. 1048.101(c) for all 
normal operation and use (see Sec. 1048.515). Describe in detail any 
testing, engineering analysis, or other information on which you base 
this statement.
    (u) State that you operated your test engines according to the 
specified procedures and test parameters using the fuels described in 
the application to show you meet the requirements of this part.
    (v) State unconditionally that all the engines in the engine family 
comply with the requirements of this part, other referenced parts, and 
the Clean Air Act (42 U.S.C. 7401 et seq.).
    (w) Include estimates of engine production.
    (x) Add other information to help us evaluate your application if 
we ask for it.

Sec. 1048.210  May I get preliminary approval before I complete my 
application?

    If you send us information before you finish the application, we 
will review it and make any appropriate determinations listed in 
Sec. 1048.215(b) within 90 days of your request. If we need to ask you 
for further information, we will extend the 90-day period by the number 
of days we wait for your response.

Sec. 1048.215  What happens after I complete my application?

    (a) If any of the information in your application changes after you 
submit it, amend it as described in Sec. 1048.225.
    (b) We may decide that we cannot approve your application unless 
you revise it.
    (1) If you inappropriately use the provisions of Sec. 1048.230(c) 
or (d) to define a broader or narrower engine family, we will require 
you to redefine your engine family.
    (2) If we determine your selected useful life for the engine family 
is too short, we will require you to lengthen it (see 
Sec. 1048.101(h)).
    (3) If we determine your deterioration factors are not appropriate, 
we will

[[Page 51196]]

require you to revise them (see Sec. 1048.240(c)).
    (4) If your diagnostic system is inadequate for detecting 
significant malfunctions in emission-control systems, we will require 
you to make the system more effective (see Sec. 1048.110(b)).
    (5) If your diagnostic system inappropriately disregards trouble 
codes under certain conditions, we will require you to change the 
system to operate under broader conditions (see Sec. 1048.110(g)).
    (6) If your proposed label is inconsistent with Sec. 1048.135, we 
will require you to change it (and tell you how, if possible).
    (7) If you require or recommend maintenance and use instructions 
inconsistent with Sec. 1048.125, we will require you to change them.
    (8) If we find any other problem with your application, we will 
tell you how to correct it.
    (c) If we determine your application is complete and shows you meet 
all the requirements, we will issue a certificate of conformity for 
your engine family for that model year. If we deny the application, we 
will explain why in writing. You may then ask us to hold a hearing to 
reconsider our decision (see Sec. 1048.720).

Sec. 1048.220  How do I amend the maintenance instructions in my 
application?

    Send the Designated Officer a request to amend your application for 
certification for an engine family if you want to change the 
maintenance instructions in a way that could affect emissions. In your 
request, describe the proposed changes to the maintenance instructions. 
Unless we disapprove it, you may distribute the new maintenance 
instructions to your customers 30 days after we receive your request. 
We may also approve a shorter time or waive this requirement.

Sec. 1048.225  How do I amend my application to include new or modified 
engines?

    (a) You must amend your application for certification before you 
take either of the following actions:
    (1) Add an engine to a certificate of conformity.
    (2) Make a design change for a certified engine family that may 
affect emissions or an emission-related part over the engine's 
lifetime.
    (b) Send the Designated Officer a request to amend the application 
for certification for an engine family. In your request, do all of the 
following:
    (1) Describe the engine model or configuration you are adding or 
changing.
    (2) Include engineering evaluations or reasons why the original 
test engine is or is not still appropriate.
    (3) If the original test engine for the engine family is not 
appropriate to show compliance for the new or modified engine, include 
new test data showing that the new or modified engine meets the 
requirements of this part.
    (c) You may start producing the new or modified engine anytime 
after you send us your request.
    (d) You must give us test data within 30 days if we ask for more 
testing, or stop producing the engine if you cannot do this.
    (e) If we determine that the certificate of conformity would not 
cover your new or modified engine, we will send you a written 
explanation of our decision. In this case, you may no longer produce 
these engines, though you may ask for a hearing for us to reconsider 
our decision (see Sec. 1048.720).

Sec. 1048.230  How do I select engine families?

    (a) Divide your product line into families of engines that you 
expect to have similar emission characteristics. Your engine family is 
limited to a single model year.
    (b) Group engines in the same engine family if they are identical 
in all of the following aspects:
    (1) The combustion cycle.
    (2) The cooling system (water-cooled vs. air-cooled).
    (3) The number and arrangement of cylinders.
    (4) The number, location, volume, and composition of catalytic 
converters.
    (5) Method of air aspiration.
    (6) Bore and stroke.
    (7) Configuration of the combustion chamber.
    (8) Location of intake and exhaust valves or ports.
    (c) In some cases you may subdivide a group of engines that is 
identical under paragraph (b) of this section into different engine 
families. To do so, you must show you expect emission characteristics 
to be different during the useful life or that any of the following 
engine characteristics are different:
    (1) Method of actuating intake and exhaust timing (poppet valve, 
reed valve, rotary valve, etc.).
    (2) Sizes of intake and exhaust valves or ports.
    (3) Type of fuel.
    (4) Configuration of the fuel system.
    (5) Exhaust system.
    (d) If your engines are not identical with respect to the things 
listed in paragraph (b) of this section, but you show that their 
emission characteristics during the useful life will be similar, we may 
approve grouping them in the same engine family.
    (e) If you cannot define engine families by the method in this 
section, we will define them based on features related to emission 
characteristics.

Sec. 1048.235  How does testing fit with my application for a 
certificate of conformity?

    This section describes how to test engines in your effort to apply 
for a certificate of conformity.
    (a) Test your engines using the procedures and equipment specified 
in subpart F of this part.
    (b) Select from each engine family a test engine for each fuel type 
with a configuration you believe is most likely to exceed the emission 
standards. Using good engineering judgment, consider the emission 
levels of all exhaust constituents over the full useful life of the 
engine when operated in a piece of equipment.
    (c) You may submit emission data for equivalent engine families 
from previous years instead of doing new tests, but only if the data 
shows that the test engine would meet all the requirements for the 
latest engine models. We may require you to do new emission testing if 
we believe the latest engine models could be substantially different 
from the previously tested engine.
    (d) We may choose to measure emissions from any of your test 
engines.
    (1) If we do this, you must provide the test engine at the location 
we select. We may decide to do the testing at your plant or any other 
facility. If we choose to do the testing at your plant, you must 
schedule it as soon as possible and make available the instruments and 
equipment we need.
    (2) If we measure emissions on one of your test engines, the 
results of that testing become the official data for the engine. Unless 
we later invalidate this data, we may decide not to consider your data 
in determining if your engine family meets the emission standards.
    (3) Before we test one of your engines, we may set its adjustable 
parameters to any point within the physically adjustable ranges (see 
Sec. 1048.115(d)).
    (4) Calibrate the test engine within the production tolerances 
shown on the engine label for anything we do not consider an adjustable 
parameter (see Sec. 1048.205(m)).

Sec. 1048.240  How do I determine if my engine family complies with 
emission standards?

    (a) Your engine family complies with the numerical emission 
standards in Sec. 1048.101 if all emission-data engines representing 
that family have test results

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