[Federal Register Volume 62, Number 152 (Thursday, August 7, 1997)]
[Rules and Regulations]
[Pages 42638-42644]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 97-20821]



[[Page 42637]]

_______________________________________________________________________

Part IV





Environmental Protection Agency





_______________________________________________________________________



40 CFR Parts 90 and 91



Control of Air Pollution; Amendments to Emission Requirements 
Applicable to New Nonroad Spark Ignition Engines at or below 19 
Kilowatts and New Marine Spark Ignition Engines: Provisions for 
Replacement Engines and the Use of Two Stroke Engines on Certain 
Nonhandheld Equipment; Final Rule and Proposed Rule

Federal Register / Vol. 62, No. 152 / Thursday, August 7, 1997 / 
Rules and Regulations

[[Page 42638]]


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ENVIRONMENTAL PROTECTION AGENCY

40 CFR Parts 90 and 91

[FRL-5871-1]


Control of Air Pollution; Amendments to Emission Requirements 
Applicable to New Nonroad Spark Ignition Engines At or Below 19 
Kilowatts and New Marine Spark Ignition Engines: Provisions for 
Replacement Engines and the Use of Two Stroke Engines on Certain 
Nonhandheld Equipment

AGENCY: Environmental Protection Agency (EPA).

ACTION: Direct final rule.

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SUMMARY: This final rule amends the regulations applicable to spark-
ignition nonroad engines at or below 19 kilowatts (kW) and spark-
ignition marine engines to address situations that have arisen 
regarding the implementation of regulations applicable to these nonroad 
engines. No significant air quality impact is expected from these 
amendments.
    These amendments will allow engine manufacturers to provide 
uncertified engines to replace older engines when major engine failures 
occur and no suitable certified engine is available that will fit in 
the nonroad equipment or marine outboard or personal watercraft. These 
amendments will also broaden a provision in the existing regulations 
which permits the use of two stroke engines to power lawnmowers, 
subject to a phase-out schedule described in the regulations. The 
amendments will extend this provision to other types of nonhandheld 
equipment subject to appropriate constraints.

DATES: This final rule is effective October 6, 1997 unless adverse or 
critical comments are received by September 8, 1997. If the effective 
date is delayed, timely notice will be published in the Federal 
Register.

ADDRESSES: Written comments should be addressed to: EPA Air Docket (LE-
131), Attention: Docket Number A-97-25, room M-1500, 401 M Street, SW., 
Washington, DC 20460 (telephone 202-260-7548, fax 202-260-4400). Please 
contact the individual listed below before submitting comments. 
Materials relevant to this rulemaking are contained in the docket 
listed above and may be reviewed at that location from 8:00 a.m. until 
5:30 p.m. Monday through Friday. As provided in 40 CFR part 2, a 
reasonable fee may be charged by EPA for photocopying.

FOR FURTHER INFORMATION CONTACT: John Guy, Office of Mobile Sources, 
Engine Programs and Compliance Division (6403J), 401 M Street SW., 
Washington, DC 20460, 202-233-9276.

SUPPLEMENTARY INFORMATION:

I. Regulated Entities

    Entities potentially regulated by this action are those which 
manufacture and use spark-ignition marine outboard or personal 
watercraft (including jetboat) engines and spark-ignition small nonroad 
engines of 19 kW or less. Regulated categories and entities include:

------------------------------------------------------------------------
             Category                  Examples of regulated entities   
------------------------------------------------------------------------
Industry..........................  Manufacturers and users of spark    
                                     ignition engines of 19 kW or less. 
                                    Manufacturers and users of marine   
                                     spark ignition outboard or personal
                                     watercraft engines.                
------------------------------------------------------------------------

    This table is not intended to be exhaustive, but rather provides a 
guide for readers regarding entities likely to be regulated by this 
action. This table lists the types of entities that EPA is now aware 
could potentially be regulated by this action. Other types of entities 
not listed in the table could also be regulated. To determine whether 
your product is regulated by this action, you should carefully examine 
the applicability criteria in Secs. 90.1 and 91.1 of title 40 of the 
Code of Federal Regulations. If you have questions regarding the 
applicability of this action to a particular product, consult the 
person listed in the preceding FOR FURTHER INFORMATION CONTACT section.

II. Obtaining Copies of the Regulatory Language

Electronic Copies of Rulemaking Documents

    Electronic copies of the preamble and the regulatory text of this 
rulemaking are available via the Internet on the Office of Mobile 
Sources (OMS) Home Page (http://www.epa.gov/OMSWWW/). Users can find 
Nonroad Engines and Vehicles information and documents through the 
following path once they have accessed the OMS Home Page: ``Nonroad 
Engines and Vehicles,'' ``Equipment'' or ``Marine''. Electronic copies 
of the preamble and the regulatory text of this rulemaking are also 
available on the Office of Air Quality Planning and Standards (OAQPS) 
Technology Transfer Network Bulletin Board System (TTN BBS). Users are 
able to access and download TTN BBS files on their first call. After 
logging onto TTN BBS, to navigate through the BBS to the files of 
interest, the user must enter the appropriate command at each of a 
series of menus. The steps required to access information on this 
rulemaking are listed below. The service is free, except for the cost 
of the phone call. TTN BBS: 919-541-5742 (1,200-14,400 bps, no parity, 
eight data bits, one stop bit). Voice help: 919-541-5384; Internet 
address: TELNET ttnbbs.rtpnc.epa.gov; Off-line: Mondays from 8:00-12:00 
Noon ET.
    1. Technology Transfer Network Top Menu: Gateway to TTN Technical 
Areas (Bulletin Boards)
    2. TTN Technical Information Areas: OMS--Mobile Sources Information
    3. OMS BBS===Main Menu File Transfers: Rulemaking & Reporting
    4. Rulemaking Packages: Nonroad
    5. Nonroad Rulemaking Area: File Area #2 . . . Nonroad Engines
    6. Nonroad engines
    At this stage, the system will list all available nonroad engine 
files. To download a file, select a transfer protocol which will match 
the terminal software on your computer, then set your own software to 
receive the file using that same protocol. If unfamiliar with handling 
compressed (i.e., ZIP'd) files, go to the TTN topmenu, System Utilities 
(Command: 1) for information and the necessary program to download in 
order to unZIP the files of interest after downloading to your 
computer. After getting the files you want onto your computer, you can 
quit TTN BBS with the <G>oodbye command.

III. Table of Contents

IV. Statutory Authority and Background

A. Statutory Authority
B. Background

V. Use of Uncertified Engines for Replacement of Failed Engines in 
Older Equipment and Marine Outboard Engines and Personal Watercraft 
(Including Jetboats)

A. Discussion
B. Regulatory Approach

VI. Use of Two Stroke Engines in Nonhandheld Equipment

A. Discussion
B. Regulatory Approach

[[Page 42639]]

VII. Final Action

VIII. Cost Effectiveness

IX. Administrative Requirements

A. Administrative Designation
B. Reporting and Recordkeeping Requirements
C. Regulatory Flexibility
D. Submission to Congress and the General Accounting Office
E. Unfunded Mandates Act

IV. Statutory Authority and Background

A. Statutory Authority

    Authority for the actions in this notice is granted to EPA by 
sections 202, 203, 204, 205, 206, 207, 208, 209, 213, 215, 216, and 
301(a) of the Clean Air Act as amended (42 U.S.C. 7521, 7522, 7523, 
7524, 7525, 7541, 7542, 7543, 7547, 7549, 7550, and 7601(a)).

B. Background

(1) Replacement Engines

    EPA promulgated final regulations applicable to spark-ignition 
nonroad engines at or below 19kW (Small SI engines) on July 3, 1995 (60 
FR 34582, codified at 40 CFR part 90) and final regulations applicable 
to spark-ignition marine outboard and personal watercraft (including 
jetboat) engines (Marine SI engines) on October 4, 1996 (61 FR 52088, 
codified at 40 CFR part 91) <SUP>1</SUP>. The Small SI regulations take 
effect with model year 1997 for the majority of covered engines but not 
until the 1998 model year for certain higher displacement handheld 
engines. The Marine SI rule takes effect with 1998 or 1999 engines, 
depending upon their usage, and involves a corporate average standard 
which tightens each year through 2006. Both rules prohibit engine 
manufacturers from introducing into commerce any engine not covered by 
a certificate of conformity issued by EPA under the regulations (40 CFR 
90.1003(a)(1)(i); 40 CFR 91.1103(a)(1)(i)). The rules also prohibit 
equipment and vessel manufacturers from introducing new nonroad 
equipment and vessels into commerce unless the engine in the equipment 
or vessel is certified to comply with the applicable nonroad emission 
requirements (40 CFR 90.1003(a)(5); 40 CFR 91.1103(a)(5)) <SUP>2</SUP>.
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    \1\ The preamble to the final Marine SI rule (61 FR 52090) 
explains that for purposes of the Marine SI rule, jetboats are 
considered as personal watercraft, except where their engines are 
derived from sterndrive or inboard type marinized automotive blocks.
    \2\ The regulations also prohibit, in the case of any person, 
the importation of Small SI engines and Marine SI engines 
manufactured after the applicable implementation date for the 
engine. The regulations also prohibit the importation of equipment 
containing Small SI engines unless the engine is covered by a 
certificate of conformity. (40 CFR 90.1003(a)(1)(ii) and 40 CFR 
91.1103(a)(1)(ii)).
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    These prohibitions have caused or will cause engine manufacturers 
to be unable, in the event of a major engine failure, to provide 
uncertified replacement engines to repower pre-regulation nonroad 
equipment and outboards and personal watercraft (including jetboats), 
as well as outboards and personal watercraft (including jetboats) 
certified to an earlier standard <SUP>3</SUP>. Equipment and engine 
manufacturers have indicated that for many items of older equipment, 
older outboards and older personal watercraft (PWCs), no certified 
engine is, or will be, available that will fit. Amendments in this 
package will alleviate this unintended side effect of the current 
regulations for users of Marine SI and Small SI engines.
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    \3\ The Marine SI standards take effect with the 1998 or 1999 
model year, depending upon application, and then become 
progressively tighter each year through 2006. Some engines certified 
early in the program will be discontinued as the standards tighten 
down. Consequently, Marine SI engine manufacturers may need to 
provide uncertified replacement engines for pre-regulatory engines 
as well as for engines built to meet an earlier standard. The Phase 
1 Small SI standards take effect with the 1997 or 1998 model year, 
depending upon application, and remain the same throughout Phase 1. 
At least during Phase 1, the Small SI manufacturers will only need 
to provide uncertified engines for pre-regulatory equipment.
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    While this rulemaking addresses the needs of both the Marine SI and 
Small SI engine manufacturers for a replacement engine provision 
together, there are differences in the products and structure of the 
industries that should be noted here. The majority of the engines 
subject to the Marine SI rule are outboard engines where the engine 
manufacturer produces the complete outboard engine containing both the 
powerhead (engine) and the drive unit (the lower part of an outboard 
engine which contains the drive shaft and exhaust system and holds the 
propeller). Outboard engines are sold to consumers and vessel 
manufacturers who affix them to the outside rear of boats. With respect 
to replacement engine provisions for Marine SI engines in this 
rulemaking, the term ``engine'' refers to the powerhead of an outboard 
engine or the analogous power unit of a personal watercraft or jet 
boat.
    Small SI engines can be split into two factions. Nonhandheld 
engines are produced by engine manufacturers and sold to equipment 
manufacturers that produce lawnmowers, tillers, garden tractors, 
commercial mowing, farm and construction equipment, small generators 
and other such equipment. Some of this equipment can be extremely 
expensive relative to the cost of a new engine. When engine failures 
occur, equipment operators may desire to replace the engine. Handheld 
engines are generally produced by companies that make chainsaws, string 
trimmers, hedge trimmers, backpack blowers and cut off saws. The 
handheld industries are generally integrated, producing the entire 
consumer product, while the nonhandheld industries are not. For 
handheld products, the engine comprises a substantial portion of the 
value of the equipment, and most equipment is of low value relative to 
engine repair or replacement costs. Consequently, handheld engine 
replacement is expected to be extremely rare even in high end, 
professional usage products.

(2) Use of Two Stroke Engines in Nonhandheld Equipment

    The Small SI final rule provides for separate categories for 
handheld and nonhandheld engines. Within each category are different 
displacement classes with different emission standards. Handheld 
engines use predominantly two stroke combustion technology because of 
the need for light-weight engines that can be used multipositionally, 
including upside down and sideways, in handheld equipment. Nonhandheld 
engines, which are not so constrained by weight and generally operate 
in limited positions, are nearly all four stroke combustion technology. 
Because of their operating characteristics and design, two stroke 
engines have much greater hydrocarbon (HC) emissions than four stroke 
engines.<SUP>4</SUP> The standards for two stroke and four stroke 
engines reflect these differences--the nonhandheld hydrocarbon plus 
oxides of nitrogen standards are designed around four stroke engines 
and are significantly more stringent than the corresponding handheld 
engine standards.
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    \4\ A two stroke or two cycle engine produces power strokes 
twice as often as a four stroke or four cycle engine, and therefore 
produces greater power for a given weight. Also, two stroke engines 
are lubricated by oil which is added to the fuel, while four stroke 
engines require a crankcase full of oil that must remain at the 
bottom of the engine. Consequently, two stroke engines can be 
operated multipositionally, but burn oil with their gasoline. Four 
stroke engines can not typically be operated multipositionally, but 
do not burn oil with their fuel. The two additional strokes used by 
a four stroke engine serve to push the exhaust gases out of the 
cylinder before any fresh fuel and air is admitted. In a two stroke 
engine, these extra strokes do not occur and there is considerable 
mixing of fresh fuel and air with the exhaust stream. The presence 
of this unburned fuel along with the byproducts of oil combustion 
cause two stroke engines to exhibit high HC emissions.

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[[Page 42640]]

    While nearly all nonhandheld equipment is powered by four stroke 
engines, some lawnmowers have historically used two stroke engines. A 
special provision was incorporated into the final rule to ease the 
transition to four stroke engines for the affected manufacturers. See, 
40 CFR 90.103(a)(3). This provision allows certain manufacturers of 
lawnmowers to continue to use two stroke engines, subject to a 
declining production cap, up through model year 2002, provided the 
engines are certified to meet the handheld standards. This provision is 
discussed in greater detail in the preamble to the final rule (60 FR 
34582, 34593-34594 (July 3, 1995)).
    Recently, EPA has learned that some very low volume, specialized 
nonhandheld equipment has also historically been produced with two 
stroke engines. This equipment would require substantial modification 
and redesign to utilize four stroke engines. An amendment in this 
package will extend the flexibility provided for manufacturers of two 
stroke lawnmowers to manufacturers of other nonhandheld equipment, 
provided the equipment manufacturer can demonstrate to EPA its 
inability to readily convert to four stroke engines. If EPA approval is 
granted, this provision would then allow those equipment manufacturers 
to have the same opportunities to modify their equipment to use four 
stroke engines that the two stroke lawnmower manufacturers have. This 
provision is expected to affect a very small number of low volume, 
specialty equipment manufacturers.

V. Use of Uncertified Engines for Replacement of Failed Engines in 
Older Equipment and Marine Outboard Engines and Personal Watercraft 
(Including Jetboats)

A. Discussion

    As indicated above, the Marine SI and the Small SI rules prohibit 
the introduction into commerce of any new nonroad engines subject to 
those regulations unless the engines are covered by a certificate of 
conformity issued by EPA. According to letters received from Small SI 
and Marine SI engine manufacturers, the Engine Manufacturers 
Association and a number of nonroad equipment manufacturers, these 
prohibitions pose a hardship to engine manufacturers and their 
customers when equipment produced before the applicable effective date 
of the rules, and therefore equipped with uncertified engines, or 
marine equipment with engines certified to an earlier standard, 
experiences catastrophic engine failures. <SUP>5, 6</SUP> In such 
cases, particularly for newer equipment still under warranty, engine 
manufacturers desire to be able to provide an entire new engine. 
However, certified engines that will fit in pre-regulatory equipment or 
equipment subject to an earlier standard will not always be available 
for reasons discussed below.
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    \5\ For simplicity, from this point on in this preamble 
discussion, unless otherwise specified, the term ``equipment'' 
refers to both nonroad equipment using handheld or nonhandheld 
engines and to marine propulsion units including outboard and jet 
engines and their drive units. Therefore, the term ``engine'' as it 
pertains to marine engines will mean the powerhead of an outboard 
engine or the analogous power unit of a jet engine used in a 
personal watercraft or jet boat.
    \6\ Copies of these letters are available in the docket for 
today's rulemaking.
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    Under current regulations, an equipment owner who experiences a 
major engine failure with an uncertified engine or a marine engine 
certified to an earlier standard is limited to the following options. 
It can:
    (1) Obtain a new, uncertified engine or a marine engine certified 
to an earlier standard from a manufacturer's or distributor's 
inventory. Engine manufacturers have informed us that because of the 
many variations of engines they produce, inventorying quantities of 
older marine engines or uncertified engines produced before the 
effective date of the regulations for anticipated replacement purposes 
would be impractical and prohibitively expensive. The Small SI 
regulations at 40 CFR 90.1003(b)(4) specifically provide

* * * Nonroad vehicle manufacturers may continue to use noncertified 
nonroad engines built prior to the effective date until noncertified 
engine inventories are depleted; however, stockpiling (i.e. build up 
of an inventory of engines outside of normal business practices) of 
noncertified nonroad engines will be considered a violation of this 
section.<SUP>7</SUP>

    \7\  No correponding provision is found in the Marine SI rule, 
however this regulation is essentially a codification of 
longstanding EPA policies implementing the prohibitions of section 
203(a) of the Act. These policies are similarly applicable to marine 
engines. See, for example, EPA's letter of November 22, 1989 to the 
Public Transportation Division of the City of High Point, North 
Carolina. Copy in docket.
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    EPA does not regard engines inventoried beyond the end of a model 
year for reasonable anticipated warranty needs to be ``stockpiled''. 
However, because of the manufacturers' understandable desire to avoid 
inventory costs, this option would not likely be able to supply 
significant numbers of replacement engines.
    (2) Obtain a used or remanufactured engine. EPA has no restrictions 
on the installation of used or remanufactured engines in equipment that 
predates the relevant effective date of the Marine SI or Small SI rule. 
Further, marine engines certified to an earlier standard may be 
remanufactured to be identical to a certified configuration of the same 
or later model year and used for replacement applications. However, 
engine and equipment manufacturers have informed us that there is no 
significant rebuilding industry for Small SI engines as there is for 
categories of larger engines. Rebuilding of marine engines is more 
common, however marine engine manufacturers have informed us that 
rebuilt engines are not commonly available to replace engines that are 
less than approximately five years old and even then may not be widely 
available for some configurations.
    (3) Repair the individual engine using a ``short block''. In this 
case, a new cylinder block with pistons, connecting rods, crankshaft 
and timing gear (a ``short block'') serves as a repair part. EPA has a 
long standing policy that a short block is not a new engine and will 
not result in a new engine when combined with the used components from 
the original engine.<SUP>8</SUP>
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    \8\ Letters of December 11, 1989 and April 6, 1990 from Charles 
N. Freed, EPA to Mitsubishi Motors America, Inc. Copies located in 
docket.
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    (4) Replace the failed engine with a new, certified engine. In this 
case, a new certified engine is installed in place of the uncertified 
engine or older marine engine. This is the most desirable option from 
the Agency's point of view, however in many cases certified engines 
will not fit in equipment that may have been designed around 
uncertified engines or older marine engines. Engines certified to the 
latest standards may be equipped with additional or different 
components which impact the external dimensions of or connections to 
the engines and therefore limit their abilities to fit in engine 
compartments of older equipment.
    From the engine and equipment manufacturers' point of view, all of 
the current options described above have limitations. The manufacturers 
point to long standing industry practices of being able to provide 
complete, new replacement engines expeditiously when catastrophic 
engine failures occur, particularly when those failures affect 
equipment in the first few years of use, and even more particularly 
when it may still be under warranty. Many of the Small SI engines are 
used in specialized agricultural or construction equipment. Timely 
repairs can be crucial when the broken engine is in a piece of

[[Page 42641]]

construction equipment and a construction project sequence is being 
held up. Many Marine SI engines are used in commercial fishing or 
tourist vessels where downtime means loss of income to the operator. 
Also, many users of Small SI powered equipment and Marine SI engines 
are small businesses who can not afford the additional downtime and 
expense that may be associated with waiting for an engine overhaul. 
Further, because of the diversity of nonroad products using Small SI 
engines, suitable replacement or rental nonroad equipment is not always 
readily available. The equipment and engine manufacturers have also 
explained that the need to repair an engine using a short block leads 
to delays and extra costs that would not occur if the old, broken 
engine could simply be exchanged for a new uncertified engine. They 
argue that the short block option requires greater skills and 
facilities and more time to complete than an engine swap and produces 
an engine that is not a factory-tested and adjusted unit. From an air 
quality standpoint, they argue that an entire new uncertified engine 
might be better than an old engine repaired with a new short block or 
replaced with a remanufactured engine.
    The two major U.S. manufacturers of outboard marine engines have 
indicated to EPA that replacement powerheads comprise less than one 
percent of annual U.S. sales. Engine replacement is rare in walk-behind 
lawnmowers which is the most common application of nonhandheld Small SI 
engines. Further, the two major manufacturers of walk-behind mower 
engines have indicated that their certified configurations will fit 
older mower applications. One of these companies has told EPA that 
replacement engines are less than one percent of its business. Another 
Small SI engine manufacturer has indicated to EPA that only about two 
percent of its annual sales are for replacement purposes, and that many 
of these will be certified engines. This particular manufacturer 
pointed out that its sales of replacement engines are probably higher 
than the industry average, because it produces mostly larger, more 
expensive nonhandheld engines used in ``high end'' equipment where the 
value of the equipment drives the decision toward replacing the engine 
rather than the entire piece of equipment.
    Engine manufacturers are still producing uncertified complete 
engines for export, or are sometimes willing to produce small 
quantities for domestic replacement purposes, and desire to be able to 
sell them (or provide them under warranty) for replacement purposes. 
EPA notes that the California Air Resources Board, in its regulation of 
both Small SI engines and large nonroad compression ignition engines, 
permits the introduction into commerce of uncertified engines for 
replacement purposes up through January 1, 1999 and January 1, 2000 
respectively. (California does not regulate Marine SI engines.) In a 
direct final rulemaking very similar to today's rulemaking that was 
published on November 12, 1996 (61 FR 58102), EPA established 
provisions to permit the sale of uncertified large compression ignition 
(Large CI) nonroad engines for replacement purposes in pre-regulation 
equipment based on considerations consistent with those described 
above.
    The Agency is amending the Small SI and Marine SI regulations to 
permit the sale of uncertified replacement engines in those cases where 
a new, certified engine is not available with appropriate physical or 
performance characteristics to repower the equipment, as a reasonable 
way to balance achieving the air quality benefits of the Small SI and 
Marine SI programs with the desire to minimize disruption to equipment 
owners accustomed to using replacement engines. However, if a certified 
engine is available with sufficient torque and horsepower that will fit 
in the equipment, then the certified engine should be used so that the 
goals of the Clean Air Act to convert the fleet of Small SI and Marine 
SI engines to certified status are promptly fulfilled. The amended 
Small SI regulations will permit a nonroad engine in a piece of 
equipment that predates the applicable implementation date of the Small 
SI rule to be replaced with a new, uncertified engine. Similarly, the 
amended Marine SI regulations will permit the powerhead in an outboard 
or PWC (including a jetboat) that predates the applicable 
implementation date of the Marine SI rule to be replaced with a new, 
uncertified engine. The amended Marine SI regulation will also permit 
powerheads certified in an earlier year of the phase in, but not 
certified in the then current model year to be replaced with a new, 
uncertified powerhead provided the powerhead is of a configuration 
identical in all material respects to that of the failed powerhead or a 
later model year powerhead.
    Given the small percentage of engines that will likely require 
replacement, the fact that some of those will get replaced with 
certified engines and the likelihood that a new replacement engine will 
be at least as clean as a remanufactured engine or an engine repaired 
with a short block, EPA concludes that permitting the use of 
uncertified replacement engines in these situations will not pose an 
environmental threat or reduce the environmental benefit of the Small 
SI or Marine SI rules. Further, EPA concludes that it would be 
unreasonable to impose upon equipment operators, the costs associated 
with having to replace failed engines with certified engines, where 
appropriate certified engines are not available for pre-regulatory 
equipment or for marine engines built to less stringent standards.

B. Regulatory Approach

    EPA is implementing this provision through amendments to the 
Prohibited Acts sections at 40 CFR 90.1003 and 91.1103. To ensure that 
the replacement engine provision is properly used, these amendments 
will include controls nearly identical to those adopted in the direct 
final rule for Large CI engines referenced above. EPA is requiring that 
any uncertified Small SI engine produced for replacement purposes be 
clearly labeled as such and that such label include a warning that any 
use of the engine in post-regulation nonroad equipment constitutes a 
violation of the Act subject to civil penalty. EPA is adopting these 
same provisions for replacement marine engines except that the labeling 
requirement will be different to reflect the phase in of the marine 
standards. In this case the label must reflect that the engine may be 
used to replace only pre-regulation engines or engines certified for a 
model year that is no later than the last year in which the replacement 
engine was certified. For both Marine SI and Small SI engines, EPA is 
requiring that the manufacturer ascertain that no certified engine with 
appropriate characteristics is available that will fit in the equipment 
and that the manufacturer or its agent takes possession of the old 
engine. Requiring the equipment owner to ``turn in'' an old engine 
provides the manufacturer or its agent with a clear opportunity to 
confirm the existence of an old engine, evaluate its configuration and 
make sure the appropriate replacement engine is supplied. Unlike in the 
Large CI replacement engine rule, we are providing that EPA may approve 
alternative control measures to the requirement that the manufacturer 
or its agent take possession of the old engine when selling an 
uncertified replacement engine. We believe this flexibility may be 
necessary to accomodate some distribution channels through which small 
engines and marine engines may be sold if these channels are shown to 
be unable to accomodate old engines. EPA would approve alternate

[[Page 42642]]

approaches if persuaded that the approach provides equivalent control 
to the requirement to turn in the old engine to the manufacturer or its 
agent.

VI. Use of Two Stroke Engines in Nonhandheld Equipment

A. Discussion

    Presently, the Small SI rule contains provisions at 40 CFR 
90.103(a)(3) and 90.107(e)(1) through (5) to permit manufacturers of 
two stroke lawnmower engines to continue to sell those engines through 
model year 2002 provided they can certify them to the handheld 
standards appropriate for their displacement. These provisions require 
the engine manufacturer to establish a baseline annual sales number 
based on their 1992 through 1994 sales of such engines and then comply 
with a declining production cap through the 2002 model year. In 2003, 
the engines would have to meet the appropriate nonhandheld standards, 
either those contained in the current rule or in any superseding rule.
    As discussed in the preamble to the final Phase 1 rule, these 
provisions were established to minimize the economic hardship of the 
small engine rule on two stroke lawnmower engine and equipment 
manufacturers and to provide adequate lead time for compliance with the 
nonhandheld standards. See 60 FR 34593-34594. EPA incorporates that 
discussion by reference. Recently, EPA has become aware of a very small 
manufacturer (less than 100 units per year) of specialty lawn care 
equipment who has historically used two stroke engines on its products, 
was unaware of the promulgation of the Phase 1 rule until recently, and 
would face severe lead time problems and economic hardship if it had to 
quickly switch over to four stroke engines to power its equipment. Its 
equipment will require substantial redesign to use four stroke engines 
for which additional lead time is necessary. EPA believes there may be 
other small entities with similar situations but does not believe there 
are any that produce substantial volumes of equipment. In the case of 
small volume manufacturers, the per unit cost of forcing equipment 
redesign to accommodate four stroke engines is especially high. EPA has 
concluded that it is equitable and appropriate to treat such companies 
in the same manner as the two stroke lawnmower engine manufacturers are 
being treated and has determined it is appropriate to expand the 
provisions providing relief for lawnmowers to encompass any nonhandheld 
equipment that has historically been produced with two stroke engines, 
provided that the manufacturer can demonstrate to EPA that no suitable 
four stroke engine is available and that substantial redesign of the 
equipment requiring additional lead time to avoid economic hardship 
would be necessary to accommodate a four stroke engine. Without 
providing relief to address these situations, the cost of compliance 
with the nonhandheld standards would be unreasonably high. In order to 
avoid this result, EPA has determined that it is more reasonable to 
provide a relaxation of standards in these situations.
    With regard to the declining annual cap imposed in Sec. 90.107(e) 
upon the lawnmower engine manufacturers, EPA believes that a declining 
cap may not be appropriate or necessary for specialty equipment whose 
production is already very low, and could serve to eliminate any 
benefit that the provision may offer to a small equipment manufacturer, 
because it might force them to produce both two and four stroke 
versions at the same time to maintain sales levels. Therefore, EPA is 
adding a provision at Sec. 90.107(g) that would allow the cap to be 
waived by EPA upon a demonstration by the engine or specialty equipment 
manufacturer that compliance with the cap would not be economically 
feasible. This waiver authority would not be extended to the high 
volume lawnmower manufacturers currently covered under Sec. 90.107(e), 
nor would it be extended to any other high-volume nonhandheld engine 
manufacturer, in the unlikely event that one might come forward and 
seek relief to enable it to use a two stroke engine.

B. Regulatory Approach

    The regulatory change will be implemented by modifications to 
sections on Exhaust Emission Standards (Sec. 90.103) and the 
Application for Certification (Sec. 90.107). The relevant provision at 
Sec. 90.103(a)(3) previously applied only to manufacturers of two 
stroke lawnmowers and will now be expanded to include ``lawnmowers or 
other nonhandheld equipment''. In Sec. 90.107, a new paragraph will be 
added to provide the criteria by which EPA can approve the use of two 
stroke engines in nonhandheld equipment other than lawnmowers. Because 
the provision for two stroke engines in lawnmowers was based on 
substantial information about the impact of the Small SI nonhandheld 
standards on certain manufacturers and because EPA desires nonhandheld 
equipment manufacturers to use engines certified to nonhandheld 
standards whenever possible, EPA is including a requirement, applicable 
to manufacturers of nonhandheld equipment other than lawnmowers, that 
the equipment manufacturer must demonstrate that a suitable engine 
meeting nonhandheld standards is not available to fit the existing 
equipment design and that the equipment can not be converted to accept 
an engine meeting the nonhandheld standards without substantial and 
costly redesign for which additional lead time is necessary.
    The original regulation included a declining production cap at 
Sec. 90.107 to provide for the phase out of two stroke equipped 
lawnmowers. The declining cap approach was designed to address 
relatively high-volume two stroke lawnmower manufacturers who would be 
able to gradually shift their production to four stroke mowers. 
Nonhandheld equipment other than lawnmowers that may qualify to use two 
stroke engines is expected to be produced only in very small quantities 
and EPA believes that a declining production cap may be unnecessary for 
such equipment. Consequently, a provision has been added to permit EPA 
to waive the declining cap for equipment other than lawnmowers, if the 
equipment manufacturer can make a demonstration that complying with the 
cap would be economically infeasible.

VII. Final Action

    EPA is publishing this rule without prior proposal because EPA 
views these amendments as noncontroversial and anticipates no adverse 
comments. However, in the event that adverse or critical comments are 
filed, EPA has prepared a Notice of Proposed Rulemaking (NPRM) 
proposing the same amendments. This NPRM is contained in a separate 
document in this Federal Register publication. The direct final action 
will be effective October 6, 1997, unless adverse or critical comments 
are received by September 8, 1997. If EPA receives adverse or critical 
comments on either the relevant revisions discussed in Section V or 
those discussed in Section VI, the revisions described in that section 
will be withdrawn. If adverse or critical comments are received on the 
revisions described in both sections, then both sections will be 
withdrawn before the effective date. In case of the withdrawal of all 
or part of this action, the withdrawal will be announced by a 
subsequent Federal Register document. All public comments will then be 
addressed in a subsequent final rule based on this action serving as a 
proposed rule. EPA will not provide a second comment period on this 
action. Any parties

[[Page 42643]]

interested in commenting on this rule should do so at this time. If no 
adverse comments are received, the public is advised that the rule will 
be effective October 6, 1997.

VIII. Cost Effectiveness

    This rulemaking alters an existing provision by allowing nonroad 
equipment manufacturers to have greater flexibility in their choice of 
engines under certain circumstances. It also permits nonroad engine 
manufacturers to sell engines that the original rule would not permit. 
Therefore, because this rulemaking alters existing provisions, and that 
alteration provides regulatory relief, there are no additional costs to 
original equipment manufacturers associated with this specific final 
action.
    The costs and emission reductions associated with the Small SI rule 
were developed for the July 3, 1995 final rulemaking. The costs and 
emission reductions associated with the Marine SI rule were developed 
for the October 4, 1996 rulemaking. We do not believe the changes being 
implemented today affect the costs and emission reductions published as 
part of those rulemakings.

IX. Administrative Requirements

A. Administrative Designation

    Under Executive Order 12866 (58 FR 51735, October 4, 1993), the 
Agency must determine whether the regulatory action is ``significant'' 
and therefore subject to OMB review and the requirements of the 
Executive Order. The Order defines ``significant regulatory action'' as 
one that is likely to result in a rule that may: (1) Have an annual 
effect on the economy of $100 million or more or adversely affect in a 
material way the economy, a sector of the economy, productivity, 
competition, jobs, the environment, public health or safety, or State, 
local, or tribal governments or communities; (2) Create a serious 
inconsistency or otherwise interfere with an action taken or planned by 
another agency; (3) Materially alter the budgetary impact of 
entitlements, grants, user fees, or loan programs or the rights and 
obligations of recipients thereof; or, (4) Raise novel legal or policy 
issues arising out of legal mandates, the President's priorities, or 
the principles set forth in the Executive Order. It has been determined 
that this rule is not a ``significant regulatory action'' under the 
terms of Executive Order 12866 and is therefore not subject to OMB 
review.

B. Reporting and Recordkeeping Requirements

    This final rulemaking does not change the information collection 
requirements submitted to and approved by OMB in association with the 
Small SI final rulemaking (60 FR 34582, July 3, 1995) or submitted to 
OMB in association with the Marine SI final rulemaking (61 FR 52088, 
October 4, 1996). An Agency may not conduct or sponsor and a person is 
not required to respond to a collection of information unless it 
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.

C. Regulatory Flexibility

    EPA has determined that it is not necessary to prepare a regulatory 
flexibility analysis in connection with this final rule. EPA has also 
determined that this rule will not have a significant adverse economic 
impact on a substantial number of small entities. This is because 
today's rulemaking will provide regulatory relief to both large and 
small volume engine and equipment manufacturers by permitting greater 
flexibility in engine choices in equipment. Moreover, the provisions in 
this rulemaking simply permit long-standing business practices to 
continue.

D. Submission to Congress and the General Accounting Office

    Under 5 U.S.C. 801(a)(1)(A) as added by the Small Business 
Regulatory Enforcement Fairness Act of 1996, EPA submitted a report 
containing this rule and other required information to the U.S. Senate, 
the U.S. House of Representatives and the Comptroller General of the 
General Accounting Office prior to publication of the rule in today's 
Federal Register. This rule is not a ``major rule'' as defined by 5 
U.S.C. 804(2).

E. Unfunded Mandates Act

    Under Section 202 of the Unfunded Mandates Reform Act of 1995 
(``Unfunded Mandates Act''), signed into law on March 22, 1995, EPA 
must prepare a budgetary impact statement to accompany any proposed or 
final rule that includes a Federal mandate that may result in estimated 
costs to State, local, or tribal governments in the aggregate, or to 
the private sector, of $100 million or more. Under Section 205, EPA 
must select the most cost effective and least burdensome alternative 
that achieves the objectives of the rule and is consistent with 
statutory requirements. Section 203 requires EPA to establish a plan 
for informing and advising any small governments that may be 
significantly or uniquely impacted by the rule. EPA has determined that 
the action proposed today does not include a Federal mandate that may 
result in estimated costs of $100 million or more to either State, 
local, or tribal governments in the aggregate, or to the private 
sector. Therefore, EPA has not prepared a budgetary impact statement 
for this rule.

List of Subjects in 40 CFR Parts 90 and 91

    Environmental protection, Air pollution control, Confidential 
business information, Imports, Labeling, Nonroad source pollution, 
Reporting and recordkeeping requirements, Research, Warranties.

    Dated: July 30, 1997.
Carol M. Browner,
Administrator.

    For the reasons set out in the preamble, title 40, chapter I, of 
the Code of Federal Regulations, is amended as follows:

PART 90--CONTROL OF EMISSIONS FROM NONROAD SPARK-IGNITION ENGINES

    1. The authority citation for part 90 continues to read as follows:

    Authority: Sections 203, 204, 205, 206, 207, 208, 209, 213, 215, 
216, and 301(a) of the Clean Air Act, as amended (42 U.S.C. 7522, 
7523, 7524, 7525, 7541, 7542, 7543, 7547, 7549, 7550, and 7601(a)).

    2. Section 90.103 is amended by revising paragraph (a)(3) to read 
as follows:


Sec. 90.103  Exhaust emission standards.

    (a) * * *
    (3) Notwithstanding paragraph (a)(2) of this section, two stroke 
engines used to power lawnmowers or other nonhandheld equipment as 
allowed in Sec. 90.107 (e), (f) and (h) may meet class III, IV, or V 
standards until model year 2003.
* * * * *
    3. Section 90.107 is amended by adding a new paragraph (h) to read 
as follows:


Sec. 90.107  Application for certification.

* * * * *
    (h)(1) The Administrator may, upon receipt of a written request 
from an equipment manufacturer, accompanied by sufficient 
documentation, permit two stroke engines produced for nonhandheld 
equipment other than lawnmowers to meet the standards specified in 
Sec. 90.103(a)(3) under the schedule outlined in paragraph (e) of this 
section. The equipment manufacturer must demonstrate to the 
satisfaction of the Administrator that:

[[Page 42644]]

    (i) Four stroke engines for such equipment are not available with 
suitable physical or performance characteristics; and
    (ii) The equipment can not be converted to use four stroke engines 
without substantial redesign for which additional lead time is 
necessary to avoid economic hardship.
    (2) The Administrator may waive the phase-in percentages of 
paragraphs (e)(3) and (e)(4) of this section for engines used in low 
volume nonhandheld equipment other than lawnmowers where the equipment 
manufacturer demonstrates to the satisfaction of the Administrator that 
compliance with the production cap is not economically feasible.
    4. Section 90.1003 is amended by adding paragraph (b)(5) to read as 
follows:


Sec. 90.1003  Prohibited acts.

* * * * *
    (b) * * *
    (5) A new nonroad engine, intended solely to replace an engine in a 
piece of nonroad equipment that was originally produced with an engine 
manufactured prior to the applicable implementation date as described 
in Sec. 90.2, Sec. 90.103 and Sec. 90.106, shall not be subject to the 
requirements of Sec. 90.106 or prohibitions of paragraphs (a)(1) and 
(b)(4) of this section provided that:
    (i) The engine manufacturer has ascertained that no engine produced 
by itself or the manufacturer of the engine that is being replaced, if 
different, and certified to the requirements of this subpart, is 
available with the appropriate physical or performance characteristics 
to repower the equipment; and
    (ii) Unless an alternative control mechanism is approved in advance 
by the Administrator, the engine manufacturer or its agent takes 
ownership and possession of the engine being replaced; and
    (iii) The replacement engine is clearly labeled with the following 
language, or similar alternate language approved in advance by the 
Administrator:

This engine does not comply with federal nonroad or on-highway 
emission requirements. Sale or installation of this engine for any 
purpose other than as a replacement engine in a nonroad vehicle or 
piece of nonroad equipment whose original engine was not certified 
is a violation of Federal law subject to civil penalty.

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

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

    Authority: Sections 203, 204, 205, 206, 207, 208, 209, 213, 215, 
216, and 301(a) of the Clean Air Act, as amended (42 U.S.C. 7522, 
7523, 7524, 7525, 7541, 7542, 7543, 7547, 7549, 7550, and 7601(a)).

    6. Section 91.1103 is amended by adding paragraph (b)(4) to read as 
follows:


Sec. 91.1103  Prohibited acts.

* * * * *
    (b) * * *
    (4) A new marine spark-ignition engine intended solely to replace 
an engine in an outboard engine, or other engine to which this Part is 
applicable as determined by Secs. 91.1, 91.101, 91.106 that was 
originally produced with an engine manufactured prior to the applicable 
implementation date as described in Secs. 91.2, and 91.106 and 
91.205(a)(1), or that was originally produced in a model year in which 
less stringent emission standards under this part were in effect shall 
not be subject to the requirements of Sec. 91.106 or the prohibitions 
of paragraph (a)(1) of this section provided that:
    (i) The engine manufacturer has ascertained that no engine produced 
by itself or the manufacturer of the engine that is being replaced, if 
different, and certified to the requirements of this subpart, is 
available with the appropriate physical or performance characteristics 
to repower the outboard, personal watercraft or jetboat; and
    (ii) Unless an alternative control mechanism is approved in advance 
by the Administrator, the engine manufacturer or its agent takes 
ownership and possession of the engine being replaced; and
    (iii) The replacement engine is clearly labeled with the following 
language, or similar alternate language approved in advance by the 
Administrator:

This engine does not comply with Federal nonroad or on-highway 
emission requirements. Sale or installation of this engine for any 
purpose other than as a replacement engine in a marine vessel whose 
original engine was not certified, or was certified to less 
stringent emission standards than those that apply to the year of 
manufacture of this engine, is a violation of Federal law subject to 
civil penalty; and

    (iv) Where the replacement engine is intended to replace an engine 
built after the applicable implementation date as described in 
Secs. 91.2, 91.106 and 91.205(a)(1), but built to less stringent 
emission standards than are currently applicable, the replacement 
engine shall be identical in all material respects to a certified 
configuration of the same or later model year as the engine being 
replaced.

[FR Doc. 97-20821 Filed 8-6-97; 8:45 am]
BILLING CODE 6560-50-P